PERILS OF BUYING THE REVENUE SITES

(Advocates, Property advocates in Bangalore, Property lawyers in Bangalore)

Agricultural land cannot be directly put to use for residential purpose.It needs to be converted by paying conversion charges.The Special Deputy Commissioner is the competent authority to grant permission for conversion of agricultural land for non-agricultural purpose. 

Revenue site is one that is situated in the layout formed on the agricultural land for a non-agricultural purpose without proper approval under the relevant law i.e., Karnataka Land Reforms Act,Karnataka Land Revenue Rules and other provisions of law. 

No building can be constructed on agricultural land without obtaining conversion orders,layout and building plan approvals from the concerned authorities. Residential layouts can be formed only in the residentially converted land, such a land should be in the residential zone as per the zonal regulations for getting the conversion for residential purpose.The Village Panchayath is not the competent authority to approve the layout plans.

Zonal Regulations:

As per zonal regulations of the comprehensive development plan, green belt area is meant only for agricultural activities. Non converted land continues to be agricultural land and there are various restrictions on sale and purchase of agricultural land. In Bangalore Urban Agglomeration, Bangalore Development Authority (BDA) is the competent authority to approve layouts and to get this approval road width, residential area, civic and other amenities are to be provided as per law. The Bangalore Metropolitan Regional Development Authority (BMRDA) is the regulating authority to approve layouts on the outskirts of the Bangalore.

All around Bangalore, it is a very common practice for people to buy a piece of agricultural land, which is more popularly known as revenue site, without being aware of the hassles involved in buying such sites. Sites such as those formed in the agricultural land without getting the layout approved by the competent authority are generally referred to as "Revenue Sites".Small time promoters misguide the buyers and motivate them to buy the revenue sites even by concealing the vital defects and flaws in the title of the owner. In addition, there are several instances wherein the land would have been notified for acquisition by certain statutory authority or even the land on which sites are formed may be grant land for schedule caste or schedule tribe people wherein obtaining prior approval of the competent authority for change of land use and for sale is necessary. Ultimately, it is the innocent purchaser who faces the legal battle after purchase of revenue sites.

Middlemen rule:

Generally, a nominal sum is paid by the Small Time Promoter as a token advance to the landlord and a general power of attorney is obtained; and thereafter, search for the innocent purchasers begins. The middle men, like double edged razors, hike the price of the land and at the same time, do not properly settle the accounts with the illiterate and ignorant land owners. 

These Small Time Promoters form layouts on agricultural lands without approval of the layout from the competent authority. To increase the saleable area of the sites, they provide narrow roads. These layouts generally do not have civic amenities and other facilities, since the promoters generally do not have any intention of providing them.

Marketing Strategy:

The Small Time Promoters know the art of marketing. They make colorful brochures with photographs of certain parts of Bangalore and paint an attractive picture to attract the people to buy sites in these layouts. Some of them even download foreign photographs of houses from internet for their brochures. Better the presentation, deeper the deceit, which very few people understand. After the Small Time Promoter has got his money, the purchaser will have the bitter experience.

These promoters/agents in league with brokers will register some imaginary sites at the sub-registrars office using their clout. There are many instances where the lands bearing Khaneshumari number without any link to the old survey number are being registered in the Sub-Registrars office by the Owners in connivance with the Brokers either by creating or manipulating the existing documents since it is not the duty of the Sub-Registrar to verify the legality of the documents.

Ancestral Property:

In the recital of a sale deed, it is customary to mention how the seller has acquired his title, interests and rights to the immovable property from origin to the end. In the case of revenue sites, the brokers at the office of various sub-registrars have devised a very ingenious method to hide out this fact.They merely mention in the recital that the property is the ancestral property of the seller. In this way, the brokers pass on the defective title of the property to the innocent purchasers.

There are several instances where the land notified for acquisition and the land granted for schedule caste people have been made into sites, where the purchaser of such a site would not get title of the property.

