PROPERTY TITLE & NRI
It can become a nightmare for an NRI who wants to make a property transaction in India when he/she has to inherit his ancestral property or Buy or Sale Property. The property document along with the appropriate identification is mandatory while inheriting the ancestral property. The process of transferring the title of a Property in India can be quite a hassle if the paperwork is not in order. This can even lead to court matters. Also, the absence of a Will may lead to property disputes. However, the Indian sensitivity prevents heirs from asking for estate documents before the death of parents or the owners. As a result the property transfer might take years together.
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.
Title Clearance Certificate (Title Search Report)
For sale or purchase of any property it is necessary or essential, that the property must hold clear & marketable title i.e. the property is free from any rights and saleable. The advocate inquires in the office of Talati, Tehasildar, City Survey Officer, Collector and from revenue records of Govt. for the last 30 / 60 years and collects the information about subsequent entries related to the ownership / transaction of the property. The advocate than prepares the report on the entry or sequence of ownership changed from one owner to other owner up to date; along with all information of third party rights if any in report generally known as Search Report. Public notice is given in the local 2 newspapers and after response of the public notice for not claiming any rights by other parties, examination of title deeds i.e. original documents / sale deeds / any other documents are checked by the advocate in this regard. After getting satisfied that nobody has any claim or right for the property, he issues “The Title Clearance Certificate” stating that the property has clear and marketable title.
Reasons for Defective Property Title
Some of the common issues (the list is illustrative and not exhaustive) in defective title are:
(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/Green Zone 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.
(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.
(k) Continuance of old defect: Many properties are inherited by the successor/s with very minimal paper work without following due process of law like Public Notice, Probate/Succession Certificate/Release Deed and when we look at such property for buying, we risk any successor cropping up at later date challenging that the due process of inheritance has not been followed.