Defect in property is different from defect in title

Advocates, business lawyers, senior advocates, property lawyers in Bangalore, property advocates in Bangalore

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 tocast 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.

REGISTRATION OF SALE DEED ALONE WOULD NOT GET OWNERSHIP

Advocates, business lawyers, property lawyers in Bangalore, property advocates in Bangalore

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 theproperty.

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.

TAX DEDUCTION ON HOME LOANS INTEREST

Advocates, business lawyers, senior advocates, property lawyers in Bangalore, property advocates in Bangalore, Property transfer advisor

Incentives are offered under the Income tax Act on the investment in housing properties. Incentives come by way of deduction of payment of interest on the borrowed amount to buyor construct the house. Provisions relating to such deductions are provided in Section 24 of the Income Tax Act.The interest paid on a housing loan can be deducted from out of the taxable income of an Assessee according to this Section. The interest is permitted both on an accrual basis or due basis even if it is not actually paid in the year of accounting. To claim the deduction, the Assessee has to present a certificate from the Lender to whom the interest has to be paid on the borrowed capital pointing out the amount of interest paid or payable. The money should have been borrowed for acquiring the property or for constructing the property or repair of the property. Interest paid on a new loan taken to repay another existing loan is also permitted. The amount can be deducted in five equal installments starting from the previous year in which the house is acquired or built.

LEGAL QUESTIONS AND ANSWERS ON PROPERTY MATTERS

The first installment has to be deducted in the year of completion of property construction or the property is acquired and the remaining four installments in the four following years. Deduction for the full year is allowed even if one day is left in the year.The maximum amount that can be deducted is Rs.1.5 lakhs. The money should have been borrowed on or following April 1, 1999 for acquiring it or for the construction. It is necessary that such acquisition or construction should have been finished within three years from the end of the financial year, in which the capital was borrowed. It has to be certified by the Lender that the interest is payable for the loan advanced for acquiring or constructing the house.

The deduction amount is limited to Rs.30, 000 if the money has been borrowed prior to April 1, 1999. The date when the construction was started is not important. It is important only when the construction is completed within three years from the end of the financial year in which the money was borrowed. It is also not necessary that the whole cost to be financed though loan. Any portion of the cost of the house can be financed through loan.

It is advisable for purposes of tax to borrow and build or purchase instead of using one's own fund. The reason is that, if one uses his own fund he will not get any tax deduction from his total income.

Occupancy Certificate

Advocates, business lawyers, senior advocates, property lawyers in Bangalore

Occupancy Certificate is a very important document. It evidences the completion of the building as per the approved plan and compliance of local laws. Local bodies like; City Corporations/City Municipalities issue Occupancy Certificates. Without Occupancy Certificate, it is difficult to get the water and sanitary connections. Financial Institutions also insist on Occupancy Certificate.

Problems with respect to issuance of Occupancy Certificate arise on account of violation of building Law, which are increasing day by day. Though the people have spent their hard earned money on the project with a dream of owning a house, they could not occupy the house for want of Occupancy Certificate. They have to suffer for none of their faults.

Having invested their precious money in such buildings and after waiting for many years to get Occupancy Certificate, the Purchasers are forced to occupy the flats even without power, water and sewage connections instead of losing the property.

In one of the cases, a Builder was unable to obtain the Occupancy Certificate. After a prolonged wait, he requested his Purchasers and handed over the apartments without power, water and sewage connections. He put the entire blame on the Revenue Authorities and disappeared. The Occupants had to find their own ways.

Obtaining the approval of the plans has become just a formality and a casual affair. Nobody will abide by that. It is just a document to be produced during inspection. During the boom time, a Builder constructed several houses and flats violating building rules and regulations. He deviated from the approved building plans and went on to construct apartments where he should not have constructed.

The Civic Authorities refused to give Occupancy Certificate despite the best efforts of the Builder.

In the mean time, the apartment Purchasers on the assumption that things were happening to their satisfaction, performed house warming ceremonies and took possession of the flats. When they were about to move in, the Builder revealed the shocking news that even though he had constructed the apartments and houses to their liking, the Authorities were not issuing Occupancy Certificate on one pretext or the other.

Another Builder constructed small flats targeting the Middle Income Group (MIG). The Authorities, however, refused to issue Occupancy Certificate because of deviation from the approved plan. In this case, the Builder got the plan approved for construction of 4 dwelling units, 2 on the ground floor and 2 on the first floor. However, he did something different in gross violation of the approved plan. Instead of constructing 4 dwelling units, he constructed 6 dwelling units. The persons, who invested in Flats, are now desperate, as they would lose their money and the flats, if the Authorities decide to demolish the structure.

