An Article Regarding "Defect in property is different from defect in title"

Defect  in  property  is different  from  defect  in  title

 

In recent times, dealings in real estate in Bangalore  have been  at the peak. Predominant reason for this is the growth of IT sector and the eagerness of the people to invest their money in real estates in and around Bangalore. As the real estates require huge investments, the purchaser has to  take  necessary precautions before investing his money to save himself from future complications. If the property transferred suffers  from any  defect in  the title of the vendor, the purchaser does not get good and marketable title.   Therefore, the purchaser  has  to make doubly sure  before finalizing the deal, that the  vendor has got a valid and marketable title. 

Marketable Title:

The term “Marketable title” means a title which  is clear and free from reasonable doubts and is a title good against everybody.  Thus, it is the title which establishes full ownership of the vendor to the property intended to be conveyed, without reasonable doubt. A  buyer is not bound to complete the sale if there are defects in the title to  the property  which are material and latent. The defect to be material, it is to be of such a nature that if the purchaser were aware of it he would not  have entered into the contract of sale at all.

Doubtful or defective title:

A title is said to be doubtful when the vendor does not have any conclusive evidence to prove the ownership. The defects in title are generally latent defects which can be found only on investigation of title by perusal of documents, by an eminent advocate,  carrying out  searches of Government Departments  and Municipal records and by making reasonable enquiries. The vendor is bound to disclose such latent defects  known to him.

A title becomes doubtful:

-> Where the doubt arises by reason of some uncertainty in law itself;

-> Where the doubt pertains to the application of some settled principle or rule of law.
 

-> Where a matter of fact upon which a title depends is either not in its nature capable of satisfactory proof or is  capable of such proof  but yet not satisfactorily proved.


The ownership of the vendor to the property intended to be sold, must be the  property traceable from the previous title deeds commencing from the Deed which can be considered as a good root of title and for this purpose  at least 30 years previous title would need to be verified. The property should have already been properly  transferred from all predecessors-in-title and no third person other than the Vendor should have any right or claim thereto.

Thus, for example, if ‘A’ has sold the property to B and if it is found that the property under sale belonged to a Hindu Joint Family property and ‘A’ has sold it neither for  legal necessity nor after obtaining the consent from Co-Parceners, then the property sold to ‘B’ is said to be defective.

The following are a few instances where the title cannot be termed as defective:
 

->An omission to disclose a prior agreement for sale by the Vendor is not a defect in title.

->Title by adverse possession is marketable and not a defective title, if proper title by such possession can be successfully made out. A title may be good  although there are no Deeds but there must have been such a long uninterrupted possession, enjoyment and dealing with the property as to form a reasonable presumption that the title  is absolute .

-> Loss of title deed is not a defect, if the loss can be explained satisfactorily.

Defect in property:

Defect in property is different from the defect in title. A defect in the property only prejudices the purchaser in the physical enjoyment of the property but the defect in title exposes the purchaser  to adverse claims. This difference has been enunciated in Section 55 (1) (a) of the Transfer of Property Act, which provides that the vendor is bound to disclose to the purchaser any material defect in the property or in the vendor’s title. The defects in property are generally patent defects which can be seen on an  inspection of the property and the Vendor need not disclose the same so long as the same does not lead to defect in title.

Root of title:

In investigating title and in considering whether the title is marketable and free from reasonable doubts, it is necessary to find out the root of the title. Documents are considered as root of the title. A good root of title is a document purporting to deal with the entire property conveyed, which does not depend upon the validity of any previous instrument and without inviting any suspicion on the title of the Vendor.  It may also be described as a document of transfer of property showing nothing to cast any doubt on the title. An instrument, the effect of which depends on some earlier document is considered as an instrument with  insufficient root of title. In India, there is no law which stipulates statutory period for examination of  root or commencement of title. However, it is advisable to investigate the title for a minimum  period of 30 years unless the circumstances warrant production of documents beyond 30 years.

Though our law makes it obligatory on the part of the  vendors to disclose the defects in title  before the  sale of a property, purchasers have also  to exercise due diligence and investigate the title of the property before purchasing the same, to avoid future complications.

Property Registration

An Article about "REGISTRATION OF SALE DEED ALONE WOULD NOT GET OWNERSHIP"

REGISTRATION OF SALE DEED ALONE WOULD NOT GET OWNERSHIP

The general perception amongst the people at large is that  registration of the sale deed in  the concerned Sub-Registrar’s office  would conclude the formalities for  transfer of ownership of the property from the vendor to the Purchaser or his nominee, but it is not so. The formalities in purchase of immovable property could be broadly classified into pre-registration formalities and post-registration formalities, compliance of both is a must for getting the ownership rights over  the property  transferred in totality in favour of  the purchaser or his nominee. 

