Purchase and Registration of Immovable Property in India
Real Estate is one of the growing sectors in India as it offers tremendous investment opportunities and ensures good returns on your investment. Immovable property includes land, buildings, houses, bungalows, apartments, farm-houses, agricultural land, shops etc. This article analyses the purchasing and registration process for these properties.
Fri Jun 03 2022 | Real Estate, Wills, Probate and Trust | Comments (0)
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It is essential to purchase as well as register these immovable properties in accordance with governing state and central laws of India. The buyer must take critical care in purchasing immovable property and should be aware of the legal proceedings involved in registering the same.
Title search before purchasing a property in India
Title search is an important exercise that should be undertaken by the buyer before acquiring a property in India as it will ensure the buyer that the title is clear, marketable and free from encumbrances and liabilities. This will safeguard the interest of the buyer and mitigate the risks involved in property transactions.
Title search process:-
- Trace the title of the property to buy from the title deeds and revenue records. In order to ascertain the origin of the property, one must scrutinize the title documents for the last 40-60 years.
- In order to ascertain any adverse possessions or conflicting claims against the buyer, documents for last 12 years should be thoroughly examined.
- If the property is illegally acquired and its illegal title is against the government, then documents for last 30 years are to be searched and examined.
- After scrutinizing the origin of title, there is a need to find out how the property has been transferred from previous owners to the current one i.e. by way of inheritance, gift, sale, mortgaged etc.
- It also includes checking of all the necessary documents to ensure that they have paid the applicable statutory clearances and possess latest receipts of tax payments and encumbrance certificate.
- There is a need to check the identity and physical measurements of the property as per the title deed.
Process and Procedure for Purchasing Property in India
Plot of land
- Make all the requisite legal checks about the history of land with regard to its third party rights/interests, ownership papers/title deeds, Government approved/freehold, approved building plan, tax payment receipts etc. before giving consent to purchase.
- Draft a purchase agreement between the land owner and the buyer on apt stamp paper. The agreement must contain valid points including agreed cost of the land, any advances, if given, duration of time for full and final sale execution, land particulars, method of dispute resolution and procedure of clearing losses or defaults made by any of the parties.
- Payment of advance and signing of agreement by both the parties as well as witnesses.
- Preparing an appropriate title deed through a document writer/ lawyer.
- Registration of land along with the registration of original title deeds, previous deeds, property/house tax receipts, Torrance plan (plan prepared by the licensed surveyor with meticulous details with regard to land measurements) in the sub-registrar office. It also includes payment of requisite stamp duty.
- After verifying all the submitted documents by the Sub-Registrar and paying the registration fees and stamp duty, the land will be registered in the name of buyer.
Agriculture
- The purchase of agricultural land is governed by respective state laws and the provisions with regard to lease, sale and purchase by a non- agriculturalist differs from state to state.
- Most of the Indian states permit only famers to buy farm land, hence, one has to either provide a proof that exhibits that he/she previously owns agricultural land or a proof that shows that his/her grandfather or father was a farmer or in the business of farming. If you are not a farmer, then it is possible only via conversion of land for non-agricultural purposes and see whether that state has a provision for conversion of land in their drafted regulations.
- NRI, PIO and OCI cannot buy agricultural land, plantation property and farm-houses in India.
- There are restrictions applicable by the state government on purchases made by resident Indians on agricultural land in order to protect the cultivable land.
- The District collector has the authority for reclassification or conversion of dry agricultural land, but the rules vary from state to state.
- One thing is important to check before purchasing any agricultural land i.e. to ensure whether seller holds the right to transfer/sell his/her property and sharing arrangements for water allocation, power-lines or sewer lines etc.
Commercial building, shops, offices in commercial areas
The buyer must be clear about the purpose, location and requirements before making the purchase of any commercial property especially in commercial areas. The property you chose must fit with your criterion with respect to price, location, uses and kind of business.
Check all the documents pertaining to ownership i.e. land allotment letter from the authorities, construction approvals i.e. building plans, floor plans, NOCs, environment clearances, water authority etc.