It is not only the flat Owners are suffering. A few Builders, who have a heart for the investing Public, too face problems.

One such Builder constructed 8 flats in accordance with the building regulations and Bylaws and approved building plan. He has completed 5 flat and 3 remains to be completed. The Builder received full payment from five Purchasers while the other three backed out. This has put the Builder in a difficult situation. For want of funds, three flats remained incomplete and Occupancy Certificate could not be obtained as the Authorities will issue Occupancy Certificate only after completion of the entire construction. The Financial Institutions refused tolend in the absence of Occupancy Certificate or No Objection Certificate from the Authorities. The net result was that not only the Builder was losing money but also the Purchasers of the flats, who have to pay interest to the Financial Institutions. The Financiers too face difficulties in getting repayment of loan installments.

The Authorities in the scheme of things must be blamed for this state of affairs. The inspecting Authorities do not carry out periodic and surprise visits at the construction site. In case of deviation, they should take the Builder to task in the beginning itself and not at the flag end of the construction. Majority of the Builders follow rules and regulations but a few do not. They disobey rules and regulations and violate them.

This is a vicious circle, which only the Government can break. Government must initiate immediate remedial action to stem the rot. The Authorities should not be very rigid in granting completion of Certificates. If the Builder has deviated a little more than the allowed percentage, the Authorities may impose a penalty and regularise the building.

The Investors too are responsible for this fiasco. They do not check the antecedents of the Builder and his track record. Before taking possession, they do not check whether the building is according to the agreement. Many do not demand the Occupancy Certificate, Parent Documents, Title Deeds, Deposit receipts from the Builder.

The Purchaser, who has not collected the required documents, will have to face various types of problems at a later stage.

Builders and Developers are struggling for the VAT recovery by the Buyers

Business lawyers, senior advocates, property lawyers in Bangalore, property advocates in Bangalore

Burdened by the Value-Added Tax (VAT) demanded by Maharashtra’s Sales Tax Department on all property deals, Developers are struggling to recover the amount from flat Buyers to minimize their tax load.

Some Developers appear to have given up trying to recover the amount from people who have already taken possession of flats, but they are hoping to be able to get this payment from Buyers who have yet to take possession.

According to the President of Maharashtra Chamber of Housing Industry (Navi Mumbai Unit) Arvind Goel stated, “God knows whether they will be able to collect the VAT amount or not. If a Developer tries to recover an amount of Rs.50, 000 by any way of VAT from an individual flat Buyer, he may have to spend as much in litigation. Even after that they are not sure whether they will be able to recover the money.

Goel has VAT dues totalling about Rs. 25 Crore that he is seeking to recover from Buyers who have already occupied flats. Most of these flats are resold and he doesn’t have the facilities to track down these defaulters, send notices, or pursue legal cases.

According to Anand Patvardhan, who has conducted seminars on this matter says, however, Tax Experts are still questioning the reasonableness of enforcement of VAT. It is a violation of the constitution. A flat is an immovable property, so VAT cannot be imposed. This anomaly should be challenged in Court.

Patvardhan had advised flat Buyers to make Right to Information (RTI) applications to get details about the VAT paid by the Developers and also seek a breakup. If the Developer has not paid the amount, one should demand an inquiry, because the Government is responsible for the mess.

Other Tax Experts inform that a petition has been made to the State Chief Minister to rationalize the charge to 1% instead of 5%, but they are disappointed that they have not heard anything yet from the Government.

According to the Managing Director of Puranik Developers, his Office was sending out demand letters to defaulters. They will pursue the matter. Those who have got the possession of the flat will have to pay before getting possession of the flat will have to pay before getting possession. But, in the case of those who have already got possession it will be difficult. I hope they will understand and pay the VAT amount.

Developers are sending these VAT demand letters by registered post with an aim that if the matter goes to Court the registered notices will have a Legal basis .

