Property Advocate Article “All You Need to Know About a Sale Deed”

                                                             

(property advocates in Bangalore, property lawyers in Bangalore)

Sale Deed is also known as conveyance deed. This is the document by which the seller transfers his right to the purchaser, who, in turn, acquires an absolute ownership of the property. This document is executed subsequent to the execution of the sale agreement and after compliance of various terms and conditions detailed in the sale agreement.

Before the execution of the sale deed the title of the seller is to be established beyond doubt. Copies of the documents of title must be scrutinized by an advocate, well versed and experienced in property dealings.

If there is any encumbrance on the property, such encumbrance is to be cleared by the seller at his cost.

All statutory payments like property tax, water and power charges and any other payments due on the property should be cleared before the execution of the Sale Deed. Any previous charges or mortgage should be clear before execution of the Sale Deed.

Clearances, and permissions required to be obtained by the seller should be obtained prior to execution of the sale deed.

Latest encumbrance certificate of the property, subsequent to the date of the saleagreement up to the proximate date of sale deed should be obtained, and such certificate should be of nil encumbrance.

All the persons having interest in the property should be made parties to the deed. Particular attention needs to be paid in case of purchase of properties from a Limited Company, Partnership Firm, Hindu Undivided Family, Trust, Power of Attorney Holder and Minor.

DraftSale Deed:

A draft Sale Deed, containing full details of the parties, advance amount paid, mode of balance amount payable, receipt of the balance amount by the seller, handing over the original documents of the property, handing over the possession of the property, handing over the authorization letter to transfer power and water meters, signing of the application for transfer of khatha, title of the seller of the property, indemnifying the purchaser in case of defect in the title, easement rights, will be prepared by the purchaser’s advocate. Such draft Sale Deed should be captioned as draft Sale Deed and shall be signed by the purchaser’s advocate.

A copy of the draft Sale Deed will be given to the seller for his approval. The seller and his advocate will verify the draft sale deed and approve it, or may suggest suitable deletions, additions or amendments. The purpose is to bring forth the correct intention of the parties to the Sale Deed.

On approval of the draft Sale Deed, the same has to be prepared on a quality or a document paper. In Karnataka it may be prepared on good quality paper like bond paper or green paper and the stamp duty may be paid by way of demand draft or pay order or cash. The exact amount of stamp duty should be ascertained from the Sub Registrar office. Purchaser is liable to pay the Stamp duty as per value stated in the documents or as per the Sub- Registrar office value whichever is higher.

Execution:

After the Sale Deed is prepared all the parties to the deed shall execute it by affixing full signatures. Each page should be signed by all the sellers. Any overwritings, cancellations, erasures and additions have to be authenticated by full signatures of the parties.

The execution of the Sale Deed requires to be witnessed by two witnesses. The witnesses shall give their full particulars and addresses.

Sale Deed of immovable property of value more than Rupees one hundred needs compulsory registration. The duly executed sale deed should be presented at the jurisdictional sub-registrar office. All the parties, including the confirmation witnesses shall be present at the time of registration and admit the execution. Purchaser also has to be presented for the execution of the documents at the Sub Registrars office. In case the purchaser is not in position to be present before Sub Registrar, he can give Power of Attorney to any of his persons to sign and present the documents on his behalf. In case seller signs the Sale Deed, it is compulsory that through the registered Power of Attorney holder only can represent for him to present the documents before the Sub-Registrar.

Registration:

In Karnataka, the Sub-Registrars office, take the photos of purchaser, vendors, witness and also their thumb impressions and print the same on the Sale Deed.

The vendors has to produce all the original documents pertaining to the property to the purchaser. If the property is divided into one or more portions, the seller has to give certified copy or Xerox copy of the documents to the purchaser and has to give declaration to that effect. Generally, the larger portion holder should get the original documents.

There is a time limit for presenting the documents for registration. The time limit is four months from the date of execution.  Thereafter a grace period of another four months is allowed on payment of penalty. The maximum penalty is ten times of registration charges.

