When it comes to real estate transactions in India, there are several parties involved who have a distinct role to play in such transactions. However, there is a requirement for laws to regulate these transactions. This is to ensure that the parties perform their roles properly, diligently, and in good faith to avoid illegalities, to protect the rights of citizens against abuse, and to ensure that definite procedures are prescribed to allow the smooth progress of the transaction.
There are certain laws that a homebuyer needs to be aware of to perform his or her part in the transaction and as a homeowner to ensure the protection of ownership interests and proprietary rights of the owner and discharge of duties towards his or her neighbour’s and other individuals. These laws ensure that the homeowner’s rights are protected and the protection of other homeowner’s and person’s rights by ensuring that the homeowner discharges his or her duties.
Some of these laws are the Indian Contract Act, Indian Penal Code, The Registration Act, The Income Tax Act etc. This article seeks to explain some of the laws that every homeowner needs to be aware of and the importance of these laws.
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The Indian Contract Act, 1872
The Indian Contract Act, 1872, is an important law that a homeowner needs to be aware of.
- When it comes to transferring property from the previous homeowner to the prospective one, a conveyance deed in the form of a sale deed is usually executed for recording important details of the transaction, property, and parties in writing. There is an agreement for sale which is used between builders and prospective buyers when it comes to property under construction.
- This documentary record is proof of the contract between the parties in a transaction and every owner needs to understand the details of the property, parties, consideration, date, and place of execution of the contract for securing his or her interests before, during the and after the transaction.
- This understanding comes from knowledge of the provisions of the Indian Contract Act like the meaning of competency to contract, the capacity to contract, what is fraud, misrepresentation, what is a consideration.
- You need not learn these yourself. You can always consult a lawyer who will explain the necessary tenets of the contract to you and guide you through the process.
- However, it is good to have a basic knowledge of the law like a child is trained in basic first aid in school.
The Income Tax Act, 1960
- The Income Tax Act, 1960 is probably the most important law a homeowner should be concerned with.
- One of the income heads under which a homeowner is a charged tax is on income arising under the head “Income from house property”.
- Under various sections like Section 24, Section 54, Section 80C, Section 80EE and so on, the homeowner can avail exemptions and deductions to reduce his or her tax liability on the income from house property. These provisions allow a homeowner to reduce his or her financial outlay towards tax and save a significant amount of money.
- Then some provisions prescribe rates for the taxation of long-term and short-term capital gains on the sale of real estate property which is a capital asset. The Act also prescribes ways to calculate the value of these gains from the sale of the property to arrive at the amount that has to be taxed.
The Registration Act, 1908
- The Registration Act is an important law that a homeowner needs to be aware of
- A homebuyer may have paid valid consideration for residential property and would have performed his part in a real estate in good faith, but his or her ownership rights in the property are not recognized until these rights are not recorded in the title deed and such title deed and other property documents are not registered!
- The Government recognizes the ownership rights of the homeowner if s/he gets the property documents in his or her possession registered with the authorities.
- Section 17 of the Registration Act states that certain documents like instruments that deal with immovable property be it gifting or selling property or creating, assigning, declaring, limiting or extinguishing present or future rights in the property.
- A homeowner has to mandatorily get his property documents registered for getting his ownership and proprietary interests in the property recognized by the Government.
Indian Penal Code, 1860
- The homebuyer needs to be aware of certain provisions in the Indian Penal Code like Section 268 (deals with Nuisance), Section 441 (deals with Trespass), Section 421 (deals with fraud), and so on.
- Provisions like that dealing with Nuisance and Trespass have a direct bearing on the homeowner’s property rights and obligations.
- If a stranger or unauthorized person is caught trespassing your property, you have all the rights to evict such a person from your property using reasonable
- The homeowner also requires knowing the provisions regarding nuisance because a homeowner cannot abuse his or her ownership rights and the right to enjoy his or her property to cause detriment to his or her neighbors, fellow homeowners or members of the public.
- Unlike the other civil laws, the Indian Penal Code deals with criminal offenses and warrants penal action against such offenses with imprisonment, fins or both.
- For a homeowner to protect his or her property interests and comply with the law of the land, there is a need for the homeowner to have basic knowledge of the India Penal Code, 1860.
Knowledge about the laws of the country is of paramount importance for a citizen when it comes to the rights enjoyed by the citizen and the duties and obligations such citizen discharges towards the nation. A homeowner is a citizen who enjoys ownership and proprietary rights in the residential property and there are certain laws which s/he needs to be aware of to enjoy these rights and to discharge obligations towards the general public.
Where there are civil laws that outline the rights enjoyed by the homeowner, there are criminal laws that prescribe punishment and penal action against persons who abuse their property rights to cause inconvenience and are a nuisance to their neighbors and fellow members of the public. A homeowner cannot seek to escape punishment using the excuse that s/he was not aware of the law. It is presumed that every citizen of India is aware of Indian law.