Bharti
Vidyapeeth New Law College,
Pune
Purchasing
and owning real estate is always linked with high risk and always
requires utmost care — whether it’s a single family home that
you’ll occupy or an apartment building for income. You’ll hear
experts say to make sure to “do your due diligence” when buying
property, what does that actually mean? What is due diligence?
The
truth is, there isn’t an Easy Button for doing your due diligence.
It’s really a time-consuming process, and few people have any idea
what to do. So here is what it means and some of the steps you should
consider and perform.
Do
research !
Due
diligence means taking caution, performing calculations, reviewing
documents, procuring insurance, walking the property, etc. —
essentially doing your homework for the property before you actually
make the purchase. If there are too many issues with the property —
and that means too much potential risk and cost — then you can
cancel your purchase agreement and look for a better property.
A
seller can sell only what he possesses. Therefore if a seller has
proper and valid title, on purchase you will get valid title. If the
seller's title is defective, you will get only defective title. The
simple reasoning is that he can sell what he has, and nothing more.
Investigation
of Title
Title
is a legal term; it means the ownership right to property. Title of
property is the prime concern of everyone at the time of purchasing
of a property. Every property has a title. Title is the evidence of
the right of ownership or the ground of right of ownership. Title can
be created by act of parties or by operation of law. Title is
acquired by transfer or by operation of law .The law relating to
transfer of immovable property is governed by the Transfer of
Property Act .Two other Acts closely connected to it are the Indian
Registration Act and the Indian Stamp Act. Law of Contract, and the
various Statutes passed by State Legislatures from time to time have
important bearing in the matter of ascertaining title to immovable
property. Law relating to succession is another important area
connected to investigation of title.
As
buying the property in India is the most complex process because
buying a property is like falling into litigation, therefore it is
important to examine title of the property by investigating the
source from which the seller acquired the property. This search can
be conducted at the sub-registrar’s office. It is advisable to
investigate the title for the past thirty years or up to the original
owner whichever is later.
An
EC (encumbrance certificate) from the Registrar for 13 years.
All
documents examined, should be original to ensure that the seller has
a clear title and that there are no encumbrances on the property such
as lien or mortgage or any other charge. Non-availability of any
original document should be taken seriously.
Title
to immovable property is ascertained by perusing relevant “Documents”
and “Deeds” pertaining to such property. The term “Document”
has very wide import. Under general law ‘document’ means any
matter expressed or described up on any substance by means of
letters, figures or mark for the purpose of recording that matter.
The documents relating to property or commercial transactions are
generally called Instruments or Deeds.
Investigation
of title is very essential since the ownership of the property is
required to be complete, fair & free from any doubts, risks &
interest. To ensure this an investigation is much needed so that a
purchaser can take all necessary steps at the time of acquiring
property to obtain a good & clear title of the land. When search
is conducted unto the property of the person who owns it, it is
called the Investigation of Title. It is also popularly called as
‘SEARCH’ into the ownership of the property. The investigation is
carried out broadly to ensure that the property is indeed in the name
of the person selling, is free from liens, mortgages and
encumbrances, that the property tax has been fully paid up to date
and that the property is not engaged in any legal conflicts.
The
investigation of title is a step as towards an agreement of sale. An
agreement of sale has three main step preceding the completion of a
transaction of sale they are: - (1) Settlement of the terms of the
deal between the parties particularly relating to the consideration &
the property to be transferred, (2) Preparation and execution of the
agreement & (3) Investigation of title of the transfer of
property.
Some
of the important aspects to be borne in mind while purchasing a land
may be classified under different heads as follows:
1.
First and foremost ask who the seller is. Get the full name and
address of the seller.
2.
Find out what is the nature of his right. The seller may be having
absolute ownership right, or a conditional or limited right.
3.
So far as the types of rights in the land, it can be classified
mainly as follows:
• Free
hold or absolute ownership land known as Warg right
• Mulgeni
right (right of permanent lease),
• Tenancy
right,
• Lands
granted by government, under Land Grant Rules, Land Revenue Act,
Grant of Flouse sites.
• Lands
granted under Land Reforms Act, etc
4.
It is always advisable to deal with a Freehold right or absolute
ownership right, which is also called as Warg right.
