PROPERTY POSSESSION RIGHTS

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

Possession In essence means holding an immovable property in possession with or without title of ownership. It is a continuous act of claiming exclusive use of the property as if the holder owns the property to which he may or may not be having right of ownership. Possessions are of various types. Adverse possession,symbolic possession, possession under an irrevocable power of attorney, possession under lien and possession under part-performance of a contract are a few important ones.

A person inactual possession of an immovable property has certain right and interest in the property he is holding. The possessor has such a strong control over the immovable property that he can keep others out from occupying it. Unless otherwise proved, possession may be taken as title of ownership. Mere possession of an immovable property does not mean that the person is the real owner of the property.

Holding a property after a decree is passed for vacating it, even after enough time is given for vacating the premises, is illegal and cannot be termed as permissive possession, ownership are not one and the same. Possession means not only physical possession (or constructive possession) of a property but also full control over it.Occupation means the right to hold and occupy a property. Ownership means lawful possession of a property which may not come with actual physical possession of property.

A landlord gives his agricultural land to a tenant for cultivation. Though the property is the same, the rights enforced are different. The landlord possesses the land without occupation and the tenant cultivates the land without possession. The mere right to cultivate does not confer the right of possession on the tenant.

Similarly,In a mortgage, the tenant as the mortgagee is in actual physical possession of an immovable property and the landlord as the Mortgagor is the true owner of the property.Here the mortgagee possesses the property without ownership and the Mortgagor owns the property without occupation. Possession is temporary.Ownership is permanent.

Adverse Possession means a person possessing an immovable property which is unfavorable, unhelpful or harmful to the interest of the rightful owner. Adverse possession is possession of a property by a person on his behalf or on behalf of some other person on which the true owner has a right of immediate possession. If, however, the true owner does not enforce his right within the time limit stipulated under Law of possession of the property becomes adverse to the true owner.The result is that the true owner not only loses his right, title and interest in the property but also cannot maintain a suit in a court of law.

Possession must be hostile in total denial of the title of the true owner. The Possessor must be in actual possession of the property under a claim of right. The property must be in his continuous possession and the people in the neighborhood must know that he has been staying on the premises peacefully and continuously for a long period of time and paying taxes in his name so as to show that the title of property is adverse to the true owner. It must be open and hostile enough for the interested parties to come to know of it.

A person,who exclusively holds an immovable property physically,openly, peacefully and without interruption by the true owner for a period of 12 years or more, is considered to have acquired the ownership and title of the immovable property by adverse possession.The expression adverse possession indicates a hostile or unfriendly possession, which is either expressed or implied by open denial of the title of the true owner.

Adverse possession is a one- sided act.Therefore, it cannot be documented. A person holding a property for a long time does not mean that title of the property can be denied to the true owner.Possession turns adverse only when the rights of the possessor and the true owner do not match.The person holding possession of the land should hold the same on his own behalf or on behalf of some person other than the true owner, while the true owner all along has a right of immediate possession of the property.

Further possession to constitute adverse possession should be exclusive and actual physical possession. It is not at all necessary that the true owner should have actual knowledge of the adverse possession so long as it is open and the interested parties have knowledge of it. Also, it is not necessary that the person claiming the title of adverse Mr. A, who claimed to be a 'thika tenant' since 1966 was renting out the property to tenants. However, he had all along been claiming to be the attorney of Mr. B. It was only since 1975 that Mr. A started depositing rent in his own name. Mr. A filed a suit in 1982 for permanent injunction seeking to restrain the owner from taking over the property from him. The court heard Mr. A's case and held that Mr. A had been a trespasser on the property, but started asserting his rights only from 1975 and not earlier. The court held that the suit filed in 1982 was pre-mature, as at the time when the suit was filed, Mr. A. was not in adverse possession of the property for 12 years.

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YOUR HOME LOAN AND FINANCIER

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

Selecting a house to suit one's needs and taste is a difficult task. After moving into newly constructed or purchased house, residents complain of various shortcomings, and often feel that previous house was more convenient.

Choosing a suitable home financier is even more difficult, it requires lot of study of various schemes, interaction with the present borrowers. Market is flooded with financiers, offering different schemes supposed to suit borrowers' needs, glossy advertisement proclaiming to save a lot of interest as though financial institutions are charitable institutions doling out money for acquisition of house.The borrower needs to be very selective and careful while choosing the financier.

Your Banker

Generally every individual will have a bank account and have personal relations with the bank. The bank having dealt with the account for many years will have adequate knowledge of financial position of its client and many a times will be a family friend.