The term “Post registration formalities” refers to those activities  which are required to be performed subsequent to the registration of the Sale Deed.  They are:

Obtaining original title deeds:

Once registration of sale deed is completed, the Purchaser has to obtain all the original documents of title from the seller and compare them with the copies which his advocate had scrutinized for rendering his opinion to make sure that the documents scrutinized and documents referred to in the Sale Deed are  the same and have been correctly spelt.  If his advocate had called for production of certain other  relevant original documents or certified copies, the purchaser has to ensure that such documents are also made available to him for his custody.

Generally, at the time of entering into agreement of sale only certain basic original documents are made available to the purchaser along with copies of few other documents and therefore, at the time of sale agreement, the purchaser has only skeletal original  documents with him and the remaining original documents will be with the vendor himself.  Thus, the purchaser has to keep in mind to collect all the remaining original documents from  the vendor at the time of registration of the property. 

Upon registration of the property, the purchaser  has to collect the original registered sale deed. In addition to this, it is better if  he  applies and gets a few certified  copies of the Sale Deed for his custody and use.

Encumbrance Certificate:

Normally, encumbrance certificate for the  period prior to the date of transaction will be made available for scrutiny by the vendor.  In order to have Encumbrance Certificate with the reflection of the  latest sale transaction between the present vendor and the purchaser,  it is suggested that the purchaser  may apply for up-to-date encumbrance certificate on the date of registration of sale deed itself so that he can avoid making another  trip to the office at a later date for the purpose.  

Physical  Possession of the property:

Taking physical possession of the property is a very important step in a property transaction. Therefore, it is necessary for the purchaser to inspect the property at least a day prior to the date of registration to make sure that the property is free from occupation of any stranger and there is no hurdle to get possession of the property upon purchase.

In some cases, the property could have been under occupation of persons other than the owner/vendor  like tenant or leaseholder, trespasser, etc. Irrespective of such occupancy by strangers, the vendor should be insisted upon to deliver vacant physical possession of the property  at the time of registration so that the purchaser could exercise his right over the property and  take possession of the same immediately upon purchase and put his lock for the building. 

In  case of vacant sites,  it is always  safe to fence such  sites immediately upon purchase, though it is a little expensive. In the alternative, the purchaser may display a board on a prominent place of  the site clearly indicating that “This property belongs to  XYZ. Trespassers will be prosecuted”. 

Periodical visits to the site are necessary to detect and prevent encroachment. 

Security Deposit and Tax receipts:

Once a property is purchased, the purchaser is duty bound to make all the statutory payments due on the  property to Government and other agencies. Therefore, the  purchaser is to get confirmed  whether property tax and other levies payable to Municipal authorities,  BWSSB, BESCOM, etc.,  are paid up-to-date and upon finding that any payment is outstanding, either he has to make such payment himself or insist upon the vendor to effect such payments. For this purpose, the purchaser has to collect and verify the latest property tax paid receipt and all the relevant statutory payment  receipts from the seller and upon visiting the concerned tax/revenue  offices. 

Khatha transfer:

Once the registration of the sale deed is concluded, the purchaser has to ensure that the Khatha of the property standing in the name of the vendor in the records of the concerned local authority is transferred to his  name. For such a transfer, both the seller and purchaser have to sign the application for transfer of Khatha and it is better that such an application is prepared and signed at  the time of executing  the sale deed itself to avoid complications at a later date. The application for Transfer of Khatha along with a copy of the sale deed, duly filled is to be submitted before concerned authority within whose jurisdiction the subject property falls. 

The Local bodies transfer the Khatha in the name of the purchaser upon collecting transfer fee which is, generally 2%, of the stamp duty paid on the Sale Deed and issue written confirmation of transfer in the name of the purchaser. Usually, the Local bodies  reassess the property and issue assessment notice in the name of the purchaser. The tax paid receipt should be in the name of the owner. 

