12/4/2014 Investigation of Property Title Real Estate and Construction India

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Last Updated: 2 December 2012Article by Uttam Hathi and Gaurangi PatilBrus Chambers Advocates & Solicitors

India: Investigation of Property Title

A property is divided into movable and immovable property. The base definition of an immovable property as defined in TheGeneral Clauses Act, 1897 U/S. 3(26), "Immovable property" shall include land, benefits to arise out of land, and thingsattached to the earth, or permanently fastened to anything attached to the earth." An immovable property is also defined invarious other acts like Transfer Of Property Act,1882, Registration Act, 1908, The Income Tax Act, 1961 etc.

Herein we shall deal with investigation of title required for various purposes including but not restricted to sale, but also forlease, sublease, mortgage. For the purpose of brevity the reference of sale shall also mean to include purposes of lease,sublease, license, mortgage where applicable.

Title is a legal term; it means the ownership right to property. Title of property is the prime concern of everyone at the time ofpurchasing of a property. Every property has a title. Title is the evidence of the right of ownership or the ground of right ofownership. Title can be created by act of parties or by operation of law. Title is acquired by transfer or by operation of law .Thelaw relating to transfer of immovable property is governed by the Transfer of Property Act .Two other Acts closely connected toit are the Indian Registration Act and the Indian Stamp Act. Law of Contract, and the various Statutes passed by StateLegislatures from time to time have important bearing in the matter of ascertaining title to immovable property. Law relating tosuccession is another important area connected to investigation of title.

Title to immovable property is ascertained by perusing relevant "Documents" and "Deeds" pertaining to such property. Theterm "Document" has very wide import. Under general law 'document' means any matter expressed or described up on anysubstance by means of letters, figures or mark for the purpose of recording that matter. The documents relating to property orcommercial transactions are generally called Instruments or Deeds.

Investigation of title is very essential since the ownership of the property is required to be complete, fair & free from any doubts,risks & interest. To ensure this an investigation is much needed so that a purchaser can take all necessary steps at the time ofacquiring property to obtain a good & clear title of the land. When search is conducted unto the property of the person whoowns it, it is called the Investigation of Title. It is also popularly called as 'SEARCH' into the ownership of the property. Theinvestigation is carried out broadly to ensure that the property is indeed in the name of the person selling, is free from liens,mortgages and encumbrances, that the property tax has been fully paid up to date and that the property is not engaged in anylegal conflicts

The investigation of title is a step as towards an agreement of sale. An agreement of sale has three main step preceding thecompletion of a transaction of sale they are: (1) Settlement of the terms of the deal between the parties particularly relating tothe consideration & the property to be transferred, (2) Preparation and execution of the agreement & (3) Investigation of title ofthe transfer of property.

The object of investigations of title is to ascertain the ownership and title of a given property, in most cases immovable innature. The attributes of ownership are , (1)right to have and to get possession ; (2) right to prevent interference by others ; (3)Power of alienation (4) liberty of using the object according to owner's will ;(5)liberty of enjoying the fruits and to avail of theobject owned ;(6) liberty of changing its form and even destroying it. The origin of ownership is in possession: Actualpossession implies a right to retain it until the contrary is proved and to that extent possessor is presumed to be the owner .Theconcept of ownership gave birth to "title" and the idea of title as the better right to obtain or retain possession evolved throughtrover and detenue. A person, who would succeed in establishing a better right to have possession than the other, would bethe owner. All titles to land are ultimately based on possession. This is the position in English law as well as Indian law. There

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is a dictum, which says that so far as land is concerned, there is no law of ownership but only a law of possession. Person canhave control over land only if he is directly in contact with the land. In other words person can control over the land if the land isunder his possession. It directly means word "possession" and word "ownership" goes together. Possession is most importantcomponent of the ownership. If owner is not in touch with land and somebody else is having control over the land, under thecircumstances owner loses his ownership. There are legal provisions for granting ownership to the person having control onland for long period

Investigation of title is an intricate matter. There is no standard period prescribed for the root of title. After the execution of theagreement of sale it will be the duty of the vendor's advocate to send to the purchasers advocate the title deeds of the property.These title deeds are sent in exchange of an accountable receipt to be signed by the purchasers advocate. The purchaseradvocate signs the accountable receipt and keeps a copy thereof with him with the title deeds. Investigation of title starts withthe present owner's original title deed which will always be 'the document of title 'to the property. Once the original deed isperused the investigator proceeds to verify the parent documents or the prior title deeds The work then of investigation of titleby the purchasers advocate commences He will than take searches in the office of the subregistrar to find out all thedocuments relating to the property which is the subject matter of sale which are registered.. To what extent and up to whatperiod the prior title deeds are to be perused vary from case to case. The safest thing is to peruse the title deeds for the last 30yeas. The reasons for this proposition are; (1) the period of Limitation against Government is 30 years; (2). Under Section 90 ofthe Evidence Act , a document 30 years or more are presumed to be validly executed.(3) The contents of any document arepresumed to represent the correct agreement or understanding between the parties there to .However a search for the last 12years is treated as normally sufficient . If the title cannot be reasonably be ascertained with in 12 years, then it is necessary togo back as much as necessary. In addition to ascertaining the owner's title, it is the duty of the investigator to rule out thepossibility of any subsisting charge by way of equitable mortgage on the property under investigation. For this, perusal of alloriginal title deeds for the last 12 years or even more may become necessary.

