FORMALITIES TO BE COMPLETED AFTER PURCHASE OF PROPERTY

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

Ownership over the immovable property will not be conferred by mere execution of the sale deed in favour of the purchaser.There are many other formalities required to be completed after the purchase.Such post registration formalities, subsequent to the registration of the sale deed has been discussed below:

1. Obtain original documents of title from the seller in order to compare and confirm the same with the copies and the same has to be scrutinized by the purchaser's Advocate. After thorough scrutiny by the advocate and if further original documents are necessary, it is advisable to ensure the production of such documents in originals only. If you are availing housing finance, then you have to apply for the certified copy of your sale deed in the concerned jurisdictional Sub-Registrar Office.

2. Apply for the latest and updated encumbrance certificate in the concerned Sub-Registrar Office. It is also important to verify whether such Encumbrance certificate reflects the execution of sale deed in favour of the purchaser along with the details regarding the date, registration number and also the name of the parties to the deed.

3. Possession of property is very important. The Seller should hand over the vacant possession of the property to the purchaser. In order to ensure that the seller is in actual possession of the property, the purchaser should inspect the property a day prior to the registration. If the seller is in physical possession of the property then handing over the vacant possession of the same is very easy. On the other hand, if the property is in occupation of the tenants, it is very important to ensure that the tenants are vacated before registration. However, the fact that the seller is in physical or constructive possession, has to be clearly incorporated in the sale agreement. As per the terms of sale agreement, the purchaser should receive all the keys of the property at the time of registration. If possible, main door lock can be replaced with the new lock. In case the property conveyed to the purchaser is a vacant site, it is necessary to put display board with the wordings “This property is owned by ‘X’ trespassers will be prosecuted”. Further, fencing around such sites or constructing compound wall, though expensive, is preferable. Periodical visits to the site are also advisable in order to detect encroachment over the site, if any.

Consent Letter

The purchaser should verify that all the taxes, statutory payments in respect of the property including power, water charges are paid up-to-date by the seller.Further, the purchaser must collect all the receipts for the statutory payments and should also verify at the concerned offices, whether there are any arrears is there or not. Power and water supply agencies collect deposits from the consumers before providing services.In order to transfer such deposit in the name of the purchaser, consent letter from the vendor has to be obtained from the vendor.

Registration of Khatha:

Khatha Certificate and Khatha Extract are one of the mandatory and important documents to prove the present ownership of the purchaser over the property after execution of the sale deed.Purchaser must ensure that the Khatha in the records of the local bodies, gram Panchayath or the city corporation is transferred to his name.

Both the seller and purchaser have to sign the application for transfer of Khatha, which is better if done simultaneously while signing the sale deed in order to avoid any future disputes.Application for Transfer of Khatha has to be duly filled along with copy of the sale deed enclosed and the same has to be submitted before the concerned authority and to obtain acknowledgement to that effect. In case of the property falling within the limits of BMP, then applications for Khatha transfer may be filed in any of the citizen service centers or any of the 30 revenue offices along with the documents mentioned in Sarala Khatha Scheme Book. Documents required to be produced includes Mother Deed, sale deed, National Savings Certificate of Rs.200, sketch showing the site details and Betterment charges paid receipt.If the Khatha has to be transferred in the name of one of the co-owners, then No Objection Affidavit declaring that they do not have any objection for transfer of khatha in the name of the applicant, duly sworn before the notary by the remaining co-owners, has to be submitted along with the application for transfer of khatha and other required documents.

Sarala Khatha Scheme Book, introduced by BMP, gives all the details about the services of the Revenue Department, documents to be filed, fees required to be paid, working hours and also rates for assessment of property tax under the Self-Assessment scheme.

For transfer of Khatha in the name of the purchaser, transfer fee will be collected and subsequently written confirmation of such transfer endorsement will be issued in the name of the purchaser. During the process of transferring Khatha, the property is again re-assessed on the basis of revised property taxes, if any, and then issue assessment notice in the name of the purchaser. It is very important that the tax paid receipt should be in the name of the new/present owner.