GPA transaction:

Generally, brokers will take GPA from the landowner for the entire land. Most of the revenue sites are registered on the strength of GPA. Only a very few people take care to check up the legality of the GPA executed by the original vendor. Nobody bothers to find out whether the GPA is registered or not, and whether the executor of the GPA is alive or not.If the executor of the GPA is not alive the GPA transaction is totally invalid. A Joint GPA executed by two or more owners would become invalid if any one of them dies.

Form 9 and 10 :

Originally, property falling under the village Panchayath area alone has the genuine site status. Form No.10 is for a house situated within Gramathana area and Form No.9 is for a vacant site situated within Gramathana area. Middlemen and some revenue officials make bogus Forms No.9 and 10 and register immoveable properties in favor of innocent purchasers. 

When the Urban Land Ceiling Act was in force, thousands of revenue sites were registered by merely mentioning in the sale deed the description as one square asbestos sheet house. This was mentioned just to avoid getting the relevant clearance under the said Act. After the Urban Land Ceiling Act was abolished the term one square asbestos sheet house was also removed from the real estate agents dictionary.It is not legal to form layouts and sell sites in the agricultural land/green belt area, even after selling all the sites; RTC (Record of Rights, Tenancy and Crop Inspection) will be in name of the original landowner. 

The Agent being a GPA holder will sell the sites, as ancestral properties to the innocent purchaser. The numbers assigned to these sites will never match with the survey numbers assigned to these lands by the government.The purchaser of the revenue site does not get the title of the property. What is purchased is an imaginary site only. If, however, the original owner is good then the purchaser can enjoy the property, till the government regularizes such revenue sites. 

Loan clearance:

If the title deeds are not clear and does not establish marketable title, it is difficult to obtain bank loans for construction by mortgaging these sites. Generally, these sites are situated on the city outskirts.There will be no proper roads, electricity or water supply. There is no scope for immediate development of the locality. With all this, if the prices of the sites appreciate over a period of years, the original landowner will appear from nowhere and start cultivating the area.

He will remove all the boundary stones laid by the broker/small time promoter making it difficult for the purchaser to identify his property. In certain cases the GPA holder sells the same site to several persons and collects money from all of them. Consequently, marathon litigation awaits the purchaser.The laws are so complex that they give rise to multiple interpretations.

In recent times, litigation's pertaining to property transactions are increasing. Common problems involved are that the property might have been sold by one of the Co-owners without arraying the other Co-owners as parties to the sale. After the death of the person who sold the property, his Legal heirs/representatives and the surviving co-owners with an intention to take advantage of the rising prices for their property may approach courts with suits.The buyers may, therefore, consult a legal expert in property matters before investing their hard earned money. 

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BANKS CAN SELL YOUR HOUSE IF YOU DEFAULT IN PAYMENTS

(Advocates, Property advocates in Bangalore, Property lawyers in Bangalore)

It is not very easy to defraud the banks and financial institutions by the defaulting borrowers since various statutory protections are provided to the lending banks and financial institutions.The activities of borrowing and lending are inseparable activities and there is a change from Savings based economy to credit based economy not only in individual's budget but also in the budget of a country.

When a person borrows money, a duty is cast on him not only to repay the money borrowed but also to pay interest in time at the agreed rate on the amount borrowed.Therefore, so long as the amount due is not repaid, there remains a liability on the borrower and this liability in other words is called the Debt of the borrower.Duty is cast on the lender as well to realize the money lent with interest. In spite of the fact that the lending institutions take precautions and take sufficient security for the money lent, some debts become bad and irrecoverable in the ordinary course of business. Bad debt or non-performing asset would mean an asset or account of a borrower which has been classified by a bank or financial institution as sub-standard, doubtful or loss asset in accordance with the directions or guidelines relating to asset classifications issued by the Reserve Bank of India.

