NEED FOR DRAFTING OF PROPERTY DOCUMENTS

NEED FOR DRAFTING OF PROPERTY DOCUMENTS

Identifying a suitable property is the first step taken towards the purchase of a property. After completing the same, documentation is the next and very important aspect.

The agreement to sell is governed by the provisions of the Indian Contract Act 1872 and the Transfer of Property Act 1882.

Mode of stamp duty

Previously, documents were prepared on the stamp paper issued by the Government Department. After the ‘Telgi Scam’, usage of the stamp papers is prohibited in Karnataka. Now, a white paper or Rs 2 document sheet which is issued by the department of Registration is preferred. Regarding stamp duty, it has to be made either by way of Pay order / Demand Draft or Banker’s Cheque in favour of the concerned Sub-Registrar. The Registration charges either by way of DD or cash, is to be submitted to the concerned Sub-Registrar. The details of the stamp duty and registration charges will be entered by the Sub-Registrar on the reverse side of the sale deed.

The beginning

Documents consist of several distinct parts. The name and description of the documents is the first caption shown in the document. This gives a general indication about the nature of a document. However, contents are the most important factor to decide the nature of the document. The date and place of the execution of the document is the beginning of the document. The date of the document may differ from the date of registration. Documents can be presented for registration within four months from the date of execution. However, the date and place of execution is important for purpose of determining the limitation and jurisdiction.

The name of the parties to the contract, their age, father’s name, in case of a married woman her husband’s name, and place of their residence should be mentioned.

All the owners, as one of the parties to the contract, should take abundant care at the time of executing the documents. The party to the contract may act for himself/itself or on behalf of someone else or he may represent in any other capacity. In such a case, the party should clearly mention the capacity in which is he is representing.

All the relevant facts are to be explained in a logical and chronological order should be narrated. The rights and obligations of the parties must be stated. The intention of the party should also be clearly mentioned in the document.

‘Preamble’

Preamble reveals the history of the property, nature of the transaction and the intention of the party. The previous history of the property can be established, by an advocate, from the Preamble.

Operative portion

The operative portion of the document states the nature of the transaction, i.e., whether it is an absolute transfer or an agreement to transfer the right, title and interest, consideration paid, mode of payment of such consideration and balance payable, if any. The duration for completion of the transaction should be mentioned clearly. The covenants of the vendor, pertaining to clear and marketable title, is an important aspect of the transfer.

Default clause

In the case of default in the payment or non-performance of the other party, remedy available to the opposite party has to be clearly mentioned in the document.

In case of delayed payment, what is the percentage of interest payable or damages payable to the other party or the mode to terminate the agreement in case of breach of contract should be stated clearly.

In case of non-performance, specific performance clause should also be included in the document.

The arbitration clause is advisable to be incorporated in the agreement.

Possession

The time of delivery of possession should be clearly and specifically mentioned. It may be noted that the seller need not give the possession of the property to the purchaser on execution of the agreement or on part payment. Possession has to be given on completion of the sale process and receipt of full consideration amount after execution of the conveyance deed. The agreement should also refer to the mode of possession of the property and whether it is vacant or not. When the property is let out, the seller has to arrange for a rental agreement between the existing tenant and the purchaser of the property. Possession is the most important ingredient of the transaction.

Description

Location and description should contain the total measurement, the municipal number, street, road, with complete and proper boundaries and properties surrounding the property agreed to be sold. It should also include the area, floors, type of constructions and materials used among others. The details should be exhaustive so as to identify the property clearly as Section 21 and 22 of the Indian Registration Act makes it mandatory to disclose the details.

Execution

At the end, the document should contain an undertaking that the executants is signing the documents before the witnesses. The witness who sign in the document, may or may not know the contents of the agreement. Whereas, in the case of consenting witnesses, who have a certain interest in the property, they should know the contents of the documents. The non-testamentary document should be drafted by an Advocate or licensed documents writer and they should sign on the same.

Preservation

Preservation of the original document is the most important aspect as it is an evidence of ascertaining the ownership of a particular person and incase of his death, for their legal heirs. If the original document is misplaced or unavailable, it would seriously affect the title of the property. It may be presumed that the property documents are pledged with some financial institutions by way of deposit of title deeds. It is advisable to laminate the documents and preserve them in safe custody.



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REQUIREMENTS FOR DRAFTING DEED

REQUIREMENTS FOR DRAFTING DEED

Before drafting any kind of deed of transfer, it is very important to incorporate all the necessary requirements for an effective enforcement of such deeds apart from giving legal sanctity, which requires due diligence and a thorough scrutiny. The following are the essential requirements:

Nature of the Deed

The deed has to specify the description of the deed, such as “This Deed of Sale”, “This Deed of Mortgage”, “This Deed of Agreement to sell”, etc, which may not necessarily be in Bold letters, but is preferable in order to highlight the nature of the deed.