Khatha Extract

After issuing Khatha Endorsement, we have to apply for Computerized Khatha Certificate and Khatha Extract. Khatha Extract reflects the name of the Present Owner, Tax assessment details, sital area and Built up area.

CMC Khatha

If the property has falling under the CMC jurisdiction, Khatha Endorsement is issued in the name of the Present Owner. City Municipal Councils (CMC) were issuing Form No.19, CMC Khatha in the name of the Present Owner. Now-a-days Form No.III Khatha is being issued to the properties falling within the limits of CMC since issue of Form No.19 has been stopped from 29/05/2003.

The properties falling within the limits of Village Panchayath, Form No.9 and 10 is issued in the name of the Present Owner, which refers to Assessment Order and Assessment Extract.

Transfer of Electricity supply

After the Municipal authorities transfer the Khatha in the name of the owner, water meter and power meter installed are required to be transferred in their name. You have to submit the necessary application along with the deposit transfer letter issued by the previous owner. After completion of all the formalities, water and electricity authority will change the present owner name in their records.The authorities will issue written confirmation of transfer and raise the bills in the name of the Present owner. This will help the owner to verify and check up their electricity and water bills to be raised in future.

Annual property tax and periodical Encumbrance Certificate has to be regularly obtained at least once a year.

After completion of all the post registration formalities, absolute title, right over the property will be conferred to the purchaser thereby enabling the purchaser to enjoy the peaceful and uninterrupted possession of the property.

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RECTIFICATION DEED

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

Rectification deed is a document correcting the mistakes of facts in the original/principal deed.

Mr.Sampath had negotiated to purchase a residential site at Peenya for Rs.4lakhs and got the sale deed registered. After receipt of the sale deed, he found, that the dimensions of the area are wrongly mentioned in the schedule as East to West 40' and north to south as 30' instated of East to West 30' and North to South 40'. Mr.Rajagopal had a similar problem in the sale deed; the boundaries of property purchased are wrongly mentioned. 

The case of Narasimhan is slightly different; he has purchased two different properties from a common vendor under a common sale deed including both the properties under single schedule. Mr. Narasimhan was for a pleasant shock to find that encumbrance certificate did not reflect the sales in respective property schedules, but was combined under a single property schedule. 

Such instances are many. Many mistakes creep into the sale deeds, as they are not properly verified and compared with the title deeds, revenue records, and at times are not drafted by professionals/advocates.Sometimes, the area of the property, survey numbers, location, boundaries, municipal numbers, description and number of floors, are wrongly written.Names of parties may be mis-spelt, amount of consideration may be wrong, easementary rights may not have properly dealt.In many cases, the real contention of parties to the deed may not have been reduced into writing. 

Such mistakes, errors in the deeds should be corrected by another document. This is called rectification deed. It is equitable relief granted by the Court of equity based on doctrine of mistake.In order to have deed of rectification, there must be mutual mistake and the original deed does not reflect the true intention of parties. 

More important is that mistake should be of facts and not a mistake of law. But, mistake of foreign law is considered as mistake of fact. Sections 20 and 21 of Indian contract act deals with this aspect.When the parties to deed, agreed to modify, add, delete the terms of original deed to bring in true intention it is necessary to reduce such modifications into writing properly and pay the requisite stamp duty.

Rectification Deeds are executed on mutual consent of the parties to main deed, all the parties who have executed the main deed should join in execution. But real problem lies where the mutual consent is not possible. In such cases, the recourse is to file a suit under section 26 of Specific Relief Act 1963.This section provides, where the real intention of the party is not properly expressed in the documents because of mistake of fact or fraud, either the party or his representative may institute a suit to have the deed rectified.

The section also empowers the court to direct the rectification of an instrument if the court satisfies that the deed does not express the real contention of the parties.Further the contract in writing may first be rectified and then if the party claiming rectification has so prayed, in his pleading and the court thinks fit, may be specially enforced.This relief will be granted, if it has been specially claimed.If it has not claimed such relief in his pleadings, the court at any stage of the proceedings may allow him to amend the pleadings. This is entirely discretionary and when granted does not prejudice the rights acquired by the third party in good faith for value.

