Friday 29 April 2016

Scrutiny of Title Deeds



 Scrutiny of Title Deeds




Verification of title of the property is very important before entering into an agreement for purchase of any property. It is not merely tracing the title on the record but also examination of the genuineness of the records, identifica­tion of the property, notification in a newspaper and physical possession of the title of the property which involves scrutiny of title deeds. Clear and marketable title free from doubts and encumbrances with a right of physical possession of the vendor is a necessary ingredient for peaceful possession and enjoyment of the property by the purchaser.
Every purchaser having paid consider­able amount for purchase of immov­able property expects a perfect unencum­bered marketable title of the property purchased. But the seller cannot pass on a better title than what he has and all the defects in his title will also pass on to the purchaser. Many purchasers do not get the title of the seller verified by advo­cates who is having specialised knowl­edge and experience on property matters, often rely on real estate agents, middlemen and assurance of seller and seller's advocates legal opinion. Though they spend lakhs of rupees on purchase of property, they hesitate to spend a few thousand rupees on verification of title and later on land in trouble. Some of the reputed builders refuse to give title papers to the pur­chaser, dictate the terms and insist that property be purchased on their own. Advocates certify the title in just four lines without referring to the devolution of the property. The vendors / builders also force the purchaser to avail the loan from a particular new generation bank. Most of the times power of attorney is the only document which is handed over to the purchaser.


The   title   may  be   freehold  or leasehold. In case of freehold title, the owner has absolute title without any  encumbrance with power to alienate the property. But in case of leasehold the owner will be different who had leased the property to the Lessee for certain period and the rights are not absolute and the lessee will be only in possession of the property for agreed period. After the lapse of the agreed period, the lessee has to hand over the vacant possession to the owner. Such person may transfer only leasehold rights to the purchaser, if the lease document provides for alienation and the purchaser is bound by terms of lease deed. There are different forms of legal ownership of the property. Most common mode of ownership is individ­ual ownership where a single individual owns the property.   The following are different types of ownership:
1.    Government lands either Central or State.
2.                 Individual ownership.
3.                 Hindu undivided or joint family ownership of property.
4.    Property owned by a Private  Company or Public Company duly constituted under Indian Companies Act.
5.     Property ownership of a Government Company.
6.   Property ownership of a Co­operative society registered under Co-operative   Societies  Act   of respective stores.
7.    Property ownership of partner­ ship firms formed and registered under Indian Partnership Act.
8.    Wakf  proper­ties
9.   Trust properties including properties of temples and religious endowments.
10. Property ownership of public societies and clubs registered under societies Act.
11.  Property ownership of Autonomous Institutions (Statutory Bodies) like universities, electricity boards etc.
12.            Property ownership of Nationalised undertakings etc.
The first and foremost step in purchase of property is the scrutiny of title deeds before entering into an agreement with the seller / vendor. The ownership can be traced from the title deeds and the revenue records. Verification of title is very important.
Ascertainment of origin of the property, subsequent transfers, present status of the property are the three most important steps to be followed to trace the title of a property. For peaceful enjoyment of a property, apart from having possession, whether physical or constructive, clean and marketable title, free from all kinds of encumbrances is very important. There is no set yardstick to trace the title and it depends upon the diligence and application of mind of the advocate. As it is the duty and responsibility of the purchaser's advocate to safeguard the interest of his client, he shall have to thoroughly scrutinize the marketable title of the property and genuineness of the documents and advise his client about the risk, if any, involved in the transaction after such examination.


Ascertainment of the origin of the property is very important to trace the title of the property. It is otherwise called "Root of Title". The Vendor may have acquired the property by various modes such as Government Grant land, allotment made by the Government/Autonomous bodies/Housing Societies, by virtue of Will, sale, inheritance, etc. If the property is a Grant land or allotted by any authority, then the Grant Certificate or Allotment letter issued by the Competent Authority is necessary, apart from the other connected documents,  which  is considered as the origin of the property. In case of succession or transfer by way of Will, Sale, Gift, Exchange, Partition, Release, Settlement Deed or inheritance, we require documents of at least 42 years to be scrutinized and verified in a sequential order requiring methodical examination of all the events or transfers concerning the property. Documents covering a minimum period of 43 years of Adverse Possession against individu­als or Conflicting Claims (other than mortgage) against individuals and documents covering a minimum period of 30 years must be checked. If a person is enjoying the property for more than 30 years, he will get title by adverse interest against the government as per the Limitation Act. Also as per Section 90 of the Indian Evidence Act 1872, a document executed 30 years before is presumed to be valid.
Tracing of the title has to start by verification of the earliest document available, which is called parent deed or mother deed. If the earliest document is not available, the certified copy must be obtained at the Jurisdictional sub-registrar office. This earliest document details as to how the first owner got the property. Generally in earlier times, all the landed property was owned by Kings, Jodidars, Inamdars and they gifted or granted the land to the people. Such acquisition document generally will be by an Order of the Court, Government, Statutory Authority, ruler. Thereafter, the property might have passed through different hands who are referred to as intermediary parties. Such documents have to be examined in chronological order tracing the devolu­tion of property to each of the intermedi­ary parties. The sequence should be continuous without any break till the immediate transferor. In case of any missing link, the records at the sub registrar's office revenue department have to be verified to the satisfaction, but should not be ignored.
But documents like gift deed, partition deed, release deed, settlement deed are not mother documents and the title of the executants of such deeds has to be examined. After tracing the title of the property from the first owner to the immediate transferor, the latest docu­ment which describes how the present owner got the property has to be verified. Apart from legal documents like transfer deeds, the revenue records like tax paid receipts, Khatha, approved plans, encumbrance certificates, mutations, family tree and other records extracts have to be verified. The most important function of tracing the title is investiga­tion, where it is ascertained that records, documents produced actually exist are recorded in books, records of respective departments. But advocates certify the title with a narration "based on docu­ments produced" which does not refer to the investigation or genuineness of the documents. Often the advocates accept the latest documents without supporting documents and certify the title which is a dangerous practice.

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