5.
After getting the particulars as to who is the seller, what is his
right, then find out the source of his right or title.
a)
The title of the seller may be by purchase, by inheritance, by
partition, by gift, by settlement or by grant.
b)
To find out the source of title there must be some document like.
Right
of purchase ---------- Sale Deed
Inheritance
----------------- Entries in Revenue records, and predecessor's title
Partition
--------------- Deed of partition
Gift
---------------------- Gift Deed
Settlement-------------------
Deed of settlement
Grant
------------------------ Grant order
Mulgeni
--------------------- Deed of Mulgeni or permanent lease
c)
If the right is by purchase ask for the original sale deed. See when
the seller had purchased the land and from whom he had purchased.
Verify the previous records. Verify the title for thirty years.
d)
If it is by inheritance, ask the particulars as to from whom he has
inherited. What was the right of his predecessor? Again it may be a
sale deed or gift, or inheritance. Verify the previous title Get the
details as to how his predecessor acquired the title, and whether he
is the only person who has inherited. If here are other persons who
have jointly inherited, then you have to find out, whether there was
any partition. Whether there are any minors who have inherited the
property. If there is a minor, the minor's property can not be
purchased without obtaining permission of the Court.
e)
If it is by partition there must be a deed of partition.
f)
See whether there are any conditions or restrictions in the deed of
partition. Find out whether there are any conditions, like
pre-emption, water rights, rights of way, payment of maintenance etc.
g)
Likewise if it is gift deed, or settlement deed, or grant, get the
original Gift deed, settlement deed, or grant order as the case may
be. Read the document and see whether there are any conditions, like
reservation of life interest, restrictions for alienation, payment of
maintenance, preemption etc. Some times there may be reservation of
life interest, or what was gifted may be only right of enjoyment
h)
Rights acquired under various types of Grant orders again are subject
to several conditions regarding alienation and enjoyment. This has to
be verified. If the grant is in favour of a person belonging to
Scheduled Caste or Scheduled Tribe community, generally there will be
a condition prohibiting alienation. Such lands cannot be purchased
i)
If it is a Mulgeni ask for the deed of mulgeni, again see whether
there are any conditions. Mulgeni or right of permanent lease is
again a conditional right. In such cases there are two parties or
persons having the right in the Jand. One is the owner and another is
the permanent lessee. In other words, one is the Mulgar/owner and the
other one is Mulgenidar/ tenant. The possessory right or right of
enjoyment will be, with the Mulgenidar/tenant.,The owner/Mulgar will
have the right of ownership with right to collect the stipulated
rent. The deed of Mulgeni or deed of permanent lease will contain the
restrictions regarding alienation, payment of rent, and the other
rights of the lessee etc. All these have to be verified. Because the
owner/mulgar will generally have a right to challenge or question the
alienation/transfer and the very right of mulgeni can be cancelled or
terminated. It is always advisaWe to find out as to that is the
Mulgar, or owner, and purchase his rights also.
j)
If there are any conditions in the documents, examine the conditions,
and if the conditions restrict or prohibit the transfer or
alienation, do not proceed.
6.
Find out the extent of the property and see whether it tallies with
the one mentioned in the documents. Verify the survey number,
location and boundaries and get the land measured through a competent
surveyor.
7.
Find out whether there is an approach road.
8.
Examine the sketch or plan of the property.
9.
Get the record of rights (RTC) of the land and confirm that the name
of the seller is shown as owner in possession of the property. You
can get the latest computerized RTC from the Taluka Office. The
record of rights will disclose the name of the owner, name of the
person in possession, nature of right, nature of land, and also
encumbrances if any.
10
Identification of the lands will be always by Survey Numbers. Record
of rights/ khata will give an indication as what is the right of the
holder. Confirm the entries in the record of rights/khata with some
other registered documents / or previous documents. This is because
the Record of rights or khata by itself is not a document of title.
11. For
converted lands there will be what is called as Khata. Apply and get
Khata extract from the City Corporation.
a.
The zone where the property is situated. Apply to the Urban
Development Authority with survey number and sketch for a zonal
certificate. If the property is in residential zone, construction of
house will be permitted. If the property in commercial zone,
industrial zone, park zone, etc, construction of house will not be
permitted.
b.