Water and Power Meters:

Once  Khatha is transferred, steps for getting the   water and power connections registered  in the name  of the purchaser are to be initiated. For this purpose, careful verification of the receipts issued by the concerned authorities for the deposit and charges in favour of the vendor is necessary to make sure that such receipts stand in the name of the seller. A letter of No Objection addressed to the concerned authorities by the seller for such transfer of water and power connections and  the deposits made there under in the name of the purchaser is also necessary. The purchaser, along with the letter of No Objection  from the seller and the latest Khatha Certificate has to  apply to the appropriate authorities for effecting such a  transfer in his name at the earliest.  Upon consideration of such a request, the authorities will issue a written communication intimating the transfer of water and power connections and the deposits in the name of the purchaser. 

Though the above mentioned actions are simple in nature, to have peaceful possession and enjoyment of the property purchased compliance with these is necessary.

Property Registration

An Article about "Deed of Covenant for Production of Title Deeds"

Deed of Covenant for Production of Title Deeds

The transfer of immovable property by way of sales, gift, will, releases etc. presupposes that documents to the title of transferred immovable property are delivered to the transferee on completion of process. This is statutory obligation. Section No. 55(3) of Transfer of Property Act, casts this responsibility on the seller. But the section has a proviso that in case where only a part of the property is sold and the seller retains a part of the property the seller is entitled to retain the original documents, and copies of such documents are delivered to the purchaser.

In case, where the property is transferred to different persons, in different lots, the transferee of greatest portion is entitled to hold the documents of title and others are provided with copies of such documents.

In the circumstances dealt above, the persons holding the documents either the seller or one who hold the greatest portion has some responsibilities. He has to keep the documents in safe custody and in good condition. He has to make available the documents for inspection to other buyers, and also furnish the true copies of such documents; extract from such documents, whenever required.

But the cost has to be met by the buyer who needs such inspection or copies, extracts. Those responsibilities are required to be recorded properly.

The document, which records such obligations of safe keeping the documents; producing them for inspection, providing copies, extracts is called “Deed of covenant for production of documents.”

The deed of transfer like sale, gift, will, and release may contain such a covenant by the vendor in favour of purchaser or a separate deed may also be executed by the vendor in favour of purchaser.

In case of the person holding greatest portion, a separate covenant deed about his obligations becomes necessary. A separate deed in favour of each of other transferee of other portions or a common deed in favour of all other transferees jointly may be executed.

In the deed of transfer of the greatest portion or of highest value an explicit covenant, that, the transferee shall safe keep the documents in good condition, produce for inspection of other transferee and furnish true copies or extract should be included. Similar relevant covenant should also be incorporated in deed of transfer of other transferees.

Generally all the portions of the property are not transferred at the same time, and the above suggested procedure may not be possible. In such cases, the transferor should give a covenant of production of documents in each of the deeds of transfer and it should further provide that if and when the transferor hands over the documents to any other transferee at a later date he would procure a similar condition from the such transferee. Under a covenant of production of document, the original covenantor remains liable indefinitely unless a condition provides that he is no more responsible after he parts with the remaining portion of the property.

Stamp duty: In case the condition is included in the deed transfer itself, no separate stamp duty is payable. If a separate deed is executed, it attracts the stamp duty as that of an agreement depending upon the stamp duty prescribed by the state.

Registration: This deed of covenant does not require the registration, but it is advisable to get it registered.

Property Registration

An Article about "Realty to survive in future"

Realty to survive in future

 

The growth rate of the country’s population is prodigions. The Indian population grows at a every ten years rate of more than ten per cent, naturally needs to find a corresponding number of new homes over and above the existing number of residences of the previous ten-year period. In addition to the above core need, at least ten per cent of the existing number of houses require the need for reconstruction or replacement, to stand up to the changing tastes of youth who inherit the elder generation's homes. These two factors are considered to be favourable to the growth and sustenance of Realty Sector and constitute the mainstay of Real Estate Business demand structure.

The second factor makes very little demand for additional space. It creates only demand for construction activity. Old buildings are extended within existing land area or demolished and built vertically with more space added through the means of enhanced FSI.

Obviously the need of the increased population for housing units creates demand for new land for construction. But the availability of land for new construction has been shrinking over the past few decades, which forces the Governments to enhance the Floor Space Index for construction in many major urban areas. To add to this unavoidable phenomenon, Governments both at State and Central levels have been voraciously gobbling up all available lands under the pretext of Economic Development and Industrialization.

In the fond desire of generating sustainable employment State Industrial Development Corporations and others of the kind have taken away vast tracts of land out of the market, for preferential allotment to Industries. In spite of such supportive measures, an unconscionably high number of industrial units are today lying sick, with the land and other resources invested in them becoming unproductive. In addition, a high percentage of the developed industrial plots are lying unsold with the corporations. If the prescribed price of the plots for allotment of these plots, one will be wondering why these plots are remaining unsold.