Date of Execution:

It is very important to mention the date of execution of the deed since the same is required for determining the limitation and also for registration of such conveyance in the revenue records by the concerned revenue departments. Further, the date of execution of the document may vary from the date of registration. However, the documents can be presented anytime within four months from the date of execution.

Parties to the Deed:

All the necessary persons having interest in the property intended to be conveyed have to be mandatorily made as parties to the deed in order to avoid any future legal disputes, likely to be raised by the parties having interest over the schedule property. It is also important to properly depict the status of each party to the deed.

Recitals

The deed shall contain the previous history pertaining to the property in a precise way, explaining the nature of the interest and motive behind the execution of such deed, which authenticates the title, which is called Recitals in the legal terminology.

Habendum

This part of deed speaks about the interest in the property that the purchaser is being conveyed such phrases as “To Have and To Hold”. This phrase can be seen in almost all the deeds.

Covenants

A covenant is an agreement wherein either or both the parties to the deed bind themselves to certain terms and conditions, which create an interest over the property, which may be express or implied. In recent times, with the advent of Apartment culture, it is very necessary to incorporate covenants of various types besides those for maintenance of common areas and facilities in the deed.

Testimonium

This is the part of the deed which states that the parties have signed the deed. This is very important in order to prove authentication of the execution of the deed and the involvement of the proper parties having interest in the property in legally conveying the property to the parties of the other part.

Testatum

This is the witnessing clause wherein the witnesses signing the deed are introduced, along with their names, address and signature. This clause is also very important for the reason that the witnesses also play an important role to prove the execution of the document. However, it is advisable that both the witnesses are from purchaser/transferee’s side

Operative Words

This part of the deed depends upon the nature of conveyance. However, operative words clearly depict the intention of the parties conveying the property in favour of the other party/ies, which is necessary for passing of the title.

Parcels

This means description of the property following the operative words. Anything intended to be conveyed/assigned has to be specifically mentioned. Every minute details about the identification of the property has to be clearly incorporated. Any ambiguity about the description of the schedule property may lead to serious problems.

Exceptions and Reservations

Property intended to be transferred must not fall within the ambit of those prohibited under the statute or by orders of the Government. This part of the deed speaks about the conditions restraining the alienation and assurance that such alienation does not involve any restrictions.

Exception refers to some property or definite right which is existing on the date of conveyance and the same would transfer if not expressly excluded.

Reservation refers to the right which is not existing but created at the time of transfer.

Completion of transaction

The deed can be enforceable only if the same is properly stamped under Indian Stamp Act. Apart from this, it is also necessary that the same has to be registered under the Indian Registration Act. Under the said Act, registration of certain documents are made compulsory if such documents fall within either of the category. Only after the registration of such documents, the right, interest and title over the property is validly transferred from the transferor to the transferee. However, registration of the documents depends upon the nature of the transfer.

Execution

Execution of the document will be complete only after the parties put their signature on the deed. Special care should be taken when any of the deed is signed by the party who is an illiterate or blind or Pardanashin lady. In case any document is signed by some person by putting thumb impression, the documents has to be signed by the person who has taken the thumb impression and if any map or plan sketch is annexed to the document, then the same has to be signed by the parties.

Attestation

Attestation, is not a mere formality, but is imperative to prove the proper execution of the document. Though there is no standard form for it, the essential conditions of a valid attestation is that two or more witnesses have seen the executant signing the instrument and that each of them sign in presence of the executant. However, a person who is a party to the deed or a Power of Attorney Holder cannot sign the deed as an attesting witness.

Possession of property

It is very important that the transferor transfers possession of the property in favour of the transferee. It is not necessary that actual possession has to be handed over to the transferee, but even constructive possession will transfer and create a right and interest over the property.

Registration of Deeds

There are certain categories of documents which require compulsory registration. If the document need not be compulsorily registered, then the mere execution of the document incorporating all the necessary causes will complete the act of transfer. On the other hand, the documents requiring compulsory registration is enforceable only after completing the formalities of registration. The main reason for insisting for registration is to protect the intending transferee against fraud and to maintain a public register at the office of the Sub-Registrar.

Thus, the transfer or assignment of right, title and interest over the property, irrespective of the nature of transfer, entirely depends upon the deed of conveyance. Any ambiguity, inadvertent addition or deletion in the deed may give rise to lot of legal problems, thereby obstructing peaceful possession and enjoyment of the property. Thus, the above discussed are the clauses required to be incorporated in all the documents to safeguard the interest of the parties to the deed.

