Muddassar Bagadia 2

This article is written by Muddassar Bagadia, a student of Rizvi Law College.

Property disputes are a common occurrence in India, especially in states like Maharashtra, Delhi, Bangalore, Chennai, etc. where the property rates have sky rocketed and are steadily increasing with the passage of time. Wars over wealth continue for decades amongst all, from the low-level household income groups to ultra-rich families. Even the legally protected ones are not under the covered shell and at times also been attacked and challenged by the third parties and or ulterior ones. Such disputes consume a lot of time and costs in litigation, which causes loss and tremendous agony. Additionally, disputes may also cause non-use or limited enjoyment of the property for a considerable long period of time until the issue is resolved. There is no real time limit for resolution of the property disputes, each case of a dispute has its own intensity.

Many types of property disputes one may likely face, such as, disputes occurring from the unhappy beneficiaries who may have got less share in a property than what was expected by them, for instance, in cases of property received by way of inheritance under a will or otherwise. Alternately, such quarrels may also arise due to wrong motives to retaliate or extort money, even when there is no prima facie case of a claim over a property. Disputes also arise in the event of property grabbed by using illegal means, such as forceful possession, erroneous complaint’s and cases, or by way of forging or concocting documents or even by making fallacious wills.

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The obvious solution to the substantive owners of the property is to take up the matter before the court of law and seek redressed. On the other hand, courts are fully loaded with matters of such property disputes and therefore, unable to provide relief as expeditious as is required. Property disputes stretch even for decades, from the lower court to the highest court, and on the other side, there is no guarantee of winning after a long battle is fought over a disagreement. An amicable settlement or a prompt resolution by the arbitration dispute resolution system has to an extent worked well in many cases, however, has failed to resolve the issues where the stakes involved are pretty high and the level of greed involved is mountain-top. A strive to win at any cost in property disputes by the rich players in the real estate market as a matter of standard, respect and dominance continues, which causes immense harm and loss to the persons entitled to the rights over a property. Such persons economically suffer and lose their hard earned savings, and in many cases are forced to sell their surplus properties to save the disputed one or even at times are pushed by themselves to borrow loans so as to spend and defend their right and save the questioned property. Such legal costs are not even fully reimbursed to them in the event when the dispute is resolved in their favour, which again causes due economic loss.

Let’s now further look into the most common disputes in the real estate arena and how one should anticipate to prevent their properties from these issues and to avoid surprises in property transactions.

  1. Disputes relating to Title of Immovable Property  

    The title of the property refers to ownership right to a property. A person having good title to a particular property generally means an entitlement of such a person to the enjoyment of rights or interests in a property, for instance – possession, use, income by way of rent, etc. A title is always supported by sufficient documentary evidence. A clear and marketable title of a property is invariably essential for the continuous enjoyment of property without the interference of any third party and to dispose of the same with good gains in future by the owner. A clear title to the property is a strong and a valid defence against interruption by any other party not being an owner. The dispute that arises out of title may be during the transaction of acquiring the property or post transaction, such as, claims by third parties, legal heirs, co-owners, easement rights disputes, wrong representations by the seller, improper description of the property in the title deeds, etc.

During the transaction of purchasing the property one may suffer, if substantial amount of money is paid to the wrong proportionate seller, if there are two or more co-owners of a property, where one out of them is not entitled to receive the amount of share received by him and where he refuses to return or the other co-owners refuse to adjust the amount which is to be paid towards their shares. Alternately, a dispute to title of a property may also arise when a party to the transaction after receiving the earnest money or advance money refuses to perform his part of the contract, and in turn deals with the other purchaser and receives consideration from the new purchaser, the previous buyer is not constrained to move to the court for redress, which ultimately leads the property title into title dispute.

Properties acquired by gift or under a will may also face disputes raised by third party substantiating their contention that the said property was not given by will or the said will or gift is not valid in the eyes of the law.

Sometimes property is purchased without verifying or visiting the physical location of the property, without finding out the actual person in the possession,  without checking the latest development or regional plan, without verifying the right of access to a property (easement rights), without knowing whether easement rights are violated, when a property being subject to a road setback, school, welfare centre reservation or reservation of garden or playground, and is not represented to the buyer and the buyer ends up without inquiring about the same and pays earnest money or advance money and later finds out the fact of a property being restricted in its use. This leads him to cancel the contract of sale and demand refund of money from the seller. Vendors of such property having played fraud refuse to refund the money to the buyer and hence which leads the buyer to the court of law disputing the title. In such cases, free enjoyment does not continue either to the buyer or the seller without disturbance of any third party interests. Title defect may also arise if there is any notice served by the government authority for the acquisition of such property or such property being subject to restrictions and/or claims by the government and the seller ends up selling it without representing the defect in title to the purchaser.