Even with a conservative estimation, it could be said that thousands of hectares of developed industrial plots in most States are lying unsold, despite the fact of ridiculously low prices at which these are proposed to be sold.

There is something that does not meet the naked eye behind this queer phenomenon.  There is a strong case for moratorium on further acquisition of land for industrialization until all the idle plots are allotted to deserving units.

Then we are witnessing there are the lands acquired for Special Economic Zones and Port Development. The special economic zones have run into a total failure. Everywhere there are erupting agitations against new land acquisitions. Cumulatively, all these factors join together effecting in the reduction of land available for the growth of new construction on the housing sector. Some serious steps need to be taken to address concerns of the citizens about land for their essential housing needs, which remain one of the three basic requirements for any human being.

The practical measures as mentioned above could well create a favourable situation of easing out the problem of land availability for new construction. The Policy makers while examining and formulating policy options, should keep in their minds the interests of the small dealers and facilitators. Adequate reserve land should be kept for the expanding growth of housing units which has to match the increasing population. This will forestall the future problems.

Property Registration

An Article about "Transfer of Property by a Co-owner"

Transfer of Property by a Co-owner

The term property in common parlance indicates the economic status of a person. Any property is held by an individual to draw out benefit from it. Transfers are made by owners themselves, ostensible owners and the co-owners and the co-owners or we can say joint owners. When two or more persons enjoy common ownership of a property, for example say in a coparcenary the male members and now even daughters have a common and  equal interest in the ancestral property, any co-owner can transfer his own share in the property to a stranger or another co-owner. And that transferee steps in the shoes of the co-owner (transferor) and gets clothed with all his assets and liabilities. We can say that the transferee becomes the co-owner.

Section  44  Says

Transfer by one Co-owner- Where one of two or more co-owners of immovable property legally competent in that behalf transfers his share of such property or any interest therein, the transferee acquires, as to such share or interest, so far as is necessary to give effect to the transfer, the transferor's right to joint possession or other common or part enjoyment of the property, and to enforce a partition of the same, but subject to the conditions and liabilities affecting , at the date of the transfer, the share of interest so transferred.

Where the transferee of a share of a dwelling house belonging to an undivided family is not a member of the family, nothing in this section shall be deemed to entitle him to joint possession or other common or part enjoyment of the house.
Who  is  a  Co-owner?

Ownership consists of innumerable number of claims, liberties, powers with regard to the thing owned. Ownership is of different kinds. There are absolute and limited, sole ownership, co-ownership, vested ownership, contingent ownership and corporeal. When a person owns a property in one time it is called sole ownership, but if the property is owned by more than one person then it is called joint ownership. By means of partition one can have co-ownership changed into sole ownership.

The expression co-owner is wide enough to include all kinds of ownerships such as joint tenancy, Tenancy in common, Coparcenary, membership of undivided Hindu family, Joint purchase of property etc. The very fact of the reference to the property that the parties have certain shares, indicates that they are co-owners.

In Indian Law, a co-owner is entitled to three essentials of ownership-
1) Right to possession,
2) Right to enjoy,
3) Right to dispose 

Therefore, if a co-owner is deprived of his property, he has a right to be put back in possession. Such a co-owner has an interest in every portion of the property and has a right irrespective of his quantity of share, to be in possession jointly with others. This is also called joint-ownership.

The following are the types of co-ownerships:

Tenants  in  Common

When the type of co-ownership is not specifically stated, by default a tenancy in common is likely to exist. Each tenant in common has a separate fractional interest in the entire property. Although each tenant in common has a separate interest in the property, each may possess and use the whole property. Tenants in common may hold unequal interest in the property, but the interests held by each tenant in common is a fractional interest in the entire property. For e.g. B owns a 25% interest in the property and A owns a 75% interest. Each tenant in common may freely transfer his/her interest in the property. Tenants in common do not have the right to survivorship. Therefore, upon the death of one tenant in common, his/her interest passes via Will or through the laws of intestacy to another person who will then become a tenant in common with the surviving co-owners.

Joint  Tenancy

The most attractive feature of joint tenancy is the right of survivorship. Upon the death of one joint tenant, his/her interest immediately passes to the surviving joint tenants and not to the decedents estate. Joint tenants hold a single unified interest in the entire property. Each joint tenant must have equal shares in the property. For e.g. B and A hold a 50% interest. Each joint tenant may occupy the entire property subject only to the rights of the other joint tenants.

