PLAY IT SAFE
While buying a house, ensure all documents are in order.
Transactions in immovable property are carried out by parties in properties containing the following elements:
Original owner.
Intermediary owners.
Promoter.
Developer.
Contractor.
Investor.
Marketing agency.
Prospective buyer.
Lending institutions.
Association of Owners.
The following are the nature of properties:
Land.
Houses.
Flats/apartments.
Infrastructure.
Special amenities and facilities.
The following are the nature of rights:
Ownership.
Possession.
Leasehold rights.
Rights under a mortgage.
Easement.
Licence.
Lien.
There are two types of inheritance and succession:
Intestate succession i.e. by operation of personal laws.
Testamentary succession i.e. through wills.
Titles
Three-tier legal scrutiny of titles is essential:
In the hands of the present owner.
In the hands of the prospective buyer for his benefits.
For the benefit of the lending institutions.
Issuing public notice in leading English and vernacular newspapers, inviting objections or claims, is recommended in all cases.
Properties attract the following taxation:
1) Service Tax (on services in contracts).
2) VAT (on transfer of goods in contracts).
3) Income tax on income and capital gains.
4) Tax exemptions and deductions under special schemes for housing, economic zones etc.
The following are various modes by means of which any person can acquire any type of right, title and interest in an immovable property:
1. Direct purchase/transfer.
2. Gift/settlement.
3. Will/probate/succession certificate.
4. Intestate succession and inheritance.
5. Partition, release, family settlement, reunion.
6Family arrangement.
7. Partition among co-owners.
8. Property as a capital contribution in a firm.
9. Distribution of assets in a firm on reconstitution and on the dissolution of a firm. 10. Private trust.
11. Amalgamation, merger, de-merger and liquidation of companies.
12. Rights and interests held through shares in companies, cooperative society etc.
13. Adverse possession.
14. Awards in arbitration proceedings.
15. Orders and decrees of courts of law and other statutory authorities
including Lok Adalats.
16. By operation of various provisions of personal laws relating to Hindus, Mohammedans, Christians, Sikhs, Parsis, Jews etc.
17. By operation of law under laws relating to other persons and legal entities including cooperative societies, other societies including mutual benefit societies and other Association of Persons.
18. BDA sites.
19. Land acquisition.
20. Urban Land (Ceiling and Regulation) Act, 1976 (now repealed).
21.By grants given or orders passed by Governments and statutory authorities.
22. By a Conciliation Order passed under section 19(v) (i) and (ii) read with Section 21 of the Legal Services Authority Act, 1977. Such an order can be passed by a High Court Judge and other competent authorities by which rights and interests between contending parties can be settled and established.
Let us look into tracing, investigation, verification and certification of titles.
Tracing of titles
The tracing of titles should begin with the tracing of the earliest documents available pertaining to the property which, in all probability, will pertain to the documents obtained by the first owner.
First owner: The earliest original documents, records, order of a court or government or a statutory authority by which the rights to a particular immovable property is vested with the first owner.
Intermediary parties: The subsequent documents, records or orders of the type mentioned above, duly recording in a chronological unbroken sequence of legal acts, events, identifying and tracing the title in the hands of the various intermediate owners till the last owner i.e., the transferor.
Current owner: The documents of title with the current owner i.e., transferor, including the document by means of which he has acquired title and other documents like the Khatha, Encumbrance Certificate and tax paid receipts up-to-date.
An investigation of these records must be made before a certification of these records by an advocate. Investigation is the verification of the actual existence of these records in the books/registers of the various departments mentioned above. Certification, on the other hand, is done only on the basis of records produced before an advocate on an apparent examination of the same by him.
Encumbrance Certificate
Various kinds of transactions and matters mentioned below will not be entered in Book-I maintained by Sub-Registrars and hence will not appear in an encumbrance certificate furnished either in Form 15 or in Form 16 by the Sub-Registrar exercising relevant jurisdiction. Hence, other modes of evidence and documentation are required to confirm the title. The following are the transactions and matters not included in the encumbrance certificate:
1. Oral tenancy.
2. Litigation in courts (Lispendens).
3. Tax liabilities
4. Unregistered mortgage by deposit of title deeds.
5. Prior unregistered agreements.
6.Oral Partition/Family Arrangement.
7. Oral gift under Mohammedan Law.
8. Unregistered will.
9. Rights and interests held through partnership firms, Association of Persons, societies including cooperative societies, companies etc.
10. Unregistered agreements, MOUs, general power of attorney etc.
11. Rights of third parties not directly recorded in documents.
12. Orders and decrees of courts, statutory and tax authorities.
13. Rights through possession, part performance, equitable title under Section 53-A of the Transfer of Property Act, 1882.