Things to do before acquiring immovable property and the safeguards to be employed to minimise the risk involved.

  1. It is always safe to proceed with the investigation of the title to the immovable property before acquiring one, a thorough verification and perusal of the title documents of the property for at least 30 years or more should be conducted. A title search can be done with the help of the documents stated below.

For Example –

  1. A full chain of documents of property transfer, an i.e. chain of registered agreements, stamps duty payments, inheritance etc., advertisements and gazette announcements, etc.
  2.  Complete revenue records of land, i.e. 7/12 extract (Saat-Baara Utara) etc.
  3. Conversion from agricultural to non-agricultural, de-notification of Adivasi land etc.
  4. City Survey Plan indicating the boundaries of the plot or plots of land.
  5. If any land-owner inherited the land, then Will/Testament & Probate in favour of the inheritor.
  6. If there was any dispute about ownership at any point (i.e. present owner or previous owners, then copies of the final court judgment.
  7. If land was mortgaged to any bank or financial institution, then all papers of the bank etc. relinquishing the lien in favour of the owner.
  8. If land was leased by the government, then lease agreement and receipts of lease rent payments.
  9.  Registered agreement between the builder / promoter and the land-owner.
  10. Visiting the actual site or the property which is to be acquired.
  11. Verifying the access area or any encroachment thereto.
  12. Checking with a local authority (any restrictions on land use).
  13. Checking with neighbouring land owners.
  14. Cross verifying the land boundaries with DILR authorities.
  15. Conducting government survey, finding out and verifying the actual land described matches with the GutbookNakasha (plan).
  16. Publishing a public notice in two or more languages circulating in the local area.
  17. Conducting Index – II register searches at the sub-registrar of assurances office.
  18. Conducting litigation search at jurisdictional civil court and revenue authorities.
  19. Search revenue records.
  20. Verifying with the local civic authority whether any notice is served for a particular land for acquisition or any obligation or restriction is being imposed.
  21. Check reservation on the plot by perusing Development Plan or Regional plan from the local development authority.
  22. Check all mutation entry in 6/12 extract matches with 7/12 extract.
  23. Search if there is any bank lien or mortgage of the property – Look and insist on original title-deeds or documents.
  24. If acquiring a flat in a housing society, check with the society’s claims if any on that particular flat such as maintenance and interests thereof check with the nominees or co-owners having the right to such flat including whether how owner contributed to purchase the flat.
  25. Verify holders of the land by seeking their proper identity proof before paying consideration or part there to any one of them.
  26. Check if there are any obligations of the legal heir – whether all requisites such as – No objection certificate from each legal heir is been taken, who may possibly raise a claim in future and they have been made a confirming party to the final registered instrument. Be sure that only obtaining N.O.C would not suffice, as such legal heirs may raise future claims to a property.
  27. Check whether the property which is to be acquired is a freehold ownership or a leasehold property. Additionally, verify a property whether it is self-acquired or ancestral property. Also, verify whether the lessee is entitled to further sublease or assign the property to the third party for consideration or not, by perusing the title lease deed between the actual lessor and the lessee. Further, also, be sure to check whether any consideration or premium and permission have to be paid or required by the seller from the government or collector of a district before assigning such property and whether such premium has been paid or permission has been obtained from the competent authority with that respect.
  28. Check whether the seller is entitled to sell the property as a guardian of the minor’s property – whether appropriate court’s order has been obtained to that effect.
  29. Furthermore, also, verify if the property to be purchased is ancestral property or self-acquired property, as several hidden claims may subsequently arise in the former case, where the legal heirs are not disclosed, identified, or are not traceable at a given point.
  30. Before acquiring any Devasthan inam land, Khalsa land, 32-G tenancy land, whether essential government permissions are obtained by the seller.
  31. If a property is to be acquired from the Non-resident Indian, it is utmost important to be aware of Tax Deduction before paying him the full and final consideration by the purchaser, which now in the state of Maharashtra is 20.21 % of the total sale consideration. In the case of a property purchased from Indian national origin only 1 % of the T.D.S is required to be deducted by the purchaser out of the total sale proceed consideration to be paid to the seller which is subsequently paid to the government by the purchaser and he must issue a T.D.S certificate to the seller respectively.
  32. Seek as much as information by the seller and surrounding property owners.
  33. Additionally, the development potential of the land must also be verified in order to ascertain the financial benefits or loss arising out of such a transaction.This may be done by appointing an architect and knowing the repercussions of the land.