PROCEDURE TO MAKE CHANGES IN THE PROPERTY DOCUMENT

PROCEDURE TO MAKE CHANGES IN THE PROPERTY DOCUMENT

Documents are the record of various transactions; they contain certain terms, conditions, consideration amount, names of the parties to the transaction, date of the transaction, clear and complete description of the subject of transaction, so as to make them easily identified. For example, sale deed of a property contains the origin, flow of the title, present status, names of seller and purchaser, consideration amount, easementary right and brief description of the property with measurement, construction and boundaries. They are the permanent records, which are relied on for generations. Such documents must be legible, clear, readable, free of error and should not create any doubts or disputes. They reflect the terms of transaction for which both the parties have freely consented.

It is always advisable to prepare draft copies of the document for verification by both the parties in case of agreements and understanding. However, the sale deed should be in favour of purchaser since the vendor receives the consideration. He has to safe guard the purchaser’s interest in the property to be purchased. Any additions, deletions, alterations in the draft copies should be discussed by both the parties and another draft copy as agreed by both the parties is to be prepared.

The second draft copy has to be vetted by legal advisers to ensure that it complies with legal, statutory requirements. Thereafter only the final deeds are to be prepared. As for as possible, additions, alterations, cancellations should be avoided.

Additions, Cancellations:

But at times, some additions, alterations, cancellations are inevitable which are discovered at the time of execution. All such alterations, cancellations, additions are to be done before presenting the document for registration. All such modifications should be authenticated by full signature of all the parties to the document. But signature of witness is not necessary for such modifications. Only full signature and not initials or short signature should be affixed. 

For cancellation, the original words should be neatly struck off. It should be signed by the parties to the document. Erasing fluid should not be used. Registering authority records such additions, alterations, cancellations pagewise on the document itself. This validates the additions, alterations, cancellation etc. Any modification done after registration is not valid and does not form a part of the document. More over the document itself becomes invalid. Copies of the registered documents are maintained at registering offices and certified copies issued by such authorities also record on certified copies the number of cancellations, additions and alterations done before registration. They do not contain anything added deleted, modified after registration. So proper care should be taken so that all modifications are done before registration and full signature of all the parties are obtained to the transaction. If anything has to be changed after registration a separate rectification deed has to be executed.

Filling up blanks:

Some documents may have blanks as the required information will be available only at the time of execution. Often, date of execution is left blank, until the date is finalized. Details of the demand drafts, cheques like number, name of Bank, Branch are also left blank. All such blanks have to be filled up before presenting the document for registration and should be authenticated by all the parties to the document or executor with full signature.

Attestation:

Attestation means witnessing the documents. Certain documents like will, agreement to sale, sale deed require attestation. Execution of the documents should be witnessed by two persons, who are major and of sound mind. Both the witness should affix their full signature and should furnish their address. Attestation is not necessary in case of certain documents.

Thumb Impression:

There are many people who cannot sign. Thumb impression of such people are taken for execution of documents instead of signature. Left hand thumb impression (LTM) in case of males and Right hand Thumb Impressions (RTM) in case of females have to be obtained on documents for execution. Brief description “LTM or RTM of ---------------- has to be written immediately below the thumb impression. As the persons who affix thumb impression are illiterate, who cannot read or write, the entire contents of the documents should be read over and explained to them and a separate note to that effect has to be annexed to the document preferably signed by an Advocate.

LITIGATIONS IN PROPERTY MATTERS

LITIGATIONS IN PROPERTY MATTERS

Scrutiny of property documents is a very technical job which only experts in the matter can correctly carry out. If scrutiny of property documents is not carried out in a scientific way there is every likelihood of the purchaser being trapped into litigation.

The first and foremost thing to be considered by a prospective buyer of an immovable property before finalization of any deal is to get scrutinized the property documents to know about the marketable title of the property, genuineness of the document, enforceability of the title and whether the provisions of the laws, rules and regulations of the revenue authorities are complied with. Origin of the property, flow of title and present status of the property are to be verified in a systematic manner.

On being satisfied with the title of the property, the purchaser can enter into a sale agreement with the vendor. It may be noted that the property transactions are not executed through oral agreements or understandings. These transactions are executed under written documents which require compulsory registration. While drafting property documents, be it a sale agreement, sale deed, gift deed, mortgage deed, will, etc., every minute care is to be taken to protect the interests of the parties which requires deftly dealing with the various aspects of the matter and bringing out all the relevant information leaving no scope for interpretation and litigation. Any lapse to adhere to this would lead to misunderstanding, different interpretations and litigations. The fact that a large number of cases are filed in property matters would itself go to show that there is a great scope for improvement for scrutiny and in drafting various property documents. Failure on your part to take care of tracing the title of the property in a proper way will lead to various types of litigation.