In City/ urban areas the user of the lands are regulated by zonal
classifications. The Urban Development Authority is the Department,
which deals in the matters relating to zonal
classifications.
We have to see in which zone the land is located.
For
construction of house the property must be in residential
zone.
12.
Whether the property is converted? For using the land for building
houses or other buildings, the land has to be converted from
agricultural use to non-agricultural use. By filing an application to
the Tahsildar, with sketch and other particulars as prescribed, and
by paying the prescribed fee you will get an endorsement/order that
the land is converted. This is necessary because all lands assessed
for land revenue are considered as agricultural lands. The conversion
is done under the provisions of Land Revenue Act. The Tahsildar, and
in some cases the Deputy commissioner are the authorities prescribed
under the Land Revenue Act for getting the land converted.
13. National
High way and State High way: As per the National High
Way and State High way Rules construction of buildings will not be
permitted within a range of 60 meters from the center of the National
High Way. If the land is by the side of National High Way, this
aspect has to be verified.
14.
Coastal Regulation Zone: Construction of buildings are not permitted
within a range of 200 meters from the high-tide zone in case the
property is situated by the side of river and 500 meters in case the
property situated by the side of sea.
15.
We have to find and out and see whether there are any encumbrances,
charges, or mortgages on the property. Verify Encumbrance certificate
for at least 13 or 15 years up-to-date. If there are any
charges/mortages/ or other encumbrances noted in the Encumbrance
certificate do not proceed till the same are cleared or clarified.
How
to find out this?
a.
Apply and get an encumbrance certificate at least for 13 or 15 years,
from the office of the Sub-Registrar where the immovable property is
situated. Give the particulars of the property like Survey Number,
extent of land, name of the village, name of ward, boundaries, etc.
and specify the period for which you require the encumbrance
certificate.
b.
The encumbrance certificate will show the details of registered
documents relating to the property, Like sale deeds, mortgage deeds,
etc.
c.
If there are no such registered records relating to the property the
encumbrance certificate will be a Nil Encumbrance certificate.
d.
Mortgages or charges can be created by registered documents, or by
depositing the original title deeds. If it is by registered
documents, like deed of mortgage, it will be reflected in the
encumbrance certificate. If it is by deposit of title deeds, the
Encumbrance certificate will not disclose it. Therefore you have to
ask for the originals title deeds for verification. If the original
title deeds are with the owner it means that he has not deposited it
with any body. Sometimes, the originals might have been lost by
misplacement, fire, or by some other means. If that is the situation
then one has to proceed only on the basis of trust. We can ask for an
affidavit, a sworn statement of the owner to the effect that the
original title deeds are really lost and that he has not created any
charge, or deposited it with anybody. A paper publication can also be
given.
16.
If the properly which you are going to purchase is a land with
building, you have to verify the building licence, completion
certificate and latest tax paid receipt
17.
Khata of the building and land has to be verified and it must show
the name of the owner.
18. Apartments: If
the property which you are going to purchase is an apartment you have
examine and verify:
a.
The title to the land on which the apartment building is constructed.
For tracing and confirming the title of the land on which the
Apartment building is built, the same points narrated above have to
be followed.
b.
The land and the building must have been submitted to the provisions
of Apartment Ownership Act 1972, by a registered document called the
Deed of Declaration. Read the Deed of declaration and it will give
you a clear picture as to what are the common rights, facilities, how
it has to be enjoyed, how it has to be maintained. As a whole the
deed of declaration will contain the various provisions regarding the
mode of enjoyment of the apartments, common areas, and facilities.
c.
The percentage of right in the land which you are going to get has to
be verified
d.
Whether the Association of the Owners has been formed?
e.
Get a no due certificate from the Association of Owners regarding
maintenance or other charges so far as it relates to the apartment,
which you are purchasing.
f.
The building license, plans, completion certificate latest tax paid
receipt have to be verified.
g.
All documents relating to land as explained above have to be
verified.
h.
The original of the sale deed relating to the apartment, which you
are purchasing, has to be obtained.
19. Some
points regarding Minors right, and rights of inheritance:
a.