REGULATE APARTMENT CONSTRUCTION TO AVOID TRAGIC DISASTERS

Advocates, business lawyers, senior advocates, property lawyers in Bangalore, property advocates in Bangalore

The latest tragic incident of an eleven storey under construction residential project  building collapse in on Moulivakkam near Porur on Kundrathur Main Road, Chennai on 26/06/2014 in which nearly 30 construction workers have lost their lives, must be an eye opener to our State and Central Governments. The project ‘Trust Heights’ which had two 11 – storey buildings under construction The Faith  and The Belief are promoted by real estate developer Prime Sristi Housing Pvt.Ltd.  As reported in newspapers  the 11 storey building ‘The Faith’ has collapsed on an adjoining building. It was also reported that there was nothing wrong with the approved  plan, but the builders knowingly committed many violations and did not adhere to the plan that was approved. The loss of human lives would have been in hundreds had the building collapsed after the buyers had occupied the building.

Real Estate and Property matters

This is not a rare incident and earlier also high rise buildings have collapsed in Delhi, Mumbai, Bangalore and other major cities in which hundreds of people have lost their lives. In general the violation of building bye laws and approved plans by the developers is quiet rampant in India. There are many instances where the builders have constructed extra floors without  approval by the city planning authorities leading to demolition orders by the authorities /courts.

In a case pertaining to illegal constructions, the Allahabad High Court has issued orders for demolition of two 40-storey buildings in Noida’s ‘Super tech Emerald Court project’ which is having two towers having a total of 857 apartments. In this  case the developers i.e, Supertech initially had sought permission to build 24 floors but later increased it to 40 floors.

Another famous case is that of  ‘ Campa Cola compound building ' in Mumbai which is a nearly 20 year old building in which the builder has constructed extra floors. The BMC later ordered for demolition of illegal floors in the building comprising of 102 un- authorized  flats. The residents fought their case up to the Supreme Court, where their plea for staying the demolition was turned down by the court. Now, the flats are facing demolition making the lives of the residents miserable. on account of the greediness of the builders. 

The above incidents are happening as the real estate sector is unregulated, some of the greedy builders/developers are indulging in rampant violation of building bye-laws and cheating the gullible buyers of residential flats in our cities. It is alleged that the civic authorities admit that there are thousands of illegal constructions in most of the major cities.

Ultimately, the buyers are the sufferers due to the dishonest actions of some of the developers and corrupt officials. The Central and State governments must look into such lapses, enact stringent laws to punish the guilty and protect the interests of innocent buyers.

Fair Practice in renting out the properties

Advocate Selvakumar, Advocates, property advocates in Bangalore

It would not be that easy to let out the property and stay free from litigation unless there exists a properly drafted rental agreement. Therefore, it is better to know the salient features of the rental agreements before any property is let out.

Rental agreements in the legal terminology, are known as Lease Agreements. The person who transfers the property is called the 'Lessor', and the person who accepts the transfer of property is called the 'Lessee'.

According to section 105 of the Transfer of Property Act, a lease is defined as “A lease of immovable property is a transfer of the right to enjoy such property, made for a certain time, express or implied, or in perpetuity, in consideration of the price paid or promised, of money, a share of crops, service or any other thing of value, to be rendered periodically or on specified occasions to the transfer or by the transferee, who accepts the transfer on such terms”. In short, a lease is a transfer of a right to enjoy the property of the lesssor by the lessee for a certain time, during which period the lessee is put in possession of the property upon payment of lease money or rent. 

Elements of a good lease

The essential elements of a lease are 

(1) parties, 

(2) subject matter, 

(3) the terms and 

(4) the consideration or rent. A lease transaction involves commitments by both the landlord and the tenant which are complimentary to each other, the landlord agreeing to let out his accommodation to the tenant in consideration of the latter paying him the rent and the tenant agreeing to pay to landlord the rents in consideration of the landlord allowing him to use the leased premises. A lease is that form of encumbrance which consists of a right to the possession and use of property owned by some other person. It is the outcome of the separation of ownership and possession.

A tenancy is created not only by an express contract but also by implication by the conduct of parties. Acceptance of rent by the landlord clearly establishes a tenancy. A lease of immovable property may be effected either by a registered instrument or by unregistered instrument. However, in cases where the lease is from year to year or for any term exceeding one year or reserving a yearly rent the lease agreements are to be made only by a registered instrument [Sec.107 of Transfer of Property Act]and the lease agreements for a period less than one year do not require registration. Applicable stamp duty for lease agreements of a period of less than one year is Rs.50/-[Rupees fifty only].

One Year Period

It is a common practice to terminate the lease agreement at the end of every eleventh month and  enter into a fresh Lease Agreement since if the rent is paid on yearly basis or if the period of lease exceeds one year, then it is mandatory to register the lease agreement. The practice of termination of lease agreements at the end of eleventh month and entering into new lease agreement is adopted generally to avoid payment of stamp duty and registration charges on such lease agreements.