Disputable Issues

Precisely, it is not possible to categorically state as to the type of disputes which could arise from out of a property transaction - It may relate to the valid title of the vendor, time schedule for payment of sale consideration, handing over possession of the property, non-compliance of the conditions detailed in the agreement to sell by either of the parties to the transaction, share of a coparcener on partition of HUF, interpretation of the recitals of a will, and the like.

When disputes arise, at the first instance people try to resolve their disputes amicably and when they fail to reach an amicable settlement they knock the doors of the competent court for resolving the disputes. Readers may kindly note that when once the matter becomes subjudice, it will take very long period to get the disputes resolved by the courts and the litigants are generally prevented to deal with the property without the permission of the concerned court when the matter is subjudice.

There could be different type of relief sought from a court of law. The relief may be for specific performance, restraining the opposite party from interfering from peaceful enjoyment of the property, compensation for the loss, recovery suits, eviction suits, interpretation of a Will, declaratory suits, partition of joint family property and so on.

Types of suits / action

When the vendor of a property though initially has agreed to sell his property to the purchaser at an agreed sale consideration backs out of his commitment, the purchaser can file a suit against the vendor for specific performance of the agreement and the court on being satisfied with your claim, as a purchaser, may adjudicate and pass an order for execution of the sale deed in your favour. On failure of the vendor to transfer the property in your name despite the court’s order, you may file an execution suit. On the basis of the execution suit, the court will take necessary steps to get the property registered in your name as per court’s order.

Declaratory suits

Under certain circumstances, when your title to the property is challenged or found to be doubtful or defective, it is necessary for you to get an order from the court on your title for which purpose you may need to file a declaratory suit in a court of law.

Injunction

Filing suit for permanent injunction restraining the illegal occupant of your property from interfering with your peaceful possession and occupation of the property may be necessary when your property is under occupation of a trespasser.

Partition suit

Similarly, when you are a co-owner of a property and when you desire to get your share in the property to be enjoyed by you separately and independently, you may have to file a suit for partition.

Money Suit

For realization of the money lent on the security of an immovable property by way of mortgage, you may have to file a suit for recovery of the money due from the Mortgagor and on his failure you may have to proceed, according to law, for realization of the money due by selling the property mortgaged.

Disputes before quasi-judicial authorities

Different types of litigations concerning the land revenue, land acquisitions, title documents etc., are heard and disposed of by several quasi judicial authorities such as Tahsildars, Assistant Commissioners, Deputy Commissioners, Survey Settlement Commissioners. Therefore, knowledge of authority of these officers would help you a lot in your property matters.

Disputes concerning stamp duty and under valuation

District registrars of Registration and the Inspector General of Registration adjudicate the disputes concerning the stamp duty payable and under valuation of property. In case you have any grievance with regard to the valuation and the payment of stamp duty on your property transfer, you may approach these authorities for remedy to your grievance.

Landlord and Tenant disputes

In respect of disputes between the landlord and tenant falling within the jurisdiction of the Rent Controller, you may have to file petition only before the Rent Controller for relief. The disputes may relate to non-payment of rent, enhancement of rent, fixation of fair rent, eviction of the premises etc.

Criminal cases

To initiate cause of action for forgery and fraud in property transactions, you may have to file at the first instance a police complaint or file a complaint before the Magistrate. Criminal courts have a different structure and if you lodge a complaint, the State will prosecute the matter. In criminal matters, there is no suit valuation.

Writ jurisdiction

You may invoke writ jurisdiction against the decisions of the Government affecting your property rights by filing writ petition in the concerned High Court or in the Supreme Court for appropriate relief.

The type of legal remedy explained above are only illustrative and not exhaustive. In addition to these remedies, there are other relief/remedies available to a party. The relief are to be sought from a court of competent jurisdiction and for this purpose having knowledge of the jurisdiction of various courts is necessary. An experienced advocate dealing with property matters could render very useful service in the matter who in turn may guide your property and avoid litigations.

TRACING OF TITLE OF IMMOVABLE PROPERTY

TRACING OF TITLE OF IMMOVABLE PROPERTY

Transfer of immovable property by sale, gift, exchange, inheritance, Will, etc is a very natural phenomenon. Out of these various modes, sale involves payment of consideration (purchase price) and every purchaser hopes to get perfect absolute title.

