While investing in any property, it is always the buyer’s duty to make sure that the title of property is clear of all encumbrances. Buyers should appoint advocates to verify and investigate the seller’s title to the property.
Generally, once a sale agreement is executed, the seller immediately sends the property’s original title deeds to the buyer or his advocate against a receipt. After it has been received, it is now the buyer’s responsibility to keep these original deeds safe. Buyers can use some of the below mentioned guidelines to ascertain if the seller’s title to the property is clear and free from encumbrance.
Role of an advocate
Firstly, the advocate on his part should carry out investigations in the offices of the sub-registrar to cull out all the documents registered in relation to the property. He/She should establish the Cadestral Survey Number (CS) and the City Survey Number (CTS) and collects other details. Under the present laws of limitation, any mortgagor has about 30 years from the date to redeem or recover possession accrues which therefore allows the title to be traced back to thirty five to forty years.
The state government has introduced a number of provisions requiring registration of notices that provide details of the pending litigations in respect to the property. If such notices are not registered with the registrar of societies, they would not be able to restrict sale or transfer of such properties to bona fide buyers.
The buyer’s advocate should also issue a public notice in at least two local newspapers, one in the English language and another in the local language. The notice should state that his client has agreed to purchase or is negotiating the purchase of the said property from the said seller. It should invite claims in the nature of mortgage, charge, lease, lien, easement, gift, trust or any other claim against the property asking them to notify the buyer’s advocate within a specified time period with the supporting documents.
The notice should also state that if no such claim is received within the specified period, it will be deemed that no such claim exists or it will be deemed to have been waived. But remember though that any such notice is not binding on the real claimants to the property. However in case of a dispute, such a public notice shows that the buyer is a bonafide purchaser.
Enquiries should also be made with the Ward Officer in which the property is located to find out (i) if the property or any portion of it has been notified under the Land Acquisition Act for any public purpose; (ii) whether any notice notification, action or claim is pending against the property; (iii) whether the property or any portion of it is included in the set-back; and (iv) whether the property or any portion of it is reserved for any public purpose under the Development Plan (DP) that is reserved for garden, school, hospital, development road or for any other purpose.
Responsibilities of the buyer
There are a series of pre-conditions that need to be fulfilled in order to obtain a clear title to a property. The owner of the property has to first produce all the originals of the title deeds in his possessions after which records pertaining to the property have to be searched from the specific offices maintaining them. Slight discrepancies in the title of the property can lead to immense problems in the future vis-à-vis rights that arise from ownership and possession.
Like public notices that have to be issued in newspapers inviting claims or objections from anyone affected in respect of the said transaction. Following the public notice, if an objection is lodged, the person should be asked to substantiate it within a stipulated period of time or else, ignored.
For a transaction to be considered valid in a court of law, it must be registered accordingly. The registration of a document serves as a notice of the transaction to those affected by it.
The seller has to clearly mention in unequivocal terms that there are no encumbrances or mortgages on the property being sold. Very often, several months after the deal has been struck, an unassuming buyer realises that the property purchased has been mortgaged to someone else and that he has been duped.
Often, in order to save on a little money, a buyer may ignore the registration aspect of a document. If a document isn’t registered properly, it fails to confer any title to the buyer who could land with several problems.
However, mere registration of the document doesn’t affirm its genuineness. Both the parties need to have executed the document and shouldn’t be in dispute with regard to the transaction. The sole registration of a document very often is commonly misunderstood as being evidence of a transaction. This, however, doesn’t provide whole and complete proof of execution which needs to be fulfilled.
Incidentally, for premises purchased in a registered co-operative society, a buyer needs to check a few documents before going in for the deal. The share certificate issued by the society to the owner has to be checked in order to authenticate the owner’s credentials and standing in the society. Very often, the seller could himself be a sub-tenant in a society flat with the actual owner oblivious of the transaction. In that case, the seller would be unable to produce the share certificate in his favour.
And, in case the deed has been lodged for registration, the seller should be asked to produce certified true copies of such conveyance, sale deeds and other documents along with the original receipt of the Sub-Registrar where the document has been lodged for registration.
In case a buyer opts for a flat in a society that hasn’t been registered, he should look for previous chain of agreements with past owners; Original stamped receipts of payments issued to the previous and present owners by the builder/development authority/society and transfer authorisation papers from the respective authority as well as a copy of approved plan and occupancy certificate issued by the civic body.
When acquiring any immovable property, the onus of making sure that the title of the said property is clear of all encumbrances lies squarely on the buyer. Buyers and their legal representatives should act responsibly to verify and investigate the title of the seller to the property. Ideally sellers should make out a clear and marketable title to the property. But generally, the buyer decides to buy the property from the seller on an ‘as is where is’ basis wherein the seller does not need to make a clear and marketable title to the property and he can then sell the property with any existing encumbrances.
As a general practice, during the conveyance formalities, when parties agree to enter into a sale or purchase transaction for a property, they enter into an agreement recording their intention to sell or purchase the property according to the terms and conditions recorded in the agreement. Once the agreement is executed, the seller immediately sends the property’s original title deeds to the buyer or his advocate against a receipt. After it has been received, it is now the buyer’s responsibility to keep these original deeds safe.
Maharashtra and Gujarat laws have introduced a number of provisions requiring registration of notices providing details of the pending litigations in respect to the property. If such a notice is not registered with the registrar of societies, then such pending litigations do not restrict sale or transfer of such properties to bonafide buyers.
Buyers and their advocates should follow some of the above mentioned guidelines to ascertain if the seller’s title to the property is clear and free from encumbrance.