Contents

An agreement of lease should be drafted carefully and properly to protect the rights of both the parties and to avoid any misunderstanding in the future. It should be fair to both the Lessor (landlord) and the Lessee (tenant). It should mention the parties to the deed, the description of the property being transferred, the duration of the lease, the monthly rent payable, the date of payment of the monthly rent; the clause for enhancement of rent on renewal of the lease period. The amount of interest-free refundable security deposit, penalty clauses in case of rent default, liability of the Lessee for damages to the property and the fixtures and fittings, notice period in case of early termination of lease; the date of commencement of lease and the date of expiry of lease; the notice period and manner in which the notice will have to be served must also be mentioned.

Obligations of the Lessor

The first and foremost duty of the lessor is to abide by the terms of the lease agreement in letter and spirit and to ensure that the lessee is allowed to enjoy the leased premises without any interference from any unlawful person. He shall have to ensure that all the basic and civic amenities are provided to the leased premises. It is the responsibility of the lessor to carry out major repairs to the leased property to make it habitable and pay municipal and other taxes due on the property. The Lessor should ensure that the leased premises is not used for any immoral or unlawful purposes nor allow storing of any hazardous and inflammable materials like explosives etc. Lessor shall issue receipts for the earnest money deposit and the rents received by him in respect of the leased property. The lessor shall refund the security deposit received from the Lessee when once the lease has come to end. He shall not unfairly make deductions while refunding the security deposit on ground of  repair to the damages caused by the lessee. Lessor is bound to disclose to the lessee any material defect in property, with reference to its intended use, of which the former is and latter is not aware, and which the latter could not with ordinary care discover. Lessor is also bound on the Lessee's request to put him in possession of the property.

Obligations of the Lessee

During subsistence of the lease, the Lessee has a right to enjoy the leased premises without any interference from the Lessor or byany person on his behalf. The Lessee shall pay to the Lessor the monthly rent for the leased premises on the agreed date. He shall also pay the electricity and water bills on or before due dates to the concerned authorities and furnish a copy of the receipt received by him from such authorities to the Lessor for his records. The Lessee shall always keep Lessor informed about the additions or alterations that the leased premises may require to enable the Lessor to attend to such work. The lessee shall not make any structural alterations to the premises or cause damages to fixtures and fittings during the subsistence of the lease. The lessee is under a legal obligation not to use the leased premises for immoral or illegal purposes nor for storing the hazardous and inflammable materials like explosives, etc. The lessee is under obligation to use the leased premises for self use and not to sub-let the same unless the lease agreement has a provision for sub-letting. He shall not cause any nuisance to the co-tenants, maintain the premises in a habitable condition, and on completion of the lease period, hand over the premises to the landlord without creating any nuisance, upon receipt of the earnest money deposit from the Lessor. If the Lessor neglects to make any repairs, within reasonable time after notice, the lessee may make the same himself and deduct the expense of such repairs with interest from the rent, or otherwise recover it from the Lessor. If the Lessee becomes aware of any proceeding to recover the property or any encroachment or any interference with the Lessor's right concerning such property, he is bound to give, with reasonable diligence, notice thereof to the Lessor.

General grievance

The following grievances are generally encountered by the Lessee and the Lessor and an effective and properly drafted Lease Agreement shall contain penal clauses for failure to adhere by the parties to the terms and conditions of the agreement:

Non-refund of security deposit

Some of the Lessors (landlords), for obvious reasons, fail to pay back the security deposit to the Lessees (tenants) at the time of termination of lease agreement or make unreasonable deductions from the security deposit. Generally, the landlords who mainly depend upon the rental income and who would have utilized the security deposit for their personal needs, fail to refund the security deposit as per agreement. Thus, when the tenant issues notice indicating his intention of vacating the leased premises or when the lease comes to an end, such landlords would start dodging till they get the security deposit from a new tenant. It is the common practice that tenants prefer to continue to occupy the leased premises till they receive back the security deposit fearing losing of security deposit once they have vacated the leased premises. In the absence of payment of monthly rent by the tenant during this period, the landlords resort to adjust the same against the security deposit and till  the security deposit becomes  nil. 

Non-vacating the premises by the tenant

It is not uncommon that the tenants continue to occupy the leased premises even after the lapse of the lease period on some pretext or the other. Upon failure of the persuasive method adopted by the landlord to vacate the leased premises by the tenant, the landlords, in many cases, take coercive actions to get their leased premises vacated.