But the seller cannot pass on a better title than what he has; any defects in his title will also pass on to the purchaser, but purchaser having paid considerable amount wants a perfect unencumbered marketable title.

But many purchasers do not get the title of the seller verified by advocates who is having specialised knowledge and experience on property matters, often rely on real estate agents, middlemen and assurance of seller and seller’s advocates legal opinion. Though they spend lakhs of rupees on purchase of property, they hesitate to spend a few thousand rupees on verification of title and later on land in trouble. Most of the times power of attorney is the only document which is handed over to the purchaser. Some of the reputed builders refuse to give title papers to the purchaser, dictate the terms and insist that property be purchased on their own. Advocates certifiy the title in just four lines without referring to the devolution of the property. They also force the purchaser to avail the loan from a particular new generation bank.

Title of property:
The title may be freehold or leasehold. In case of freehold title, the owner has absolute title without any encumbrance with power to alienate the property.

But in case of leasehold the owner will be different who had leased the property to the Lessee for certain period and the rights are not absolute and the lessee will be only in possession of the property for agreed period. After the lapse of the agreed period, the lessee has to hand over the vacant possession to the owner. Such person may transfer only leasehold rights to the purchaser, if the lease document provides for alienation and the purchaser is bound by terms of lease deed.

There are different forms of legal ownership of the property;

1. Government lands either Central or State.
2. Individual ownership.
3. Hindu undivided or joint family ownership of property.
4. Property owned by a Private Company or Public Company duly constituted under Indian Companies Act.
5. Property ownership of a Government Company.
6. Property ownership of a Co-operative society registered under Co-operative Societies Act of respective stores.
7. Property ownership of partnership firms formed and registered under Indian Partnership Act.
8. Wakf properties
9. Trust properties including properties of temples and religious endowments.
10. Property ownership of public societies and clubs registered under societies Act.
11. Property ownership of Autonomous Institutions (Statutory Bodies) like universities, electricity boards etc.
12. Property ownership of Nationalised undertakings and Etc.

Most common mode of ownership is individual ownership where a single individual owns the property.

Tracing of title
Tracing of the title means tracing the history of property through documents, Government records, how the present owner got property. This is a very complicated exercise and only professionals specialised in property laws of Central, State and latest court decisions could help to trace the title. Though the seller is bound under section 55(1) (a) of the Transfer of Property Act to disclose any material defects in the property in his title, it is prudent to scrutinise the title to the satisfaction. A good marketable title is one which is free from all encumbrances, doubts, and gives the holder full ownership rights to the exclusion of the rest of the world.

The property might have been acquired by various modes, like sale, gift, settlement, will, succession, partition, release, adverse possession, allotment, grant etc.

Mother deed
The tracing of the title has to start by verification of the earliest document available, which is called parent deed or mother deed. If the earliest document is not available, the certified copy must be obtained at the Jurisdictional sub-registrar office. This earliest document details as to how the first owner got the property. Generally in earlier times, all the landed property was owned by Kings, Jodidars, Inamdars and they gifted or granted the land to the people. Such acquisition document generally will be by an Order of the Court, Government, Statutory Authority, ruler. Thereafter, the property might have passed through different hands who are referred as intermediary parties. Such documents have to be examined in chronological order tracing the devolution of property to each of the intermediary parties. The sequence should be continuous without any break till the immediate transferor. In case of any missing link, the records at the sub registrar’s office revenue department have to be verified to the satisfaction, but should not be ignored.

But documents like gift deed, partition deed, release deed, settlement deed are not mother documents and the title of the executants of such deeds has to be examined.

After tracing the title of the property from the first owner to the immediate transferor, the latest document which describes how the present owner got the property has to be verified. Apart from legal documents like transfer deeds, the revenue records like tax paid receipts, Khatha, approved plans, encumbrance certificates, mutations, genealogical trees and other records extracts have to be verified.

The most important function of tracing the title is investigation, where it is ascertained that records, documents produced actually exist are recorded in books, records of respective departments. But advocates certify the title with a narration “based on documents produced” which does not refer to the investigation or genuineness of the documents. Often the advocates accept the latest documents without supporting documents and certify the title which is a dangerous practice.

Limitations of tracing the title
Though the title is traced to perfection by referring to the documents, revenue records and also investigation, there are certain limitations. Instances like pending cases, government notifications, prior unregistered agreements are not easy to trace. These are called hidden areas of the properties. There may be cases disputing the title, which are not reflected in the documents. A proper search in jurisdictional courts would help in tracing such pending cases but multitude and hierarchy of courts makes it a difficult task. A search also in Government bodies, Statutory authorities, who have authority to acquire the land is necessary to rule out any notification of acquisition. Further, No-objection Certificates from urban development agencies would help. But the possibility of earlier sale agreements which are not registered is very difficult to find out. Proper enquiries with the vendor, neighbour’s and discussions would help. A paper notification to call for objections and claim on the property to be purchased would be helpful.