If right of minor is involved in any property, it is not advisable to
purchase such land. The minor can always question the sale by the
father or mother as guardian within three years of his/her attaining
majority. Getting Court permission for sale of minor's property, or
right in the property will protect your rights to some extent.
ii)
Regarding rights of inheritance, among Hindus all children
irrespective of sex, they get right by birth in ancestral property as
per the latest central amendment to the Hindu Succession Act. The
rights of children are equal. So far as Indian Succession Act is
concerned, which is applicable to Christians, when a male dies
intestate, (i.e. without a Will or other documents) his wife will get
one-third right and the remaining two-third will go to the children
equally. For Mohammedans, when a male dies the wife and children will
get the rights. However if there are no male issues and only
daughters, as per Mohammedan Law, some of the near relatives of the
deceased father will also get a share.
iii)
If the property is self-acquired property, the question of children
inheriting any right by birth does not arise. However when a male
Hindu dies leaving behind his self-acquired property, without leaving
behind any Will or other documents, the succession to the property
will be as per the Hindu Succession Act. If the property is ancestral
property, or a property inherited by his father, the succession for
such property shall be as per the Hindu Succession Act and the same
can not be regulated by Will. However this concept of ancestral or
family property etc are not there under Indian Succession Act. Thus
the property inherited by a Christian will be as good as his/her
self-acquired property.
20. Sale
by General Power of attorney holder. In many cases the
actual owner does not come forward for executing the sale deed and
the GPA holder represents the owner. In such cases first of all we
have to verify the genuineness of the GPA. The original GPA must be
verified and the GPA holder must have the custody of the original
GPA. The following points may be borne in mind while examining the
GPA:
a)
The GPA is still in force. If it is an old GPA ask for a
confirmation.
b)
The GPA must contain the following powers and particulars:--Power of
sale, power to sign and execute the sale deed, receive the
consideration, appear before the Sub-Registrar, present the document
for registration, admit execution and receipt of consideration,
deliver possession of the property and description of the property,
full name and address of the person giving the power and the person
to whom it is given. If all these powers are there the GPA holder can
execute the sale deed.
c)
The GPA must be drawn on stamp paper of the required value. It must
be attested by a Notary, Magistrate, Sub-Registrar or embassy.
21.
As the sale transactions cannot be done then and there, and since it
requires some reasonable time for both the seller and purchaser, many
a times, the parties enter into agreement for sale pending
registration of the actual sale deed. Before entering into agreement
for purchase or sale, all the points narrated above have to be
verified. The purchaser must retain the original agreement. Copies of
the title deeds have to be obtained. The agreement has to be drawn
and executed on stamp paper of required value. The agreement for sale
must contain at least the following particulars:
a)
Full name and address of the Seller and Purchaser.
b)
A brief history of the title of the seller, with reference to his
title deed.
c)
An undertaking by the seller to sell |he land to the
d)
The total price of the property agreed between the parties.
e)
The amount of advance paid, mode of payment, acknowledgement of
receipt of the advance by the seller, the amount of balance price to
be paid, the time for payment of the balance price.
f)
Time for execution and registration of the sale deed.
g)
An undertaking to deliver vacant possession of the property
h)
An undertaking to hand over all title deeds
i)
A clear description of the property
j)
Date and time of the agreement.
k)
A default clause stipulating penalty or damages for breach of
agreement.
How
could we conduct such research?
Sec.
51. Of TOPA(transfer of property act) Register books to be
kept in the several offices. -The following books shall be kept in
the several offices hereinafter named, namely:
In
all registration offices -
Book
1 - "Register of non-testamentary document relating to immovable
property".
Book
2 - "Record of reasons for refusal to register".
Book
3 - "Register of wills and authorities to adopt"; and
Book
4 - "Miscellaneous Register".
B
- In the offices of Registrars -
Book.5
- "Register of deposits of wills".|
Book
1 - In book I shall be entered or filed all documents or memoranda
registered under sections 17, 18 and 89 which relate to immovable
property, and are not wills. Book 1 is open to public inspection and
copies of the document entered/pasted in them shall be given to all
the person on the payment of prescribed fees.