Thus, non-fulfillment of obligation by the landlord and the tenant would lead to uncalled for misunderstanding between the landlord and the tenant and would sore relationship between them, ending up in prolonged and uncalled for litigation.

Need for amicable settlement

All said and done, problems do crop up even when the lease agreements clearly spell out the rights, duties and obligations of the Lessor and Lessee, since it is not possible to change the mindset of any person. However, what is needed is to  adopt “give and take” policy by both the Lessor and Lessee and part with over a friendly note instead of litigating. It should be based on the philosophy of LIVE AND LET OTHERS LIVE.

It is advisable for the landlords who intend to let out their property to take the help of an experienced advocate in property matters to avoid any complications because of loop- holes in the lease agreement.

Getting Occupancy Certificate is builders duty - Consumer Court

Advocates, business lawyers, senior advocates, property lawyers in Bangalore

Before taking possession of the flats purchased by any individual, obtaining Occupation Certificate (OC) is a “must have document”. If you are denied of the same, then the consumer court can come to your rescue.

The Bandra Consumer Disputes Redressal Forum noting that the Occupancy Certificate is an essential requirement for a flat-buyer, has ordered Dharia Developers to give the purchaser, the  Occupancy Certificate  within a specified time.

As per an agreement dated September 26, 2006, Mr. Mehul Thakkar bought two flats on the sixth floor (601 and 602) of an apartment building by paying Rs 40.25 lakh for each of the flats, the remaining one lakh per flat was agreed to be paid at the time of delivery of possession. It appears that M/s. Dharia Developers had promised to give the possession of the flats within 12 months from the date of agreement. However, Thakkar is yet to obtain the Occupancy Certificate or the Completion Certificate for these flats. Hence, Thakkar sent a notice to the builder demanding the same. When the builder didn't respond, Thakkar filed a complaint before the Forum and also an application seeking interim relief.

In their defence, Dharia Developers argued that Thakkar wanted to merge both the flats into a single unit, as per his letter in September 2006. The builder claimed that though this was against the building's approved plan, they permitted Thakkar to do so at his own expense after getting an approval from the sanctioning authorities. The builder stated that since Thakkar couldn't complete the work in time, the Occupancy Certificate couldn't be obtained from the authorities. Hence, they are not responsible for the delay in handing over the possession and the Occupancy Certificate to Thakkar.

In their interim order, which is common for both of Thakkar's flats, the Bandra Consumer Disputes Redressal Forum has held the builder as having committed deficiency of service. The forum observed, “These explanations are hardly satisfactory, because it was an obligation incurred by Thakkar. If Thakkar had not carried out the modifications that he had suggested, the builder could have completed the construction disregarding Thakkar's suggestions.” The forum noted that though Thakkar had given the letter informing of the modifications to the builder in September 2006, the flat's construction is incomplete even after three years. “The builder should have completed the constructions, internal as well as external, as per the original plan, since the modifications were at Thakkar's instance. The builder was not required to wait till the modifications were completed. This shows that the builder has put forward a lame excuse for not completing the construction and for not obtaining the Occupancy Certificate. The builder received almost the entire consideration of the flat, more than Rs 40 lakh in 2006. He has retained the amount and utilized the same, but has not collected the Occupancy Certificate”. The Forum also held, “Obtaining OC is an essential requirement under the MOFA (Maharashtra Ownership Flat Act) and the flat purchased cannot be legally occupied, unless the Occupancy Certificate is obtained by the builder. The builder has not produced a single piece of paper to show that he has taken effective steps with the competent authority for obtaining Occupancy Certificate.”

COMPULSORILY REGISTERABLE PROPERTY DOCUMENTS

Advocates, property advocates in Bangalore, property lawyers in Bangalore

All documents do not require registration compulsorily. The Transfer of Property Act, 1882 and the Indian Registration Act, 1908 have made registration of certain documents compulsory while in respect of certain other documents it is optional.

According to section 17 of the Indian Registration Act, 1908 registration of documents is compulsory if they relate to an immovable property. Similarly, Section 54 of Transfer of Property Act 1882, stipulates that sale of immovable property the value of which is one hundred rupees or more should be registered. Since no immovable property is available for rupees one hundred or less than rupees one hundred, implicitly all sale deeds of immovable property need compulsory registration.

Compulsorily registerable Documents:

Section 17(1) of Indian Registration Act 1902, deals with the documents which require registration compulsorily.  

