Purchase of a property: How do we ascertain the clear title of the seller?

A house/flat in own name is the most cherished dream for majority of Indian families. Owning a house is a celebration. There are many laws that protect the rights of the purchaser of a property. Even then, it is better to follow the principle of ‘let the buyer beware’ especially since the investment in a residential property is huge and for a long term.

Let us examine some of the cardinal steps to be followed while purchasing of a residential property or any other property.

1. Ensuring Clear Title of the Seller:

Clear title means the seller has absolute right on the property he intends to sell. This can be ensured by verifying the following documents.

a. Verification of Original Title Deeds and Prior Deeds: The original title deeds and prior deeds must be verified to ensure the derivation of right of the seller. If the seller purchased only a portion of the total area that was in possession of the previous owner, then the original of prior deeds may not be with him. However, he ought to be in possession of his original title deed. When a property owner creates equitable mortgage in a Bank, the same is done by mere delivery of title deed to the Bank officials and such transaction will not be reflected in the registry records. In such cases, the owner of the property has no right to sell the property without the concurrence of the Bank/ settling the liability with the Bank. Hence, the ownership shall not be ascertained based on the copies of the deeds alone and original should be demanded for verification.

b. Verification of Encumbrance Certificate: All property transactions and attachment on properties are entered in the sub- registry (SRO) records. An encumbrance certificate (EC) is a certificate issued by the sub-registry office showing the abstract of transactions that have happened over a particular period. Many banks insist on verification of EC for a period of 13 years. However, it is advisable to verify EC records of minimum 30 years . If any attachment exists on the property from court or income tax authorities, the same also will be reflected in the encumbrance certificate.

Search the records of society too, if the property is one that comes under a society. It is advisable to get a no dues certificate and NOC in the case of properties under a society.

c. Verification of Possession Certificate: Possession certificate is a document issued by village/ municipal office, specifying in whose possession is the property. The document along with the original deeds indicates the ownership of the seller.

d. Verification of Building Tax and Land Tax Receipts: Building Tax and land tax receipts shows whether the seller has transferred the property into his name after purchase.

e. Verification of Location Sketch: This is a pictorial representation of the site plan of the property with boundaries issued by local authorities. It assists in easy identification of the property mentioned in the title deed.

f. Verification of Power Of Attorney: As of now many property transactions are carried out based on Power of Attorneys. It is to be ensured that the power of attorney is legally executed, given by proper authority and is still valid.

It is always better to seek the professional guidance of a lawyer to scrutinize the title of seller.

2. Verification of actual possession by visit:

The property intended to be purchased shall be in the possession of the seller and it shall be confirmed by visiting the site. If it is occupied by others, the nature of the tenancy shall be ascertained and it is better to insist for a vacant condition on purchase. The boundaries of the property shall be reconciled with that in the title deed, location sketch and possession certificate.

3. Verification of approved plan and validity of building permit

More incidents are now being reported about unauthorized construction and demolition of even completed buildings. It is essential to verify the approved plan to ensure that the construction is approved by concerned authorities. If the building is under construction, building permit shall also be verified to ensure that the construction is happening within valid permission. Whether the approval is for construction for residential purpose or commercial purpose also should be ascertained. Another major point to be ensured is that the construction is carried out by obeying other terms of sanction like leaving sufficient space to boundaries, rainwater harvesting, sewage disposal stipulations etc.

The above verifications will ensure that the seller has a clear title and that the construction is with proper permission.

Now, let us go through some of the Additional Precautions