The razing of the Apex Tower and Ceyane Tower, popularly referred as the Noida Supertech Twin Towers was in the news recently. Although it became the talk of the town for various reasons, it again brought concern in the minds of home-buyers as they keep getting robbed by the fraudulent builders and lose their hard-earned money.

In 2016, With the aim to protect the rights of the home-buyers and to boost the investment in real estate, government of India passed Real Estate (Regulation and Development) Act, 2016. RERA specifies certain rules and regulations for building and development of real estate projects which brought the transparency in transactions in the real estate sector. Although government is letting no stone unturned to protect the interests of the buyers, still they are left with loopholes which are being misused by the fraudulent builders against the buyers. Majority of the cases related to real estate investment are in a form of title fraud, Dishonour of Builder-Developer Contracts, delay in possession to the buyer due to regulatory non-compliance, non-payment of tax dues and testamentary challenges to sale.

Under Section 17 of the Registration act, 1908, it is mandatory to register title deed of the property. The Buyer needs to be cautious and should check whether the property belongs to the seller or not. Section 54 of the Transfer of Property Act, 1882 mandates registration of the sale deed, i.e., only the instrument that helped in the sale of the property but does not mandate the registration of Agreement to Sale (ATS). As soon as a sale deed is registered, it becomes a legal proof that the title of the property has been transferred in the name of the buyer

Before getting the property registered and making the payment in lieu of the property. The registration of property requires preparation of documents and paying the applicable stamp duty registration charges for the sale deed to be legally recorded at the Sub-Registrar’s office. It is advisable to the buyer to conduct legal due diligence, that is going through the records before purchasing the property. Following are the key components of due diligence before purchasing a property.

Rights of seller in the property

The first step to due diligence is to check that whether the property in question belongs to the seller or not. This can be done by going through the records maintained by revenue department or municipal corporation. Property tax bills are also one of the sources to verify or to establish the title of the property. The buyer should make sure that the ownership holder should have all the vested rights in the property which shall be transferred by him to the seller through title deed. The buyer should make sure that the transfer of property should not violate any statutory law of the land. He should examine that the seller has authority to execute the sale deed legally, for this purpose the buyer should go through documents related to mutation and jamabandi records or khatiyan.

To secure the property rights of people belonging to schedule tribes or schedule caste, special laws are framed by some of the State government such as Chhattisgarh and Jharkhand, where a property owned by ST’s, SC’s or other backward classes shall be transferred only to the person belonging to the same tribe or a prior permission of government is required before transferring such property to anyone outside that tribe.

Nature of Property

Buyer needs to go through the and records and should verify that whether the land is agricultural land or a residential property.

Encumbrances over the property

Before purchasing the property, the buyer should ensure that the property is free from incumbrance, that is it should be free from mortgage and loan.

When the land was originally owned by any government authority, a no-objection certificate may be obtained by the buyer.

Land Approvals and Building Permits

When the homebuyer is purchasing the property from the builder, the purchaser needs to ensure that the builder has taken approvals from all the relevant authorities for the construction and types of activities allowed on the premises.

To ensure that the promises with the home-buyers are kept, RERA Act, 2016 mandates any ongoing real estate projects that do not have Completion Certificates (CC) as of the Act’s start date must be registered with the relevant State RERA within three months. Therefore, before the home-buyer purchases a property from the Builder or a construction company. It should make sure that the project in which they are planning to invest are registered with RERA authority.

Preparation of agreement to sale and other deeds documents

According to the provisions of the RERA Act, 2016, an agreement of sale also needs to be registered by the parties.

It is pertinent to mention that agreement to sale is different from title deed. An agreement to sell is an instrument wherein the seller makes a promise to transfer the property to a buyer on fulfillment of certain conditions however it does not create ownership of the buyer over the property. Title deed on the other hand is an instrument which creates right, interest and ownership of the property to the buyer.

Recently, to safeguard the interest of home-buyers, a PIL, Ashwini Kumar Upadhyay V/S Union of India & Ors. was filed, seeking the implementation of a model builder-buyer agreement across the country. Where in order to protect customers and bring transparency in the real estate sector, directions to the Centre were sought to frame the model pacts for builders and agent with buyers in line with the Real Estate Regulatory Authority (RERA) Act, 2016. In this case, ASG Ms. Aishwarya Bhati submitted that central govt will frame a model Builder-Buyer agreement and certain clauses of the agreement shall be necessary to be incorporated in every Builder-Buyer agreement.

It is recommended to get the sale deed and agreement to sale registered as any document required mandatorily to be registered but not registered cannot be registered as evidence in any court of law. The unregistered property holds no validity legally, and the owner risks losing this property with time even if you hold the position to the property. Additionally, the government can acquire unregistered properties at any time to develop the infrastructure project. Therefore, the owner will not be able to claim their compensation which gets offered to these owners at the time of acquisition of the property. Hence not registering your property during the given timeline can attract a lot of penalties and make your property null and void.