Transfer of immovable property by sale,
gift, exchange, inheritance, Will, etc is a very natural phenomenon.Out of
these various modes, sale involves payment of consideration (purchase price)
and every purchaser hopes to get perfect absolute title.But
the seller cannot pass on a better title than what he has; any defects in his
title will also pass on to the purchaser, but purchaser having paid
considerable amount wants a perfect unencumbered marketable title.
But
many purchasers do not get the title of the seller verified by advocates who is
having specialised knowledge and experience on property matters, often rely on
real estate agents, middlemen and assurance of seller and seller’s advocates legal opinion.Though they spend lakhs
of rupees on purchase of property, they hesitate to spend a few thousand rupees
on verification of title and later on land in trouble.Most of the times power of attorney is the
only document which is handed over to the purchaser. Some of the reputed builders refuse to give
title papers to the purchaser, dictate the terms and insist that property be
purchased on their own advocates certificate of the title which has just four
lines without referring to the devolution of the property.They also force the purchaser to avail of the
loan from a particular new generation bank.
Title:The title may be freehold or leasehold.
In
case of freehold title, the owner has absolute title without any encumbrance
with power to alienate the property.
But
in case of leasehold the owner will be different who had leased the property to
the Lessee for certain period and the rights are not absolute and the lessee
will be only in possession of the property for agreed period. After the lapse of the agreed period, the
lessee has to hand over the vacant possession to the owner.Such person may transfer only leasehold
rights to the purchaser, if the lease document provides for alienation and the
purchaser is bound by terms of lease deed.
There
are different forms of legal ownership of the property;
1.Government
lands either Central or State.
2.Individual
ownership.
3.Hindu
undivided or joint family ownership of property.
4.Property
owned by a Private Company or Public Company duly constituted under Indian
Companies Act.
5.Property
ownership of a Government Company.
6.Property
ownership of a Co-operative society registered under Co-operative Societies Act
of respective stores.
7.Property
ownership of partnership firms formed and registered under Indian Partnership
Act.
8.Wakf
properties
9.Trust
properties including properties of temples and religious endowments.
10.Property ownership of public societies and clubs registered under societies Act.
11.Property
ownership of Autonomous Institutions (Statutory Bodies) like universities,
electricity boards etc.
12.Property
ownership of Nationalised undertakings and Etc.
Most
common mode of ownership is individual ownership where a single individual owns
the property.
Tracing of title
Tracing
of the title means tracing the history of property through documents,
Government records, how the present owner got property.This is a very complicated exercise and only
professionals specialised in property laws of Central, State and latest court
decisions could help to trace the title.
Though the seller is bound under section 55(1)(a) of the Transfer of
Property Act to disclose any material defects in the property in his title, it
is prudent to scrutinise the title to the satisfaction. A good marketable title is one which is free
from all encumbrances, doubts, and gives the holder full ownership rights to
the exclusion of the rest of the world. The property might have been acquired
by various modes, like sale, gift, settlement, will, succession, partition,
release, adverse possession, allotment, grant etc.
Mother
deed
The
tracing of the title has to start by verification of the earliest document
available,which is called parent deed or mother deed. If the earliest document is not available,
the certified copy must be obtained at the Jurisdictional sub-registrar
office.This earliest document details
as to how the first owner got the property.Generally in earlier times, all the landed property was owned by Kings,
Jodidars, Inamdars and they gifted or granted the land to the people. Such
acquisition document generally will be a Order of the Court, Government,
Statutory Authority, ruler. Thereafter,
the property might have passed through different hands who are referred as
intermediary parties. Such documents
have to be examined in chronological order tracing the devolution of property
to each of the intermediary parties.The
sequence should be continuous without any break till the immediate transferor.In case of any missing link, the records at
the sub registrar’s office revenue department have to be verified to the
satisfaction, but should not be ignored.
But documents like gift deed, partition
deed, release deed, settlement deed are not mother documents and the title of
the executants of such deeds has to be examined. After
tracing the title of the property from the first owner to the immediate
transferor, the latest document which describes how the present owner got the property has to be verified.Apart from
legal documents like transfer deeds, the revenue records like tax paid
receipts, khata, approved plans, encumbrance certificates, mutations,
genealogical trees and other records extracts have to be verified.