At times, the registering authorities may dispute the stamp duty paid. In such cases, the purchaser has an option of paying the additional stamp duty by way of cash or payorder. The purchaser may contest it in which case the Sub Registrar will do the pending registrations and send it to the Registrar of Under Valuation to arrive at proper Stamp Duty.

Parties have to quote their Income Tax Permanent Account Number in case the transactions are done in cash for the property which values more than Rs 5,00,000. Parties, who have not yet been allotted Permanent Account Number, will have to file Form No.60 or Form No. 61 in case of Agriculturists.

The purchaser’s advocate has to take all precautions while preparing Sale Deed. It is a most important document and decides the fate of the purchaser.  The purchaser has to preserve the Sale Deed very safely.

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Property Advocate Article Regarding "REQUIREMENT OF AGREEMENTS"

Realty Bites by S. Selvakumar

                                                                         

REQUIREMENTOF AGREEMENTS

The various modes of transfer of property are Sale, Mortgage, Lease, Exchange, Gift etc., All these transfers are subject to general principles of Transfer of Property and contract under the Indian Contract Act, 1872.  This has been expressly stated in Sec. 4 of the transfer of property Act, which states that, “The Chapters and sections of this Act which relate to contracts shall be taken as part of the Indian contract Act, 1872.”

Now so far as agreement &contract is concerned, it is very much essential to know,

a)            What is valid agreement?

b)           When agreement becomes contract?

c)            What is the effect of agreements made not according to the law?

The term “agreement” has been defined in Sec 2(C) of the Indian contract Act, 1872 as, “Every promise and every set of promises, forming the consideration for each other, is an agreement”.

Consideration:

One person is said to make a promise to the other, if his /her offer is accepted by the other person.  When this promise is supported by consideration, it becomes a contract.  Therefore first and foremost requirement of agreement is, it must have been supported by the consideration.   However, the consideration is not an determining factor in certain cases as detailed in Section 25 of Indian Contract Act

q  Gift to near & dear ones,

q  Something given for past service

q  Acknowledgement of time barred debt.

Requirement:

          The second important requirement of agreement, for an agreement to be enforceable by law, it must fulfill the conditions set out in Sec – 10 of the Indian contract Act.  They are :

q  Agreement must be made

q  By competent parties,

q  With free consent,

q  For lawful consideration and

q  For lawful object.

Sec – 11 of the Indian Contract Act defines competent parties as, those persons who have

q  Attained the age of majority

q  Are of sound mind, and

q  Are not disqualified by any provisions of law.

The age of majority for any person is 18 years under the Indian Majority Act. In case of a person is suffering from any mental disease during certain intervals of time, he or she can enter into an agreement during the time such person is of sound mind.  Now the question that arises for consideration is if person is drunk or intoxicated due to drugs can he enter into an agreement.  In this kind of situation, if the intoxicated person is in position to understand and appreciate the pros and cons of terms and conditions of the agreement, there is no bar for the drunken person to enter into an agreement. However, in case of any disputes, it has to be established to the satisfaction of the court that the person suffering from mental disease, under intoxication was in a position to understand the terms, pros and cons of agreement.

Another requirement for a person to enter into an agreement is that, such person should not have been disqualified by any law in force like insolvency Act.

Free Consent:

The parties to the agreement should have agreed to the terms with free consent. Any consent is said to be free, when it is not given under.

q  Coercion,

q  Undue influence,

q  Fraud

q  Misrepresentation.

In case consent is given under by any of above elements then the agreement or contract becomes voidable. The effect of voidable contract is the contract becomes enforceable only at the option of the party whose consent has been taken by coercion or undue influence or fraud or misrepresentation.  Under voidable contract if any property is sold, the purchaser gets a valid title so long the contract is not cancelled on the ground that contract is voidable.

Lawful Object:

U/S 10, the third & fourth essential requirement of agreement are :-

q  Lawful consideration &

q  Lawful object.

If the consideration and object of contract is not lawful, then such agreement becomes void, Contracts or illegal contracts u/s 23 & 24 of the Indian Contract Act.  If any property is sold under void or illegal contract, then purchaser would not get valid title to the property. Void contracts are not enforceable.