The above type of work is normally conducted by an Advocate or a reputed title investigator. So it is wise to appoint a suitable professional with regard to the investigation of the title to a property, so as to avoid disputes at a later stage.

  1. Disputes related to delay in possession of flats by builders

Delay’s with regards to delivery of possession of flats by builders to the buyers is in vague today. Almost more than 80% of the real estate development projects, whether residential or commercial are being delayed due to vast variety of reasons, but, mainly due to delays in procuring regulatory and authoritative compliances which the builder is required to obtain, such as, Intimation of disapproval, construction certificate, occupation certificate, and other No objections certificates of sewerage, water, environment, fire, tree, police etc.

Delays occur not only due to the delays in procuring the permissions but also due to title disputes over a land, complaints against builders for not conducting the development in accordance with the sanctioned plan, Erroneous complaints against buyers to extort money, lack of funds with the builder, builder transferring the project to the other developer / investor without obtaining consent from the society or the landowner, when the consent is required to be taken as per the term of contract, ultimately resulting in a dispute in the court of law and furthering delay.

Apparently, a builder sometimes sells a single unit or a flat to many buyers to raise funds at a construction stage, such act when revealed, leads to a dispute and the construction halts. On the other hand, a builder at times may also shelve the project and may not want to continue. In such cases, the builder wants to return the money raised by him and want to sell the project at much higher price than the price at which it was sold earlier. In such cases, the buyers deny and do not accept the consideration paid by them without receiving any interest on the principal consideration or even denying receipt of consideration paid by them and demanding the possession of the unit or flat which they purchased. Such acts of builders lead to disputes amongst builder and the buyer, which then ultimately lands up at consumer courts and, in turn, causes the delay of the project, and amounts to delayed possession or no possession.

Furthermore, delays may also occur because of lack of sufficient funds available to the builders. Builders face challenges in sourcing funds due to funds available at a higher rate of interest.

Things to check in order to avoid delay in acquiring property possession.

  1. A buyer needs to check the permissions required by the builder to construct are in place and are obtained prior in time before the builder is entitled to sell i.e. the builder must have the approved plans in place and other no objection certificates are procured by him. Commencement certificate obtained by the builder him during excavation would not suffice.
  2. Peruse the documents, plans and permissions of the proposed construction. Investigation of the title of the land, flat or building proposed to be constructed or under construction is the most important thing to consider before buying one.
  3. Ask for a construction schedule from a builder, they give construction progress reports to claim payments for construction-linked property bookings. If a payment has not been claimed by the builder from the buyers within the stipulated time, it is a sign of the project going off-schedule.
  4. Visit the site under construction or proposed to be constructed. In cases of the redevelopment of housing societies, consult the concerned authorised person from the housing society.
  5. Look for Litigation Disputes over boundary by physical survey and or from knowing government and courts records.
  6. Financial statements of the builder and his past profile must be asked for, Number of constructions completed by him till date and the number of pending litigations or criminal cases on the builder should be ascertained.
  7. Seek complete papers of the builders firm or company i.e. Memorandum of Partnership, Memorandum of Association, Audited Annual Reports of all previous years etc.

Depending on the form of ownership and the relationships involved, you – the flat-buyer – will have to bear various invisible risks. For example, a)    If the builder is not an individual i.e. but part of a partnership firm, then in the case of a dispute between partners, the project may get stuck. b) If the builder (the individual you are dealing with) is director or employee of a private limited company of builders, then you need to know the legal powers of that individual. For example, you are at risk if he is signing papers that he is not legally authorized to sign; if so, all documents signed by him are of doubtful legal value for enforcing your rights in a court.