The encumbrance certificates disclose only transactions which are registered. They do not reflect, oral tenancy, litigation in courts, tax liabilities, equitable mortgages which is not registered, oral partition, oral gift under Mohammedan law, unregistered will, liability of maintenance, General Power of Attorney, etc. Small change in the description of the schedule of the property will lead the registering authorities to issue nil encumbrance certificates. EC’s are one of the document to trace the title but entirely depending on encumbrance certificate is dangerous.

Period of Verification of title
Most of the advocates trace the title for period of 13 years only. Even many nationalised banks advise their advocates on panel to trace the title for 13 years and their pro-forma’s are also designed accordingly which is not correct.

It is safe and advisable to trace title for a minimum period of 42 years or more to weed out any chances of dispute in title. If a private individual lays conflicting claim on any document other than mortgage the maximum limitation period is 12 years. The period of limitation against government is 30 years and execution period is 12 years. Further, as per section 90 of the Indian Evidence Act, a document executed 30 years or before is presumed to be validly executed. The Articles 61 (a) & (b) of Limitation Act provides a limitation period of 30 years for redemption. Article 61(b) provides a limitation of 12 years for instituting a suit for recovery of possession against a transferee who has taken the property from mortgagee for valuable consideration, and the limitation is to begin to run when the transfer becomes known to the Mortgagor. We shall examine this with reference to an example. Limitation period for redemption of mortgage is 30 years. Suppose a mortgagee sells the mortgaged property after 29 years from the date of execution of mortgage deed without the knowledge of the Mortgagor and before the Mortgagor institutes a suit for redemption. The Mortgagor has a right to institute a suit for redemption. The Mortgagor has right to institute a suit for recovery of possession of the mortgaged property from the purchaser within a period of 12 years after coming to know of the transfer. Thus, a Mortgagor can lay hands on the property within 30+12 years of the execution of mortgage deed. The question of adverse possession is also relevant in this regard. A person who remains in actual, peaceful, open and exclusive possession of immovable property for a period of twelve years or more, expressly or impliedly in total denial of the title to the true owner is deemed to have acquired ownership and title to the immovable property by adverse possession. Thus, it is safe and clear to trace the title for a minimum period of 42 years at least. Original title deeds Generally, only photocopies of the documents are scrutinised. The advocates should insist on production of all the original title deeds for verification, before finalising the legal opinion to rule out the possibilities of mortgage by deposit of title deeds which is not registered. In case of tracing the title of the properties allotted / granted by statutory authorities and government it is sufficient if the title is traced from the date of allotment to the immediate seller and there is no need to trace the title for a period of 42 years.

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VERIFY THE DOCUMENTS BEFORE PURCHASE OF THE PROPERTY

VERIFY THE DOCUMENTS BEFORE PURCHASE OF THE PROPERTY

A clear and marketable title of property free from encumbrance would provide the owner a rightful ownership of such property and the possession of the property could be either physical or constructive.

The foremost requirement to be exercised by the intending purchaser of property is to thoroughly scrutinize the title deeds of the property. There is no particular yardstick prescribed to trace out the title and, therefore, it depends upon the diligence and application of mind of the person who scrutinizes the documents. Scrutiny of documents is a specialized work and only persons who are well versed in scrutiny of property documents can analyse and give a clear opinion. Generally speaking, origin of the property, subsequent transfers and the present status are the three most important aspects which are taken into consideration to trace the title of a property.

Modes of acquisition:
There are different modes of acquisition of property by any individual. Some of the modes of acquisition of property are Grant Land by the Government, allotment made by the Government / Various Autonomous bodies / Housing Societies, etc., acquisition of property under a Will, by purchase or inheritance.

If the property is a Grant Land or allotted by any authority, then the Grant Certificate or Allotment Letter issued by the Competent Authority is necessary, apart from the other relevant documents. In the case of acquisition of property under a Will or by way of purchase, Gift, Exchange, Partition, Release, Settlement or inheritance, it is necessary to scrutinize and verify all the relevant documents of 42 years prior to the date of the present transaction to ascertain the transactions which have taken place during this period. This will enable the purchaser to make sure of the valid title of the vendor. At the same time, genuineness of the relevant documents at the time of transfer of property during this period has to be diligently examined.

The next important step is to examine the present status of the property i.e. who is the present owner, whether his / her name has been recorded in the revenue records of the concerned Authority and whether property taxes are being paid by the owner periodically.

