How to obtain title deed of a property
A title deed is a document that proves the ownership of a property and gives specific rights to the person who holds it. The title deed is specifically required when a property is being transferred or sold to a new person.
One of the documents that any buyer should get while buying a property is title deed. Thanks to the number of loopholes present in the real estate sector in India, all buyers need to be careful when it comes to buying properties. The buyer should ensure that the title deed is in the name of the seller who is selling the property. The title deed will also confirm that the right to sell the property lies with the seller and not with anyone else. Sometimes the seller might give a photocopy of the title deed but the buyer should insist on seeing the original title deed. If the seller has pledged the land due to a loan, the title deed would be with the bank. In such cases, the seller might be able to show photocopy of the title deed. However, he would not be able to produce the original title deed which might imply some possible problems with the property.
In addition to the original title deed, the buyer should also ask for all previous title deeds. These documents should be verified for any possible issues.
Some of the documents that are required to get the title deed are site allotment notice, sale deed, intermediate sale deeds, encumbrance certificate, and tax paid receipts, registration certificate and possession certificate.
Reasons for Defective Property Title
(a) Lien on the Property: Lien means right on the title of the property till property owner clear the debt or dues of the individual who has put a lien on property.
(b) Encumbrance: Difference between Lien and Encumbrance is that in Lien, it is not necessary that property is mortgaged. Whereas Encumbrance means that property is mortgaged as collateral.
(c) Civil Suit / Case in Family Court: It is not necessary that court always put lien on property. Another possibility is that civil suit is filed against owner related to property matter. Very common scenario is dispute between husband and wife or between family members like father and son.
(d) Notified Property: Sometimes government notifies land / site / property for infrastructure project / road widening / flyover etc. The current owners try to sell in a hurry.
(e) Restrictive Rights on Property: It is also referred as Conditional Ownership in property. We can call it as Defective Property Title because title cannot be used freely.
(f) Land Conversion: Urbanization in India is restricted only to handful cities. Most of the development activity is happening on outskirts of city. City limits are extended beyond imagination. Most of the land used for residential activity was originally notified as agricultural land. Defective Property Title in this case means that an agricultural land is used for residential purpose without land conversion.
(g) Multiple Sale Transactions: This is fraudulent activity where in owner sell the property to multiple buyers and collects money from all the parties. It is very common in small cities/towns or in case of Bank Auction properties. This happens in case of debt trap or owner is not able to pay the Home Loan.
(h) Encroachment / Right to Access: Another common reason for Defective Property Title. Public / Govt. land is included in property or Access is not provided to neighboring residential units.
(i) Property developed by Govt Authorities: Any property developed by Govt authority or under special scheme comes with lot of caveats. In some cases, if certain conditions are not met then Govt reserves the right to re-acquire the property. In properties developed by government agencies like MHADA in Mumbai, they are mostly Leased hold property and not freehold. This results in MHADA reserving certain rights like share in redevelopment of property. Because of this, while property value appears cheap but it is cheap due to inherent built in rights of MHADA has rights on excess FSI when the property goes for Redevelopment.
(j) Owner is Guarantor of Loan: Last but not the least. In many cases it is observed that owner of property is Guarantor to some business loan or loan of relative / friend. In case of high value business loans, the property details of guarantor is included in loan agreement as bank reserve right to take possession in case of default.
Importance of Due Diligence and Title Search before buying a Property
Due diligence and title search play an important role in real estate/property transactions. People approach us and often have the following queries.
Due diligence means taking all precautions and ensuring that investment in a property is safe and secure. By exercising due diligence:
· The buyer identifies and evaluates all types of risks involved in investment
· The buyer tries to rule out/minimize these risks
Due diligence implies:
Scrutiny of title:
Title Search relates explicitly to the search of ownership and the rights of the owner to sell the property. Two kinds of title search reports are there.
· Full Search – The title of the property is searched for a period of previous 30 years.
· Limited Search – The title of the property is searched for a period of previous few years (less than 15 )
The search report is prepared depending upon the nature of the transaction. The title search is a very crucial part of due diligence as the defective title leads to no transfer at all.