  1. Make sure the builder is not a first-timer or a small-timer, a small building contractor or a small investor trying to become a big-city builder with the help of local or friendly investors. One small dispute with his lenders (investors) can shake his tiny boat and put a question-mark on your investment.
  2. Details of the builder’s debt – equity ratio, exposure to other risk factors i.e. other construction projects, speculative investments in stocks and commodities, etc. (These may come from indirect sources such as newspapers, internet research and word-of-mouth)

If your builder is taking heavy financial risks on other fronts, then failure on those fronts may leave him unable to complete your building project. If your project gets stuck halfway due to his financial failure, it becomes your problem. For instance – Is your builder low on working capital, and, therefore, dependent on large borrowings from private lenders? If so, then project delays (your project or some other projects) can raise the interest burden to crushing levels, and he may lose all interest in your project.

  1. Disputes relating to timely payments or non-payment of rent to members of housing societies by builders.


One more common occurring dispute in the realty sector is the non-payment or delay in payment of rent to the members of the housing society in case of redevelopment of housing societies. The builder undertakes to develop a housing society is under an obligation to offer a temporary accommodation or rent for the temporary accommodation of the members till the new building is constructed and the possession of permanent premises is given. Builders normally give post-dated cheques for about 24 months from the date of vacation of old premises. In the beginning process of redevelopment, things move pretty smooth, but, at times, the construction of the building halts for one or the other reason, be it a financial crisis or delays in compliances, disputes with a title or otherwise. In such a scenario a huge financial burden falls on the builder, such as paying interest on the money raised by him and subsequently also balancing the other projects and other overheads. Also, sales are affected and, therefore, results in a lack of revenue coming in. In such cases, the builder does not fulfil his obligation to pay rent to the members of the housing society.

The members of such redeveloping housing societies are left with little choice, that is, to request the builder from time to time to make the payment or else approach consumer court, which again remedy is not opted by such members in the majority of the cases. Many societies avoid litigation because of the cost involved in moving to the court. One such case was of the project been redeveloped by M/s Vaidehi Aakash Pvt Ltd at Andheri west area in Mumbai. Where 1000 families were knocked out and had to pay the rent out of their own pockets to continue to live in the rented premises for more than 8 years. This problem is too rampant nowadays and the members of the society before opting into redevelopment have this troubling question in their heads. No amount of written promises or guarantees provides them the satisfaction required to move ahead. But are left with no option and with their building deteriorating they take up the risk and move with their cause without even bothering whether the builder will fulfil this promise until the time he is obliged to do so.

This issue is in direct relation to the dispute which we have dealt earlier, i.e. about the delay in possession of flats by the builders. As mentioned earlier, delays occur due to several reasons; the financial condition is one of them. Non-payment or delayed payment is the reason of the financial crisis of the builder in most of the cases.

Now, how must one avoid such an issue is the concern here – let’s have a look at the things to avoid such disputes.

How to avoid such issues of non-payment.

In adjunct to the point listed under the head “Things to check in order to avoid delay in acquiring property possessionpoints (f) to (I) – Below points may be the preventive steps which could be undertaken to avoid such risks. However, these steps are not conclusive and are just opinion based.

  1. Instead of accepting monthly rentals from builders, one may insist on payment of lump sum amount as a security deposit. Which can be typically the amount if invested in an open market would fetch you the amount required to pay the rent for alternate accommodation. Such substantial amount of money shall be used for getting the alternate accommodation on the basis of deposit only and no rent (ordinarily called as heavy deposit basis – which is refundable to the licensee-lender). Where one has to enter into an agreement with the owner of the flat, negotiate and pay a lump sum amount (a heavy deposit) and shall pay no rent on a month to month basis. The licensee of such flats can occupy the premise until the termination of the agreement and the deposit money is refunded to him. This will ordinarily act as the safeguard in the event if the builder does not pay or delays the payment.
  2. Ensure and ask sufficient security for non-payment in addition to heavy penalty clause in the consent agreement or the permanent alternate accommodation agreement.