Book
2 – It is also open for public inspection, and copies of the
document shall be given to all the persons applying for them. This
book contains following types of headings :-
(1)
serial number
(2)
Date of order of refusal
(3)
Name of the person representing documents
(4)
Nature & volume of transactions
(5)
Reason for refusal
(6)
Remarks
Book
3 – It is not open for public inspection, nor are its indices, but
copies of wills and authorities to adopt pasted in it shall, on
payment of the prescribed fees, be given to the persons executing the
documents to which such copy relates, or to their agent and after the
death of the executants to any persons applying for such copies.
Book
4 – Copies of all documents registered , under clause (d) & (
f) of sec 18 which do not relate to immovable property is pasted in
book 4.It is not open for public inspection, nor are its indices, but
copies of wills and authorities to adopt pasted in it shall, on
payment of the prescribed fees only to the parties executing or
claiming under the documents to which such copy relate, or to the
agents or representatives of such persons.
Book
5 – Book V is to be kept only in the office of registrar, who alone
can receive wills in sealed covers for deposit. It shall contain the
following headings :-
(1)
Serial number
(2)
Superscription of the sealed cover
(3)
Description on the seal of the cover
(4)
Time of presentation & receipt of the sealed cover, year, month,
day & hour.
(5)
Name of the depositor
(6)
Names of the person testifying to the identity of the depositor.
(7)
Time of delivery of the sealed cover to applicant for withdrawal
year, month, day & hour.
(8)
Names of the person testifying to the identity of the applicant and
the time of delivery.
(9)
Time of opening the sealed cover.
Catalogue
of permanent records :
A
catalogue shall be maintained in every Registration office of a
permanent record year wise in the following Performa :
Book
or Index No. ……….
Vol.
Date
of Commencement
Date
of Completion
Date
of dispatch to central room
Signature
Remark
No.
Date
Month
Year
Registering
Officer
Transfer
of Property through
GPA
(General
Power of Attorney)
According
to the ‘Section: 1A’ of “POWER OF ATTORNEY ACT, 1882”, “A
‘Power Of Attorney’ includes any instruments empowering a
specified person to act for and in the name of the person executing
it”.
SCOPE
OF GPA
• A
power of attorney is not an instrument of transfer in regard to any
right, title or interest in an immovable property.
• It
is creation of an agency whereby the grantor authorizes the grantee
to do the acts specified therein, on behalf of grantor, which when
executed will be binding on the grantor as if done by him (1A and
section 2 of the Powers of Attorney Act, 1882).
• It
is revocable or terminable at any time unless it is made irrevocable
in a manner known to law. Even an irrevocable attorney does not have
the effect of transferring title to the grantee.
A
recent Supreme Court verdict is quite significant, in disallowing
“General Power Of Attorney” (GPA) as a legitimate way to transfer
property title.
Concept:
GPA based sales went like this:
• I
own a property that you want
• You
pay me money to buy it from me
• You
don’t intend to keep the property, you want to sell it for a higher
price
• You
don’t register a sale deed in your name, because that will involve
your paying registration fees and stamp duty (can be 5% to 12% of the
property value).
• Instead,
you take a power of attorney in your name, which means that you act
as my “attorney” in both selling the property I own and receiving
money on my behalf.
• When
you find a buyer, you register the transfer in that person’s name
saying that you’re my representative (as my attorney). This time,
registration fees will be paid, but for two transactions, fees are
paid only once.
The
“General” part of the GPA entitles the holder to do anything with
the asset. (as opposed to “specific powers of attorney” where you
limit the rights of the holder)
The
GPA concept was being used in a number of ways:
1.
To avoid high registration fees as described above.
2.
To stash black money or avoid scrutiny. Since you do not need to
disclose a GPA as an asset (it isn’t one) people can “own”
property without anyone ever getting to know. Plus think of how good
this is for politicians or public officials – they have to declare
their assets, but since a GPA isn’t an asset….
3.
For land grabbing. Find the owner, make sure he sells to you through
a GPA; then sit on the land for years until it appreciates; then sell
it. The risk here is that the seller could realize that the GPA means
nothing to land authorities, so he might resell the land to someone
else without the GPA holder knowing. (This kind of deal is often
where mafia and politicians are involved)
4.
