This article has been written by Samridhi Srivastava. The article talks about the process of registering a property in India.
When you are in the process of purchasing a decent property with a preferred location in India the next most important step after choosing your dream house is to register the property in your name. The registration of the property is mandatory as per section 17 of the Indian Registration Act, 1908 which secures the ownership of it, as you become the authorized owner of the property in the eyes of the law. In case, if anyone ignores the registration of the property in their name, the seller from whom they have purchased the property they will be considered the legal owner, and any interest, rights, bills, etc. will be in the name of the seller.
However, at the time of registration of the property, the buyer has to be aware of the property they are going to own by the seller. The knowledge about any outstanding, previous owner, etc., has to be procured by the buyer before registration of the property is made.
What are the documents required before registering for a property?
When we are heading towards finalizing the transfer of the property from the seller, there are current documents that need to be checked and verified before registering a property. They are the followings:
- Encumbrance Certificate: As per Merriam-Webster, it is defined as a limitation on property ownership. For instance, if there is a property whose ownership is going to be transferred, and if the property has any outstanding mortgages, lien, unpaid taxes related to property, etc., it will affect the process of ownership, and the buyer must attain an encumbrance certificate from the seller before finalizing the deal. One can also apply for the certificate through a government portal named Meeseva.
- Chain of Documents: These documents are related to any previous transfer of property made from builder to 1st owner and an agreement document between the constructor, builder, and 1st owner.
- Receipt of Payment of Dues: This document ensures that the payment of all dues has been successfully made by the previous owner or occupier.
- Preparation Deed: The next documents that are required include sale deed, gift deed, a title deed, etc. because these documents suggest the terms and conditions involved in the process of completion of the transfer of property and also includes the full details of all the parties involved. Also, sale deed and title deed needs to be registered under the jurisdiction of the sub-registrar’s office.
- Other Certificates: There is also a requirement of certain certificates that involves:
- Khata Certificate: A document that certifies the entry of the property is made and is in the knowledge of the local municipal body;
- No-Objection Certificate: A document that is to be procured from departments like pollution board, sewage department, water department, electricity department, etc., by the constructor as these confirm the uninterrupted safety, supply and service from these departments to the buyer.
- Occupancy Certificate: A document that certifies the construction of the building was done as per the sanctioned blueprint by the municipal body.
These certificates confirm that the seller is initiating the sale under the knowledge of the local authority, and also stays the buyers aware regarding the investment they are making, so that, if any legal action takes place against the construction, they can provide all the necessary documentation to the authority.
When will the final transfer of the property owner be complete?
The final transfer of the ownership from the seller to the purchaser is considered complete only when the stamp duty and registration fees are duly paid. The stamp duty is a fee levied by the state government during the process of transferring of ownership of the property from one person to another, and as per section 3 of the Indian Stamp Act, 1899 it is compulsory to pay stamp duty because through this the State Government verifies the purchase of the property.
However, the stamp duty and the registration fees differ from one state to another and UTs. The following are the rates at which stamp duty and registration fees are charged in different states and UTs:
- Delhi: Male and Female buyer is charged at 6% and 4% rate which is applied on the circle rate or on the considerable amount of the property, whichever is higher, whereas, registration fees are charged at 1% rate of the total market value.
- Uttarakhand: Male and Female buyer is charged at 5% and 3.75% respectively.
- Punjab: Male and Female buyers are charged at 7% and 4% on the stamp duty and 1% for the registration fees.
- Mumbai: Stamp duty rate at 4% for the agreed value of the property and 5% for areas that fall under municipal zone whereas, 1% for registration fees or Rs.30000 whichever is lesser.
- Chennai: Stamp duty and registration charges are charged at 7% and 1% respectively.
- Bihar: Stamp duty is 6% if there is a transfer of property from male to female is 5.7% and female to male is 6.3%.
The stamp duty rate also varies depending on the various other factors. They are the following:
- Location of the property: if the property is in an urban area or municipality zone, you may end up paying more stamp duty compared to the properties in the rural or outskirts area.
- Age of the purchaser: if a senior citizen is purchasing the property they may land up paying the subsidized rate of the stamp duty.
- Gender of the purchaser: if the property is going to be registered under a female name, then the charged stamp duty rate will be lesser than compared to that of the male purchaser.
- Age of the property: the age of the constructed building also fluctuates the stamp duty rate.
- Purpose of the usage: if a property is being purchased for commercial or business purposes then the stamp duty rates are higher comparatively than the properties that are purchased for residential purposes.
- Amenities: the rate of the stamp duty is usually higher where the apartment or a duplex includes a gym, swimming pool, elevator, etc. in comparison to those properties where no such facilities are available.
What are the documents required for payment of the stamp duty on the property?