  1. Disputes relating to inherited property

 Inherited property basically refers to the property received by a person through succession or by a will, as an heir or otherwise. One has to be very careful in buying inherited property inherited from his or her ancestors or from other persons. Problems buying or even selling such property are cumbersome and the probability of fraud is high in such cases. Disputes generally occur when a purchaser purchases such inherited property without the knowledge of such property being a inherited property or without the knowledge such property being subject to the conditions of will, probate, letters of administration or a succession certificate. However, mere knowledge does not suffice, it is relevant to understand how such property was inherited and whether the person was entitled to such a property. The property is inherited from deceased persons to their legal heirs and even by other persons. When a person dies and has made a will for distribution of his assets, the property is distributed as per wishes set out in the will and in the case of a person dying intestate i.e without making any will, the property is distributed as per the letters of administration obtained by one of the administrators from the court of law or through or under a succession certificate obtained from the court of law under the appropriate succession laws of an individual. Disputes in both the cases may occur if such inherited property is acquired without going through the process of due diligence and without knowing how the property was transferred to the current seller. Ideally, for such transactions, it is always advisable to hire an experienced property lawyer and to understand the adverse effects of the same.

Wills may be challenged as to its authenticity on the grounds that the maker of the will was not a fit person when he made the will or the will is not the last and final will or the property has been distributed in contravention of the wishes set out in the will or the will is fallacious.

On the other hand, in cases where the property was not distributed by a will but through letters of administration or succession certificate, buying such inherited property also leaves the buyer open to many risks, if the property is distributed as opposed to the conditions set out in the letters of administration or succession certificate or in the rare case the property was not distributed as per the laws governing a class of persons or an individual.

A dispute may arise from the legal heir or a person if he has not received his share to his entitlement under a will or the letters of administration or the succession certificate. Thus, it is utmost important and necessary to be extra diligent in buying such property and to avoid legal tangles at a future date. Such disputes are a common cause of the defect in the marketable title to the property.

Things to check in order to avoid disputes with respect to the inherited property.

  1. Check the name of the beneficiary (seller- in whose name the property is inherited) is mutated in the relevant government and or revenue records depending upon the nature of the property.
  2. Check whether such property was transferred with the substantial proof of inheritance e. Will, probate, letters of administration or succession certificate or by any mutual understanding)
  3. In the absence of a will, check whether the property was distributed as per the appropriate succession laws governing a class of persons or individuals. For instance – according to the Hindu succession law, if a Hindu man leaves behind property without a will it is primarily passed on to class 1 heirs (which includes the widow, children and mother) in equal shares. If there are no class-1 heirs, class-2 heirs come under the operation (which includes father, grandchildren, brother, sister and other relatives) can effectively claim the property. Thus, before buying an inherited property it is very important to know which class of heirs have acquired the property and is correctly distributed amongst them.
  4. Find out whether the property passed on under a will was also the self-acquired property of the testator. Because one can only pass on the property as per her wish if the property was self-acquired and not inherited.
  5. Take all the details of the inherited property from the seller in addition to the due diligence of the members of the sellers family.
  6. Ensure that the correct procedure of inheritance was followed under which the present seller has acquired the title.

5. Disputes between Buyers and Builders or Estate Agents – For the fraud played on the buyers.

Fraud played on the buyers in the metropolitan cities have nowadays become a common phenomenon. This is one of the reasons the buyer is not ready to purchase under construction property and  hence the sales of the builders and the estate agents have affected tremendously. The reason behind this is only that of the fraud played by many builders in the market, coupled with the fraud of estate agents.  The fraud mainly is with respect to a unit sold which does not exist or will not exist (such as by showing a proposed plan and allotting a letter to that effect and extracting money out of the buyer by playing misrepresentation)

Even many estate agents play fraud on the buyers who come to them to buy property. In many cases, documents of the property are interpolated or at times even shown the documents  which do not pertain or are connected to a property.

Disputes between buyers and builders ultimately lead to criminal complaints, civil disputes and sometimes physical threat or retaliation as well.

Such disputes have found their place at consumer courts and one may find that consumer courts are mainly full of disputes between buyers and the builders. Fraud is not mainly limited to money extracted out from the purchasers but it extends even to many other breaches which the builder or the estate agents commits in contravention to their respective promises being made to the buyer.

How to avoid such a dispute.

  1. All those points referred to in the dispute with title mentioned (supra) and how to avoid them must be considered in order to avoid such a disputes.
  2. A legal expert should always be appointed or hired before buying any property and before even paying or signing any document with that respect.
  3. History of the builder and the estate agent should be known or inquired before dealing with them.
  4. The property offered at heavily discounted rates must be avoided or, at least, looked carefully into, before buying one. It may probably have defects with respect to title or might be a property belonging to mafias.




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