For the purchase or lease of real estate for self-occupation as a home or commercial premises, or as an investment, various factors need to be considered beyond the price and location. In the case of properties in new projects by reputed developers, there is no reason to be too stressed about this. However, it can and often does become necessary while purchasing a resale property. One of the most important aspects to verify is the title of such a property.
The title verification process should actually begin even before an actual check of documents. For instance, if a person or entity offers a property at a rate which is below the going market value, it is definitely a signal for caution. Owners of property with complicated or defective titles will attempt to pressurize interested parties to buy the asset at short notice by offering a very low price as enticement.
In all property transactions, it is essential to subject all related documents to rigorous scrutiny and verification by a qualified expert in order to ensure that the property has a clear and marketable title. To begin with, a prospective investor needs to establish whether the property on offer is leasehold or freehold, and whether it is fully or jointly owned. Next, the documents creating interest in the property – namely the title papers – must be reviewed.
Depending on the nature of the property or proposed transaction, these include the sale deed, lease deed, conveyance, development agreement and the documents establishing the chronological chain or ownership. The primary intention behind this search is to establish how the owner acquired the property and what kind of rights he or she has over it.
Other documents to be checked are the property card (if available), the 7/12 extract and the Index II. Further, a prospective investor needs to establish whether all the above documents are properly registered in government records, along with any encumbrances such as mortgage or pending litigation.
How A Title Search Is Conducted
An advocate issues a Title Certificate after conducting a search on the title of the property that is intended for purchase. This search will encompass the chain of sale/conveyance agreement, property card, 7/12 extract, Index II and records in the sub registrar’s office. The title certificate states that the property is unencumbered and has a clear, marketable title.
Also to be included in a thorough title search are aspects indicating ‘right of adverse possession’, which means that any person physically holding the property without dispute from the true owner can claim the right of ownership. All this considered, it is advisable to conduct a 30-year title search, or at least a 12-year search.
Public Notice
Though it is not mandatory, there are sometimes reasons for doubt about a resale property or a piece of land with a long history of ownership. In such cases, the intending purchaser or his advocate often issues public notices in newspaper. The practice is to issue two public notices – one in English and the other in the local language of the state – stating that the purchaser or his client has agreed to purchase or negotiate for the purchase of a property from a named vendor. This invites counter-claims in the form of mortgage, charge, lease, lien, easement, gift, trust, etc. against the property to be notified to the buyer or his advocate within a specified time (normally 14 days) with supporting documents.
However, it must be noted that merely giving public notice and not receiving claims from any persons will not bind those who may be real claimant if they were not aware of the public notice. In case of dispute, such public notice will support the buyer’s contention that he is a bona fide purchaser for value without notice of such claim.