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 upto 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 enquiries 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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