Unlike tenants in common, joint tenancy has several requirements that must be met in order to be properly created. Massachusetts law requires that in order for a joint tenancy to be created specific language must be included in the conveyance or devise.  Such language includes that the grantees take the land: “jointly”, “as joint tenants”, “in joint tenancy”, “to them and the survivor of them”, or using other language in the instrument that it was clearly intended to create an estate in joint tenancy. However, even if such language is contained in the conveying instrument, a joint tenancy may not exist. There are four additional common law requirements necessary in order to create a joint tenancy.

The four unities are,

1)  Unity  of  Time
The interests of the joint tenants must vest at the same time.

2)  Unity  of  Possession
The joint tenants must have undivided interests in the whole property, not divided interests in separate parts.

3)  Unity  of  Title 

The joint tenants must derive their interest by the same instrument (e.g. a Deed or Will)

4)  Unity  of  Interest

Each joint tenant must have estates of the same type and same duration. All four unities must exist. If one unity is missing at any time during the joint tenancy, the type of co-ownership automatically changes to a tenancy in common. A joint tenancy may be created by a Will or Deed but may never be created by intestacy because there has to be an instrument expressing joint tenancy. A joint tenancy is freely transferable.

Tenancy  by  the  Entirety

This type of co-ownership is exclusively for husband and wife. Similar to joint tenancy, tenancy by the entirety provides the right of survivorship. To exist, tenancy by the entirety requires that the four unities of joint tenancy exist plus a fifth unity of marriage between the two co-owners. However, even if all five unities exist, the type of co-ownership may still be joint tenancy if the conveying instrument indicates such. Unlike joint tenancy, tenancy by the entirety does not allow one spouse to convey his interest to a third party. However, one spouse may convey his/her interest to the other spouse. A tenancy by the entirety may only be terminated by divorce, death, or mutual agreement by both spouses. A terminated tenancy by the entirety becomes a tenancy in common.               

In Konchunju Nair v. Koshy Alexander it was held that if a co-owner wants to erect a dwelling house on the land he is free to do so. If division of co-ownership of property takes place, the co-owner can claim, that the said property be allotted to his share. The Court would ordinarily grant such an equitable right.

When is a co-owner legally competent to make a transfer?

Section 7 of the Transfer of Property Act, 1882 provides that every person competent to contract i.e. a major and of sound mind or is not disqualified by law for contracting. Therefore even the interest of a co-owner or co-sharer can be sold, mortgaged, leased to another co-sharer or to a stranger. The fact that the partition has not taken place by metes and  bounds, does not stand in the way of the interest of a co-owner.

According to the law prevailing in some areas, a coparcener of a Hindu Joint Family can alienate his share in the Joint Family Property for consideration. Such a coparcener is  a  legally competent person. But in some cases of Mitakshara coparcenary, the consent of other coparceners is required before any such transfer. Also where one co-owner is in exclusive possession of a plot of a joint land and lets it out to a tenant without the consent of other co-sharer landlords, such a tenancy will not bind the latter. The lease in such a case will only be confined to the interest and share of the lessor.

In Baldev Singh v. Darshani Devi it was held by the Court that a co-owner who is not in actual physical possession over a parcel of land cannot transfer a valid title of that portion of the property. The remedy available to the transferee would be to get a share out from the property allotted after the partition or to get a decree for joint possession or can claim compensation from the co-owner.
In Rukmini and others v. H.N.T.Chettiar it was held by the High Court of Madras that a co-sharer cannot be allowed to cause prejudice to the other co-sharers by putting up a substantial construction during the pendency of a suit for partition filed by the other co-sharers.

The High court of Punjab and Haryana in a case of Hazara Singh v. Faqiria  where a co-owner contended that he had, by adverse possession, a peaceful undisturbed possession by the other co-owners had become the sole owner of a land, held that the possession of a co-owner is possession of all the co-owners. It cannot be adverse to them unless there is a denial of their right to knowledge by the person in possession. If a co-sharer is in possession of the entire property, his possession cannot be deemed to be adverse he possesses the property on behalf of all others.  

What  are  the  rights  of  a transferee  in  such  a  transaction?

