While buying property, every buyer tries to avoid the purchase of the disputed property. There is a certain amount of due diligence that is involved to ensure that the property being purchased has a clear title. A title defect is a potential threat to a current property owner’s right. Having a clear title in the property will allow the buyer to avoid unpleasant experiences and have maximum utilization of his property.
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What if I find a fault in the title after the sale?
Most property owners have the presumption that after all the documents are signed, they are the owners of the property and have all the rights that are involved with the possession of the property. However, there may be certain instances in which the property owners realize the presence of a fault in the title of the property after the sale has been conducted. When the property or asset cannot be legally transferred to another party, the title is considered to be unmarketable.
The seller has a duty to declare that the property that he is selling is free from all kinds of legal and other defects. There can be no contract protecting the seller from his legal obligation to sell property free of all title defects to the buyer. In most cases, there is an express contract in the sale deed itself, which fixes a contractual liability on the seller, undertaken by himself, to compensate the buyer for a defect in his title, if any, when found out in the future, to cover contingencies which were not yet wholly foreseen.
If a sale is conducted and the property is found to have a defective title, the seller may be held liable for damages. Furthermore, the seller may lose all rights to the title.
How to protect property title from hidden facts?
There may be certain hidden facts that are present on the property which the buyer may not be aware of. These hidden facts will always create unpleasant experiences for the buyer. Before purchasing the property, it is important to go over all the documents relating to the property to verify that there is no hidden fact involved with it, which might harass the buyer and will not allow him to enjoy possession of his property.
The following documents can be verified in order to reveal the hidden facts that may be present and to protect the property:
- Encumbrance Certificate, to ensure that there is no hidden charge or mortgage on the property being purchased by the buyer.
- Sale deed, to verify that the seller has not made multiple sale transactions. It may happen that the owner has promised to sell the property to multiple buyers and has collected money from all the parties.
- Due diligence with respect to the title of the property, sometimes the government may notify that the property is being notified for the purposes of an infrastructure project. The current owners may try to sell the property in a hurry to avoid it being declared as a notified property and may make a wrong representation to a potential buyer regarding the title of the property.
- Checking court records to ensure that the property is not tied up in a litigation suit and that the current owner of the property is not a party to a civil suit during the sale of the property to a potential buyer.
What are the common disputes related to real estate properties?
It is observed that property disputes are a common occurrence in India. Such disputes are time-consuming and result in the litigation being conducted for a long period of time. Disputes can be seen to arise due to the event being taken by illegal means such as forceful possession, forgery of documents, etc. Common disputes relating to real estate property are –
The dispute regarding the title of the property
Title fraud can be avoided by verifying all the documents that are related to the property. It is important that the seller has a valid title to the real estate property being sold.
Disputes between builders/developers and buyers
There is an existence of a valid contract that exists between the builder and the buyer. However, there are times when the builders are unable to fulfill the contractual obligations, resulting in the buyer getting stuck. To avoid such disputes, it is important that buyers invest in real estate property which is RERA registered and approved.
Disputes regarding the non-provision of occupancy certificate (OC)
After the construction of a residential project, it is observed that many buyers are unable to move into the house due to the absence of an occupancy certificate from the authorities.
Misuse of rented/leased property
There may be a dispute between the owner and the tenant or the tenant and the welfare association. In order to avoid such disputes, it is important to make a rent/lease agreement with clear rules and exceptions regarding the maintenance of the rented property.
Disputes related to inherited property
Disputes generally occur when a purchaser buys the property without the knowledge of the property being inherited property, or that the property is subject to certain conditions arising from a will.
How to check the titles of flats in societies?
Prospective buyers have to be aware and well acquainted with the paperwork involved in the home buying process. Buyers will have to furnish details and documents to authorities and banks while availing a home loan, but also need to check documents to ensure the clear title of ownership and government approvals.
The following documents must be verified to check the title of a flat:
- Sale deed, a legal document that describes the transfer of rights, title, and ownership of a property by the seller to the buyer for a certain price.
- NOC from a Bank, to ensure that the flat is not mortgaged for a loan.
- Completion Certificate, a document which is awarded after the inspection of the building, stating that it has been constructed according to the building plan and satisfies the necessary standards set by the municipal corporation.
- Occupancy Certificate, a document issued by local authorities, certifying that a building is ready to be occupied by residents.
- Possession Certificate, a document which states that the property is possessed without any illegal means.
- Building approval certificate, a document that is issued when the building has been built according to the requirements of the Building Authorities and has obtained technical clearances for the same.
- Encumbrance Certificate, a certificate of assurance that the property is free from any legal or monetary liability such as an uncleared loan or a mortgage.
- NOC from society/building association, ensuring that the flat in the society has no outstanding dues, and that the bills of the flat have been paid.
- Latest Tax paid receipt
- Utility Bills
How to check the title of the property in court litigation?
There may be a possibility that the property is under court litigation and the owner has not informed the buyer about the same. A suit may be filed against the title of the property or against the owner of the property. It is very important to verify that the title of the property is clear and is not involved in any court litigation.
- The registrar’s office is where all sale deeds are registered and the registrations have to mention details of any court proceedings under a separate sub-head in the respective file. Each property has its own diary number or a file number. While at the time of registration, property owners get the file number, and prospective buyers can enquire about the same from the registrar’s office about any court proceedings by filing an application under the Right to Information Act.
- The registrar’s office has to enter these details within three months of the initiation of the court hearing. It is the duty of the registrar office to update the details of the court proceedings from time to time. In case there has been a judgment, the office has to mention the final judgment and the name of the person in whose favor the court has given its verdict.
While purchasing property, it is important to obtain a good title from the seller. Before paying the agreement purchase amount, it is important to ensure that due diligence regarding the title of the property has been conducted in a through manner, so as to avoid obtaining a property with a defective and unmarketable title. A defective or unmarketable would result in interference with the rights that the property holder has.