Once you are ready to make investment in the construction project of the developer, get a written agreement which must include all the requisite terms and conditions, payment plan, time of delivery, procedure to adopt in case of defaults etc.
After making the complete payment of the property, the developer will give you a possession letter, allotment letter and other necessary document that will help you claim ownership.
Apartments, Residential homes
- The residential homes/apartments can be purchased either from the developers/builders when they launch their projects or on resale basis from the owners.
- Check all the documents pertaining to ownership i.e. land allotment letter from the authorities, construction approvals i.e. building plans, floor plans, NOCs, environment clearances, water authority etc.
- Once you are ready to make investment in the construction project of the developer, get a written agreement which must include all the requisite terms and conditions, payment plan, time of delivery, procedure to adopt in case of defaults etc. If it is a purchase of constructed apartment/flat, then ensure to get all the other important documents including occupancy/ownership deed, property tax receipts, connections/fittings etc.
- The agreement has to be registered by the concerned authority.
- After making the full and final payment of the property, the developer will give you possession letter, allotment letter and other necessary document that will help you in claiming ownership.
Process/ Procedure for buying property in India
In general, one must follow the basic procedure for buying a property in India, which includes the following:-
- First, check the property details before making any purchase deal which includes ensuring the area of the property, whether it is freehold/leasehold, owner details etc. It should actually match with the details mentioned in the title deed.
- If the construction is yet to take place whether commercial or residential, then ensure that the provided layouts, designs and builder/floor plans are approved by the concerned authorities.
- Make a Title search and obtain the Title Search certificate.
- Acquire the encumbrance certificate from the owner which will legally clarify that the property is free from any kind of loans/encumbrances.
- Ensure that the property taxes and bills have been paid for that property for last 5 years so owner must provide all the receipts or get it from the respective offices. It will confirm that it does not carry any such liabilities.
- Draft a sale agreement and conveyance deed on the stamp paper of prescribed value. The agreement will contain all the relevant terms and conditions, agreed price, procedure to adopt in case of any defaults, dispute resolution procedure etc.
- Signing of agreement by both the parties and at-least two-three witnesses.
- The buyer will get the property registered in his own name with the help of real estate lawyer or agent.
Documentation required for purchase of immovable property
Plot of land
- Sale Deed/ Title Deed/Conveyance Deed
- T.C. Extracts if property is a converted land i.e. land converted from agricultural to Non-Agricultural
- Khatha Certificate and Extracts which records the name of the land holder in the records of local municipality committee and it is constructed as per sanctioned plan.
- Mutation Registration Extracts confirms the details of previous owner, the mode of acquisition etc.
- Joint Development Agreement
- General Power of Attorney
- Sanctioned Building plan by the concerned authority
- NOCs from respective government departments such as Electricity board, Water Board, etc. in order to ensure all pertinent government approvals.
- Supplementary Agreement, if any modifications are made in the main agreement.
- Encumbrance Certificate
- Final Sale Agreement
Urban Property
- Public Notice in the newspaper to check if there are any third party objections on the sale/purchase transaction for 15 days from the date of publication.
- Sale Agreement between Seller and Purchaser or Conveyance deed to transfer property in favor of his/her heir, nominee etc.
- Property Register Card issued by City Survey Officer of respective Zone
- City Survey Plan shows the boundary of the property land and existing structures
- Title Search and Title Clearance certificate
- Affidavit and Declaration Letter by the owner/co-owners declaring their rights and interests in the property and their legality to execute the transactions.
- Indemnity Bond
- Letter of Approval from competent authority under Urban Land(Ceiling & Regulation) Act,1976 (The properties owned by Co-opt Housing societies, State & Central Government and statutory bodies do not fall under the purview of this Act)
- NOC from Electricity department/water department etc.