Housing finance is of a long duration, generally with a minimum of 15 years and a maximum of 25 years. It is but natural to have ups and downs during their long period with fluctuation in income, may be owing to illness, expenditure on marriages, mishaps in the family leading to temporary cessation of payment of equated monthly installments. Your banker should be able to understand your difficulties and co-operate with you during those difficult days.With the enactment of SRAFESI Act, the banker may take possession of your house with anotice of 60 days and there after may sell it. So it is always preferable to choose your long time banker, for financing of acquisition of house, who will not resort to aggressive measures in the event of default/delay in repayment of loan.

Amount of loan

Many new era bankers sell their products, home loans by adopting aggressive methods and also lure you to borrow big loans, which in future may become difficult to service. Borrower's failure to repay the loan as agreed would be a boon to such bankers, who may take possession of the property and sell it and add various expenses to borrower's liability.

One should not always anticipate that income will regularly increase until retirement. Inflation frequently erodes savings. Prepare cash flow statements by taking into consideration the probable expenditure on providing education of children, marriages, illness and unforeseen expenditure. Correctly arrive at your wise surplus funds, portion of which may be directed towards equated monthly installments, based on which the loan amount may be arrived. Please avoid directing entire surplus to repayment. It is advisable to seek the help of financial consultants.

Repayment period

Though the loans are available within repayment period of25 years or more it is viable to repay the loan in 10 to 15 years so that interest burden is not too much. Repayments in five years or less may be feasible for small loans for a couple of lakhs. EMI for one lakh of rupees alone at 7.5% will be Rs. 2000/-. Do not stretch the repayment until retirement, but ensure that loan is closed at least a couple years before retirement.One should not expect that his terminal benefits to take care of repayment.Terminal benefits are meant for future unencumbered happy living.Choose step-up or step-down repayment depending upon your needs.

Interest rates

There are two different types of interest rates viz., floating and fixed. Some institutions offer different types of fixed rates, semi fixed, fixed for certain period, a combination of fixed and floating.

Floating rates are related to market condition and may increase or decrease. Fixed rates are supposed to be fixed for entire period of loans, but loan agreements of many financial institutions have conditions where fixed rates are also revised under certain circumstances. Floating rates are preferable where the interest rates are going down and the repayment period is small.Fixed rates have to be opted where interest rates are going up and repayment period is long.At present interest rates are at lowest, fixed rates are preferable.

Card Rates

Though financial institutions advertise their lending rates, the advertised rates are called card rates. But actual lending rates depend on the income of the borrower and his negotiating skills. This also is related to risk involved, higher the risk, lower the income, interest rates will be more.Many banks reduce their card rates in case of borrowers with good income and lower risk.

Documentation

Borrowers have very little choice in documentation. Each financier has his own set of documents and will be made available to the borrower at the last minute. They are predominantly one sided in favor of financiers. But borrowers should study each and every clause, conditions, and seek clarification wherever required. They should obtain a copy of all documents executed.

Uninvited Borrowers

Every financial institution has its own list of category of people to whom finance is advanced.It is based on the experience of the institution, and category of people whose income is not assured, litigant minded people and the people who may influence the repayment. Politicians, advocates, film and TV,artists, Journalists, Police, are among a few who are on negative list. Such borrowers may approach their regular bankers.

Direct Selling Agents

Of recent times, direct selling agents are very active in the field. They are just agents of the financial institution to procure business. They have a sweet tongue, work for commission and will be in touch with you, until the loan is disbursed. You cannot get any service from them once your loan is sanctioned by the bank. The borrower should develop personal rapport with manager of the financial institution to have better after sales service.

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DEFINING NECESSITY OF AN APARTMENT SOCIETY

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

In Bangalore, rapid growth of the Apartment culture is seen for the last five years.Now-a-days the educated people generally opine that owning an Apartment is safer than an independent house.After the hectic day in office or business, one would like to socialize for some time. In such case, Apartment living offers excellent opportunities for group living with a diverse culture.

Object of the society:

The motto behind forming the society is to build harmonial relations with a bond of common habit and common usage and inculcate the fellow feelings, which itself transforms into a new community wherein they live as each is for all and all for each.Further such societies are also necessary for maintaining Electricity,Water Supply, maintenance of lift,Security, Cleaning of the premises, Parking,Collection of Garbage, preserving various statutory and accounting records. Apart from this, the society also looks after affairs, which includes economic betterment and social welfare.

Constitution of the society:

After completion of the construction of an Apartment,Owner of the flats/residents of such apartment, form an association, to take care of the needs of the residents and maintenance of common facilities. The society must consist of minimum of 7 members.In addition to the above, Managing Committee should consist of at least one or two lady members for effective governance of the society.

