Before
entering into an agreement for purchase, verification of title is very
important. It is not merely tracing the title but also examination of the
genuineness of the records, identification of the property, notification in
newspapers and physical possession of the title of the property. Clear and
marketable title free from doubts and encumbrances with a right of physical
possession of the vendor are necessary ingredients for peaceful possession and
enjoyment of the property by the purchaser.
The
first and foremost step in purchase of property is the scrutiny of title deeds
before entering into an agreement with the seller / vendor. The ownership can
be traced from the title deeds and the revenue records. The following are the
methods of scrutiny:
The
origin of the property is very important to trace the title of the property. It
is otherwise called “Root of Title”. To trace the title of the property,
examination of the origin of the property up to a maximum period of 43 years
may be required in most of the cases. If a person is enjoying the property for
more than 30 years, he will get title by adverse possession against the
government as per the Limitation Act. As
per Section 90 of the Indian Evidence Act 1872 any document executed 30 years
before is presumed to be valid. Will,
Partition, Family Settlement are not considered as concrete origin. Some of the
old revenue records like Index of Land, Record of Rights, Phani, Survey
documents are considered as better origin.
After
ascertaining the origin of the property, it should be followed by methodical
examination of later events and further transactions in an uninterrupted and
sequential manner, involving the previous owners and the present owner of the
property. Here, the purchaser's advocate has to very carefully look into all
aspects from various legal angles as to how the property was transferred from
the previous owners to the present owner. Such a transfer may be by possession,
inheritance, settlement, will, sale, mortgage, release, gift etc., involving
such intermediate parties. To get a clear picture of rightful ownership, title
and interest, the advocate has to carefully examine the title deeds and other
supporting documents like revenue and other records. It is also necessary to
verify the identity of the names of parties and their family connections and
examination of the proceeding involving the parties before any Court of Law and
other legal forums and authorities including revenue authorities, if any. While scrutinizing the documents, Advocates
have to apply their mind and logically link the relevancy of one document with
the other.
“Present
Status” is an important factor to establish
ownership over a property. The advocate has to find out who is the
present owner and what are the title deeds and supporting documents the vendor
has in his possession, whether it is an ancestral property or self acquired property,
who are his legal heirs etc. If the legal heirs of the vendor are major, the
vendor must ensure their presence while executing the Deed of Conveyance. If
they are minors, the vendor has to get the permission from the court before
executing the Deed of Conveyance. In some cases the vendor may conceal the fact
of existence of legal heirs. Therefore, the advocate must insist upon the
vendor to produce either the succession certificate or the family genealogical
tree issued by the revenue authority. Similarly, it is necessary to verify and
confirm that no acquisition or requisition or any other court proceedings are pending before any authority.
It is also necessary to find out whether there exists any bank loan, charges,
encumbrances over the property.
For
completing the sale transaction, various statutory clearances are to be
obtained from the concerned authorities such as Income-tax, RBI, revenue
authorities, etc. In case of purchase of agricultural land, there are various other
clearances to be obtained before executing the Deed of Conveyance.
The
advocate must find out in whose name the Khatha stands, whether the Khathedar
possesses up-to-date tax paid receipt in his name and up-to-date Encumbrance
Certificate to establish his right, title and interest over the property. The
advocate has to check the Encumbrance Certificate covering the relevant period,
generally for a minimum period of 13 years to 43 years on case to case basis.
An examination of Encumbrance Certificate would go to show as to whether any
kind of charge has been created on the property and whether such an encumbrance
is still subsisting or not. Municipal and other revenue authorities also
maintain records as to in whose possession the property exists, what is the
amount of tax payable on the property and up to what period tax has been paid.
All this can be ascertained from these records.
After
thoroughly scrutinizing the documents, the purchaser or his advocate has to
crosscheck all documents with the concerned revenue or other departments to
ensure that the documents are genuine and are originated from the concerned
departments and that they are not fake. In the case of buildings, it must be
ensured that the vendor has constructed the building as per sanction plan and
according to the statutory guidelines.
The
identity of the property must be checked on the spot. Measurements mentioned in
the documents must tally with actual physical measurement of the land available
on the property. It must also be ensured that there is no encroachment on the
property. In case of encroachment, the measurement of the available land must
be recorded and this must be mentioned in the Deed of Conveyance. The boundaries
in the schedule surrounding the property must be checked physically. Also, the
purchaser may make enquiries tactfully with the adjacent property owners about
the ownership of the property he is proposing to buy.
Though
paper notification is optional, it is always advisable to notify in a leading
local newspaper about the buyer's intention to purchase the property. This is
done to safeguard the interest of the purchaser. Even after examining the
various documents, the Advocate may not be able to find out whether the
property is truly free from any claim or not. A paper notification will beget
response from genuine claimants, if any. Therefore, paper notification will be
of some help to the purchaser to make sure as to the genuineness of the
ownership of the vendor.
In
the case of a vacant site, the purchaser may, with the permission of the vendor
fence the property with barbed wire or he may construct a compound wall and put
up a signboard, if necessary, to display his
ownership over the property.
Even
after entering into an “Agreement to Sell”, the purchaser can continue to make enquirers about the
title. A doubtful title cannot be forced upon the purchaser. Purchaser is not
bound to complete the sale transaction, if there are defects in the property,
material or latent, which are not discernible in the ordinary course. A mere
suspicion of fraud will not make the title doubtful and the purchaser cannot
reject the title.
It would be of great help if a prospective
purchaser utilizes the services of an experienced advocate for a thorough
scrutiny of the documents as to the vesting of the marketable title with the
vendor and genuineness of the documents who on examination of documents will be
in a position to explain to his client about the risk involved in the
transaction and guide him suitably so as to save the purchaser from litigation's.
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