In Maharashtra to check the title verification of the property the investigator must do the following checks: a) Recent 7/12Extract ( 712 Utara) : It will give idea about the type of ownership, total number owners ( and their share in property) of theproperty. Loan on the property, tenant in the property ( if any), cultivable and non cultivable area in the property, source ofirrigation ( if any), assessment for the property, Class of the property, Reservation on property( if any). b) All mutations on 7/12extract ( Ferfar ): Mutations are the entries made by the revenue department in respect of any change in ownership of theproperty, such changes may be because of death of any owner, Loan obtained by any owner etc some time it may happen thatname of any person appears in Mutation but not in 7/12 extract, to check such things it is advisable to check all mutations, c)Maps : it is advisable to check maps provided by the government authorities, this gives better idea about he exact location ofthe property and access to the property, d) Ceiling Limit : As per the type of the property there is a Limit provided for theholding of the Land , the purchase must check that the Land which he is going to purchase will not cross his limit as well as hehave to check that the vendor is also not holding it as excess land. The Khate Utara (8 A Extract) is a document which gives usidea about the exact holding of the owner, e) 6c Certificate ( Varas Register ) : 6c Certificate is a document which gives usidea about the names of all Legal Heirs of deceased person. This document is very important as, it is noticed that some timesnames of Female Legal Heirs are not appearing on revenue documents, to avoid such ambiguities it is advisable to check 6cCertificate

Lis Pendens if any, recorded U/S.52 of the T.P. Act should also be verified with the District Sub Registrar. It would also benecessary to take search in the office of the collector of the relevant records and it would give the buyer's advocate the title tothe property and show how title has devolved. No doubt should be left unanswered and nothing should be taken for grantedwhere a continuity link is broken and without satisfactory explanation forthcoming therefore.

Some transactions are unregistered to check such transaction it is advisable to the purchaser to Publish notice at least in twoLocal News paper and ask for objections this helps the purchaser advocate to satisfy him self about the title of the property.Claims are invited in the nature of mortgage, lien, charge, lease, easement, gift, trust, or any other claim against the propertywhich is required to be notified to the buyers advocate within a period of 15days after which it shall be deemed to have beenwaived. Such Public Notice supports the buyer's contention in the case of dispute that he is a bonafide purchaser for valuewithout notice of any claim.

An Enquiry in Bombay Municipal Corporation (BMC) is necessary(if applicable). It must be inquired whether there are anyclaims to the property concerned. A letter to be addressed to the Assessor and Collector, BMC, to find out whether there areany arrears of municipal bills or water charges or riot bills in respect of the property agreed to be purchased by the buyer. AnEnquiry with the Ward Officer must be made with the Ward Officer in which the property is situated to find out (1) whether theproperty or any portion thereof has been notified under the Land Acquisition Act for public purpose or (2) Whether any notice,

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Uttam Hathi Gaurangi Patil

notification, action or claim is pending against the property. (3) Whether any portion of the property is included in the setbackand (4) whether there is any notice pending against the said property.

An enquiry is also to be made in CRZ and other zones as it is not allowed to any development in such zones it is necessary forthe purchaser to check such zones before signing any deed. The purchaser also satisfy himself that the seller is not going tobecome a Landless person after said purchase of land.

The title deeds have to be gone through after arranging them in chronological order and then prepare an abstract of title. Theabstract must contain in a nut shell relevant information relating to the deed which is abstracted. An abstract of title contains agist of the documents commencing with root of title and facts which constitute the vendor's title.

For closure in a sale after all these reports purchaser's requisitions on the vendor's title to the property is to be prepared. Therequisitions are of two type's general and special requisitions. Special requisitions are objections raised by the buyer onscrutiny and appraisal of the documents produced by the vendor, and relate to title or defects in conveyance. Generalrequisitions are more or less of a routine type of inquiries. A set of general requisitions are those which one may adopt to suit aparticular transaction.

Thereafter arises the stage of preparing draft of the conveyance. The following points are generally covered in the deed., 1]Indemnity/ Guarantee from the present owner about his title over property, 2] Indemnity/ Guarantee from the present ownerabout his possession over property, 3] Indemnity/ Guarantee from the present owner about nonreservation of the property, 4]Point making clear that the said property does not relates with any public activity, 5] Point making clear that the said property isnot a Trust Property, 6] Point making clear that said property is not a Government Granted Land, 7] Point making clear that noone has any right ( road/ parking) over said property, 8] ) Point about the existing structure on property (if any). Because it mayaffect valuation of the property, 9] If the said property is ancestral one then it is necessary to make all members of the family asconsenting parties for the deed, 10] Purchase price of the property is agreed mutually, with the schedule of payment, 11] ThePhoto Identity Cards of the present owners must be attached to title deed, 12] Indemnity/ Guarantee from the present ownerabout Non Litigant property because any transaction for a property for which litigation is pending is null and void in the eye oflaw, 13] Boundaries of the property gives clear idea about the exact location of the property. Therefore it is necessary tomention it clearly in the TitleDeed, a part from this it is advisable to attach a map showing exact location of the property., 14]Witness to the deed plays very important role if the deal goes in to any Litigation, It is advisable to take one owner of adjoiningproperty as witness as it will help to prove possession of the present owner..

Also the an income tax clearance certificate must be obtained under section 230A of the income tax act. All necessaryregistration and stamp duty must also be complied with. Thus investigation of title is a very vast procedure and it plays primerole in matters of property.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought aboutyour specific circumstances.

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