If the original deed is registered, the corresponding rectification deed also requires Registration.The stamp duty and registration charges are payable as prescribed by respective states.

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REGISTRATION OF PROPERTY

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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.  

Most of the instruments dealing with the immovable property for creating, declaring, assigning, limiting or extinguishing any right, title or interest in the property require compulsory registration,as enumerated under the Indian Registration Act, 1908. For executing an instrument, the first and the foremost aspect to be considered is the nature of the right intended to be transferred. If the document falls within the category of the documents which warrants compulsory registration, any avoidance of registration of such document would invalidate the document itself.For documents which require mandatory registration certain procedures are prescribed.

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. It is not uncommon that the date of execution and the date of registration may differ. For the non-testamentary documents such as Sale Deed, Gift Deed, Mortgage Deed, etc, the time limit within which the document has to be registered is four months from the date of execution. Decrees drawn in terms of Compromise Petition wherein shares of the parties are allotted by metes and bounds require registration.

Even for registration of the court decree, four months time limit is stipulated under the Act. If the document is executed by all or any of the parties residing abroad, the same can be accepted for registration within four months from the date of receipt of the document in India. In case of doubt as to the validity of registration, the document may be re-registered within four months from the date when it is noticed that the registration is invalid or of doubtful validity. Where a document is executed by several persons at different times, it should be presented within four months from the date of the latest execution for registration.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 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 within the prescribed period of time for registration, the Registering Officer may, on payment of proper registrat- ion 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.

Fees of Registration

Fees charged for the registration or searching the register are prescribed by State Governments through Notifications.

Testamentary instrument

In case of Testamentary instrument, that is, Will, registration is optional and time limit is not prescribed. It can be registered any time before the death of the Testator.How-ever, it is advisable to register the same as soon as possible in order to avoid disputes about the genuineness of its execution. In case of registration of Will, the same may be presented by the Testator during his life time and after his death, by the beneficiary or the administrator, for registration.

A Will may be deposited with the Sub-Registrar in a sealed cover and such deposit may be done through an agent.After the death of the Testator, the sealed envelope will be opened and the contents recorded in the relevant register maintained in the Sub-Registrar's Office.The Original copy of the 'Will' will be in the custody of the Sub-Registrar.

Jurisdictional Sub-Registrar Offices

Generally documents have to be presented for registration only at the Sub-Registrar's office within whose jurisdiction the immovable property is situated. However, in certain exceptional cases, documents may be presented for registration with the Registrar who has been conferred with the power to register the documents. In fact, Sub-Registrars have been vested with the special power to register the document at the residence or office of the executants or to accept deposit of Will.

Presentation of the document

Documents which require mandatory registration have to be presented in the concerned Sub-Registrar Office for registration by the executants or person claiming under the Decree. However, in certain cases, the representatives of the Executants, duly authorized under Power of Attorney, can also execute the same on behalf of the Executants. A power of Attorney holder can execute the document, representing the Principal only if an authority has been vested in him under Power of Attorney, which is authenticated by the Registering authority within whose jurisdiction the Principal resides. If the Principal does not reside in India, then the Power of Attorney should be executed before and authenticated by a Notary Public or any Court, Judge, Magistrate, Indian Consul or Vice-Consul or the Representative of Central Government in that country and the same is required to be presented with the concerned registrar in India with in a period of three months of its receipt in India. When a document has been executed by more than one executants and after execution of the same, one of the executants refrain from attending the concerned Sub-Registrar's Office for registration, then the remaining executants can compel attendance of the executant reluctant to be present before the registering authority through the process of law.

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 it purports to have been executed such a document.He may insist on production of proof for 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 requires compulsory registration  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 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 event 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.

Endorsement

After accepting the document for registration, the Registering authority shall endorse the document regarding affixation of the signature of the Executant, payment of consideration, date and other relevant particulars. If registration is declined by either of the party, the same shall be endorsed on the document itself. Apart from this, the Registering authority shall also endorse on the Document the registration number, Book number, pages, volume or CD number and affix the seal of the office of the Sub-Registrar. Such a Certificate shall be copied in the Register meant for the purpose and copy of the map or plan, if any, shall be filed in Book No.1Thereafter, the registered document will be returned to the person who has presented the same for registration or to his representatives.