Basically this section deals with the rights of a transferee and also safeguards their rights. The transferee steps into the shoes of his transferor i.e. the co-owner, and is clothed with all the rights and becomes subject to all the liabilities of his transferor. In short, we can say that he becomes as much a co-owner as his transferor was before the transfer. 

Following are his rights after the transfer-Right  to  Joint  Possession
Every joint owner or co-owner of property has a proprietary right in the whole estate. After the transfer, the transferee becomes the co-owner and gets all his rights. He also has the right to joint possession in property except a dwelling house. If a co-owner or his transferee ousted from joint possession, he is entitled to joint possession by a suit, and is not necessary forced to sue for partition. A co-sharer can sue for possession either for the benefit of the entire body of co-sharers or for the partition and possession of the plaintiffs share.

Property Registration

Valid Transfer of Property Rights by a Seller

Valid Transfer of Property Rights by a Seller

Marketability of Title is the condition precedent for sale of any immovable property. Under Section 55(1) (a) of the Transfer of Property Act, the seller is bound to disclose any material defect in the property or title and to produce all the documents of title to answer the requisitions on title made by the purchaser.  Under Section 55(2) of the aforesaid Act, the Vendor is deemed to warranty the title or the right to sell. 

Marketable Title:

The statutory covenant of title is implied in every contract for sale of an immovable property, even if there is no express clause embodying such a warranty. The term “Marketable Title” refers to absolute right, title, interest and ownership of the Vendor to convey the property without any hindrance. 

In other words, the title is considered to be marketable if the same is free from encumbrances, claims and beyond reasonable doubts. Thus, if there is any encumbrance or claims and the vendor does not discharge it, the title cannot be said to be marketable.

In fact, Section 55   (1)  of the Transfer of Property Act envisages that if the property is sold subject to any encumbrances or claims, it should be so clearly stated and the Vendor will be under obligation to discharge any such encumbrances existing at the time of sale on the property. 

On the other hand, if any encumbrance is found to exist and the same is not revealed before completion of sale, then the Vendor is bound to pay for the same or indemnify the purchaser in that behalf.

The primary duty lies on the person intending to sell the property to prove that title of the property is free from any defects and any subsequent transfer will not make such transaction either void or voidable.

For example, if the vendor owns a property as Kartha of the Joint Hindu Family in which minor’s rights and interests are involved, the Kartha is bound to prove the legal necessity for sale or to obtain an order from the competent Court seeking permission to the property on behalf of the minors. 

Restrictions on title:

Implied warranty of title on the part of the Vendor, although absolute, will not however apply to cases where there is a clear contract between the parties to the contrary. 

Such a contract can be either express or implied, but the contract must be such as would clearly negate the warranty of title. 

Thus, certain restrictions are imposed on the purchaser’s right to examine the title in full, which is done when the Vendor is not sure of making out a marketable title, particularly when the Vendor is not in possession of the property. 

Though, the restrictions may be contrary to the provisions under Section 55 of the Transfer of Property Act, the same will be binding on both the parties by virtue of mutual agreement and understandings and even if defect in the title is found subsequently, objections in this regard cannot be raised due to such restrictions.

Where the Vendor stipulated that the property would be conveyed as he has received the same from his predecessor or that the title of the Vendor has to be accepted without dispute or that it should not be enquired into and the Purchaser is bound to accept the title of the Vendor as it appears to be, such a stipulation would be contrary to the contract and Section 55(1) (c) and (2) of the Transfer of property Act will not apply. Further, such a condition will not relieve the Vendor from the obligation of making out the best title though the purchaser would be bound by such condition even if the title is proved to be defective. 

However, in absence of such a contract to the contrary, the Vendor is bound to remove all the defects even if the purchaser was aware of the same. Again an express covenant does not, in clear and unambiguous terms supersede the implied covenant.

Thus, by virtue of Section 55(2) of the Transfer of Property Act, the purchaser can rest his claim on the implied covenant of title contained therein.

Conditions restricting the title or proof of title to which the purchaser is entitled must neither state nor suggest things which, to the Vendor’s knowledge, are incorrect. The condition will not be binding if it requires the purchaser to assume that what the vendor knows to be false or it affirms that the state of title is not accurately known to the vendor when, in fact, it is known.

Production and Scrutiny :

In order to examine the title of the Vendor, the purchaser has to examine all the relevant title deeds in the possession or power of the Vendor.  Under Section 55(1) (b) of Transfer of Property Act, the Vendor is under an obligation to produce not only those documents in his possession but also in his power to produce. 