Identification of the Property
The third step is identification of the property which is very important and a must. The purchaser should not only get the property identified but also should compare the description of the property shown in the document with the actual. Accurate details pertaining to the number assigned to that particular property, its extent, boundaries, name of the Village or Municipal Council or any Autonomous bodies within whose limits the said property falls are required to be ascertained. If the building exists on the particular property, then details pertaining to the existing building and whether the building is constructed in accordance with the building sanction plan and relevant Bye Laws of the concerned Authority has to be mentioned. Measurements mentioned in the document should tally with the physical measurements. In case the physical measurement mentioned in the document is less than the actually physical area available, the actual area available is to be considered for the purpose of payment and documentation. Normally, the purchaser shall pay either for the measurements mentioned in the documents or the actual physical measurement, whichever is less.

Nature of Title
Nature of title such as tenancy right, occupancy right, possessory right, full ownership is also another important aspect which requires search and examination since the persons having some interest or right over the property are necessarily to be made as parties to the transaction, sale or mortgage.

Tenanted property
If the property is tenanted, then it is very important to get confirmed from the tenant that there is no litigation pending between the vendor and the tenant pertaining to the ownership of the property or the tenancy rights. Further, it is also necessary to convey the tenant about the proposed sale transaction and to attorn the tenancy in favour of the purchaser.

Conversion
Normally, agricultural lands cannot be put to use for non-agricultural purposes. To put to use the agricultural land for non-agricultural purposes it is mandatory to get the agricultural land converted for utilization for non – agricultural purposes. However, there are certain exceptions to this mandatory requirement and the agricultural land can be put to use for non-agricultural purposes with the specific order of the competent authority. The special enactments applicable to grant lands also require to be looked into. Further, it is also necessary to find out from the Land Acquisition Department whether the property in question is under the orders of acquisition by the Government and whether any notification to this effect has been issued. by the Government.

Encumbrance certificate
Verification of encumbrance certificates is a part of scrutiny of property documents to rule out any subsisting encumbrance over the property. But, such certificates cannot be totally relied upon since there are instances wherein transactions duly registered in the concerned Sub – Registrar’s office are not reflected in the E.Cs issued by the department. In such cases it is necessary to do the search in the office of the Sub Registrar, on payment of the prescribed fees.

Minors interest
In cases of sale of ancestral property, it is necessary to find out whether the vendor has a clear title over the property and there are no claims of minors interest. If the property proposed to be conveyed is ancestral property, then the involvement of Minors interest is very common. In cases where minor’s interest are being transferred or conveyed, permission from the court for conveying the property is mandatory under the provision of Guardianship and Wards Act. If the property is conveyed in contravention of the provisions of this Act, then such conveyance can be challenged by the Minor within three years from the date of his attaining majority or from the date of getting knowledge of such a sale.

Thus, for purchase of property it is necessary to verify as to how the vendor has acquired the property. Only upon being satisfied about the valid title of the vendor, the purchaser can negotiate and enter into an agreement of sale with the vendor. It may be noted that if the property is a composite property, then most of the owners will retain the original title documents and only Xerox copies of such documents will be delivered to the purchaser.

Since scrutiny of property documents is technical in nature, utilization of services of an experienced advocate in property matters would help the purchaser immensely and while scrutinizing the documents the advocate shall be able to decide as to which documents are to be in original and which could be certified copy or Xerox copy.




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SAFEGUARDING YOUR PROPERTY RIGHTS

SAFEGUARDING YOUR PROPERTY RIGHTS

Before entering into an agreement for purchase, verification of title is very important. It is not merely tracing the title on the record but also examination of the genuineness of the records, identification of the property, notification in a newspaper and physical possession of the title of the property. Clear and marketable title free from doubts and encumbrances with a right of physical possession of the vendor is a necessary ingredient for peaceful possession and enjoyment of the property by the purchaser.

The first and foremost step in purchase of property is the scrutiny of title deeds before entering into an agreement with the seller / vendor. The ownership can be traced from the title deeds and the revenue records. The following are the methods of scrutiny:

Origin of the Property:
The origin of the property is very important to trace the title of the property. It is otherwise called “Root of Title”. To trace the title of the property, examination of the origin of the property up to a maximum period of 43 years may be required in most of the cases. If a person is enjoying the property for more than 30 years, he will get title by adverse possession against the government as per the Limitation Act. As per Section 90 of the Indian Evidence Act 1872 any document executed 30 years before is presumed to be valid. Will, Partition, Family Settlement are not considered as concrete origin. Some of the old revenue records like Index of Land, Record of Rights, Phani, Survey documents are considered as better origin.