Consequences of void, voidableor illegal contracts .

If a contract is declared as void, the transferee of property would not get valid title to the property, the position of parties is like as if they are not entered into the contract at all.  Therefore u/s 64 of the contract Act, the parties are liable to return the advantages they have taken under void contract.

As stated earlier, in voidable contract the transferee will get a valid title, so long the contract is not cancelled by the party whose consent was obtained under coercion, undue influence, fraud, misrepresentation. Such party has to exercise his option of treating the contract as void within the limitation period, which is three years. In case of illegal contracts, if one party has given or delivered something to the other party the same cannot be recovered at all.

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Property Advocate Article Regarding "Advantages of investments in real estate"

 (property advocates in Bangalore, property lawyers in Bangalore)

     During the last few years, the investment scenario in the country has significantly changed as interest rates have fallen very sharply.  Fixed deposits that were once the staple and no discussion required, readymade, one for all type investment has in today’s scenario lost its worth, totally.  The post tax real rate of return is just equivalent to inflation.  Similar is the story with postal schemes or relief bonds and all of them have seen a downward trend.  The gross yield from these once very investibleinstruments have almost halved.

     In this situation it is now time that the investor should shift his focus on real estate investment.  Also, causative to the decision is the rigged up stock market.  In the changed scenario it is high time that all investors, and more particularly high net-worth investors, shifted their investment pattern from movable assets to immovable assets in the form of commercial building or residential building.

     In this soft interest regime, the best time to own a property is: Now. Interest rates have bottomed out and are even showing signs of firming up.  Tax is an important consideration while planning any investment and Real Estate is no different.  With so many tax incentives on demand side in both Income Tax and Wealth Tax, it is very important that the investment be meticulously planned on tax front so that maximum benefits are taken.  The article is a modest endeavour to bring out general principles for not so expert common man, so that he may broadly ensure that the transaction is best suited to his tax return.

     As regards Property for self-occupation or dwelling by self or any member of the family, one of the most important rules for tax planning while buying a house property in India is that one should own only one house or a part thereof in the form of a flat or apartment.  Section 23 of the Income Tax act allows exemption for only one self-occupied property. In case two houses were self-occupied by an assessee, one of them would be deemed to be let out and the annual value of the same shall be chargeable to tax.  So if you do not own a house, buy it in any name, no discussions required.  If a second house for self-occupation were desired, then the best course is to acquire the same in the name and through the funds of any other member of the family like, wife or major son or major daughter or brother or sister or father or mother or the Hindu Undivided Family.

     In respect of properties that are self occupied, no deduction regarding the municipal tax paid or any other expenditure like Insurance is allowed under any of the provisions of the act.  However the interest paid on any amount borrowed for the purpose of acquisition of such a house is allowed as a deduction upto a maximum of rupees one lakh fifty thousand under the provisions of Section 24(1) (b) of the act.  Further the amount paid towards principal is allowed as a deduction subject to the maximum ceiling of rupees one lakh under section 80C of the act.  It is almost as if the whole of your income you invest in a house property has been exempted from tax.

     The loss generated under the head ‘Income from house property’ due to the deduction of interest is allowed as a set off against any income of the same year under any other head.  The loss that could not be so adjusted due to no other income or insufficient income would be allowed to be carried forward for the next eight assessment years to be set off against any income from house property arising in future years.

     If an investor is interested in acquiring residential house properties for renting purposes, then it is beneficial to acquire such properties in different names i.e. through funds different members of the family.  This is particularly beneficial when different members fall in different tax brackets.

     However, in some cases, there may not be any great incidence of income tax, if an investor were to acquire one house property for self-occupation and other house property for letting out.  In such a case, one property or flat or apartment used for self-occupation would be completely exempt from income tax whereas the other house would be liable to income tax in respect of net income from it.

