“There is something permanent and something extremely profound in owning a home.” - Kenny Guinn
Not everyone in this world has a shelter over his head and of those who have, the majority lives in rented apartments. The wish of being blessed with the possession of a house lies in every person’s heart whether it be an independent bungalow or a flat in an apartment.
With the proliferating Indian population, the idea of becoming an owner of an independent house has become a practical ‘no’. Consequently, apartments and flats are the latest trend and have acquired an essential place in the Indian economy. People nowadays are opting for flats more and more for their housing preferences. But while dreaming of having a flat to one’s name takes no money and effort, its purchase and registration process definitely does, at least a little bit.
The registration of a flat is done in the same manner as for other immovable properties. Since the common masses are, in the general run of things, not aware of all the steps and procedures involved in the sale, purchase and registration of properties in India, they find it to be a relatively complex process. It is actually not. Let’s clear all our doubts and be informed of each and every essential of the registration process of property in India blow by blow.
To begin with the basics, let’s answer a few questions:
- Why Registration?
When you get an agreement of sale registered, you get legal recognition as the owner of the property. After registration, a person becomes the property’s unquestioned possessor. This helps when your holdings are questioned in the Court of law. It becomes the evidence of your title over your possessions.
Mere agreement of a property transaction does not hold a good evidentiary value of ownership and title under the law.
- In India, which law controls the registration of property?
The Registration Act of 1908 governs the registration procedure of property in the territory of India, except, of course, for the state of Jammu and Kashmir. Section 17 under Part III of this Act specifically postulates all the documents which must necessarily be registered in our country.
- What is the body which works for this purpose?
For the sake of efficiency and ease of functioning of all the property dealings in India, the whole country is divided into several Districts and Sub Districts, each of which contains an office of the Registrar and Sub Registrar in accordance with Part III of the Registration Act. They are appointed and their offices are established by the State governments in every District, Sub District or Joint Sub Districts (an amalgamation of two or more Sub Districts). This whole mechanism is headed by the Inspector-General of Registration of every State.
Now, let’s plunge in to the whole registration process, step-by-step:
The law makes it mandatory to register all immovable properties worth 100 rupees or more. So, initially, it is essential that both the parties first sit and evaluate and estimate the price of the property in concern.
“It is always the start that requires the greatest effort.” - C. Penny
Thereafter, the buyer has to show a lot of diligence in verifying all the documents related to the title and ownership of the property. It is necessary to be sure about whether the property is being directly bought from the developer i.e. is it a new registration? or is it a transfer of an old property? i.e. a second registration. If latter is the case, then verification becomes all the more easier since the seller will already have all the title deeds with him ready for registration and you will not have to approach the government offices for checking the property’s holding.
It is mandatory that the registration be done within four months of the execution of the agreement deed for sale or purchase of the property at the Sub-Registrar’s office. In some cases, the concerned office of the Sub-Registrar also requires a NOC along with the sale deed for the smooth so that no ambiguity remains of the transaction.
Now, what is a NOC?
A NOC (A No Objection Certificate) is a legal document that declares and outlines each and everything related to the sale of the property, from the decision of the seller to the consideration of the sale and all other relevant details of the transfer.
It’s time for adequate stamping and paying the registration fee at the sub registrar’s office for the registration the sale deed.
- Registration Fee
In accordance with the Registration Act, 1908, the State Government charges a certain percentage of the sale/purchase amount of the property as registration fees. There are two kinds of prices for the property. One is the current price of that area i.e the market price and the second is the price fixed by both the parties i.e. agreement price. Generally, of the two prices whichever is higher, the registration fee is fixed upon that. This registration fee is normally 1% of the total price but it varies from State to State and depends upon a lot of factors such as:
- Whether the property to be registered is a new or an old property. Generally, the registration fee is higher for the registration of new properties.
- The registration fee of commercial properties is higher than for the residential ones.
- Registration fee of property located in cities is more.
- The purchase of property from a family member or a gift deed requires a lower registration fee.
- Gender is a very important factor. In India, if property gets registered in a woman’s or a senior citizen’s name, then the registration amount is relatively low.
