Each of us dreams of owning an immovable property; however knowledge about the legal implications involved is minimal.
The expression Real estate signifies an immovable property- it could be a piece of land, a building, an apartment, a floor etc. Real estate is considered a wonderful investment, which in past have given returns much higher than alternate investments. A real estate could be enjoyed by the owner himself, could be transferred to another person for gain (in most of the cases) and is certainly capable of transfer by way of inheritance to one’s family. Each of us dreams of owning an immovable property; however knowledge about the legal implications involved is minimal. At the stage of acquisition of an immovable property, ordinarily people prefer to rely on the half baked information provided by the real estate agents rather than relying on sound legal advice. The book “A hand book on real estate investment-A legal perspective” throws light on relevant legal aspects in transfer of an immovable property, which a prudent transferor and transferee ought to know. The first and foremost it must be understood that the applicable law for the transfer of an immovable property is the Transfer of Property Act, which was enacted in 1882. Besides the Transfer of Property Act, incidental laws like Indian Stamp Act, Indian Registration Act, Service tax and Income Tax Act are also applicable. Properties in which the either the transferor or transferee are foreign nationals or where the transaction money is paid in foreign exchange, Foreign Exchange Management Act (FEMA) and rules made under this Act are also applicable. The Transfer of Property Act broadly classifies five modes of transfer of an immovable property namely: a. Sale b. Lease c. Mortgage d. Gift and e. Exchange The ownership of an immovable property stand transferred from the transferor to transferee in transactions of Sale, Gift and Exchange. An agreement to sell at times is confused with the transfer of ownership; however it is made clear that the Agreement to sell does not transfer ownership in favour of the transferee. The ownership continues to vest with the transferor in transactions of lease and mortgage-only certain rights and interest are transferred in favour of the transferee. Restrictions have been imposed on Non Resident Indians, Persons of Indian origin and Foreign Nationals in acquiring ownership of any property in India. Agricultural properties cannot be acquired by foreign nationals; however residential properties can be easily acquired by all foreign nationals except citizens of Pakistan, China, Bangladesh, Sri Lanka, Afghanistan, Iraq, Nepal and Bhutan. An additional method of transfer of an immovable property is by way of inheritance. Since India does not have uniform civil code, hence the succession/inheritance shall take place through the personal laws of respective religions. Hindus, Jains, Buddhist and Sikhs shall be governed by Hindu Succession Act. Muslims would be governed by Islamic law. Christians, Jews, Parsis and children born out of inter-faith marriages would be governed by different provisions of Indian Succession Act. The succession could be testamentary and non-testamentary. Where a person dies without making a Will the succession is non-testamentary and is governed by the respective personal laws of the parties. Where a person makes a Will before his death, the succession is testamentary and is determined by the wishes of the deceased. It is however necessary that the Will of the deceased should be proved in a court of law in accordance with law. Cities in India are witnessing tremendous growth of real estate sector by way of building of several apartments. Those who buy the properties from the developers have all the rights of the consumers and can seek compensation for delay in delivery of the property, poor quality etc. The Government is proposing certain new bills like Land Titling which proposes to have a unique identity to each of the property. The bill if made law would eliminate the chances of disputes in the transfer of property. The Government is proposing to regulate the real estate sector by introducing bills to appoint regulator to govern the developers. The Indian real estate sector is on a cross road where the government is conscious of the needs of new legislations to deal with current difficulties, while holding on to the 125 years old laws on transfer of an immovable property. The author of this Article is Anupam Srivastava who can be reached at email@example.com