Saturday, 9 May 2015

PURCHASE OF PROPERTY BY SHARE CERTIFICATE


 PURCHASE OF PROPERTY BY SHARE CERTIFICATE


Transfer of immovable properties, particularly through transfer of shares, is very common in Mumbai, Gujarat and West Bengal but not so popular in Karnataka.
The Transfer of Property Act, 1882 defines the transfer of property as “An act by which living persons convey the property in present or in future to one or more other living persons or to himself and to transfer the property is to perform such act” (Sec 5).
The act further describes the word “living persons” to include company, association, body of Individuals, whether they are incorporated or not.
The recognized mode of transfers are sale mortgage lease, exchange and gift. In case of mortgage and lease, the owner of the immovable property retains his ownership rights but transfers some interest, and in certain cases possessory  rights.
Sale, exchange and gifts are transfer of absolute rights in the immovable property by the owner to the other. In sale and exchange, the transfer is for consideration in cash or kind. In gift, the property is transferred to others out of love and affection and no other consideration is accepted and the transfer is absolute without any conditions attached. Section 10 of the Transfer of Property Act mandates that no absolute restrictions can be imposed on transfer of property and only some temporary restrictions may be part of the transfer.
Registration of sale and exchange deeds, if the value of property transferred is rupees one hundred or more is a must. In case of transfer of immovable property is by gift, the document evidencing the gift should be registered irrespective of the value of the gifted property. Section 17 of Indian Registration Act deals with the documents whose registration is compulsory. It includes deed of gift, non testamentary document (other than will) which create declare, assign, limit, extinguish any right, title, interest on immovable property, the value of which is Rs.100 or more.
The Stamps Acts of various states prescribe the stamp duty payable on such documents of transfer. Thus, any transfer of immovable property shall be absolute without permanent restrictions, with power to alienate and shall be by registration of the deed of transfer on which prescribed stamp duty has to be paid. The prescription that the registration is compulsory when the value of the immovable property is Rs. One Hundred or more is only of academic interest, as no immovable property will be less than worth Rs.100. But, we are dealing in this article, with an altogether different type of transfer of immovable property adopted by some housing co-operative societies where the transfer is neither absolute nor the deed of transfer is registered.







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