Mandatory registration of the society:

After formation of such societies, the same has to be mandatorily registered under the Karnataka Apartment Ownership Act or Societies Act. Since most of such societies are functioning without getting it registered, it is advisable to register in order to give legal sanctity and clarity for their activities.

Participation of the members:

The members of the society should actively and jointly participate in casting the vote for appointment of the members to the Managing Committee.  They should participate in every General Body meeting and appoint the Managing Committee members who are honest,disciplined,duty conscious,and hard working. Generally, retired officers are preferred to be employed as the Manager of the said committee, as the presence of the aforesaid aspects and qualities are essential to run the Society efficiently who can carry out their duties at the best of their abilities.

The members of the managing committee should not have the impression that they are the landlords of the Society.Further, they should also not dictate their own terms and conditions or their say in the Society but have to keep in mind that they are the respected persons duly appointed by the members of the Society to look after the interest of members of the Society.

The following points are required to be covered in their bye-laws in order to practically sort out issue, which may arise now and than such as:

1)  The administration of every property shall be governed by bye-laws, a true copy of which shall be annexed to the Declaration.No modification or amendment to the bye-laws are valid, unless set forth in an amendment to the Declaration and such amendment is duly recorded and a copy thereof is duly filed with the competent authority.

2)  The bye-laws shall provide for the following matters, namely:-

a) The election for the  Board of Managers should be among the apartment owners and that the terms of atleast one-third of the members of such Board shall cease annually;the powers and duties of the Board, the compensation, if any, of the members of the Board, the method of removal of the elected  members from the office of the Board; and whether or not the Board may engage the services of a Secretary, a Manager or Managing Agent, and specifying which of the powers and duties granted to the Board by this Act or otherwise may be delegated by the Board to either or both of them;

b) Method of calling meetings of the apartment owners; what percentage, if other than a majority of Apartment owners, shall constitute a quorum;

c) Election of a President should be from among members of the Board of Managers and he/she shall preside over the meetings of such Board and of the Association of Apartment Owners;

d) Elected  Secretary should keep a minutes book where in resolutions shall be recorded;

e)   Elected Treasurer  should keep the financial records and books of accounts;

f) Maintenance, repair and replacement of the common areas and facilities and payment therefore;

g) Manner of collecting from the apartment owners their share of the common expenses;

h) Designation and removal of persons employed for the maintenance, repair and replacement of the common areas and facilities;

i) The method of adopting and of amending administrative rules and regulations governing the details of the operation and use of the common areas and facilities;

j)  Such restrictions on the requirements respecting the use and maintenance of the apartments and the use of the common areas and facilities not set forth in the Declaration, as are designed to prevent unreasonable interference with the use of their respective apartments and of the common areas and facilities by the several apartment owners; and

k)  The percentage of the votes required to amend the bye-laws.

3)   The bye-laws may also provide for the following matters, namely:-

a) Subject to the provisions of this Act, provision for regulating transfer or partition of any apartment and percentage of undivided interest in the common areas and facilities appurtenant to such apartment, subject to such terms and conditions as may be specified in the bye-laws;

b) Provisions enabling the Board of Managers to retain certain areas of the building and lease to non-residents for commercial purposes and for distribution of resulting proceeds to the apartment owners as income or application thereof in reduction of their common charges for maintaining the building; and

c) Any other provisions, not inconsistent with the provisions of this Act, relating to the audit and accounts and administration of the property and annual and special general meetings, annual report and the like.

These guide lines are the golden rules which are required to be followed for the smooth functioning of the apartment societies.The duty also lies on the co-owners of the apartment to duly co-operate and coordinate with the functioning of the society which in turn contributes for their peaceful enjoyment.

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TIPS FOR PROPERTY REDEVELOPMENT

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

Who will not jump at a deal in which the builder offers residents of old buildings a good amount to get a refurbished flat with additional space? This is what has been happening recently. Not only does the flat seller receive the cash but he gets a monthly rent for his temporary accommodation also. When the new property is prepared he gets a, refurbished, newly built flat in place of his old one.

This is done by builders for the purpose of redeveloping the property and adding extra floors to a certain building.By selling the extra flats they earn revenue.Depending on whether the resident is requested to move temporarily or permanently the builder will pay the money to the present residents.For a temporary shift the builder will give money for the other accommodation till reconstruction is complete.Builders sometimes also give post-dated cheques.These should be accepted only if the money paid in advance is enough for at least 18 months of the rent. You should calculate if the sum given would be adequate till you come into the refurbished home.

