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LEGAL

Introduction

One needs to be careful while buying land/house to avoid falling into legal hassles.

1. The legal status of the land is one of the first issues that you should address before confirming a property.

2. Confirm that the land has a clear and marketable title. Find out the tenure and legal right of the holder of the land in government records. Freehold land is always most preferable.

3. Always consult a good lawyer and obtain his opinion before signing the agreement and sale deed.

Inspecting Title Deeds:

1. Inspect the original title deed of the land which you are going to buy.

2. Confirm whether the land is in the name of the seller and that the full right to sell the land lies with only him and no other person.

3. Insist on seeing the Original Deed.

4. Demand to see the previous deeds of the land available with the seller.

Inspecting Tax receipt and bills

1. Property taxes are a first charge on the property and the owner should possess the latest tax paid receipts, which you must inspect.

2. The property tax receipt has two columns; make sure that the name entered in the owner's column is correct. The second column will be for the name of the one who paid the tax- inspect both columns.

3. If the owner doesn’t have the tax receipt, contact the village office with the survey no. of the land and confirm the original owner of the land.

4. If you are buying a house along with the property, then check the house tax receipt too.

5. Enquire in various departments of the municipality to ascertain any outstanding notices or requisitions related to the property.

6. Inspect the electricity and water bills/ charges to local bodies, if there any is balance payment to be made, ensure that it is made by the seller.

Encumbrance Certificate

Some properties have an encumbrance, which is a right to the property by a third party. It limits land use but does not prevent the transfer of title. Where there are encumbrances in the title to be conveyed, the contract must express the agreement of both parties. The most common encumbrances are

Obtain the encumbrance certificate from the sub-registrar office where the deed has been registered, stating that the said land does not have any legal dues and complaints. For more clarity ask for the encumbrance certificate of the past thirty or thirteen years. If you still have any more doubts, you can take a Possession Certificate of the ownership of the particular land, which is available from the village office.

Pledged land:

Ensure that the seller has paid back all the amounts due. Don't get satisfied with the receipt of the payment made. A release certificate from the bank is necessary to release all the debts over the land legally.

Measuring the land:

Measure the land before registering it in your name and ensure that the measurements of the plot and its borders are accurate. You can do this with the help of a recognized surveyor. You could also take the Survey Sketch of the land from the Survey Department and compare for accuracy. More than one owner: In some cases, the land will be owned by more than one person. So before registering, check if there is more than one owner, and if there is, get release certificate from the other people involved.

Sale consideration:

The normal practice is to pay advance at the time of signing the agreement and to pay the balance at the time of registration of the sale deed. Another payment will be contemplated on the receipt of No-Objection Certificate from the Appropriate Authority or after getting Income-Tax Clearance under Section 230(A) of the Income-Tax Act. Such clauses should be included clearly to avoid any misunderstanding and the resultant litigation.

Description of Property:

There should be a proper and clear description of the immovable property covered under the agreement of sale.

Buying land from NRI land owners:

A person staying abroad can also sell his land in India by giving a Power of Attorney to a third person authorizing him with the right to sell the land on his behalf. But in such cases, the power of attorney should be witnessed and duly signed by an officer in the Indian embassy in his province. There is no legal support for the power of attorney signed by a notary public.

Vacant Possession:

It is not advisable to buy properties including flats without vacant possession. Personal verification will go a long way to avoid the pitfalls in the transaction.

Compliance with Statutory Obligations :

If the sale value of the property exceeds Rs. 25 lakhs in Chennai, then the seller and the purchaser must forward copies of the agreement to the Appropriate Authority appointed under the Income-Tax Act, 1961 under chapter XX-C within 15 days along with Form 37-I prescribed Under the Act for their No-Objection Certificate.

Agreement / Sale Deed:

Before drafting the Agreement/sale deed, the purchaser should ensure the correct identity of the seller as well of the property (by taking physical measurement of the property), and if vacant possession is committed, then purchaser should ensure taking of vacant possession, at the time of registration. Once all the terms of the deal - financial/otherwise - are settled between the parties, it is better to give an advance and write an agreement. The agreement should be written in Rs 100 stamp paper. The agreement should state the actual cost, the advance amount, the time span within which the actual sale should take place and how to proceed in case of any default from either parties, to cover the loss.

The agreement can be prepared by a lawyer and should be signed by both the parties and two witnesses. After signing the agreement if one of the parties makes a default, the other party can take legal action against him.

Registration:

The land can be registered in the office of a sub-registrar, after preparing the title deed including all the relevant information. You could get the title deed written by a government licensed document writer or a lawyer. The document must be computer printed or typed, not handwritten. Handwritten documents can be prepared by only those who hold the scribe license.

A draft should be prepared before actually writing the document in stamp paper. Make sure all the details mentioned are accurate. If there is incorrectness in the document after registering, a secondary document with the correct details has to be registered and depending on the incorrectness, the registration expenses will be repeated. Make sure that the deed is registered within the time limit mentioned in the agreement. Original title deed, previous deeds, Property/House Tax receipts, Torrence Plan (optional) etc plus two witnesses are needed for registering the property.

Torrence plan is a detailed plan of the property prepared by a licensed Surveyor which will have accurate details of the measurements including width, length, borders etc. This plan is needed only in some specific areas. For land costing more than five lakhs, the seller should submit either his Pan card or Form Number 16 during registration.

The expenses involved during registration include Stamp Duty, Registration Fees, Document Writer’s/ Lawyer’s fees etc. The stamp duty will depend on the cost of the property and varies from Municipality to Corporation to Panchayat. In Panchayat, the stamp duty will be 4% of the cost of the land whereas in Municipality it is 5% and in Corporation 6%. Two percent will be charged as the registration fees. Document Writer’s fee also depends on the cost of the property and varies with individuals. There is a percentage prescribed by the government as Document Writer’s fee and they cannot charge more than the prescribed limit.

After registration, the registered document will be received after 2-3 weeks, from the registrar office.

Changing the title in Village office:

The entire legal procedure of purchase will be complete only if the new owner’s name is added in the village office records (Patta). An application can be made along with the copy of the registered deed to the Village office to get this done.