- Encumbrance certificate
- Tax receipts of previous years
Rural Property
- Sale Agreement/Conveyance Deed
- Revenue document of ownership especially agricultural land or rural land is issued by Talathi of respective village which contain the ownership details, property details, encumbrances, leases, Mutation entry No.etc. It is issued in the local language of the state.
- Power of Attorney
- No Due Certificate with regard to any encumbrances
- Paid Tax receipts of previous years
Agricultural Land
- Sale Deed/Title Deed/Conveyance Deed/Mother Deed
- RTC Extracts
- Revenue document of ownership especially agricultural land or rural land is issued by Talathi of respective village which contain the ownership details, property details, encumbrances, leases, Mutation entry No.etc. It is issued in the local language of the state.
- Tax receipt and Bills
- Encumbrance Certificate
- Power of Attorney
- No Due Certificate from bank
- Final Sale Agreement
Flat/Apartment/Residential Houses & Commercial Property
- Sale Deed/Conveyance Deed/Title Deed
- Power of Attorney
- Encumbrance Certificate
- NOC from respective Government Departments
- Previous tax receipts
- Requisite government approvals from society/MC/ competent authorities etc.
If purchase is made from the builder before project construction, then following additional documents are required:-
- Sanctioned building/floor plans
- Layout Approval Plan
- Completion certificate
- Release deed, if any
- Sale & Construction agreement between developer and 1st Owner
- Deed of Declaration
- Demand letters from seller
- Copy of possession letter from builder
What is the Registration Procedure for immovable properties?
A buyer can obtain the legal ownership of the property he/she purchased only after he/she registers it in his/her own name as per Indian Registration Act,1908 otherwise the previous owner will be considered as legal owner in the records of Sub-Registrar. Hence, the sale deed is required to be duly stamped and registered which requires payment of stamp duty and registration fee to the concerned authority. Property documents should be registered within 4 months from the date of execution.
Registration process of immovable property
Documents
- Ownership documents i.e. power of attorney, land purchase deed, conveyance deed, sale agreement, title deed in original along with its 2 photocopies
- Identity proof of both buyer as well as seller and 2 witnesses
- Payment proof and details
- Khata Certificate and tax paid receipts.
- Encumbrance certificate
- Payment receipt of stamp duty and registration fees.
Process
- Submit the complete set of documents required to be registered with the Registration clerk at Sub-Registrar Office of the District
- Registration office will verify the authenticity of the documents and provide a token no. to the party.
- Registration office will hand over the document to the computer operator, who will enter all the requisite information in the registration software.
- Computer Operator will capture the photo and thumb impression of both the parties with witnesses. He/she will take out the print and give it back to Registration office.
- Parties will sign the computer generated print in front of the Registrar and submit it back to registration office.
- Payment of registration fees and the final document will be signed by the Sub-Registrar or SDM.
- 3 copies of registry will be generated, where one will be received by the buyer on the same day, 2nd goes in the records of the office and 3rd will go to Patwari.
Stamp Duty and Registration Fees
Stamp Duty is paid before or at the time of execution of documents. The stamp duty can be paid in 3 ways i.e. purchase of physical stamp paper, e-stamping or via Franking. It varies as per the respective State Government laws
Registration fee is more than the stamp duty and differs from state to state. It is around 1% of the market value or agreement value, whichever is higher, subject to the maximum of Rs.30, 000.
E-Registration procedure in Urban and Rural areas
- The registration of immovable properties in both urban and rural areas comes under the territories of respective State governments and is managed by Tehsil/Taluka/Mandal.
- The land registration and application form can be downloaded online or can be acquired from the concerned authority in the respective state.
- The documents to be registered and the application form will be verified by the registration office.
- The valuation and stamp duty may vary depending on the locality and vacancy. If land is vacant, it is valued at current market price whereas if it is occupied, then it will take into consideration both the market price as well the rate of gross investment utilized by a building.
- Stamp duty differs from state to state but in general, in urban areas it is around 6% whereas in rural areas it is around 5%.