They include:

1. Instruments of gift of immovable property:

Gift is given by the donor to the donee without any monetary consideration, but only in consideration of love and affection the donor has towards the donee.  Therefore, gift deeds transferring immovable property of the value of Rs.100/- and above needs registration.

2. Other non-testamentary documents which purport to create, assign, limit or extinguish the right, title and interest in immovable property the value of which is more than one hundred rupees.

3. All non-testamentary documents which acknowledge the receipt or payment of any consideration on account of the transactions pertaining to the creation of any right, title, interest in the immovable property.

4. All non-testamentary documents transferring or assigning any decree or order, award of a court, which affect the right, title and interest in immovable property the value of which is one hundred rupees and above.

The documents may create, extinguish, assign, declare, limit or restrict the right, title and interest in the immovable property for the present or future, but if the value of such immovable property is one hundred rupees or more, the deed needs to be registered.

Though all types of mortgages need registration, mortgage created by depositing of title deeds, known as equitable mortgage, is not compulsorily registerable. Mostly, banks and financial institutions use this mode of mortgage. However, memorandum of deposit of title deed needs registration.

Section 107 of Transfer of Property Act 1882, prescribes that lease of immovable property from “year to year” or for any term exceeding one year or reserving a yearly rent must be done only by a registered instrument.  The phrase from ‘year to year’, refers to a continuous lease from year to year, that is, where the landlord has no option to terminate the lease at the end of the year without notice.

Similarly the phrase, “reserving yearly rents” means that the lease has no definite period, but the annual rent is determined.  The word “yearly” means that the lease should run year after year or at least more than a year.  In general, any lease in excess of one year and above should be registered.

Documents where registration is optional:

There are certain documents registration of which is optional.  The Section 18 of the Indian Registration Act, 1908 lays down the instruments of which registration is optional.  They include:

a] Instruments relating to transfer of an immovable property, the value of which is less than rupees one hundred;

b] Lease of an immovable property for a term not exceeding one year;

c] Wills

d] Deed of gift of property valued at less than Rs.100/-

Time limit for registration:

Under Section 23 of the Registration Act, subject to certain exceptions, any document other than a will has to be presented for registration within four months from the date of its execution. Execution means signing of the document.  If a document is not presented for registration within the prescribed period of four months and the delay in presentation of the document does not exceed a further period of four months, then the parties can apply to the Registrar for registration of the document who may direct, upon payment of a fine not exceeding ten times the actual registration fees, for registration of such a document [Sec.25].

A document relating to an immovable property can be executed out of India and later it can be presented for registration in India. As per section 26 of the Registration Act, 1908, if a document purporting to have been executed by all or any of the parties out of India is presented for registration within the prescribed period of time, the Registering Officer may, on payment of proper registration fee accept such document for registration if he is satisfied that the instrument was executed out of India and the instrument has been presented for registration within four months after its arrival in India.

Enquiry by the Registering authority:

The Registering Officer is empowered under sec. 34 of the Registration Act to enquire whether or not the person is the same by whom such a document purports to have been executed. He may insist on production of proof of his identity and in case any person is appearing as a representative or agent, the Registrar may ask for relevant documents to show that the agent or representative has the right to appear on behalf of his principal.

Effect of non-registration:

What would be the repercussion if a document which is compulsorily registerable is not registered?

Section 49 of Indian Registration Act deals with this situation. It states clearly that such un-registered documents do not convey to the transferee a legally valid title and such documents are not admitted as evidence for any transaction affecting the property referred to in the document. However, there is an exception provided in the Act. The unregistered documents may be admitted as evidence in a suit for specific performance under Specific Relief Act or as evidence for part performance of the contract as per Section 53A of Transfer of Property Act 1882 or in any other related transaction, not required to be effected under a registered instrument.

Documents are mainly registered for conservation of evidence, assurance of title, and to help an intending purchaser to know if the title deeds of a particular property have been deposited with any financial institution or person for purpose of obtaining loan or advance against security of the property. Registration of documents acts as notice to the public and to protect oneself against the likely fraud. Therefore, it is advisable to register all documents connected with the immovable property irrespective of whether the registration is compulsory or not as it creates a permanent record of evidence which are reflected in encumbrance certificates.

As registered documents have higher value of evidence than unregistered documents it is always beneficial to you if you  get all your property documents registered within the stipulated period  irrespective of the fact that such registration is mandatory or not.

Advocates, business lawyers, senior advocates, property lawyers

For more,

http://advocateselvakumar.com/home.html