DRT Act, 1993 and SRFAESI Act, 2002

Recovery of debts has become a very difficult task for the banks and financial institutions and their bad debts or non-performing assets are on the rise. The process of realization or recovery of non-performing assets (NPA) through the normal process is time consuming. To hasten or speed up the recovery process and keeping in view the alarming increase in NPAs, the Government of India has enacted the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 popularly known as DRT Act. The DRT Act had some deficiencies inasmuch as it did not provide for assignment of debts to securitization companies and the secured assets could not be liquidated in time. Therefore, the Union Government has brought in a legislation called the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 to remedy the deficiency. It is generally referred to as SRFAESI Act. The SRFAESI Act is not in derogation of the DRT Act. The object of the DRT Act as well as SRFAESI Act is recovery of debt through non-adjudicatory process and to provide cumulative remedies to the secured creditors.

The SRFAESI Act provides for setting up of asset reconstruction companies, special purpose vehicles, and asset management companies etc. By removing all fetters on the rights of the secured creditor, he is given a right to choose one or more of the cumulative remedies. To give more teeth to the Act,  the SRFAESI Act, 2002, has been amended in the year 2004 under The Enforcement of Security Interest and Recovery of Debts Laws (Amendment) Act, 2004, where under certain changes have been introduced in the Act by insertion of amendment or addition  to the existing sections. It is made specific in the preamble that the Act undertakes to regulate (1) securitization ;(2) reconstruction of financial assets and (3) enforcement of security interest. All these three concepts are independent of each other.

Enforcement of Security Interest

As far as the general public are concerned, Chapter III, Enforcement of Security Interest contained in Sections 13 to 19 are very important.The following are the requirements for initiating action for enforcement of security interest under SRFAESI Act:

[1] The account of the borrower should have been classified as Non-performing Asset, strictly in accordance with the guidelines of the Reserve Bank of India and such other authority;

[2] Assets should not be those which have been accepted under sec.31 of the SRFAESI Act and security interest can be enforced only in respect of assets which are specifically charged; 

[3] The action should be initiated well within the limitation period. If the limitation is due to expire shortly, and then it will be proper to institute a suit in a civil court or DRT as per pecuniary limit applicable for such suits.

[4] Action can be initiated only where the N.P.A.is Rs.1lakh and above.

Notice

Section 13 of the Act empowers the secured creditor to enforce the security interest in case the borrower defaults in repayment of secured debts and whose accounts categorized as non-performing asset without the intervention of the court or tribunal. The secured creditor is required to give notice under sec.13 (2) of the Act to the borrower to discharge all his liabilities in full, within 60 days from the date of notice.The notice should be comprehensive furnishing full details of the amount due and secured assets intended to be enforced. Upon receipt of the notice under sec.13 (2) of the Act, no borrower shall transfer by way of sale, lease or otherwise any of his secured assets referred in the notice without prior written consent of the secured creditor. The notice may be served by delivering, or transmitting at a place where borrower or his agent is empowered to accept the notice or documents on behalf of the borrower.

It may also be delivered or transmitted where the borrower actually or voluntarily resides or carries on business or personally works for gain.The notice may be sent by registered post acknowledgment due, by speed post, by courier, or any other means of transmission of documents like fax message or electronic mail service. If it is found that the borrower is avoiding the service of the notice, or the demand notice, or the service cannot be made, a copy of the demand notice may be affixed on the outer door or some other conspicuous part of the house or building of the borrower or his authorized agent.The demand notice may also be published in two leading newspapers having good circulation in the area, out of which one shall be in local language.