Search for the right of the owner to sell the property: The owner must be capable of transferring ownership. The buyer has to ensure that there is no restriction to the power of alienation of the owner. The limitation can be there:
· If the owner is a minor or a person of unsound mind. Such a person can sell through guardian or a person so authorized.
· The owner is not having an absolute right in the property.
· The owner is a lessee or a tenant.
· Statue does not permit sale of the property.
Records searched are:
The records maintained
· at Sub Registrar’s office
· with Tehsildar (mutation and Jamabandi)
· by Registrar of Companies
Title deeds – Gift deed, Will, Lease Deed, Sale Deed etc
Increase in the number of frauds– There has been an increase in frauds related to real estate. Due diligence involves verification of documents, title and ownership rights to ascertain the authenticity of the same and therefore, helps to prevent fraud.
Disputed property – Before buying a property, buyer has to ensure that the property is not involved in any litigation. If there is any court case pending concerning the property or the rights of the owner, it can pose hardships later for the buyer. The buyer is bound by the decision of the court, which may or may not be favourable.
Encumbrances which affect the value of the property– The property intended to be purchased must be free from all types of encumbrances like
· Mortgage
· Lien
· Charges due (utility bills, tax payment or any other statutory payment)
· Litigation
A certificate in this regard is issued by the Office of the Sub Registrar. The buyer must inspect the original title deed as it is deposited with the Bank if there is any loan against the property.
Easement Rights/ Acquisition process affect the interest of the purchaser: The property might be having
· an easement right (right to have a passage through the land)
· Covered under acquisition scheme of the Government.
The buyer must check for the same. It affects the returns from investment.
Necessary Approvals – A buyer must ensure that the owner has obtained necessary approvals from the authorities. Approval is granted if the statutory requirements have been fulfilled.
PROPERTY SEARCH
People are often found to be in need of Property Management Lawyers to help them in India with land that they have either inherited or purchased. Whether there are issues related to ownership or resolution of some other such matter, people seek legal advice that could help them come up with feasible solutions. Ownership records are not always easy to trace out and often, the registry details have been either lost or not been recorded properly – hence they often feel the need of seeking advice. The single most important requirement is to have the status of the title clearly established through updated documents. In most cases these papers are either lost or have not been updated for a long time, resulting in damage to their property rights in India. In these matters, one has to be prepared that he will be faced with some common challenges.
Ø Even if all records are now visible online, the documentation is most often insufficient for them to get an in-depth view of their exact share or valuation.
Ø Online documents obtained are mostly in vernacular languages – understanding and translating them into English is a task in itself.
Ø The extent of share cannot be fully comprehended through any ownership document available online.
Ø For residential, commercial and urban the details are mostly not available online and have to be applied for and obtained manually.
Ø One would have to look for the desired information from the offices of the appropriately concerned authorities under which the registration has been done.
Ø If a fraud like illegal transfer or an invalid sale or exchange has been committed any time in the past, one needs to apply for the older record to verify how and when that fraud was committed. Such older documents are applied for and obtained through legal experts.
Ø Sometimes formal applications have to be made through Lawyer under the RTI to verify the accuracy of the papers.
Ø Friends and relatives cannot help much and even if they do assist you to procure some information you would still need experts to decipher, interpret and transmit the information in layman’s language.
Ø Another challenge that one faces in India is that most records have changed addresses and cannot be identified by the older addresses that clients have.
Ø A common problem is that registered sales deeds which are the primary document of the title are not available either with clients or cannot be found in the archives of the relevant offices or municipal authorities.
Ø A subsequent sequel to this is to go then through courts to establish Title Declaration.
Everyone essentially seeks a soothing and efficient system – Somebody to relate to their issues, somebody to understand the nuances of both their needs and their limitations, somebody who just knows and does what needs to be done to facilitate the processes; somebody who can understand that it is not within their means or understanding to handle the required paperwork. Neither do they have the time, nor is it possible for them to travel back and forth to sort out such issues.