For owning agricultural or restricted land: Since many states impose
restrictions on who can own property (Himachal Pradesh) or who can
own farmland (only “agriculturists” in most states), people use
the GPA route to circumvent these laws.
Where
are GPAs legitimate?
If
you were living abroad and owned a piece of land in India, you’d
want someone local to handle the small bits of work – like
collecting a cheque, signing the registration deed etc. The idea
isn’t to transfer your property to the GPA holder, it’s to enable
a transaction.
What
did the Supreme Court say?
That
GPAs are not valid transfers of ownership. Only registered sale deeds
are.
But
it’s not with retrospective effect; existing properties that have
been purchased from a GPA holder (before October 11, 2011) won’t be
affected. Even those who hold a GPA today can “regularize” it by
converting it into a sale deed, but they can no longer sell it to a
third party.
According
to a TOI article
The
verdict is likely to affect a large number of property owners. A
senior lawyer who vets sale documents for a leading bank estimated
that around 70% of property sales in Delhi take place through GPA and
SA.
Apartment
owners in societies which have not got a completion certificate will
find themselves on a sticky wicket because these flats cannot be
converted into freehold. Until now, these properties could be sold
through GPA and SA. The new ruling will effectively mean such
apartments cannot be sold. Experts also say the verdict will raise
the market value of freehold real estate while depressing the price
of leasehold properties.
What
should you do?
Just
make sure when you buy a property that the seller had bought it from
the previous owner through a sale deed. Make sure you speak to the
person whose name is on the sale deed. (Not the person who signed –
that is irrelevant)
If
you’re buying an apartment, demand the ownership papers of the
underlying land also. For under-construction apartments, these will
be available – for others, you might need to get the documents from
the registrar (I wonder if you can use an RTI request).
Note
that you won’t get bank loans for GPA based property sales anymore.
This
is a great order that should at some level curb the misdeeds in the
realty business. We also need a proper real estate regulator and
unambiguous property ownership laws.
In
landmark judgment by Supreme court in Suraj Lamp & Industries
Pvt. Ltd. V. state of Haryana & Anr. SLP (C) NO.13917 OF 2009,
Court has held that:-sale transactions carried out through GPA will
have no legal sanctity & immovable property can be sold or
transferred only through registered deeds. Consequently
the revenue department of Delhi issued a circular on 26th April 2012
that instructed all the registrars & sub registrars not to
register any GPA, will or agreement to sell, through which any
immovable property is being transferred. This aroused problem for
those who were the owners of the lease hold properties and wanted to
sell that property to someone else.
However,
anon later on 5th on 5th May 2013, the Delhi high court in the matter
of Pace developers and promoters Pvt Ltd. V. Govt of NCT , struck
down the controversial circular of the Delhi state govt that
restricted transfer of property through GPA. The Delhi High Court
said that the state govt was wrong in interpreting the 2011 landmark
judgment of the supreme court on the issue of Power of Attorney,
pointing that the apex court never issued a blanket ban on
registration on by taking recourse to a GPA. The judgment said that
as long as the transaction is genuine, the same have to be registered
by the sub-registrar.
Subsequently,
the Revenue Department of Delhi Govt. issued a fresh circular on 22nd
july, 2013 where it stated that transfer of property through general
power of attorney and special power of attorney by any registered
property owner will be allowed in favour of their spouse, son ,
daughter, brother, sister, or any other relative or person of his
trust to manage his property or empowering him to execute any further
deed or transfer including conveyance, sale and gift deed. As per the
circular, property transaction through GPA will be considered ‘legal’
but, it will not be considered as transfer of title for the purpose
of mutation of property. It directed all the Sub registrars in Delhi
to once again allow the registration of such Power of Attorneys. This
provided some relief to the general public as they can now transfer
their property through a GPA in certain cases.
Important
Clauses in Sale Deed
What
is a Sale Deed?
Sale
deed is a legal document executed by a seller/vendor and the
purchaser/vendee who evidences the sale and transfer of ownership of
an immovable property. A sale deed is executed after the execution of
the agreement to sell, and after the compliance of various terms and
conditions mutually agreed between the seller and the purchaser. It
is an essential document for the further sale of property by the
purchaser as it establishes the proof of the ownership of the
property.
