Investing in real estate is considered to be one of the safest and most beneficial long term investment plans. Since the time of our forefathers, the land is considered a valuable asset that we constantly strive to own. If you are someone who has never forayed into this sector before, buying a property can be an overwhelming affair. It is very imperative to understand the legal aspects of buying a property as investing in property often calls for lifetime savings. Here are a few important legal aspects to consider before investing in a home.

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How to check if the sale of the property is legal?

Assetscan-legal rulesFinding a property that is free from all legal issues is quite an achievement. With the rapid growth in the real estate sector, the number of disputes over land has also gone high. The real estate law is undergoing various stages of implementation across the country, to make the situation more favorable for property buyers. So, here is the checklist to be followed to know whether the property you are investing in is worth it or not and if the legality of the purchase and sales agreement. 

  • Check for the title papers:

The property should have a clear title, without any dispute. A title search is necessary to identify any legal default in the title of the property as any complications in the title would lead to further legal complications in the future. While buying a new property, the title of the land should be with the construction company. In the case of resale one, study the papers carefully, or visit the property lawyer to check the authenticity of the papers

  • Ask for bank approvals:

By getting home finance from the bank, half of your work is done. Before approving your loan, banks evaluate the property. For an apartment project, several banks offer on-site offers which clearly indicates that the property is legally verified and has all approvals in place. But, remember to check the clauses before signing the loan agreement with the bank.

  • Encumbrance Certificate:

An encumbrance certificate implies that the property is legally free from any mortgage or pending loan. It also includes the name of the previous owner of the property. While buying a resale property this document helps us to know whether the previous owner had mortgaged the property and has paid all the dues.

  • Tally The Site with Actual Plan:

If you are planning to buy an apartment, make sure you get to see the copy of the approved map from the builder which is passed by the local authority. This can give you a fair idea about the area and the construction spree if it illegally encroaches.

  • Checking The  Property Tax Slips:

While buying a resale property, ask for property tax slips from the previous owner. This will give you a clear idea of two factors ― whether the colony or the area you are buying in is regularised or illegal and if the property is rightly registered and there are no dues pending.

  • Project Should have a Registered Society:

Every apartment project should have a registered society along with a resident welfare association. This is a legal process and also gives an idea about the legality of the project and the property you are buying. There are a lot many things you need to do before you buy a property. You might spend all your savings or get a loan from banks. So, it is important to take these points seriously and make a decision with peace of mind.

Who has the legal right to transfer the title of the property?

A proprietor has the legal right to transfer his property by gifting or selling it. A sale legal document, or any deed through which the ownership rights are transferred, is a document that gives verification of an individual’s proprietorship of a property. Legal rights in property can be transmitted only on the execution and registration of a sale agreement in the approbation of the buyer. A transferable agreement is executed to transfer the title from one owner to another owner. Mostly, an owner can transfer his ownership unless there is a legal restriction.

A Latin maxim says: ‘The Nemo dat quod non habet.’ That is the basic principle of the transfer of title under Section 27 to 30 of the Sale of Goods Act, 1930 states laws on the transfer of title. The Latin maxim says that no one can give what they don’t have.

1. Transfer of title by estoppel 

If by his conduct or words or by any act or omission, the true owner of the goods leads the buyer to believe that the seller is the owner of the goods or has the authority to sell them, he can not subsequently deny the seller’s authority to sell them. The purchaser is better than the seller in such a case.

2. Sale by a mercantile agent 

Goods are frequently purchased under joint ownership. In many cases, by the authorization of co-owners, the goods are held by one of these joint proprietors. If the person (who only owns the goods) sells the goods, the property is transferred to the buyer in respect of the goods. The buyer does this in good faith and has no reason to believe that the seller does not have the right.

3. Sale by a Person in Possession of Goods under a Voidable Contract 

If a person acquires possession of certain goods under a contract which is voidable on the grounds of misrepresentation, fraud, or undue influence then the purchaser shall acquire the goods with a proper title if the original owner of the goods sells the goods until the contract is terminated.

4. Sale by a person who has already sold the Goods but Continues to have Possession 

Consider a person who has sold goods but remains in possession of the goods or title documents. This person can sell the goods to another buyer.

If the purchaser acts in good faith and is not aware of the prior sale, a good title for the goods will be issued to the purchaser even if the property contained in the goods has been transferred to the first purchaser.

5. Sale by Buyer obtaining possession before the Property in the Goods has Vested in him 

Consider a buyer who obtains possession of the goods before the property in them is passed on to him, with the seller’s permission. He may sell the goods to another person, make promises, or dispose of them.

Where a second buyer receives goods in good faith and without notice or any other right from the original buyer, he gets a good title.

This rule does not apply to a contract for hire purchase that allows a person unless the sale has been agreed to own the goods and buy an option.


If the conduct prevents a goods owner from denying the authority of the seller to sell, the buyer receives a good title. However, in order to obtain a good estoppel title, it must be proved that the original owner actively suffered or condemned the seller in question as a person authorized to sell the goods.

7. Sale under the provisions of other Acts

  • Sale by the Company’s Official Receiver or Liquidator will give the buyer a valid title.
  • Under the circumstances [Section 169 of the Indian Contract Act, 1872] the sale of goods by a pawnee may convey a good title to the buyer [Section 176 of the Indian Contract Act, 1872].

What are the specific legislations impacting the transfer of the real estate property?

  • Indian Easement Act, 1882:

It is the law relating to easement rights to immovable property.

  • Transfer of Property Act,1882:

This act is a central act that provides principles relating to movable and immovable property, such as sale, lease, mortgage, the gift of property, etc.

  • The Indian Contract Act, 1872:

This Act relates to the execution, implementation, remedies available to the parties entered into contracts.

  • Registration Act, 1908 and Indian Stamp Act, 1899:

This act governs laws relating to the registration of various documents, payment of stamp duty, etc.

  • Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013:

This act governs the acquisition of private land by the government for public purposes or for a company, compensation, and rehabilitative measures in respect of the said acquisitions.

  • The Real Estate (Regulation and Development)Act, 2016(RERA):

This Act governs marketing, development, and sale of the properties to protect the interest of consumers.

  • Foreign Exchange Management Act, 1999(FEMA) and Foreign Direct Investment Policy (FDI Policy):

FEMA and regulations govern the purchase/sale of immovable property in India by citizens outside India. FDI deals with the permissibility of foreign investment in India.

In addition to these laws, the real estate sector is governed by local/municipal laws and customs. The real estate sector in India is also governed by various state/local laws, practices, customs including nuances in respect of urban development, rental control, apartment ownership, property taxes, land pooling policies, land ceiling zoning norms, real estate investment trusts regulations ct 1986, etc.

Fair and equitable distribution of wealth so as to subserve the common interest of all sections of the society has been the guiding principle in the regulation of property by the State through the instrumentality of the law. The focus has been on the socialization of property rather than adopting a narrow individualistic approach.

The rule against unjust enrichment, the doctrine of perpetuity, marshaling, subrogation, part performance, etc. are incorporated in the property law with a view to ensuring just and fair enjoyment of the property and protecting it against all kinds of exploitation.