    In respect of rental income, the municipal tax paid is allowed as a deduction.  On the net income, a statutory deduction of 30% is allowed towards all expenditure incurred by the assessee for maintaining the property and collection of rent. If there is any interest payable in respect of funds borrowed by the asses-see for the acquisition of the property or for repairs to the property, then the said interest, whether paid or not, would also be deductible in computing the net income from house property u/s24(1)(b) without any limits as to the maximum amount.

     Any loss under the head ‘house property’ from a rented out property is allowed as a deduction on similar lines as that of self occupied property.

    The taxman is really interested in making you buy a house.  There are deductions in respect of other income on acquiring a House.  If the assessee is not the owner of more than one residential house property and has long term capital gains on the sale of any other asset like commercial house property, jewellery, open land etc., then he can get 100 per cent tax exemption u/s 54 in respect of long-term capital gains made on the sale of such capital asset provided he invests the same in a residential house property.  This is not all.  There are deductions when you sell these properties.

     If an assessee is interested in selling residential house properties, whether one or more, he would be eligible to get 100 per cent exemption in respect of long-term capital gains (i.e. where the house property is kept for more than three years since acquisition) if the amount of long term capital gains is invested in the purchase of another residential house property in advance within one year of the date of sale of the first house property or within two years after the date of said sale in another property by way of purchase or within 3 years by way of construction.  Great isn’t it?  However, 100 per cent exemption from long-term capital gains can be secured only subject to some procedural rules regarding keeping the unspent amount in a bank namely, ‘The Capital Gains Account Scheme’.  But that is too easy.

     Now as regards the wealth tax, you are not disappointed after studying Income Tax as the assessee can have the following exemptions.  One there is an exemption not only for the commercial property used for one’s own business or profession but also for all commercial complexes and commercial buildings from the levy of wealth-tax.  Besides, if any individual is the owner of only one house property or a plot of land upto 500sq.mts, he would be granted complete exemption in respect of the same from wealth-tax under the provisions of section 5 thereof.  Besides, all residential properties let out for a minimum of 300 days in a year would be completely exempted from wealth-tax.  Likewise, the open land for development purposes would be exempt from tax for a period of ten years.

     Thus, in respect of real estate transactions, an investor can save a good deal of income tax and wealth-tax through proper tax planning.  The time has come, what are you waiting for?

For more: http://www.advocateselvakumar.com

Property Advocate Article Regarding: "ADDITIONS, ALTERATIONS IN THE DOCUMENTS"

(property advocates in Bangalore, property lawyers in Bangalore)

The documents are records of various transactions; it contain certain terms, conditions, consideration amount, names of the parties to the transactions, date of the transaction, the clear and complete description of subject of transaction, so that it can be easily identified. For example sale deed of a property contains the origin, flow of the title, and present status the names of seller and purchaser, consideration amount, easement, and brief description of the property with measurements, constructions, boundaries.  They are permanent records, which are relied on for generations. Such documents must be legible clear, readable free of errors and should not create any doubts; disputes. They reflect the terms of transaction for which both the parties have freely consented.

It is always advisable to prepare draft copies of the documents for verification by both the parties, in case of agreements and understandings.  However the sale deed should be in favour of purchaser.  Hence the vendor receives the consideration.  He has to safe guard the purchaser in trust on the property to be purchased. Any additions, deletions, alterations in the draft copies should be discussed by both the parties and another draft copy as agreed by both the parties.

This second draft copy has to be vetted by legal advisers to ensure that it complies with legal, statutory requirements, there after only final deeds have to be prepared. As for as possible, additions, alterations, cancellations should be avoided.

Additions, Cancellations:

But at times, some additions, alterations, cancellations are inevitable, which are discovered at the time of executions. Any such alterations, cancellations, additions have to be done before presenting the document for registration. All such modifications should be authenticated by full signature of all the parties to the documents. But signature of witness is not necessary for such modifications. Only full signatures and not initials or short signature should be insisted. For cancellations, the original words should be neatly struck off it should be signed by parties to the document.   Erasing fluid should not beused. Registering authority records such additions, alterations, cancellations page wise on the document itself. This validates the additions, alterations, cancellation etc. Any modifications done after registration is not valid and does not form a part of the document. More over document itself becomes invalid. The copies of the registered documents are maintained at registering offices and certified copies issued by such authorities also record on certified copies the number of cancellations, additions and alterations done before registration. They do not contain anything added deleted, modified after registration. So proper care should be taken so that all modifications are done before registration under the full signatures of all the parties to the transactions. If anything has to be changed after registration a separate rectification deed has to be executed.