Subsequent Transfers:
After ascertaining the origin of the property, it should be followed by methodical examination of later events and further transactions in an uninterrupted and sequential manner, involving the previous owners and the present owner of the property. Here, the purchaser’s advocate has to very carefully look into all aspects from various legal angles as to how the property was transferred from the previous owners to the present owner. Such a transfer may be by possession, inheritance, settlement, will, sale, mortgage, release, gift etc., involving such intermediate parties. To get a clear picture of rightful ownership, title and interest, the advocate has to carefully examine the title deeds and other supporting documents like revenue and other records. It is also necessary to verify the identity of the names of parties and their family connections and examination of the proceeding involving the parties before any Court of Law, other legal forums and authorities including revenue authorities, if any. While scrutinizing the documents, Advocates have to apply their mind and logically link the relevancy of one document with the other.

Present Status:
“Present Status” is an important factor to establish ownership over a property. The advocate has to find out who is the present owner and what are the title deeds and supporting documents the vendor has in his possession, whether it is an ancestral property or self acquired property, who are his legal heirs etc. If the legal heirs of the vendor are major, the vendor must ensure their presence while executing the Deed of Conveyance. If they are minors, the vendor has to get the permission from the court before executing the Deed of Conveyance. In some cases the vendor may conceal the fact of existence of legal heirs. Therefore, the advocate must insist upon the vendor to produce either the succession certificate or the family genealogical tree issued by the revenue authority. Similarly, it is necessary to verify and confirm that no acquisition or requisition or any other court proceedings are pending before any authority. It is also necessary to find out whether there exists any bank loan, charges, encumbrances over the property.

Statutory Clearance:
For completing the sale transaction, various statutory clearances are to be obtained from the concerned authorities such as Income-tax, RBI, revenue authorities, etc. In case of purchase of agricultural land, there are various other clearances also to be obtained before executing the Deed of Conveyance.

The advocate must find out in whose name the Khatha stands, whether the khathedar possesses up-to-date tax paid receipt in his name and up-to-date Encumbrance Certificate to establish his right, title and interest over the property. The advocate has to check the Encumbrance Certificate covering the relevant period, generally for a minimum period of 13 years to 43 years on case to case basis. An examination of Encumbrance Certificate would go to show as to whether any kind of charge has been created on the property and whether such an encumbrance is still subsisting or not. Municipal and other revenue authorities also maintain records as to in whose possession the property exists, what is the amount of tax payable on the property and upto what period tax has been paid. All this can be learnt from these records.

Genuineness of documents:
After thoroughly scrutinizing the documents, the purchaser or his advocate has to cross check all documents with the concerned revenue or other departments to ensure that the documents are genuine and are originated from the concerned departments and that they are not fake. In the case of buildings, it must be ensured that the vendor has constructed the building as per sanction plan and according to the statutory guidelines.

Identity of the property:
The identity of the property must be checked on the spot. Measurements mentioned in the documents must tally with actual physical measurement of the land available on the property. It must also be ensured that there is no encroachment on the property. In case of encroachment, the measurement of the available land must be recorded and this must be mentioned in the Deed of Conveyance. The boundaries in the schedule surrounding the property must be checked physically. Also, the purchaser may make enquiries tactfully with the adjacent property owners about the ownership of the property he is proposing to buy.

Paper Notification:
Though paper notification is optional, it is always advisable to notify in a leading local newspaper about the buyer’s intention to purchase the property. This is done to safeguard the interest of the purchaser. Even after examining the various documents, the Advocate may not be able to find out whether the property is truly free from any claim or not. A paper notification will beget response from genuine claimants, if any. Therefore, paper notification will be of some help to the purchaser to make sure as to the genuineness of the ownership of the vendor.

Physical Possession :
In the case of a vacant site, the purchaser may, with the permission of the vendor fence the property with barbed wire or he may construct a compound wall and put a signboard, if necessary, to display his ownership over the property.

Even after entering into an “Agreement to Sell”, the purchaser continues to make enquiries about the title. A doubtful title cannot be forced upon the purchaser. Purchaser is not bound to complete the sale transaction, if there are defects in the property, material or latent, which are not discernible in the ordinary course. A mere suspicion of fraud will not make the title doubtful and the purchaser cannot reject the title.

It would be of great help if a prospective purchaser utilizes the services of an experienced advocate for a thorough scrutiny of the documents as to the vesting of the marketable title with the vendor and genuineness of the documents who on examination of documents will be in a position to explain his client about the risk involved in the transaction and guide him suitably so as to save the purchaser from litigations.

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property advocates in Bangalore