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FAQs: Registration of Property.

By Surja Baladhikari July 27, 2016

 

The registration of property that is land, flat, shop, garage or other things are mandated by the three laws such as Transfer of Property Act 1882; The Indian Contract Act 1872; The Registration Act 1908; Hindu Succession Act 1956; Indian Succession Act 1925 and such other municipal laws, local laws and bye laws.

One should be aware that whenever someone purchases any immovable property[1] (like, land, building etc and not tractor, gold etc) which is valued at or above Rs. 100, he would have to get such a property registered with the local registration office. It is easy to locate the local registration office for this purpose-the municipal corporation within which the buyer resides would be considered as the right place.

The buyer has to appoint an advocate for carrying out the registration of his property[2]. Though a buyer can get the property registered with the local registry office[3] also he can register any property situated in the State of West Bengal at ‘The Registrar of Assurances” situated opposite to the Governor house in Kolkata.

The buying and selling of such immovable property is considered legal when an “agreement of sale[4]” is drawn up. Such deed of sale must contain every minute particulars[5] relating to the property. For instance in case of sale of a flat by a promoter to an individual buyer the deed of sale should lay down specific details like: the material used to do the flooring (Mosaic or marble or tiles) the material used to make the walls, the kind of doors (Iron gates or steel gates) installed; the kind of water facilities installed; the percentage of common area that comprises the stair case, terrace lift, water tank, reservoir.

Note here, that many a times promoters try to get away with delivering less services than what is expected of them. Usually a small clause is put into the agreement which puts the liability of construction of “better reservoir facilities” upon the buyer on the payment of an extra fee. It is better for the buyer to be cautious of such clauses and ensure that every tiny details such as these is notified explicitly in the contract. This would give the buyer the right to sue the promoter for specific performance of the suit if the latter doesn’t keep to his promise.

The deed of sale must also contain the method (cheque, cash, demand draft) and the amount of payment that is to be made by the buyer. A payment schedule contains these details.

The buyer usually pays[6] the per sq. ft. rate based upon the total area (i.e. super built up + carpet area). Now, super built area is calculated upon other amenities provided in the complex in which the building is located. For instance, if the promoter provides common facilities like lift, swimming pool etc then the super built area is calculated as 25%-30% (depends on the construction manifesto) of the Carpet Area. Whereas if these common facilities are non existent then the super built area is calculated at 20% of the Carpet Area. Do check the construction manifesto carefully to know the exact percentage that applies to you.

For eg., If an apartment has a common lift; and the carpet area purchased is 600 sq. ft.—the super built up area would be (25/100*600=150 sq ft). In other words the buyer would have to pay to the seller a total amount on the total area of 750 sq ft (600+150 = 750 sq. ft).

            Steps for registration:

The first thing the buyer must do is engage in the process of searching the property (be it a new property or an old property). Searching has to be done before agreement of sale is drawn up between the parties. This helps in identifying possible sales that a fraudulent promoter could have engaged in. This is a critical step in the process of buying and registering a property, since there are abundant cases pending before the court where the same property has been sold to more than one parties.

The buyer has to pay the stamp duty upon the market value which is obtained from the registration office after submitting the details of the buyer and seller along with the sale agreement. Incase the property is located in one of the places where the land was given as refuge land, then the photocopy of the mother deed of the land would be required. This process is called obtaining the valuation/query[7] of the property. This is primarily a clerical work and the buyer can himself visit the registration office and get it sorted.

The query takes about three working days. After this the same has to be handed over to the advocate for preparation of the draft of the registration/conveyance deed.

 

The query obtained shall contain terms such as, market value, set forth value, stamp duty, registration fees etc. The amount of fees is calculated upon the market value. An additional 1% is charged if the market valuation exceeds 25 (twenty five) lakhs of rupees. Now there are two types of fees:- registration fees and stamp duty which the government receives when a property is sold/brought. The registration fees has to be paid in cash to the office and the stamp duty has to be paid by demand draft by the buyer. The Stamp duty can also be paid through electronic transfer such as NEFT. But if the buyer wishes to make the payment through the NEFT facility he would have to ensure that the payment is made within 30 days from the date on which the query/valuation of the property is procured. Whereas if he chooses to pay by a demand draft he would enjoy an extra buffer period of 14 days (the time period for payment through demand draft is 44 days). The deed of conveyance has to be printed on a stamp paper. Such stamp papers come in various valuations: like Rs. 500, 1000, 5000[8].

