Asked September 12, 2016

Purchase of land: Legal issues

  • 1 Answer

Hello, I am located in Pune, and staying a house more then 30years, and want to take ownership of the same house. few points would like to know ,which are as follows. 1. How to know the actual Area of the house? 2. What percentage or the amount to be given to purchase the ownership? 3. If we refuse to purchase and building goes under re-construction, do we loose the pagdi ? and then do we have pay according to the actual market rate? 4. If the landlord demands more money then the actual purchase rate, how do we show prove to them that he is demanding more amount? 5. If we do not purchase the house, can we get the NOC from the landlord for any legal documentation? 6. What if the landlord refuses to give NOC for any legal documentation? 7. If we just have rent receipts and not the agreement, how do we proof that, we are tenant? Hope for your detailed and understandable response. Thank you!

Answer 1

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Saurabh Kumar


Carpet area

It is the area that can actually be covered by a carpet, or the area of the apartment excluding the thickness of inner walls. Carpet area does not include the space covered by common areas such as lobby, lift, stairs, play area, etc. Carpet area is the actual area you get for use in a housing unit. So when you are in search of a house, look at the carpet area and then make your decision, because that is the number that will give you an idea of the actual space at your disposal. Focusing on the carpet area will help you understand the usable area in the kitchen, bedroom, living room, etc. Nowadays, many builders don’t even mention carpet area at first, and usually charge on the basis of built-up area or super built-up area. Carpet area is usually around 70% of the built-up area.

Built-Up Area

Built-up area is the area that comes after adding carpet area and wall area. Now, the wall area does not mean the surface area, but the thickness of the inner walls of a unit.. The built-up consists of other areas mandated by the authorities, such as a dry balcony, flower beds, etc.,

Super Built Up Area-

It is the area calculated by adding the built-up area and common area that includes the corridor, lift lobby, lift, etc. In some cases, builders even include amenities such as a pool, garden and clubhouse in the common area. A Developer/Builder charges you on the basis of the super built-up area which is why it is also known as ‘saleable’ area.

Thus, You should calculate the saleable area as per the Super-Built Up Area and the actual are from the Carpet Area.


QUESTION TWO- There are various costs involved, and these vary from state to state. You may use the services of a seasoned real estate developer to find out the actual cost of the property in question and accordingly find out the ownership costs.

QUESTION THREE- The consideration paid to a landlord as a fine, premium or consideration (pagdi) has been legalised by Section 56 of Rent Control Act, 1999. It is now also lawful for a tenant to receive any amount in consideration of the relinquishment or transfer of his tenancy. Now too, in cities like Mumbai, for the  transfer of tenancy, 33 per cent of the amount in transaction is paid in cash to the landlord to effect the transfer of tenancy or assignment.

Yes, if you refuse to pay consideration and the building goes for reconstruction, you will lose the pagdi. In this case, to avoid  this, you may exit by- 

  • Sell off the property to the tenant: But, this will be at a discounted rate
  • Redevelopment: Either accept monetary compensation for sale of the land title to the developer or an apartment in the new property
  • Buyout: The property can be bought by the tenant. This is the most expensive option as it will not be at the market value
  • Wait for the building to collapse: This will not help. As even in that case, the tenant will not lose protection



You may use the Maharashtra Rent Control Act, it has detailed provisions to deal with the rate and mode of payment.



Local laws cover landlord and tenant agreements. Many local rent control laws such as the Maharashtra Rent Act 1999, Delhi Rent Act 1995, Tamil Nadu Buildings (Lease and Rent Control) Act 1960, strictly regulate rental agreements that are 12 months or longer in favor of tenants. Post 12 months, the landlord/owner may refuse you NOC if he wants to use the property for his personal use. Otherwise, he may refuse you NOC if he finds someone ready to pay more and likewise. He is allowed to do this act of refusing you NOC.



If you have been paying a rent above 8,333 rupees, then under the Income tax Act, then you must have the PAN details of the landlord. In this case, you can use this in addition to rent receipts plus your occupation of the house over such a long time to claim your ownership. You are rightfully entitled to prove this in the court. However, as a precaution, you are also advised to come up with a rent agreement as it will shorten the litigation process, if any, in the future.


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