The
sale of immovable property is defined under Section 54 of transfer of
Property Act. 1882, as follows “ sale is transfer of ownership in
exchange for a price paid or promised or part paid and part promised.
Such
a transfer, in the case of a tangible immovable property of the value
of Rs. 100 and upward , can be made only by a registered document.
The
sale deed is executed after the execution of the agreement to sell,
and after compliance of various terms and conditions mutually agreed
between the seller and the purchaser. Sale deed is the main document
which contains the details regarding how seller did have the title of
the property, at what consideration price the seller is selling the
property to the said buyer and assurance to the purchaser that the
property is free from all the encumbrances and liabilities, etc. A
sale deed acts as an essential document for the further sale of the
property by the purchaser as it establishes the proof of ownership of
property.
IMPORTANT
CLAUSES IN SALE DEED
1)
Description of the parties – every sale deed starts with clear
description of the parties. The sale deed must contain must the
parties name, their father/husband’s name and their complete
address.
2)
Date and place – A sale deed must mention the date and place of
execution of the sale deed by the seller and the buyer.
3)
Description of the property – A valid sale deed must contain the
full description of the property which is the subject matter of the
sale. It must include identification number, total plot area,
construction details as well as its location with its surrounding
areas.
4)
Sale consideration – a sale deed must include the clause stating
the sale consideration/ amount as agreed between the seller and the
buyer, and which has to be paid by the buyer to the seller on the
execution of the sale deed.
5)
Advance payment if any – If there is any payment of token amount by
the buyer to the seller, then it has to be clearly mentioned in sale
deed, along with the balance payment to be ,made at the time of
execution of the sale deed.
6)
Passing of the title – A sale should contain the clause specifying
the time when the title of the property will pass to the purchaser.
Once the title of the property is transferred, all the rights will
pass to the purchaser.
7)
Indemnity Provisions – A seller must clear all the statutory
provisions i.e property tax, electricity charges, water bills and all
other charges relating to the property up to the date of execution of
the sale deed.
8)
Execution – Once the sale deed is prepared all the parties to the
deed shall execute it by affixing their signatures and thumb
impressions.
9)
Registration – Acc. to sec 17 of the registration act, 1908, the
registration of the an immovable property is mandatory if the value
of the property exceeds Rs. 100/- & it is the registration of the
property which makes the sale valid.
10)
Witnesses – the executed sale deed should be witnessed by at least
two witnesses, one of whom should be preferably be from the seller’s
side and one from the buyer’s side.
11)
Original Documents – Once the property gets registered under the
registration act, all the documents of the sold property have to be
handed over by the seller to the purchaser. All the statutory rights
along with ownership, possession, title, interest, will get vested in
favour of purchaser.
Important
Point to be noted in relation to registration of sale deed in Delhi :
1)
Stamp duty & transfer duty is payable @ 4 % if the buyer/ vendee
is a male and 6 % if the buyer/ vendee is company/firm
2)
Registration fee is payable @ 1% of the total sale consideration plus
Rs. 100/- for pasting charges through bank pay order.
3)
The stamp duty payable on the sale deed should be as per the circles
rates fixed by the revenue department of Govt. of NCT. Of Delhi for
the locality in which the property is located. If the sale
consideration is more than the minimum circle rates fixed by the
government , then the stamp duty will be calculated on the sale
consideration amount mentioned in the sale deed.
4)
Both the vendor and vendee have to present along with their two
passport size photographs and identification documents. i.e Adhaar
card & PAN Card
5)
Two witnesses along with identification documents i.e Adhaar card or
PAN card need to present in the sub registrar’s office for the
registration of sale deed.
Conclusion: The
process of investigation of title is protracted and filled with
setbacks. The searches at the Sub-Registrar’s offices are in a
dismal condition and the records are not maintained properly. Replies
from the Municipal Corporation, are also not easily provided.
Therefore to find out the correct position of the property is
challenging.
The
advocates have to patiently investigate the title even though there
are several hurdles such as inaccuracy of records. No lapse on part
of the advocates is feasible and the seller will not be liable in
case of any default or shortcoming with respect to the documents.
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