The procedures in between the registration date and submission of the documents in the registration office for registering the property involves making what is popularly called “volumes”. In a crude sense, volumes refers to “big green official papers” where every minute details of the property is recorded, including the names of old buyer and new buyer and such other details which the office intends to record. This is not something a buyer should be concerned with. It is primarily the duty of the advocate engaged for this purpose.. For example: If the market value of the property is 45 lakhs, then the fees is calculated @8.2 % of 45lakhs. The amount arrived at would be termed government fees. The buyer other than this has to pay the fees of the advocate which ranges from 0.5 to 1 or up to 2%. The advocate’s fees is steep when he seeks to take up additional tedious responsibilities like sorting of the following things on behalf of the client like--- obtaining the query, drafting and typing the deed; paying the volume fees, the clerk fees and such other fees as is required. For more information you can visit: http://www.wbregistration.gov.in/(S(ddoa4qstlcfmlrx0awcygsyk))/Stamp_duty.aspx

The buyer is given the opportunity to propose a desired date for the registration of the property. If the office agrees to that date, the buyer has to be present at the registration office along with the seller, witness, landlord and such other persons as is required by the said office. There are two witnesses (each from the buyer and the seller) required to be present for the process of registration. The new regulation of obtaining[9] the query requires the seller to give the name of a person (known as the ‘identifier’) and his details who has to be present on the day of registration.

For those of you who find the above process (of visiting the registration office) cumbersome, there is another option called “commission[10]”. If you avail of this option, on payment of an extra fee, you could get the registrar and his staffs to come over to your place (the new property) to complete all the formalities of registration.

After the completion of the registry the buyer has to usually wait for one month to receive the original registry deed. This usually depends upon the functioning and efficiency of the registration office. But once the buyer gets the original deed of the property, he can keep it with himself. There is no legal requirement for him to deposit the deed at any government office. The position would however slightly change if the buyer seeks to obtain a loan from a bank against this newly purchase property. He would then have to deposit the original deed with the bank as a security.If the buyer loses the original deed of the property, he could get hold of a duplicate copy of the same after having registered an FIR/GD[11] and paying the required fees. This is possible because the buyers’ lawyers usually makes a photocopy of the original deed and keeps it in the office. Though this is not something that the buyer should be concerned with, it would be good for him to confirm with his lawyer if the same has been done.

 After the completion of the process of registration, the buyer has to initiate the process of mutation[12]. Mutation essentially is the process that allows you to pay property tax to the government. Every year a bill is sent from the municipality/corporation or sometimes one has to go to the municipality himself and pay the tax on a yearly or quarterly basis.

The buyer should ensure before making the final payments for the purchase of the property if the promoter has complied with all the promises he made regarding construction of the apartment. Do note that a part of sum can even be paid later[13] even after the completion of the registration process (this all depends on your negotiating abilities).

Upon taking delivery of the flat the buyer must obtain the NOC[14] and possession letter from the promoter and be verify if there are any pending taxes required[15] to be paid by the promoter. If the buyer does not get this clarified, and if there is tax amount due, upon possession of the apartment, the entire liability of payment of the taxes would shift from the promoter to the buyer.

There is a possibility of the promoter requiring you to engage the services of his designated advocate and telling you how that is a mandatory requirement under law. He could also that that it is important to do so in order to avoid potential legal problems pertaining to the property. Do note that there is no such limiting clause placed upon the buyer by law. The buyer can very well appoint his own personal Advocate for carrying out the work.

Also remember to inform your advocate who handles your income tax returns about the purchase/sale of any immovable property. If you don’t, you could fall on the wrong side of the law. The details of buying/selling of properties in a year has to be informed to ones’ income[16] tax advocate also so that it is recorded in the balance sheet[17]. It is advised that the buyer seeks the assistance of his advocate while choosing the mode of payment for the property (cheque, cash, demand draft etc).

There could be other smaller aspects (not covered in the blog post) involved in the purchase and sale of property. It is best to seek the assistance of a real estate and tax lawyer for the same before venturing out in the buying and selling of immovable property.

There are a couple of other things that you need to be aware of to avoid yourself from landing in any unpleasant situation are as follows.

A.There is a possibility of the promoter requiring you to engage the services of his designated advocate and telling you how that is a mandatory requirement under law. He could also that that it is important to do so in order to avoid potential legal problems pertaining to the property. Do note that there is no such limiting clause placed upon the buyer by law. The buyer can very well appoint his own personal Advocate for carrying out the work.