Filling up blanks:

Some documents may have blanks as the required information will be available only at the time of execution.  Often date of executions is left  blank, until the date is finalised.  The details of demand drafts, cheques like number, name of Bank, Branch  are also left blank.  All such blanks have to be filled up before presenting the document for registration; and should be authenticated by all the parties to the document or executor by full signatures.

Attestation:

Attestation means, witnessing the documents.  Certain documents like will, agreements to sale, sale deed require attestation.  The execution of the documents should be witnessed by two persons, who are majors, and of sound mind.  Both the witnesses should affix their full signatures and should furnish their addresses.   The attestation is not necessary in case of certain documents.

Thumb Impression:

There are many people who cannot sign. The thumb impressions of such people are taken for execution of documents instead of signatures left hand thumb impressions (LTM) in case of males and Right Thumb Impressions (RTM) in case of females have to be obtained on documents for execution. The brief description “LTM or RTM of ---------------- has to be written immediately below the thumb impression. As the persons who affix thumb impressions are illiterate, who cannot read or write, the entire contents of the documents should be read over and explained to them and a separate note to that effect has to be annexed to the document preferablysigned by an advocate.

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Property Advocate Article Regarding "A SMOOTH SALE AND CLEAN BUY"

(An agreement tosell is just the beginning of a transaction. S. Selvakumar takes you through astep-by-step process for a hassle-free purchase of property.)

A smooth sale and clean buy:

An Agreement to sell is the first step taken towards purchase of a property. This facilitates trouble free transfer of property based on the terms and processes that have been already discussed and agreed to between the seller and the buyer.

Sale and purchase of immovable property requires considerable time for completion of process and compliance of various obligations, since the stakes are high. Hence both the parties have to come to an agreement regarding the consideration amount, mode of payment and time duration. The terms agreed are put in writing in the form of an agreement, which is known as Agreement to Sell.   The Agreement to Sell is governed by the provision of the Indian Contract Act 1872 and the Transfer of Property Act 1882.

Being inaccordance with the provisions of the Transfer of Property Act 1882, a legally valid contract between the parties as per the provisions of Indian Contract Act, 1872 is mandatory. This Contract may be oral or written. Further it may be exhaustive or open. An open contract is just a skeleton, referring to the names of parties to the contract, property to be sold and the consideration amount. An exhaustive contract is a detailed one referring to the title, modes of payment, time duration for competing the transaction, obligations to be complied with etc. In immovable property dealings, it is not advisable to go for oral open type of contracts, as the stakes are generallyhigh and consequences are grave. Such contracts need to be diligently prepared referring to minute details. The services of an expert advocate in property matters should be availed. Section 54 of the Transfer of Property Act refers to the Contract of Sale/Agreement to Sell.

It defines the agreement to sell as a contract that a sale of such property that a sale of such property takes place on terms settled between the parties. It further specifies that the agreement to sell does not create any interest in property or charge on such property. The purchaser who has entered into an agreement to sell with the owner of the immovable property is not entitled to any compensation if the property is acquired by the government. Further in case of suit of injunction against the owner, the purchaser who has entered into an agreement with the owner does not have any right to be imp leaded in the suit and heard on the basis of the agreement to sell (Azeemur Rehman Vs Union of India Air 1995 ALL316).

The execution of agreement to sell needs to be witnessed by two persons capable of entering into contract. Further, with regard to witnesses, it is advisable that the witnesses be from the side of both parties i.e. one from the purchaser’s side and one from the seller’s side. And in case of execution of a sale deed. It is advisable that both witnesses be from the purchaser’s side. According to the Indian Registration Act, 1908, the registration of the agreement to sell is only optional. If registered it helps in establishing the bonafides of the transaction. Further, encumbrance certificate discloses the subsistence of such an agreement which deters any further agreements, unless the existing one is cancelled.