The following are the documents that are required for payment of the stamp duty on the property:
- Sale deed
- Khata certificate
- Receipts of Tax paid
- In the case of Joint, Development Property a registered development agreement is required.
- Power of attorney/s, if any
- GPA and Supplementary Agreement between the landowner and the constructor.
- Previous registered agreements copy (if it is sold from one owner to another)
- Encumbrance Certificate
- Sale agreement
- Electricity bill
- No-Objection Certificate
- Sanctioned building plan
- Occupancy Certificate
- Title deed
- Copy of Society share and registration certificate
How can the payment of the stamp duty be done?
After procurement of the above-mentioned document the payment of the stamp duty can be done through the following methods:
- Traditional Stamp paper: The payment of stamp duty can be done by purchasing a stamp paper from any local authorized vendor who deals in them, and all the details related to transactions have to be written on it.
- E-stamping: In our busy schedule, one finds feasible to make payment of the stamp duty through an online mode. The Government has set up an online portal named stockholding.com which is appointed as the Central Record-keeping Agency for stamping the documents digitally. The purpose of installing an e-stamping method was to fast-forward the stamping work and reducing the paperwork of the authorities. This also ensured the security of the documents, cost, and user friendly. Once the payment is made, an e-certificate is issued with a unique code, i.e., UNI.
- Agents: There are authorized franking agents whom the buyers hire for stamping the documents, for instance, bank employees act as a franking agent who is authorized to pay stamp duty and once the payment is made, the franking machines generate the stamped document.
What is the next step after payment of the stamp duty?
The next step after payment of the stamp duty is to get the registration done with a sub-registrar as per the Indian Registration Act, 1908. Here, the buyer has to pay the registration fees which is over and above the rate of the stamp duty. However, the location property should be done within the jurisdiction of the sub-registrar. By registration of the document, the buyer becomes the legal owner of the property.
What is the procedure for registration of property?
The process of registration is made in the presence of the property owner and two witnesses along with the required following documents:
- Identity Proof of both buyer and seller, for instance, Adhaar card, PAN card, or driving license.
- Two photocopies of the original sale deed. The printing of the document should be made one-sided.
- Duly paid registration fees proof.
- Duly paid stamp duty proof.
- Khata certificate.
- If the property is a secondary-property then, the tax certificate is required.
What is the limitation period for the registration of property?
As per section 23 of the Indian Registration Act, 1908 the registration of the property has to be done within 4 months from the date of execution.
What are the penalties and punishments in case of presenting false evidence or documents?
Chapter 14 of the Indian Registration Act, 1908 deals with the penalty and punishment in a case where a piece of false evidence or documents are presented in the office of sub-registrar will be punished with fine or could be imprisoned for not more than 7 years or both. The act also provides punishment for the employees who are authorized to verify the documents if they intentionally register a wrong document with fine or imprisonment for 7 years or both.
As per section 83 of the Indian Registration Act, 1908 the initiation of proceedings can be done by registering officer with the permission of the Inspector-General and the offenses will be tried in any court.
What are the consequences of the non-registered property?
When you are done with selecting the right property for residential or for commercial purpose but somehow you forgot the most important step of registering the property in your name there will be certain consequences that the buy has to suffer. Chapter 10 of the Indian Registration Act, 1908 deals with the unregistered documents, but the builder, contractor, or any involved party in the contract can file suit in any court of law under the Specific Relief Act, 1882 and can seek relief for specific performance of the contract.
The following are the consequences of the non-registered property:
- The ownership of the property will not be legal in the eyes of the law.
- The ownership could be revoked anytime on the failure of registration by the seller.
- No violation of any right by an unregistered property will be entertained by the court.
- The initiation of home loans or insurance of property will not be initiation by any bank or an insurance company.
Can a non-citizen own a property in India?
However, those who are non-residents, i.e., Non-Resident Indian’s (NRIs), Person of Indian Origin’s (PIOs), and the foreign nationals the acquisition and transfer of immovable property in India are regulated by the Reserve Bank India (RBI) who follows the rule of the Foreign Exchange Management Act (FEMA), 1999. NRIs and PIOs can purchase, accept, and transfer any immovable property except agricultural land, plantation property, and farmhouse because their parents or grandparents were the original residents in India.
However, foreigners have to satisfy their uninterrupted stay in India for 183 days, but he cannot acquire a property on a tourist visa. The requirement for buying a property in India is to first gain citizenship of India, then only he will get all the legal and fundamental rights that are conferred by the Constitution of India. The Right to Property is not a fundamental right, but it is a legal right which is conferred by the Constitution of India.
The Indian Registration Act, 1908 deals with the rules and regulation of the registration of the property and it is compulsory to register the property within the stipulated time so that one can avoid the payment of penalty that is to be paid to the sub-registrar and also to safeguard one’s legal right over the property because once the registration is done the buyer becomes the legal owner of the property.
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