If you are vacating the flat permanently you would get a larger sum of money from the builder depending on how your property has been evaluated.You should ensure that the amount is enough for you to buy another flat after subtracting tax payable.You should request a bank guarantee in order to prevent you of being defrauded.The builder deposits this amount with the bank that would be given to a resident if the builder does not finish the project within the time promised.However a builder cannot redevelop a building or a society if 100% of the families residing therein do not agree for it.

Before you ultimately give the keys of your home to any builder you should ensure that your needs for the future are taken care of.You should know the way of entering into a redevelopment contract keeping in mind your needs. In these deals the resident has to decide the terms and conditions. Therefore, the flat owners or a housing society need the services of a professional lawyer and architect to guide them. The lawyer would make sure that present and future legal issues are tackled effectively.He helps to formulate the documents according to the law.

Before you give the project to any builder you should examine his track record. Your architect may be able to help you know if the chosen builder has finished his previous projects within the time promised and has paid the sum as promised in the contract.

An architect will assist you in knowing the worth of the property upon its valuation.This is a significant factor in deciding the amount offered by the builder. In the later reconstruction time the architect would be a watchdog to make sure that sub-standard materials are not used by the builder for construction

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SOME TIPS ON REAL ESTATE INVESTMENTS

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

The real estate investment has provided many investors with positive cash flow, tax benefits and satisfaction of making an: investment in a tangible asset. However, like in any other investment, there are many intricacies and trends in the market that need to be understood for peaceful possession and enjoyment of the property.There are a large number of investors who invest their hard earned money without a thorough examination of the documents and the credibility of the vendor and thereby land themselves into problems after their investment.Therefore, it is necessary to take some precautions before investment.

Investment in property carries with it a great potential for creating wealth and it requires taking some potentially difficult decisions. Reinvestment in the property and time management all needs careful consideration.

Property investments can be the shining lights in your personal or business financial portfolio.Most of successful investors have free and clear properties. You should aim to reduce your debt as soon as you can by reinvesting your cash back into your property mortgage payments which in turn raises your net worth. Do your homework. Don't do anything alone. Work with professionals or proven successful investors to avoid finding yourself in damage control.

By aligning yourself with the right professional you can avoid the likely common mistakes so that you can ensure an excellent return on your investment.Cash flow,capital appreciation, tax benefits, and pride of ownership are just some of the things that need to be addressed before you make an investment.

An experienced real estate professional will render very useful service in evaluating your needs and in suggesting you suitably. Make sure that you have the right agent.Predicting constant appreciation in the value of the property is extremely difficult if not impossible for the unseasoned investor.Property which eats away cash every month can drain your working capital.This can create stress, frustration and become quite painful.A strain on your cash flow may cause you to sell the investment before the benefits of ownership are ever realized.

Check everything concerning the property under consideration devolution history, rents, payment of taxes, expenses,deposits etc. Ask the tenants about pest problems, structural damage or recurring problems.Don't overlook anything. When investing your hard earned money be sure and use sound business judgment. Protect yourself against the risks that come with investment property.Take insurance cover for your property.The list of documents to be examined and the statutory requirements to be fulfilled can be very many.They may include obtaining Building permits,adherence of zoning laws, building bye-laws, examination of rental and lease deeds, if any, examination of loan documents, scrutiny of title deeds, etc. If you are not trained to look into these documents yourself then it is essential to engage a qualified professional to approve all of these for you and only then you may conclude the deal. But whatever it may be don't attempt to do it alone.

Do comprehensive background checks on any prospective tenants. Previous landlords,employers,financial references,credit and judgments are all extremely important. If there are any questions do thorough research.Drive by their previous residence.A little work upfront can save tremendous problems later.

Charge fair rents,treat your tenants with respect and respond as quickly as possible to their needs. It's a lot less costly in the long run to take care of the little problems before they become big problems.Get letters from tenants confirming the status of tenancy.Make sure their version of the rental or lease agreement corresponds with the sellers interpretation.

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INSURING BUILDINGS AGAINST RISK

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

Insurance is an agreement between two parties, namely the owner of a property (insured) and the insurer (insurance company),whereby the insurance company undertakes to indemnify the owner of the property the financial loss that the owner may suffer in case the property is damaged or destroyed by a cause for which the insurance policy is taken.Insurance is one of the ways to protect buildings against natural losses and vandalism.The types of coverage available include fire, consequential loss, personal property, public liability, casualty,and surety bonds, workers' compensation.The risks are covered only after the premium is paid and the policy liability is limited to the insured sum and for a specified time limit till the policy is kept alive.