B.Also remember to inform your advocate who handles your income tax returns about the purchase/sale of any immovable property. If you don’t, you could fall on the wrong side of the law. The details of buying/selling of properties in a year has to be informed to ones’ income[1] tax advocate also so that it is recorded in the balance sheet[2]. It is advised that the buyer seeks the assistance of his advocate while choosing the mode of payment for the property (cheque, cash, demand draft etc).

There could be other smaller aspects (not covered in the blog post) involved in the purchase and sale of property. It is best to seek the assistance of a real estate and tax lawyer for the same before venturing out in the buying and selling of immovable property.

 

 Photo Courtesy: https://www.google.co.in/search?q=registration+of+property&biw=1366&bih=612&source=lnms&tbm=isch&sa=X&ved=0CAgQ_AUoA2oVChMI9Jz857LhxgIVEAeOCh3J6wWR#imgrc=QDllZFitT-0zHM%3A

http://www.covermiles.com/investment/property-registration-points-to-remember/

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[1] Section 139(1) of Income Tax Act.

[2] Section 139(1) of Income Tax Act.

[1] Part III OF REGISTRABLE DOCUMENTS u/s 17: Documents of which registration is compulsory of The Registration Act available at http://dolr.nic.in/acts&rules/registrationact(1908).htm .

[2] Hiring an Advocate is necessary as the ‘deed of conveyance’ (the official sealed and stamped document which you receive from the registration office basically saying you are the new owner of such and such property) has to be prepared based upon the agreement of sale and other documents available with the buyer and such work is entirely based upon the legal frameworks such as the present laws and other norms that have to be compiled with. The advocate also studies the agreement of sale in case of purchase of new flat and in case of resale he checks the present conveyance deed. It is prudent to allow the advocate to oversee all the above issues and avoid the possibility of incorrect statements.

Depositing the fees can also be technically done by the buyer himself but since an advocate is a regular visitor of the court, adept at handling such issues on an everyday, it is advisable that the buyer employs the services of an Advocate to check the veracity of receipts and vouchers involved in the transaction.

[3] Part V and XI of the Registration Act 1908.

[4] - Section 54 of Transfer of Property Act.

[5] Terms of contract which has been agreed between the parties under the Contract Act Indian Contract Act 1872.

[6] Municipal laws Kolkata Municipal Act, West Bengal Land Reforms Act 1955 Laws; West Bengal Premises Tenancy Act, 1997; West Bengal Estate Acquisition Act, 1953.

[7] Mainly known as the e-assessment slip issued by the Directorate of Registration & Stamp Revenue covered under PART XIII: OF THE FEES FOR REGISTRATION, SEARCHES AND COPIES under section 78 of the Registration Act.

[8] Please note that only the first page has to be purchased for such cost which is known as the stamp paper. (the other pages of the deed of conveyance are the regular green legal sheets)

[9] The office of the Registrar of Assurances Kolkata has been computerized, which now mandates supplying every minute details of the property, buyer, seller, identifier along with bank details.

[10] Section 33 and 32 of the Registration Act 1908.

[11]- Depending on the quantum of the property in question the police registers a case of FIR or GD. Both of them are valid under law

[12] Mutation of Names in the R.O.R.s (Record of Rights) under section 50 of WBLR Act, 1955 available at http://banglarbhumi.gov.in/banglarbhumi/(S(mgexizvmyggg0dvngwnh4tji))/ASP%20PAGES/lr_mutation.aspx.

[13] It can be treated as due diligence of the buyer referred under the terms of the contract which has been agreed between the parties in the agreement of sale.

[14] The is the duty of the promoter to handover the NOC and Possession certificate upon completion of payment but the buyer should be aware that he needs to receive the documents before registration is completed.

[15] The buyer before buying any property should ask for the latest tax receipt paid buy the present owner/seller. The same can be verified in the local municipality office.

[16] Section 139(1) of Income Tax Act.

[17] Section 139(1) of Income Tax Act.

TAG: sale deed , commission , registration of property , immovable property , searching , due diligence , promoter , buyer , conveyance deed , carpet area , Transfer of Property Act 1882; The Indian Contract Act 1872; The Registration Act 1908; Hindu Succession Act 1956; Indian Succession Act 1925 , The registrar of assurances , local registry office , agreement of sale , super built area , valuation query of a property , stamp duty , stamp paper , mutation


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