The
most important function of tracing the title is investigation, where it is
ascertained that records, documents produced actually exist are recorded in
books, records of respective departments. But advocates certify the title with
a narration “based on documents produced” which does not refer to the
investigation or genuineness of the documents.Often the advocates accept the
latest documents without supporting documents and certify the title which is a
dangerous practice.
Limitations
of tracing the title
Though the title is traced to
perfection by referring to the documents, revenue records and also
investigation, there are certain limitations.
Instances like pending cases, government notifications, prior
unregistered agreements are not easy to trace. These are called hidden areas of
the properties.There may be cases disputing
the title, which are not reflected in the documents. A proper search in jurisdictional courts
would help in tracing such pending cases but multitude and hierarchy of courts
makes it a difficult task. A search also in Government bodies, Statutory authorities,
who have authority to acquire the land is necessary to rule out any
notification of acquisition.Further, No-objection Certificates from urban development
agencies would help.But the possibility of earlier sale agreements which are not registered is very difficult to find out.Proper enquiries with the vendor, neighbour’s and discussions would
help.A paper notification to call for
objections and claim on the property to be purchased would be helpful.
The encumbrance certificates disclose only
transactions which are registered. They do not reflect, oral tenancy,
litigation in courts, tax liabilities, equitable mortgages which is not
registered, oral partition, oral gift under Mohammedan law, unregistered will,
liability of maintenance, General Power of Attorney, etc. Small change in the
description of the schedule of the property will lead the registering
authorities to issue nil encumbrance certificates.EC’s are one of the document to trace the
title but entirely depending on encumbrance certificate is dangerous.
Period of Verification of title
Most of the advocates trace the title
for period of 13 years only. Even many nationalised banks advise their
advocates on panel to trace the title for 13 years and their pro-forma’s are
also designed accordingly which is not correct.It is safe and advisable to
trace title for a minimum period of 42 years or more to weed out any chances of
dispute in title.If a private individual lays conflicting claim on any document
other than mortgage the maximum limitation period is 12 years.The period of
limitation against government is 30 years and execution period is 12 years.
Further, as per section 90 of the
Indian Evidence Act, a document executed 30 years or before is presumed to be
validly executed.The Articles 61 (a) & (b) of Limitation Act provides a
limitation period of 30 years for redemption. Article 61(b) provides a
limitation of 12 years for instituting a suit for recovery of possession
against a transferee who has taken the property from mortgagee for valuable
consideration, and the limitation is to begin to run when the transfer becomes
known to the mortgagor.We shall examine
this with reference to an example.
Limitation period for redemption of
mortgage is 30 years. Suppose a mortgagee sells the mortgaged property after 29
years from the date of execution of mortgage deed without the knowledge of the
mortgagor and before the mortgagor institutes a suit for redemption. The
mortgagor has right to institute a suit for redemption.The mortgagor has right
to institute a suit for recovery of possession of the mortgaged property from the purchaser within a period of 12 years after coming to know of the
transfer. Thus, a mortgagor can lay
hands on the property within 30+12 years of the execution of mortgage deed.
The question of adverse possession is
also relevant in this regard. A person
who remains in actual, peaceful, open and exclusive possession of immovable
property for a period of twelve years or more, expressly or impliedly in total
denial of the title to the true owner is deemed to have acquired ownership and
title to the immovable property by adverse possession.Thus, it is safe and
clear to trace the title for a minimum period of 42 years at least.
Original title deeds
Generally, only photocopies of the
documents are scrutinised.The advocates should insist on production of all the
original title deeds for verification, before finalising the legal opinion to
rule out the possibilities of mortgage by deposit of title deeds which is not
registered.In case of tracing the title of the properties allotted / granted by
statutory authorities and government it is sufficient if the title is traced
from the date of allotment to the immediate seller and there is no need to
trace the title for a period of 42 years.
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