If the borrower is a corporate body, the demand notice shall be served on the registered office or any of the branches.In case of more than one borrower, the notice has to be served on each of the borrowers.The notice has to be served on guarantors and on persons who have given security for due repayment of the loan Under Section 13(3A), if, on receipt of the notice under sub-sec.(2), the borrower makes any representation or raises objection, the secured creditor shall consider such representation or objection and if the secured creditor comes to the conclusion that such representation or objection is not acceptable or tenable, he shall communicate within one week of receipt of such representation or objection the reasons for non-acceptance of the representation or objection to the borrower, provided that the reasons so communicated or the likely action of the secured creditor at the stage of communication of reasons shall not confer any right upon the borrower to prefer an application to the Debt Recovery Tribunal under sec.17 or the Court of District Judge under sec.17A.

Similarly, Sec.19 of the principal Act has been substituted with the following:

19. Right of borrower to receive compensation and costs in certain cases: If the Debt Recovery Tribunal or the Court of District Judge, on an application made under sec.17 or sec.17A or the Appellate Tribunal or the High Court on an appeal preferred under sec.18 or sec.18A, holds that the possession of secured assets by the secured creditor is not in accordance with the provisions of the Act and rules and directs the secured creditor to return such secured assets to the concerned borrowers, such borrower shall be entitled to the payment of such compensation and costs as may be determined by such Tribunal or Court of District Judge or Appellate Tribunal or High Court referred to in sec.18B.

If the borrower/guarantor pays the dues in full, no further action under the Act is necessary.  If dues are paid only partly and the borrower/guarantor seeks further time, the authority may decide further action with due consideration of law of limitation and the borrower or guarantor intimated accordingly. If the borrower/guarantor fails to meet their liabilities in full within 60 days from the date of the notice, the bank/financial institution can initiate action to enforce the security rights conferred on it by the Act.

Possession and Sale

The secured creditor or his authorized officer may take recourse to one or more of the measures provided in sec.13(4) of the Act to recover his secured debt who has the following options: He may take possession of the secured assets of the borrower including the rights to transfer by way of lease, assignment or sale. He may take over the management of the secured assets of the borrower, including the right of transfer of lease, assignment, and sale. He may appoint any person as the manager to manage the secured assets, the possession of which has been taken over.The secured creditor may require by notice any person who has acquired any secured assets from  the borrower and from whom  any money is due or may become due to the borrower to pay to the secured creditor so much of the money as is sufficient to cover  the secured debt.

Both in the case of movable and immovable properties, it is obligatory to serve a notice of thirty days to the borrower about the sale. The notice of sale shall also be published in two leading widely circulated newspapers, of which one shall be of the local language.The public notice shall contain important details of the property, the debt, reserve price, time and place of public auction, earnest money to be deposited etc.The notice shall be affixed on the conspicuous part of the immovable property and may also be put on Website.Sale by any other modes than public auction/tender shall be on terms settled between the parties. After confirmation and completion of sale process, the authorized officer shall issue a sale certificate in favor of the purchaser in the prescribed format.

If the secured assets are movable properties, the authorized officer shall take the possession in the presence of two witnesses and ensure that panchanama is drawn and signed by the said two witnesses. The panchanama shall conform to the prescribed format.After taking possession, the authorized officer, shall prepare an inventory of the property as per the format prescribed and shall deliver a copy of such inventory to the borrower or his authorized agent.

If the property is subject to speedy or natural decay or expenses for keeping such property is likely to exceed the value of the property the authorized officer may sell it at once. It is the duty of the authorized officer to take proper care and take steps for preservation and protection of the assets. If necessary, the assets may be insured until they are sold or disposed of.

While taking possession or sale of the secured asset, the secured creditor may request the help of Chief Metropolitan Magistrate or District Magistrate in whose jurisdictions the secured assets fall. 

Right of appeal

Under sec.17 of the Act, the person aggrieved by the actions of the secured creditor, as provided in sec.13(4) may make an application to the Debt Recovery Tribunal, having jurisdiction within 45 days from the date on which action has been taken.Similarly, any person aggrieved by the order made by DRT under section 17 may prefer an appeal to the Appellate Tribunal within 30 days from the date of the order. The party preferring appeal shall deposit 50% of the amount of debt, with a discretion given to the Appellate Tribunal to reduce the amount to not less than 25% of the debt.