In India, an insurance company has come out with a scheme for householders to cover various risks with a single policy protecting the members who permanently reside in the house, including domestic and electrical appliances. Another company covers the possessions against different disasters, including fire, natural accidents, explosion of gas cylinder, bursting of water tanks and pipes,impact damage caused by vehicles, riots, strikes,maliciousacts, burglary and mechanical breakdown of domestic appliances and so on.

Title Insurance Policy:

Under this policy, the policyholder is protected from losses arising from defects in the title. Based on the enquiry the insurance company determines whether the title is insurable.This is the best defence of the title. The company will defend any suit based on an insurable defect and pay claims if the title proves to be defective.

Fire Insurance Policy:

This policy covers against direct loss or damage to the property due to fire. The actual amount, which the insured will receive depends on the actual loss suffered.Full reinstatement can be received only if the property had been adequately insured by payment of appropriate premium.If the building had been underinsured,only proportional sum will be paid.The value of the property is arrived at the reinstatement cost irrespective of any other value. Normally, the value of foundation is excluded.

Sometimes, an old building which is destroyed completely by fire cannot be reinstated in its previous condition due to restriction by changes made in the local municipal laws.In such a case, the insurance company may not compensate the insured of the loss suffered by him on the building cost that is not cleared.If loan is availed while purchasing a property, the mortgagee insists on the insurance cover of the property.

Earlier, the value of personal properties in a house used to be only 25 per cent to 50 per cent of the value of the house. At present, the value of personal properties in a house has increased substantially.

Public Liability Insurance:

This policy covers the damages that may be inflicted on a third party by the act of omission or commission The cost of insurance can be reduced in several ways like accepting higher deductible amount, installing security devices, installing fire alarms, and by comparing various terms and conditions issued by insurance companies.

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REAL ESTATE IS STILL PREFERRED AS A GOOD INVESTMENT OPTION

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

The real estate sector plays a significant role in India's economy. Almost 5% of the country's gross domestic product(GDP)is contributed by the housing sector. Real estate in India has been characterized by an increasing presence of a large number of public companies, along with the opening up of this sector to foreign direct investment (FDI) and private equity firms. This has increased the discipline and accountability of businesses houses undertaking large-scale real estate developments.Indians have an innate propensity to own homes.This, with rising income levels following India's rapid growth, has resulted in a phenomenal increase in the demand for homes.

The country has started viewing property as a preferred investment option, given that returns are pegged between 11 % and 15%,compared with bank deposits,which seldom offer returns over 10% a year.Prices of homes, therefore, have increased at a steady pace in the past decade.

According to Dun and Bradstreet Corp.,a provider of credit information on businesses and corporations, the total value of real estate development in India was estimated to be around Rs.67,480/- crores, growing at an annual pace of30%.This growth is fuelled by the growth in realty development in organized retail, followed by housing and information technology and information technology-enabled services.

In recent times, real estate has been seeing a plunge in demand with retail shying away from exorbitantly priced spaces or paying high rentals. Reduced consumer spending has also translated into a retail slowdown. Many firms have also decided to relocate from high to lower cost locations, leading to vacancies going up in retail and office space.

Interestingly, a careful look at the performance of the sector reveals that the pace of activity has been shifting to smaller cities. Several reasons could cause this shift. First, speculative investments in real estate, which have been largely confined to the metros, resulted in greater price volatility in these cities.

Secondly, the high price of real estate in large cities has caused a number of offshore companies setting up operations in India to expand into smaller cities, resulting in a substantial increase in demand.

Thirdly,builders and developers have mainly focused on high-end housing projects in large cities. The recent economic slowdown has meant large stock of unsold inventory. They have, therefore, shifted focus on developing projects aimed at medium-income, middle-class households. Lastly, the special economic zone policy has also resulted in a shift of activity from large to smaller cities.

So, where are we heading? The advent of the private sector in real estate and the government's proposal to offer fiscal concessions and creating an enabling environment for housing development have led to rapid growth in private investment in housing, with the emergence of developers mainly in metropolitan centers and other fast-growing towns.The growth has been fuelled by rising business opportunities in new and emerging enterprises, increasing income levels, low interest rates, employment generation and demographic changes.

The real estate market has also been boosted by a proposal to permit 100% FDI in the sector. Also, a significant factor that drove the growth of the housing market was easy availability of bank finance at affordable interest rates.Finally, it is important for policymakers to be vigilant and track the pace and economics driving the evolution of the sector.There should be adequate supervision to prevent reckless credit growth to fund its expansion.

India's favorable demography, low mortgage penetration, falling interest rates and ongoing infrastructure demand will keep the retail real estate downturn from being protracted. The fundamentals of the sector are good and its growth should continue in the foreseeable future.

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