Safeguards
Many safeguards have to be taken to ensure the vesting of a clear, absolute and marketable title in the hands of the purchaser or any person acquiring any interest in the property in question in any manner whatsoever. Some of the safeguards are mentioned below:
1. Obtain court permission for sale of minor's share.
2. Make all major co-parceners parties in case of Hindu Undivided Family.
3. Ensure compliance of legal formalities by companies, other persons and legal entities.
4. Examine Government records, documents and papers.
5. Verify original documents of title and lodge the same with a common custodian in Escrow.
6. Issue public notice through newspapers.
7. Verify marketability of title.
8. Make all other interested parties as parties in the transaction.
9. Obtain confirmations and affirmations through affidavits.
10. Obtain possession in part performance.
11. Appropriate court action for injunctions, specific performance etc.,
12. Resolve disputes through arbitration or through family arrangement.
13. Avail the benefit of other legal remedies and reliefs as provided under different transactions, different laws applicable.
14. Obtain general power of attorney to derive powers and authority to carry out all acts in general and certain specified acts, deeds and things in relation to the immovable properties and the rights, interests and title relating thereto.
15. Register agreements and get attestation by Notary Public on documents.
16. Obtain Encumbrance Certificates, tax paid receipts and certified copies of other papers and records held by statutory authorities.
17. Verify if there are any restrictions relating to land granted including restrictions in respect of land of Scheduled Castes and Scheduled Tribes.
18. Protect the rights or possession under section 145 of the Criminal Procedure Code from statutory authorities.
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Vital documents for acquiring BMP, BDA property
The following are the documents of title with respect to properties located within the jurisdiction of the Bangalore Mahanagara Palike which are to be obtained from the present owners and verified before purchase/acquisition by lease, mortgage:
Primary documents
1) Parent Deed by means of which the present owner/owners acquired title to the property.
2) Building sanction plan issued by the Chief Executive Engineer, Bangalore Mahanagara Palike, in case of a building constructed on the property.
Secondary documents
1) Khatha Certificate issued by the Bangalore Mahanagara Palike in the name of the present owner/owners.
2) Khatha Extract issued by the B MP.
3) Tax paid receipts issued by the BMP evidencing payment of taxes in respect of the property.
4) P.T. Sheet and Chalta issued by the City Survey Department containing the sketch of the property in question and its measurements.
5) Encumbrance Certificate (preferably in Form 15) issued by the Sub-Registrar exercising relevant jurisdiction over the property for a period of not less than 30 years.
6) Copy of the plan sanction issued by the BMP for the construction of a house or residential or commercial multi-storeyed building.
7) Copy of the Commencement Certificate of the BMP issuing permission to commence construction of a multi-storeyed building.
8) Copy of the occupancy certificate issued by the Palike certifying that the building constructed on the schedule property is in accordance with the sanctioned plan.
9) Copy of the receipt evidencing payment of compounding fees to the Bangalore Mahanagara Palike for regularising the deviation, if any, made from the building sanction plan.
10) Copy of the No Objection Certificate from the Fire Services Department.
11) Copy of the clearance to operate lifts in the building issued by the Chief Executive Engineer, BMP.
12) Copy of the Clearance Certificate issued by the Pollution Control Board.
13) Copy of the Endorsement issued by the Director, Fire Services Department, by means of letter addressed by him to the Bangalore Mahanagara Palike stating that he has no objection to the BMP issuing an occupancy certificate in respect of building constructed on the property.
14) No Objection Certificate from the Airport Authority of India.
The documents mentioned in (6), (7), (8), (9), (10), (11), (12), (13) and (14) usually arise in the case of multi-storeyed buildings and large layouts.
BDA jurisdiction
The following are the documents of title with respect to properties allotted and/or sold by the Bangalore Development Authority to the present owner/owners which need to be obtained by every prospective purchaser:
Primary documents
Allotment letter issued by the Bangalore Development Authority in favour of the present owner in respect of the property.
Possession letter issued by the Bangalore Development Authority in favour of the present owner in respect of the property, recording handing over of possession of the property to the present owner.
Absolute Sale Deed executed and registered in favour of the present owner by the Bangalore Development Authority in respect of the property after the expiry of 10 years from the date of allotment.
Building sanction plan issued by the Bangalore Development Authority where a building has been constructed on the property.
Secondary documents
Khatha Certificate issued by the Bangalore Development Authority in the name of the present owner/owners.
Tax paid receipts issued by the Bangalore Development Authority evidencing payment of taxes in respect of the property up-to-date.
Encumbrance Certificate (preferably in Form 15) issued by the Sub-Registrar exercising relevant jurisdiction from the date of allotment up-to- date.