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ORAL PROPERTY TRANSACTION

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

There are many many types of transaction in property dealing and documents like Koorchit, 'Memorandum Recording Ear­lier Oral Partition,' 'Memoran­dum Recording Family Arrangement,' Baagappirivinai Kathu and so on.Large number of property transactions takes place orally but we must see how valid are these transactions and are these documents valid? Let us see what the law says.The division of property is known as partition. It is also the specific ascertainment of share held by the co-owners.

A family arrangement, on the other hand, is a settlement of issues or an arrangement on the basis of claims that may arise regarding the property. Sometimes the claims may be unreal.However these claims must have a basis.The family arrangement includes the elements of a partition. The documents regarding the transactions are also not stamped and registered. Whether such documents require be stamping and registering is an im­portant issue.

Ownership transformed:

Partition is a process whereby the joint property is partitioned or divided for the individual enjoyment of the property of the co-owners. It is only a specific determination of each share. Each one of the sharers will have had a prior title. Partition is not regarded as a new transfer therefore there is no conferment of a new title.

For the purpose of family arrangement it is important to understand the word family as the word 'Family' will be interpret­ed depending on the nature of the document and the transaction. For eg; Under the Indian Stamp Act, ‘Family’ for the purpose of settlement includes father, mother, husband, wife, son, daughter and grandchild. In the case of any one whose personal law permits adoption, 'father' shall include an adoptive father, 'mother' an adoptive mother, 'son'  an  adopted son, and 'daughter' an adopted daugh­ter.

The same concept is extended to transactions like 'Release' and 'Partition.'But the word family in case of family arrangement has to be understood in a wider sense so as to include not only close re­lations or legal heirs, but even those who may have some sort of antecedent title, a semblance of a claim or a possible claim. The reason behind for this is that it ensures that future disputes are settled permanently.

In case of family arrangement it is necessary that the parties must be related to one another and has a claim or a possible claim or even a sem­blance of a claim to the property. This ground could be something like "affection," "legal claims," "claims that have arisen," "claims that could arise in fu­ture," etc. These claims need not have strict legal backing or validity.

Family arrangement:

In order to avoid future disputes and to maintain peace and harmony if a such a situation arises, the members of a family it necessary to make a family arrangement.The terms of the arrangement or partition are concluded orally by the parties in an oral agreement. After that the parties may reduce this to a mem­orandum or execute, stamp and register a document.Both types of documents are valid.The question of stamping or registration does not arise as there is no document in case of oral arrangement.

Stamping necessary:

If any right, title or interest is created, declared, assigned or extinguished by reason of family arrangement or partition then it must be stamped and registered as per the Indian Stamp Act and the Indian Registration Act.

In each case it is to be determined it is a question of fact whether the terms have been documented by the nature of phrase­ology and the circumstances in which and the purpose with which it was written. However no stamp duty or registration is required in a document like a memorandum, evidencing a family arrangement or a partition which had already been entered into and had been prepared merely as a record, in order to avoid false notions.

The document requires stamping and registration if the transaction is a contemporous one but stamping and registration may not be required if the transaction has already taken place, and is merely recorded as a past transaction.If the family arrangement or partition is stamped but not registered, it can be examined by courts for collateral purposes. Whether the purpose is a collateral purpose, is a question of fact depending on the facts and circum­stances of each case.A right or title to the property cannot be claimed by any person under the said document which can be considered only for collateral purposes.

If the documents contain such wordings as to the family arrangement or partition that it requires stamping and registration, then a person cannot get a valid title under such a document.It will not be accepted as evidence in Court.Mere usage of the past tense will not, by itself, indicate a prior arrangement or transaction.The document has to be read as a whole. Therefore, the wordings in the document and the facts and circumstances relating to the oral transactions are critical.

Therefore in order to determine the validity of the document all the above factors have to be considered. It is preferable verify the documents in the light of the above position and take remedial measures wherever needed.

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