The rights and liabilities of the purchaser and seller:

Section 55 of the Transfer of Property Act deals with the rights and liabilities of seller and purchaser. If the agreement to sell does not specifically refer to the rights and liabilities of seller and purchaser, the provisions of section 55 are enforceable. There is a caution against the use of words like “as is where is basis”, since in such circumstances, the purchaser has to specifically perform the contract irrespective of the material defect in the title of property. There is no prescribed format of agreement to sell in respect of an immovable property. It has to be ensured that the agreement is legally enforceable and binding on the parties and that it is not a mere formality.

Persons enteringin to theagreement: 

Persons must be competent to enter into a contract. They must be major, sound mind and not disqualified from contracting. The names of the parties to the contract, their age, father’ s name, in case of married woman, the husband’s name, and places of their residence should be mentioned. Care should be taken to make all the owners as parties to the contract. In case any of the joint owners is not available to execute the agreement, a clause is added to the agreement that all persons having interest in the property shall execute the conveyance deed. A partnership firm is not a legal person and as such all the partners should sign the agreement.

Title to property: 

Nature of the title held by the seller, including any encumbrance such as lease, mortgage, charges on the property should find a place in the agreement. If the executants of the agreement is not the owner, then his status and his authority under which the agreement is executed should be mentioned. A GPA holder can execute a sale on behalf of the owner if he has the power to do so. However, he is accountable for the money received from the purchaser. Any material defect in the property, defect in the title disclosed by the seller, or advantages, benefits which have come to the notice of the purchaser, should be detailed.

Exact locationand description of the property agreedto be sold: 

Location and description should contain the roads on which they front, the existing and former occupations, the municipal number, street, road with complete boundaries, and properties surrounding the property agreed to be sold. It should also include the area of the site, built up area, floors, type of constructions, materials used etc. The details should be exhaustive so as to identify the property clearly.  Sections 21 and 22 of the Indian Registration Act makes it mandatory to disclose the details.

Agreed consideration amount andmode of payment:  

Consideration amount, the price at which the property was agreed to be transferred is very important and an essential portion of the agreement. If the consideration amount is not mentioned, the contract becomes void. The consideration disclosed should be in money value, and it should not attract the provisions of exchange of property as detailed in Sec 118 of the Transfer of Property Act. Whether the consideration amount is adequate or not is immaterial. The agreement should disclose any part payment of consideration or earnest money, the mode, place and time of payment of balance money.

Production andscrutiny ofdocuments of title: 

The agreement should contain a clause that the seller should produce the documents of title in his possession for scrutiny by the purchaser and his advocate. Sec 55 (1) of Transfer of Property Act makes it mandatory to produce the documents for scrutiny.

Possession: 

Possession is the most important ingredient of the sale transaction.  The mode and time of possession should be clearly and specifically mentioned.  It may please be noted that the seller need not give possession of the property to the purchaser on execution of agreement and on part payment.  Possession has to be given on completion of the sale process and receipt of full consideration amount after execution of the conveyance deed.

If the possession is given on part payment of the consideration, section 53 A of the Transfer of Property Act operates. In such an event the seller shall never be in a possession.  The only recourse available to the seller is to recover the balance amount due.

The agreement should also refer to the mode of possession of the property and whether it is vacant or not. If the property is let out, the seller may give a letter of allotment to the tenants, to acknowledge the purchaser as the future transferee. In such cases, a clause regarding token delivery of possession by the purchaser, and issue of assignment letters should be included.

Period ofcompletion of saleprocess: 

The sale agreement should contain a clause stipulating the time within which the purchaser will pay the full consideration amount and get the sale deed executed and registered by the seller. It is always advisable to pay less amount of the sale consideration as advance and further, it should be kept in mind that the balance maximum portion of the sale consideration must be paid only at the time of registration of the sale deed. The agreement of sale should mention the date/period of completion of the sale transaction and registration of sale deed. The date for paying the maximum portion of the balance payment must be mentioned, as at the time of registration.  It is preferable to construct the sentence in such manner for eg. “The balance payment shall be made on or before 30.10.2003, i.e., at the time of registration of sale deed”.