Thus, if the Vendor has deposited the title deeds with a mortgagee, the Vendor has to produce such documents for inspection of the purchaser through mortgagee. However the Vendor is not under an obligation to produce irrelevant documents not in his possession or power but it is the discretion of the purchaser to inspect the same at his own  cost.

It is only after production of all the relevant title deeds, assistance of advocates having sufficient experience in the scrutiny of the title documents will help the purchaser to conclude whether the Vendor has got marketable title or not.

When the property market is favorable to the Vendor, the Vendor, many  times, dictates the terms and tries to foist a title on the purchaser.

Adhere to the norms

Under any contract of transfer, fundamental principles of Transfer of Property Act must be strictly adhered by the parties, without letting out either of the parties to escape from their respective obligations, which will reduce litigations and ensure transfer of marketable title from the vendor to the purchaser, free from encumbrances, liens, claims, etc. When a faulty title is passed on to the purchaser, it is bound to result in the spate of claims and litigations. 

Purchasing the property involves various steps such as scrutiny of title deeds, verification of documents, executing the deed of Agreement to sell, making  payment as agreed between the Vendor and the Purchaser and transfer of ownership and title deeds  in the name of the Purchaser by executing Sale Deed. 

It is not advisable to purchase a property hastily by approaching the brokers and subsequently entangling oneself into litigations in case of any defective title.
Ownership and right over the property has to be passed on in compliance of the provisions as envisaged under law for which services of Advocates having sufficient experience and knowledge in property transactions is necessary to avoid litigations that are likely to arise in future.

Property Registration

An Article about "Ownership of Immovable Property"

Ownership of Immovable Property

 

 

Before understanding the  terminology of 'Ownership of Immovable Property' it is necessary to understand what an immovable property is. In common parlance immovable property means land, buildings and  things which are  permanently attached to the land.

 According to Section 2(gg) of the Karnataka Stamp Act,1957 “immovable property” includes land, buildings, right to ways, air rights, development rights, whether transferable or not, benefits to arise out of land and things attached to the earth or permanently fastened to anything attached to the earth. The Transfer of Property Act, 1882, does not define the word 'immovable property' in detail, but only mentions that immovable property does not include standing timber, growing crops or grass.  According to the Karnataka General Clauses Act, 1899 immovable property shall include land, benefits to arise out of the land and things attached to the earth or permanently fastened to anything attached to the earth.  The words “attached to the earth” has been elaborately described in Sec.3 of the Transfer of Property Act.  According to this section, attached to the earth means --

1.    Rooted in the earth as in case of trees and shrubs;

2.    Imbedded in the earth as in case of walls or buildings or

3.     Attached to what is so imbedded for permanent beneficial enjoyment of that to which it is attached.

Ownership

Let us now understand something about ownership. Ownership can be broadly classified into two absolute ownership and restrictive ownership.  The ownership is an amalgam of rights, interest and title which is recognised  under law.  The word absolute ownership is a bundle of rights connected to some specified property. The word right has a wide meaning.  It gives powers to the person said to have rights to do something or  act, or not to do such thing or act, in relation to his property.  Rights are of different types such as Right in Rem, Right in Personam etc. “Right in Rem”.  is available against the whole world while the “Right in Personam”, is available against a specified person, or group or group of persons.  The owner of any property has a legal right which is recognised under  the laws of the land.  It consists of following rights which are only illustrative and not exhaustive:

1.   Right of Possession and occupation.

2.   Right to use and enjoy his property without undue interference of outsiders.

3.  Right of alienation of his property as provided under law in favour of any person's without any restrictions  by way of sale, gift, transfer by Will, and by creation of trust.

4.  Right to make alteration to the property/structure, consume, destroy, repair, reconstruct, hypothecate, mortgage, lease and to use the property as security to borrow funds.

These  rights are  rights in rem available against the whole world subject to the restrictions imposed under various laws like Land Reforms Act, Land Revenue Act, Town Planning Act etc.

Restrictive  Ownership

Apart from absolute ownership, there are other types of ownerships which are restrictive in nature.  In restrictive ownership, certain rights detailed under absolute ownership are restricted or not available for certain specified period.