Transactions not covered under the Act

The following transactions are excluded from the provisions of the SRFAESI Act:

a] A lien on any goods, money or security given by or under the Indian Contract Act, Sale of Goods Act or any other law for the time being in force;

b] Pledge of movables within the meaning of sec.172 of the Indian Contract Act,

c] Any conditional sale, hire purchase or lease or any other contract in which no security interest has been created;

d] Any property not liable to attachment;

e] Any security interest created in agricultural land;

f] Any security interest for securing repayment of any financial asset not exceeding rupees one lakh;

g] Any case in which the amount due is less than twenty per cent of the principal amount and interest thereon;

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DEVELOPING PROPERTY THROUGH JOINT VENTURE

(Advocates, Property advocates in Bangalore, Property lawyers in Bangalore)

Urbanization has accelerated the migration of people to the nearby Cities in search of jobs and other means of livelihood. This has increased the influx of population to the Cities has in turn caused the paucity of residential accommodation.The Employees prefer to have accommodation near to their job centers to avoid wastage of time in commuting, resulting in vertical growth of City instead of lateral growth.Vertical growth saves lot of land and can accommodate a number of families in a small space. But, vertical development of land requires heavy investment which in turn has led to joint venture.

Joint Venture (JV):

Joint venture is joining of hands. The words "Joint Venture" is described in the dictionary as "a business activity by two or more people or companies working together".

As stated above, vertical development   of land   comprising of number of flats requires a lot of money, manpower, expertise, experience, which an individual cannot undertake. Many a time an individual may own some land, but may not have funds to fully exploit it. Similarly, a Builder/Developer, who has a resource, may need some land to employ his resource profitably. Thus, the Owner and Developer join hands to develop the land. In order to avoid disputes, misunder­standings in working, both the parties reduce the terms and condi­tions into writing. This is called Joint Venture Agreement.

Unlike the construction of an independent house, the group housing or construction of apart­ments is more complicated, requires approval from various Agencies like; Water Supply Board, Sanitary Department, Power Supply Board and Airport Authorities.The project requires to be approved by Banks for Finance.Joint Venture Agreements, clearly stipulate the duties and responsibilities of each of the parties.

In order to avoid spending huge amounts for procurement of property, the Developers venture into joint development activity with Land Owners through joint Venture Agreements, develop the property and hand over certain number of flats to the Land Owner. The number of flats/apartments given to the land Owner depends on the prevailing market value of land in that area at the time of project commencement.

Joint Development Agreements:

The Developer or Builder enters into an Agreement with the Owner of the land known as Development Agreement or Joint Development Agreement or Joint Venture Agreement.An immovable property for development may be either vacant land or land with structures thereon.

A Developer or Builder enters into an Agreement with the Owner for purchase and development of the land. The development Agreement contains obligations and rights of Land Owners and Builder, like obtaining statutory permissions, ratio of sharing the developed property between Owner and Developer, process of finding prospective Purchasers and funding the project, time duration of comple­tion and penalties for violation.

What is contained in the J V Agreement?

The Agreement contains the particulars, like the commitment of the Promoter to construct it as per the approved plan and specifications as approved by the local Authority; possession date, price to be paid by the Purchaser and the intervals at which the installments are to be paid specifying the stage of construction; precise nature of the body to be constituted of the persons who would take the flats; details regard­ing the common areas and facilities specifying the percentage of the undi­vided interest in the common areas and facilities appertaining to the apartment that is agreed to be  sold;a statement of the use for which the apartment is intended. Copies of the title certificate issued and a copy of the approved plan and specifica­tions, a list of fixtures and amenities including the provisions for lifts to be provided for the flat that is to be sold should be attached to the Agreement.