Conditions and obligations to becomplied with: 

There may be local laws and other statutory obligations to be complied with for completion of sale. Permission may have to be procured from certain institutions. Any such obligations to be completed and the time for such acts are to be incorporated in the agreement.

Expensesto be met: 

Sale process includes various expenses like legal fee, stamp duty, brokerage and expenses towards statutory clearances. Terms of agreement should be clear as to who has to meet these expenses.

Miscellaneous: 

The agreement should also contain penalties for non-performance of the terms of the agreement. The onus on the seller is that he shall during the period between the date of agreement to sell and actual handing over of the property to the purchaser, not create any charges no the property and at the same time maintain the property.

Remedy:  

If any of the parties fail to perform, a party may sue the other party for specific performance as per the terms of the agreement. The limitation available is three years and it starts from the date on which the act is to be performed. For example, a sale agreement is dated 1-7-2003, where it is mentioned the purchaser should pay the final installment of consideration and get the conveyance completed by the seller on 31-08-2003. The Purchaser, however, failed to pay the final installment on 31-080-2003 and the limitation started from the date. The agreement to sell is to be executed on a requisite stamp paper as prescribed by the state.

Purchase of property is a transaction where the parties to the transaction must be of identical mind to ensure smooth and uncomplicated execution of the transaction. The agreement to the sale contains all the terms and conditions on the basis of which the physical process of transfer of property will take place on a step-by-step basis. The agreement to sell clearly defines the duties of the buyer and the seller and the tasks to be performed by each, ultimately leading to the registration of the sale deed and thus ensuring a successful and stress free sale and purchase of immovable property.

For more:

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Property Advocate Article Regarding "A GUIDE TO REGISTRATION NORMS"

Propertybuyers need to be careful before and after registration of property to avoidunnecessary hassles in the future.

Purchase of immovable property comprises various steps, broadly categorized as pre-registration and post-registration activities. Post registration activities are subsequent to the registration of Sale Deed.

1.    Obtain original documents of title from the seller and compare them with the copies, which the purchaser’s advocate should have scrutinized. If the advocate calls for other original documents or certified copies, ensure he gets such documents. It is always advisable to apply for additional copies of the Sale Deed.

2.    Register the application for updated encumbrance certificate with the sub-registrar office on the day of registration itself. Such Encumbrance Certificate should contain the registration details of purchaser’s Sale Deed.

3.    The possession of the property is of vital importance.  Inspect the property a day before registration.  Make sure that the property is asper the agreement to sell. As per the terms of the agreement, the seller should hand over the vacant possession and the purchaser should receive all the keys of the property at the time of registration.

In case of vacant sites, please put up a display board with the wordings. “This property is owned by Trespassers will be prosecuted”.  Fencing of such sites, though expensive, is preferable.  Periodical visits to the site are a must to detect encroachment. The purchaser should verify that all the taxes, statutory payments in respect of the property including power and water charges are paid up-to-date.

He must collect all the paid receipts and also verify at the concerned offices. Power and water supply agencies collect deposits from the consumers. Purchaser should collect such deposit receipts from the seller. After registration of the sale deed, the purchaser must ensure that the Khata in the records of the local bodies, Gram Panchayats or the City Corporation is transferred to his name. 

Both the seller and purchaser have to sign the application for transfer of Khata, which should be done simultaneouslywhile signing the sale deed.  This is necessary to avoid any disputes and complications at a later date. Duly filled in Transfer of Khata application with a copy of the sale deed is to be filed with the Gram Panchayat / City Municipal Office against acknowledgement.

Local bodies transfer the Khata in the name of the purchaser on collecting a transfer fee, generally 2 percent, on the stamp duty paid on Sale Deed and issue written confirmation of transfer in the name of the purchaser. While transferring the Khata.  Local bodies, usually 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.

