Ownership of immovable property remains to be one of the most litigious and contentious areas of law in the country, with many a suit for declaration of possession and title pending adjudication before Courts. It is a primary principle of property law that ‘a vendor cannot confer a better title upon the vendee than he himself possesses’.
The landscape for navigating and ensuring a clear title in an immovable property is rather cumbersome, given the presence of multiple and state specific regulatory authorities. Due diligence involves an extensive research process with the concerned authorities to ascertain the ownership right and title over any land parcel. It allows individuals to ascertain the potential disputes that such property may be a subject-matter of, and therefore is often crucial in determining the financial viability of transactions qua sale of such property.
Need for Title Search
A title search and due diligence is imperative for establishing and gathering information qua any infirmities or shortcomings associated with any given parcel of land, and therefore helps individuals to ascertain:
- Whether the owner or lessor has sufficient authority or right to execute any transfer or lease qua the property in question.
- Whether there exist any encumbrances such mortgage, charges, taxes or other assessments qua the property in question.
- Whether the property is or has been a subject-matter of litigation.
- Whether there exists any restriction on the use of the property in question.
Essential Aspects to be Analysed
1. Instrument of ownership/transfer
The first step is to determine as to how the property came to be in the ownership of the transferor and see whether it was acquired through the execution of a sale deed in his favour/by way of a gift deed/by way of a Will or inheritance.
In case the property is acquired through sale deed, it is critical to see whether the same was duly executed and registered before the office of the sub-registrar, whether the requisite stamp duty was paid for effecting such transfer.
Similarly in case of gift deeds, it must be determined if the same is registered and whether the same is subject to any conditions. In case of a will, it must be seen whether requisite probate proceedings were executed and in case of intestate succession, compliance with the governing law of succession must be seen.
It must also be ascertained whether there is absolute ownership with the transferor or there are any restrictions in the same, as per the recitals of the instrument conferring title upon him.
2. Searches before the Sub-Registrar office
The law mandates every sale deed made qua an immovable property to be registered before the office of sub-registrar, therefore it is critical to ensure the past sale deeds registered qua the said property to ensure a clean title and to ensure whether there are any pending cases qua the said property.
Furthermore, it is a settled position of law that a registered sale deed is conclusive proof of ownership and therefore there is a presumption of its authenticity unless proven otherwise.
Ideally, keeping in view the provisions of limitation law, the records for the past 30 years should be scrutinized to ensure that there is a clean chain of transfer of title of the property in question. The original title deed must be inspected before the office of the sub-registrar, to ensure that there are no encumbrances on the property in question.
3. Mutation Entries
The change in ownership of the property is further recorded and updated in the records of the local civic and municipal bodies and therefore it is also critical to ensure whether concurrent changes have been affected with respect to the property in question with the concerned revenue/municipal records.
It may also be relevant to note herein that mutation entries are not conclusive proof of title, and do not create or extinguish title, and as such is a process which is subsequent to the registration of sale. For the purposes of pre-empting any prospective claim, it is essential to clarify the position of the property as per revenue records before proceeding with any transaction.
4. Encumbrances/lien on property
For ensuring that a clean title is transferred to the purchaser, it remains critical to ensure that there is no lien on the property and the same is free from all encumbrances such as mortgage or uncleared loan or attached in a recovery proceeding. Furthermore, it also needs to be seen that the property is clean from all tax liabilities under law and does not have any unpaid dues to the revenue. Such enquiries are to be made with the municipal/local bodies to ensure that there is no lien/encumbrance upon the property and obtain the requisite certificate in this regard.
5. Classification of Land use
As a part of land due diligence, it is also crucial to identify the nature of the land in question and ascertain whether the same is agricultural/non-agricultural and further sub-divisions into residential, commercial, institutional, industrial, etc. The land use must be identified from the local municipality authorities and can also be changed subsequent to an application in pursuance of the same. However, the proper and prevalent use of land ought to be verified before proceeding with the purchase of any property.
6. Sanction plans/approvals
In relation to the construction of the concerned property it is also crucial to ensure that the same is compliant with governing laws such as the Real Estate (Regulation and Development) Act, 2016 and further ensure that the building plans have been duly sanctioned by the concerned authorities. Further, the construction thus made must be in accordance with the stipulations of the sanctioned plans. Furthermore, developers are mandated to obtain an occupation/completion certificate from the concerned authorities before the same is fit for habitation and therefore it ought to be verified that the said documents have been procured. In addition to the aforesaid, approvals from the fire department, Environmental Clearance from the State Pollution Control Authorities are also requisite documents which ought to be verified by the prospective purchaser.
Process
As explained in the segment above, title search is a process whereby the credentials of a property are verified, and as such, the process involves navigating across different Governmental departments such as the sub-registrar’s office/revenue department or municipal authorities for procuring mutation records and non-encumbrance certificate. The applicant must have the complete address particulars of the property as per the current usage of land demarcation.
Upon making the requisite application before the Authorities for obtaining the ownership details along with the requisite fees, the process may take anything between 15 days to 45 days for procuring the details of the land depending on the number of years the search records have been sought to be obtained. In addition to the aforesaid, the process of ascertaining whether the property is presently under litigation, etc would have to be researched through thorough due diligence.
Conclusion
Given the high financial values involved in any transfer of immovable property, and the cumbersome and elongated time periods for adjudication of property and title disputes, it is crucial that a thorough and detailed title search and due diligence is carried out qua the nature, particulars, and title of the property with the state authorities in every aspect to ensure that the title being transferred is a clean one. Even in cases where the title is defective or otherwise has some lien or encumbrances thereon, it is advantageous to have prior knowledge and negotiate the commercials of the transfer in such light.
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