A Promoter, while he is in possession and when he collects from persons who have taken over flats or are to take over flats sums for payment of out goings, has to pay all out goings until he transfers the property. The outgoings would include ground rent, municipal and other local taxes, taxes on income, water charges, electricity charges, revenue assessment and interest on any mortgage or other encum­brances, if any.

One should also ensure that the area of the apartment has been mentioned in the Agreement. It is also mandatory for the Developer/Promoter to convey the land in favour of the Society/Association of flat Owners/Condominium/Com­pany within a stipulated time.

Requirements:

The development Agreement must be in Writing and Registration of this Agreement is not compulsory. If the Developer meets the above requirements, he is well protected and can start construction work. But in case, the Developer commits any breach of the contract, the defence under Sec. 53 A cannot be availed.

Apart from equities, the Developer would have a right against a subsequent Transferee of the property with notice of the Developer's right or a gratuitous Transferee of the property under Sec. 40 of the Transfer of Property(TP) Act, but not against the Transferee for consideration and without notice of the rights of the Developer against the property.

Procedure for joint development:

After the examination of the property of the Land Owner, the Developer offers to him his offer for development of the property. This offer basically consists of the percentage of the built up area which shall be offered to the Owner towards cost of the land and the amount of security deposit that will be paid. This security deposit is a refundable advance, which has to be refunded back to the Builder on successful completion of the project.

The percentage of the area offered to the Owner is arrived at after taking into account several factors such as cost of the land, cost of construction, escalation in cost of construction, cost of obtaining the approvals for the building, marketing and administra­tive expenses and most importantly the selling price of apartments in that area.

If the offer is attractive, the Land Owner will give his acceptance and hand over a copy of the title docu­ments to enable the Builder to get the same verified by his Advocate. If the Builder's Advocate approves the title, a draft copy of the Joint Development Agreement laying down the terms and condi­tions of the development is given to the Land Owner for his approval, who generally gets it vetted by his Advocate. If the draft of the Joint Development Agreement is found to be okay, the same is prepared and prescribed Stamp Duty is paid. This Agreement is signed by the Builder and Land Owner and the Builder pays the first portion of the refundable advance to the Land Owner.

Along with the Joint Development Agreement, the Land Owner also gives a Power of Attorney to the Builder to apply for various approvals required for construction and also to sell the portion of the area coming to the Builder's share. All the procedures and formali­ties and costs for approvals are taken care of by the Builder. The Builder then gets the plan prepared by an Architect, taking into account the requirements of the Land Owner. Once the plan is ready and approved by the Land Owner, the same is submitted for approval of the Government Authorities. After the plans are submitted and approved, the Builder takes possession of the land from the Owner. At this stage, the balance portion of the refundable advance is paid to the Land Owner. After taking possession of the land, the Builder proceeds to demol­ish the old building if any and get the site ready for commencement of work.

On receipt of the approval, the Builder commences the construction and marketing of the project. As and when the apartments falling to the Builder's share are sold, the proceeds are received by the Builder in stages and the Builder will register the apartments in favour of the Buyers.

Out of the apartments coming to the Land Owner's share, they may like to retain some apartments and sell the balance. The Land Owner, can decide to sell his apartments initially or sell the same when the building is 50% over or when it is nearing completion or after completion. Based on the requirement, the Builder will sell the Land Owners apartments and pass on the proceeds to the Land Owner as and when the same is received from the Buyers. When the land Owners' flats are sold and a payment is received, the Land Owner will register these apartments in favour of the Buyers.

On completion of the project, the apartments being retained by the Land Owner are handed over to him and the advance, which was given by the Builder at the time of commence­ment of the project, is refunded back. The Builder and the Land Owner will facilitate formation of a Flat Owner Association and hand over the title documents to the Association.

