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:
Origin of the Property:
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.
Subsequent Transfers:
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:
“Present Status” is an
important factor to establish ownership over a property. The advocate has to
find out who the present owner is 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, and
encumbrances over the property.
Statutory Clearance:
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.
Genuineness of documents:
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.
Identity of the property:
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 inquiries tactfully with the adjacent property
owners about the ownership of the property he is proposing to buy.
Paper Notification :
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.
Physical Possession :
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 inquiries 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 litigations.
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