After the Municipal authorities transfer the Khata to the purchaser, the water meter and the power meter installed are required to be transferred. Verify the deposit and charges paid receipts carefully, which should be in the name of the seller. Obtain a letter from the seller addressed to the respective authorities to transfer the meters, including the deposits paid in the name of the purchaser.

The purchaser should, without delay, apply too the power/water supply authorities to transfer the meters and the deposits in his name. The original authorization letter of the seller and a copy of the new Khata (in the name of the purchaser) are to be enclosed with the application of transfer. The authorities will issue written confirmation of transfer and raise bills in the name of the purchaser. Obtain periodical Encumbrance Certificates at least once a year, which should be a routine exercise.

Power of Attorney:

Power of Attorney means the power or authority given to a person (agent) by an individual (principal) to act on his behalf or on behalf of a group of individuals in business matters or any other matter. It plays a vital role in transferring the lawful ownership of immovable property like land, building, and water source, from one person to another. The person who holds the power is called the Power of Attorney Holder. He is employed bythe principal to take care of his dealings with third persons.  

        

A person competent to contract can execute a Power of Attorney.  He can appoint one person or several persons to act on his behalf. Where several persons are appointed as attorneys, it is advisable to mention as to how they will act – jointly or independently. If this is not mentioned, then they are at liberty to act jointly.

Power of Attorney, generally speaking, is of two types.  Power of Attorney for a single specific purpose is known as “Special Power ofAttorney” and the one involving more than one work or transaction is called “General Power of Attorney”.

The duration of special power of attorney may be for a particular period or for an indefinite period until the task is completed. A General Power of Attorney may continue to be in force until it is revoked or by death of either party. A registered Power of Attorney can be revoked by a Cancellation Deed.

Though, in general, a Power of Attorney is revocable, it cannot be done so in matters pertaining to debt security till the debt is cleared even though the debtor is not alive. It can be revoked if the principal becomes of unsound mind or he is declared insolvent. It cannot be revoked if it is made irrevocable. However it should be registered by paying applicable stamp duty. Power of Attorney attracts various provisions of The India Stamp Act, Powers of Attorney Act, Registration Act, The Indian Contract Act, and Indian partnership Act, and the Indian Evidence Act.

A Power of Attorney is divided into ten categories according to the stamp duty payable. A Special Power of Attorney is given for a court case, for appointing one attorney in place of another, for collection of debts and for admitting execution and a General Power of Attorney is given for selling shares, to execute a Sale Deed, to prepare a layout and sell plots, to raise money through mortgage of property, to recover rents and many other acts.

A Power of Attorney need not be registered except in the case of an immovable property is involved. According to the Registration Act, if a Power of Attorney gives power to present documentsfor registration, then it must be executed before and authenticated by the Registrar or the Sub-Registrar.

If the Registration Act is not in force at a place where the Executants lives, then a Magistrate’s authentication is necessary. If the Power of Attorney is registered outside India a Notary Public and Court Judge, Magistrate of that country, or Indian Consul or Vice-Consul or a representative of Central Government must authenticate it.

A Power of Attorney is executed in the form of a legal document generally in the first person and begins either as “Know all men by these presents that I …….” or “By the power of attorney I ………..or “This Power of Attorney made and executed o this……………….”

After a brief introduction, the operative part is brought in. Thereafter, the specific powers given to the person are mentioned in separate paragraphs. After these a general clause is added empowering the attorney to do such lawful acts and deeds, as he deems fit and proper in the performance of his duties.

It is the duty of the agent, the Power of Attorney holder, to act honestly and faithfully on behalf of his principal, the giver.  He is legally bound to perform the tasks according to the wishes of the principal. If the agent acts otherwise and the principal suffers any loss, he must compensate the principal. He is bound to keep all accounts in a proper manner and produce it to the principal and demand. An agent possessing authority to carry on business has authority to do every lawful thing necessary for the purpose. Being a legal document, a Power of Attorney must be strictly interpreted and understood. Therefore special care must be taken while drafting General Power of Attorney.

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