Rights and obligations of a Developer

As per Sec. 54 of the Transfer of Property Act, an Agreement for Sale does not create any interest in the property in favour of the Purchaser, though the consideration is paid partly or fully unless and until a deed of transfer by way of sale or lease is executed in favor of the Purchaser. Many Joint Venture Agreements are supported by Power of Attorney executed by the Owner in favour of the Developer for the development works and enters into an Agreement to Sell and a Sale Deed to the extent of Developer's share after completion of the total building.

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REGISTRATION PROCEDURE FOR ATTENDING AT PRIVATE RESIDENCE

(Advocates, Property advocates in Bangalore, Property lawyers in Bangalore)

Karnataka registration rules 1965 has formulated procedure for attendance of the registering officer at private residence.The relevant rules are detailed in chapter 10 and under rule nos.56 to 32.Any application for attendance at private residence shall be in writing and have to be signed by the person who requests the attendance at his residence shall be in writing and has to be signed by the person who requests the attendance at his residence.

Such letter may be presented by any person to the registering officer. The request has to be complied with as early as possible.If such attendance at private residence disturbs the regular routine of the office or requires closure of office and if the case does not fall under section 31 of the Indian Registration Act, a commission may be issued, which means another person other than the registering officer may be requested to attend the private residence and complete the registration formalities.

The attendance of sub-registrar at private residence or issuing commission has to be reported to the registrar within 24 hours.The Sub-registrar shall not proceed out of his sub district for this purpose, but registrar may attend the private residence situated in his district though it may not be situated within the sub district under his immediate charge.

The commissioner appointed to attend the private residence will give evidence and the registering officer will examine the commissioner personally in his office connected with discharge of his commission and voluntary nature of admission of execution.During the course of attendance if the registering authority has to record the admission or execution of persons not exempted from personal appearance in respect of the same document executed by a person exempted from personal appearance, the registering authority may comply with the request provided attendance fee is levied.

 

Section88 of the Act refers to documents, which are executed by Government officers or certain public functionaries who are exempted from personal appearance. Any officer of the government, any administrator general, official trustee or official assignee, the sheriff, receiver or registrar of High Court, any holder of such other Court, any holder of such other public office as is notified in the official Gazette of the State government are exempt from personal appearance or through their agents in connection with registration of any instrument executed by them or any document executed in their favor in their official capacity. They are also exempted from signing the document for admitting the execution as required under section58 of the Act.

When documents are forwarded by government officer with a covering letter stating that documents executed by him be registered, the covering letter will be sufficient to satisfy the genuineness of the signature of the executants.If such document is presented by a private party, who is also a party to the document, the registering authority will satisfy as to the genuineness of the signature by a brief enquiry. The fact of exemption from personal appearance and presentation of the document by covering letter will be endorsed.

Certain category of documents like copies or orders, certificates and instruments need not be presented for registration but may be sent to the registering office for filing as per section89 of the Act. In the following cases, copies have to be forwarded to the Jurisdictional registering officer under whose jurisdiction the immovable property in question is situated:

a)Every officer granting a loan under Land Improvement Loans Act 1883. Every court granting a certificate of sale of immovable property under Civil Procedure Code, 1908.

b) In case of loans under Land Improvement Loans Act 1883, details of the land to be granted as collateral security.

c) Every officer granting loan under Agriculturists Loan Act 1884 has to forward, a copy of the document whereby the immovable property is mortgaged to secure repayment of the loan and a copy of such order.

d) Every Revenue officer, who grants a certificate of sale to the purchase of immovable property sold in public auction.

The registering officer will file the copies of such orders, certificates, and instruments in book No.1. The concerned officers need not appear in person at registration office.

State Government has made rules as to the mode of making copies and manner of filing copies.

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BENEFITS OF SWITCH OVER OF HOUSING FINANCE

(Advocates, Property advocates in Bangalore, Property lawyers in Bangalore)

In the present competitive world nobody is exception and in tune with this concept even the financial institutions which have been running after "further improvement of bottom line" of their financial statements also adopting every technique to lure the valued clientele including welcoming takeover of loans from its competitors.

