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Property Laws

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29 May 2022

Overview of Property Laws



STEPS TO BE TAKEN AFTER IDENTIFYING THE PROPERTY

  • Understanding the nature of Immovable Property:

    1. Ownership,

    2. Leasehold,

    3. Mortgaged,

    4. Commercial, industrial, residential,

    5. Collectors, Heritage, Easements, restrictive covenants.

  • Understanding the Nature of the Owner:

    1. An Individual,

    2. Karta of an HUF (Hindu Undivided Family),

    3. Partnership Firm,

    4. Limited Liability Partnership,

    5. Company,

    6. Trust – Private or Charitable.


TITLE DUE DILIGENCE

  • Things to look out for

    1. Source of right or title of the current owner;

    2. Whether the person executing the previous title documents had the authority to sign;

    3. Whether appropriate stamp duty was paid by the current and past owners of the property;

    4. Whether previous agreements registered;

    5. Legal capacity of the present owner of the property to enter into a binding contract;

    6. Nature of current owner’s right over the property, and whether such right is transferable;

    7. Legality of the construction of the property;

    8. Encumbrances over the property;

    9. Whether the property is a part of any acquisition process or litigation.



AN OVERVIEW OF TRANSFER OF PROPERTY ACT, 1882- (TOPA)

PREAMBLE

  • The Transfer of Property Act, 1882 (‘TOPA’) is an Act to define and amend the law relating to transfer property by act of parties (i.e. not by operation of law).

  • The objective of the Act is to regulate the transmission of property inter vivos i.e., between living persons. The Act governs transfer of specific rights (e.g. lease, license, development) as well as the entire bundle of rights on the property.


KINDS OF TRANSFER UNDER TOPA

  • SALE:

    • Consideration is money only

    • Sale is a transfer of ownership in exchange for a price paid or promised or part-paid and part promised.

    • In case of tangible immovable property or other intangible thing, sale can be made only by a written and duly registered instrument.

    • What is the difference between sale and contract for sale (Agreement to Sell and Sale Deed?

In a sale, there is immediate transfer of property whereas a contract for sale implies future transfer. Further, risks are transferred immediately in Sale, whereas in case of a contract for sale, they remain with the Seller till the Sale Deed is executed.


  • EXCHANGE:

    • Consideration is another property and/or money


  • MORTGAGE:

    • Transfer of part interest in property

    • “Mortgage” is a transfer of an interest in property to secure payment of money advanced or existing/future debt;

    • Six kinds of mortgages:

Simple; Mortgage by conditional sale; Usufructuary; English mortgage; Wquitable Mortgage; Anomalous.

  • Registration may not be mandatory (equitable mortgage);

  • Attestation mandatory.


  • LEASE:

    • Transfer of part interest in property

    • “Lease” is a transfer of right to enjoy a property;

    • Made for a certain time, expressed or implied, or in perpetuity; and

    • In consideration of a price paid or promised, or of money, a share of crops, service or any other thing of value which is to be rendered periodically or on specified occasions to the transferor by the transferee, who accepts the transfer on such terms.

    • A lease of immovable property from year to year or any term exceeding 1 year or reserving a yearly rent, can be made only by a registered instrument.


  • GIFT:

    • Like sale BUT Consideration is natural love and affection (not money).



Read attached to learn more:





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