Co-ownership

Under co-ownership, there will be more than one person who  jointly own the same property.  Both the persons have equal or certain percentage of rights to possess and enjoy the property as agreed to between them.  In the case of co-ownership, the owners  own the whole property jointly and thereby their respective shares are not physically ascertainable with definite measurement and  boundaries.  The shares are undivided.  For example, in  case four persons own a property of 1200 sft, each of them  would be entitled to 300 sft.of undivided share in this property. This 300 sft of undivided share of property could be  any part of the building/property and cannot be confined to a specific part.  Share of the co-owners in the property need not necessarily be equal.  It depends on their investment in the property as detailed in the purchase document.  In the absence of any such details as to the share of investment made for acquisition of property it is presumed in law, that all the co-owners have equal undivided share of interest, right and title in the property as per section 45 of Transfer of Property Act. It is always advisable to clearly mention the share of investment of each co-owner in the property and their undivided share in right, interest, title in the property for the purpose of alienation, inheritance and taxation.The Co-owners share in the property is inheritable and  transferable.  The concept of this co-ownership is often termed as “Tenants in common” in legal parlance. Practically, it is not possible to identify or divide a  property held jointly  by metes and bounds. Thus, the co-owners possess and enjoy the property in unison.

Dual  Ownership

Many owners of land, lease the property to others on long lease.  The terms of lease also gives right to the lessee to construct buildings and enjoy the benefits of such buildings on leased lands.  This practice has led to dual ownership of land and building.  The land is owned by one person and the structures thereon is owned by another person.  The terms of lease also stipulate whether the ownership of the building will get transferred to the lessor or the owner of the land free of cost on expiration of the lease period or has to pay for acquisition of such structures.  The Income Tax Act recognises the dual ownership concept and the owner of the building is taxed for the income received from the property.

Ownership  by  part  performance

In sale and purchase of immovable property, the parties generally enter into a sale agreement detailing the terms of contract and registration of the sale deed is done later, on performance of duties by the parties as detailed in sale agreement.  At times the seller receives major portion of consideration and hands over vacant possession of the property to the purchaser pending registration of sale deed.  This is called part performance.  The purchaser / transferee who is in possession of property gets equitable title over the property.  This is recognised under section 53 A of the Transfer of Property Act.  Even in the absence of registered sale deed and though legal title is not conferred on the purchaser / transferee, the rights of the purchaser / transferee is secured against the seller or any person claiming through the seller.  The only remedy available to the seller is to file a suit for payment of balance of sale consideration.  The requirements of part performance as detailed in Section 53A are as follows;

1. There must be a contract like sale agreement, etc., in writing containing  details of the contract including handing over of the vacant possession of the property to the purchaser.

2. The contract shall be for transfer of immovable property for consideration.

3. After the contract is entered into the seller has put the purchaser in possession of the property and the purchaser has taken the possession of the property in part performance as per the terms of contract.

4. The purchaser has done something in pursuance of the contract like payment of consideration or has performed or is willing to perform his part of contract.

However, this equitable right derived from part performance is available only against seller or anybody claiming under or through the seller.  But the provisions of this section do not affect the rights of a person who has  purchased the property for valuable consideration and who has no notice of prior  contract or part performance.  Equitable rights of transfer under  part performance are  recognized under the Income Tax Act 1961.

Interest

The other most frequently used word in property transaction is “interest”.  It is a right available against the entire world, when it is related to some property, land, building, immovable and movable.  The interest may be vested, contingent or absolute.

Vested interest is an interest in property enforceable by a person at present or on a future date linked to happening of certain specified event whereas the contingent interest is an interest available only on a future date and not at present, which is subject to happening of some uncertain event.  In vested interest the happening of the event is certain, whereas in contingent interest it is uncertain.  Hence it is contingent.  As the interest is contingent, it is not transferable or inheritable.  But on the happening of such uncertain event, the contingent interest becomes vested interest, when it is transferable and inheritable.

Title

The word title which an owner has over the property is a legal right. The title has to be established with documentary evidence.   The title is  transferable and inheritable. From the documents of title you will come to know who is the owner of the property and if the documents of title are defective even  the financial institutions will not advance for purchase or construction. 

Joint  Tenancy

This is different from Tenants in Common or Co-ownership.  In Co-ownership, the legal heirs succeed to the right and title of the deceased co-owner. In Joint tenancy, the other Joint owner succeeds to the right of the deceased joint owner and not his legal heirs.  This concept is not in practice in India, unless specifically made in certain documents.  In the absence of any such specific reference, the court presumes the ownership as 'Tenants in common' and legal heirs succeed to the share of the deceased joint owner.

Knowledge of the type of ownership of  the property you own would help you immensely in your possession and enjoyment of the  property.

Property Registration