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FAQs on Property Laws

Q: What elements need to be included in the agreement for the sale of a residential apartment?

The following particulars should be included in such an agreement:

  • The liability of the promoter to construct the flat according to the plans and specifications, approved by the local authority if the building is to be constructed,
  • The date by which the possession of the flat is to be handed over to the purchaser;
  • The extent of the carpet area of the flat, including the area of the balconies, which should be shown separately;
  • The price of the flat, including the proportionate price of the common areas and facilities, which should be shown separately, to be paid by the purchaser of the flat; and the intervals at which installments may be paid;
  • The nature, extent and description of the limited common areas and facilities;
  • The percentage of undivided interests in the common areas and facilities, appertaining to the flat that is agreed to be sold;
  • The statement, pertaining to the permitted use of the flat and restriction of its use, if any;

Every agreement for the sale of a flat should contain these minimum particulars. Such agreement should be accompanied with the true copy of the

  • Title Certificate by an Attorney-at-law or Advocate;
  • the Property Card or extract of Village or any other relevant revenue record, showing the nature of the title of the promoter to the land on which the flats are constructed or, are to be constructed;
  • the plans and specifications of the flat, as approved by the Municipal Commissioner.
  • >The agreement for sale is required to be registered.

In case originals of the title deeds are misplaced by the owner of a property, how should the purchaser protect himself?

This is fairly common. If the originals are found to be lost or misplaced or destroyed, the owners should be called upon to give a suitable indemnity against any loss or damage that the buyer may suffer in the event of any third party making a wrong claim to the property. There is also another reason for caution:

A seller, sometimes, cannot produce the original title deeds because he has deposited these with a bank or financial institution to create a mortgage on the property. This is known as a mortgage by deposit of title deeds. It does not require a registered deed, like other forms of mortgage, and is a preferred means of creating a security, for this very reason. A property, which is mortgaged, continues to carry the burden of the mortgage even after it is sold until the mortgage is redeemed. So check on this before signing up for the property.

Q: What can the seller do when the purchaser of his property does not make full payment?

The buyer can sue the seller for the unpaid amount. But make provision for the right to repudiate the sale in case of non-payment in the sale deed to prevent any such intent on the purchaser's part. Without this provision, the seller cannot retain possession of the property on the grounds that full payment has not been made.

Q: What should be incorporated in a lease agreement?
The agreement to lease should contain the following particulars:

  • Parties to the deed. ("A lease right can not be created by a person who has no title in the property.
  • Details of the property to be demised
  • Duration of the lease
  • Price/premium, and/or lease rent/any other thing of value/share of crops etc.
  • Periodicity/specific occasions when the payment would be made/services that will be rendered.
  • Date of commencement.
  • Date of determination.
Q: While the property is on lease, can the lessor transfer/dispose of the property?
Yes. On such transfer, unless there is a contract to the contrary, the transferee, i.e. the buyer is entitled to all the rights that the transferor, i.e. the lessor had. However, the lessor is not relieved of his liabilities to the lessee, without the lessee's consent.

Q: Can a person other than the parties to the document present a document for registration? In case a document is presented by a person, who is not empowered to do so, does the registration of the document become invalid?

This right rests only with the Power of Attorney representing the concerned parties; otherwise the registration of the document becomes invalid, as per the Registration Act.

However, when a person who executes such a document, realizes that such registration is invalid, he can apply to the registrar or the sub-registrar within four months from the date that he is aware that the registration is invalid. Subsequently, he can apply for the re-registration of the document.

Q: Is registration of property necessary?
Registration is a proof that a transaction has taken place. When a document, which is compulsorily to be registered, is not registered, it fails to confer any title given by the document.

The registration of a document serves as a notice of the transaction, to the persons affected by the transaction. Registration also serves as an implied notice to any person subsequently acquiring interest in the property, covered by the registered document.

The real purpose of registration is to ensure that every person dealing with property for which compulsory registration is required, can confidently rely on the statement contained in the register, as being a full and complete account of all transactions by which the title may be affected. Registration is not proof of execution.

When the execution of a document is directly in dispute between two parties, the fact that the document is registered is not sufficient to prove its genuineness. Registration does not automatically dispense with the necessity of independent proof that the document was executed. A certificate of Registration is mere evidence that a document has been registered. It is not proof that it has been executed.

Q: What is Stamp Duty?
Stamp Duties are taxes payable on every conceivable documented transaction. It is a form of revenue for a state. The proceeds of the duty are assigned to the state in which they are levied. It is payable when any property or other contractual transaction is entered into in India or even abroad. However, the subject matter of the transaction must be situated in India.

Stamp Duty is not payable on the following:

  • documents, executed on behalf of the Government;
  • testamentary documents;
  • documents, required to be made for judicial or non-judicial proceedings;
  • documents, filed in judicial or non-judicial proceedings.

The British Government introduced Stamp Duty in India by enacting the Indian Stamp Act, 1899. After the commencement of the Constitution of India, the power to levy Stamp Duty is vested in the following manner:

  • The power to prescribe the rate of duties on commercial instruments is vested in the Union legislature. (entry 91 of the Union List)
  • The power to reduce or remit such duties with the Central Government. S. 9 of the Indian Stamp Act 1899
  • The power to prescribe the rates of duties on other instrument, vested in the State Legislature. (entry 63 of the State list)
  • The power to reduce or remit such duties is vested in the State Government. (S.9 of the Indian Stamp Act)
All matters, relating to the mechanism of Stamp duties in respect of both the instruments, are the subject of entry 44 of the concurrent list.

As an effect of this, the rates of Stamp Duty, in respect of the instruments, specified in entry 91 of the Union List i.e. bills of exchange, promissory notes, bills of lading, letters of credit, policies of insurance, transfer of shares, debentures, proxies and receipts, are determined by the Union Government. On the other hand, the State Government is entitled to levy Stamp Duty with respect to other instruments. Thus, every State has its own Stamp Act. E.g. as far as the state of Maharashtra is concerned, the transactions, related to Stamp Duty, are governed by the Bombay Stamp Act, 1958

Q: If the lease is created for a certain specific period, can it be terminated before the specified period?
Sec.111 of the Transfer of Property Act, supplies the circumstances in which a lease could be determined. These could be:

  • On the expiry of the period of lease;
  • On the happening of an event, which is a condition for expiry
  • On the happening of such event when the lessor's interest in the property terminates;
  • When the persons holding the ownership and the lease become one and the same person, at the same time, own the right; this state is also known as a 'merger';
  • When the lessee, expressly, yields up its interest to the lessor;
  • In the case of an 'implied surrender,' i.e. by the creation of a 'new relationship' e.g. where the lessee becomes the mortgagee, the rights of the former remain in abeyance because his larger rights, as the mortgagee, come into effect. His rights, as the lessee, are restored when the mortgage is redeemed;
  • When the lessee breaks the express condition giving the lessor the right to re-enter the property: when the lessee sets up a title detrimental to the interests of the lessor: or, when the lease stipulates that the lessor may re-enter the property when the lessee is adjudged insolvent. In such cases, the lessor may give the lessee notice to terminate the lease. This is, technically, known as forfeiture;

On the expiry of the notice to terminate the lease or, to quit or, of information to quit duly given by either party to the other.

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