- Currently, E-Registration facility is available in Tamil-Nadu, Rajasthan, West Bengal, Karnataka, Kerala, Odisha, Madhya Pradesh, Punjab, New Delhi, Maharashtra, Chhattisgarh, Sikkim and Jharkhand.
What all property can a NRI or PIO or foreign nationals buy in India?
In India, a person resident outside India/NRI/OCI can purchase and acquire any immovable property except:-
- Agricultural Land
- Plantation Property/Estates
- Farm House
In order to purchase the above 3 properties, they will require special permission from RBI which is given only after consultation with the Government of India. He/she can transfer any of the above mentioned properties if acquired via inheritance to only Indian Citizens permanently staying in India.
Purchase and Registration of Immovable Property by NRI or Foreign or PIO card holders
- NRI also are given legitimate right to purchase immovable properties in India except the properties mentioned above. The purchase process is similar to those of Resident Indians and thus, do not need any special permission.
- The payment has to be made in Indian Currency only via the funds received through the usual banking route or funds maintained in NRI account under FEMA/RBI.
- There is no limit set for the number of immovable properties they wish to purchase.
- Form IPI 7 has to be submitted by Non Resident Indian or Persons of Indian origin in the Central Office of RBI, Mumbai within ninety (90) days from the purchase date of immovable property or latest payment in addition to a certified copy of the document to show that the transaction has been made and a bank certificate to show the payment .
Registration
- The procedure is same as that of Resident Indians. The documents are to be registered within 4 days from the date of execution. If it is executed in a foreign country by some of the parties in purchase, then, it can be registered within 4 months after its arrival in India.
- The documents are to be registered by the Sub-Registrar or SDM of the district, where the property is situated.
- All the parties executing the document, their representatives/assigns/relatives holding the power of attorney must be present before the Registering officer for registration.
- The documents of registration are to be signed before the Registering officer.
- Once the Officer is satisfied with regard to the identity of persons, authenticity of documents produced and the receipt of payment of registration fees has been produced, he will register the document and make requisite entries in his records.
- Lastly, he will register the document, sign it and return it back to the presenter.
Documents required for purchasing a property in India
- Permanent Account Number
- OCI/PIO Card(in case of OCI/PIO)
- Passport (if buyer is NRI)
- Passport Size Photos
- Proof of residence
- Power of Attorney to their friends or relatives to execute the property purchase procedure in India. It can be either general or specific explaining the rights and authorities the legal representative can exercise.
Documents required for registration
- Documents pertaining to immovable property i.e. original sale deed/conveyance deed/title deed/sale agreement.
Property disputes- who to approach for resolution of dispute?
There are different kinds of property disputes that may arise from any property transactions, for instance, with respect to validity of seller’s ownership title, delays in payment or non-payment of sale consideration, handing over possession of property by builder, non-compliance of terms and conditions of the agreement by buyer or seller etc.
In such cases, following are the authorities which are to be approached for resolving disputes:-
- Mutual settlement: Seller and Buyer can try to amicably resolve the disputes to reach a mutual settlement of the problem.
- Courts: The other course of resolving disputes is to take the assistance of Courts of competent authority and jurisdiction. There are different kinds of suits that are approached before the court for redressal/relief:-
- Declaratory suits (when title of the property is challenged)- District Court/Court of law
- Injunction(restraining the illegal occupant to trespass): Court of law
- Partition Suit(co-owner desiring to get his share in the property): Court of law
- Money Suit(realization of mortgage money from property kept as security) : Court of law
- Litigations relating to land revenue/acquisitions, title documents: Quasi Judicial authorities i.e. Tahsildars, Deputy/Asstt. Commissioners, Survey Settlement Commissioners.
- Conflicts relating to stamp-duty or valuation of property: District Registrars of Registration or Inspector General of Registration
- Landlord/Tenant Disputes: Rent Controller
- Forgery/Fraud in property transactions: Filing a police complaint or complaint with a Magistrate as it will come under the purview of Criminal law and courts
- Writ petitions against the decisions of Government that has an impact over your property rights: Concerned High Court/Supreme Court
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