Naturally, when there are signs of "even a small element of benefit" on switch over to other financier, the consumer/client will not have any sort of hesitation in

grabbing the opportunity. The analysis also show that at times switching over from one lender to another, certainly there exists some sort of benefit and even at times may be a most economical loan option.

A study on "home loans" reveal that, the tenure of repayment being long, in as much as ranging from 5 years to 20 years, it is certain that the market conditions are likely to fluctuate leaving impact on the consumer on certain areas like -interest rates, repayment options, penal charges etc. Hence, the prudent customer after taking into consideration these factors shall avail the opportunity of switch over to such financier, in order to reap the benefits.

Broadly, switching denotes changing in terms & conditions of the loan by either opting for another scheme or changing the financier itself. While doing so, one should bear in mind that it entails some sort of expenses to be borne which one should weigh against the benefits that may accrue on such switch

Applicability of interest rate:

Broadly the interest rates are of two types i.e., "Fixed" or "Floating". The customer has to choose either of the above at the time of a ailment of housing loan itself, which shall remain for the entire tenure of repayment. In the process, if the interest rates are decreased, the customer who opted for "fixed" rate of interest may tend to start thinking of availing the other method of "floating" rate of interest. On the other hand, the customer who opted for "floating" rate of interest shall be worried on every occasion whenever there is an increase in rate of interest and start thinking about "fixed" interest scheme. So, ultimate weighing of benefit should be worked out in the backdrop of fact that there remains a certain cost benefit in switch over, if not immediately but at least in long run.

In order to ensure that customers shall remain with them, many financial institutions are allowing their customers to switch schemes on the payment of a processing fee of half to one percent of the outstanding principal. Anyhow while some lenders do not allow switches from variable to fixed rate schemes, some
others restrict the number of switches over the tenure of the loan. In such cases, the option open is considering switch over to another lender, especially when the prevailing market rate is more than two percent lower than the rate on the housing loan. However, it should also be considered whether it is a long term trend or a short term phenomenon before going in for the switch over.

Suitable repayment options:

More beneficial and innovative schemes are appearing in the housing loan market, as it grows and develops. To benefit and suit various classes of borrowers, the repayment options are being customized. The stepped up repayment plans allow one to start with lower EMI payments and increase them as one's income increases over the years. In stepped down repayment schemes, one pays larger EMIs at the beginning of the term, decreasing the payments as the financial burdens increase. Hybrid loans partially hedge against market rate fluctuations by dividing the principal into fixed and variable rate portions. Account linked loans permit one to benefit from regular credits into the account by linking the principal to the balance to the account. Better schemes make one consider switching across schemes or across lenders. In some of the above cases, the quantitative benefits may be smaller or difficult to judge, but one may be more with hedging one's risks or taking a stepped down repayment plan. In such cases, taking a wise decision based on personal requirements would be very prudent.

Overhead expenses:

When one decided on switching between lenders, it naturally entails closing the loan with the current lender and approaching a new lender for a fresh loan. But this attracts foreclosure charges (anything between 1 to 4 percent of outstanding principal) levied by the current lender and processing fees (between 0.50 to 1.00 percent) levied by the new lender. These costs must be weighed against the savings in EMI payments resulting from switching before going for the switch. This could be easily worked out by the lender, based on the outstanding principal and remaining term.

In addition to this, all the paper work with the new lender has to be completed, and the property documents have to be transferred. Though it is a procedure which demands planning and working out, it is well worth the additional effort.

Before switching, the market outlook and personal circumstances also need to be considered elaborately. For instance, one may be attracted towards switching to a fixed rate, if rates have been increasing in the short term and if the long-term trend is a decrease in market rates one may wish to reconsider.

Hence, so many factors are in for consideration before one decided for switching. But, it is absolutely important to monitor and manage the loan during its tenure to ensure that one avails the benefits accruing out from interest rate fluctuations or market developments.

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