NOTE: The registration fee is to be paid prior to the registration of property.
- Stamp Duty
It is a government tax levied on all executed documents (here property transactions) under Section 3 of the Indian Stamp Act, 1899, as an evidence of transfer of ownership of the property. Stamp duty has to be paid by the buyer to the State Government which is some percentage of the total value of the property. Normally, it is 7-10% of the market price at the time of the conveyance of property but this also varies from one state to another state in India. It must be paid in full and in time. Any delay becomes a cause for penalty. Except for transfer by will, all transfer documents have to be properly stamped before registration.
- Preparations of Stamp Papers
Once the duty is paid, non-judicial stamp papers (stamp papers which are used for execution of documents) are to be purchased in the name of the buyer valid till six months from the date of purchase. They can either be accessed online or be brought from a licensed stamp vendor.
Now, the sale agreement/deed has to be prepared and typed on the stamp papers by an authorized attorney on behalf of the purchaser. After this is done, the stamp duty is now payable through the Collector of Stamps who is generally a sub-divisional Magistrate authorized by the government to collect the stamp duty.
It’s now time to get all the documents legally recorded with the Sub Registrar under whose jurisdiction the property lies. An appointment has to be fixed with the sub-registrar for the registration of the sale agreement.
Now, how will you know whether the title over the property has been transferred in your name or not?
‘Mutation’ is the answer. It refers to the change in ownership from one person to another during a property transaction. While getting your property registered, you have to apply for mutation of the Title Deed. This step is vital to the wholesale/purchase process as it enables the buyer to get the property recorded in his name in the Land Revenue Department, so that the taxes on the property could be levied on its rightful owner.
So, where do you make this application?
An application for mutation is done at the office of City Survey and Land Revenue Department, which after assessing the request for mutation decides the value of tax on the property and issues a letter of mutation in favour of the buyer. The authorized signatory is required to submit the duly signed application form along with the affidavit, indemnity bond and the notarized copy of the registered sale deed. An indemnity bond is a bond which the seller gives to the buyer with the intention of proper reimbursement to the buyer for any losses caused by the seller’s or third parties conduct with regards to the title of the property.
Once the letter of mutation is issued, the purchaser becomes the officially authorized holder of the property. But this procedure takes around a month to complete due to its complexity and the number of steps involved. Therefore, it is suggested that proper assistance of a property agent, consultant or a qualified lawyer be taken.
The expenses involved in the process of mutation are Rs.100 for the application fee, Rs.200 for the indemnity bond, Rs.100 for the affidavit and Rs.50 for the notary charges.
Nowadays, in maximum parts of India, the registration process if fully computerized. Therefore, once your property gets registered, records are saved immediately and the copies of the signed documents are handed over to the owner. But where there is manual handling, this may take a period of 7 to 14 days.
Both the parties have to report to the sub registrar’s office on the appointed date with two witnesses (anyone above the age of 18 years) and proper documents. If the buyer and the seller are represented by someone else, then, in that case proper a Power of Attorney has to be produced.
The documentation should include the following:
- Duplicate copy of the document required to be registered
- Two passport size photographs, each of the buyer, the seller and the two witnesses
- Photo identity proof in the form of voter’s ID card and passport of the buyer, the seller and the two witnesses
- Certified true copies of Certificate of Incorporation of both seller and buyer, in case of a company and not an individual buyer
- Copy of the latest property register card to indicate that the property does not belong to the Government. it can be collected from the City Survey Department
- Copy of the municipal tax bill to indicate the year in which the property was built/constructed
- Copy of the PAN Cards of the seller and the buyer (to be annexed along with the Sale Deed)
- Thumb impressions, photographs and signatures of the buyer, the seller and the two witnesses are mandatory
- Stamp duty
- The NOC along with the sale deed
Note: All the documents can be withdrawn before the registration of the property, if there are still any doubts or obstacles in the way of purchase. But this can only be done by the party who presented those documents on written request and no one else.
Finally, the whole procedure comes to an end with the buyer becoming the legal owner of the property. All the legal powers related to it are now conferred upon the registered owner and his possession of the property is legally recognized and incontestable.
The owner can now experience the joy and bliss of owning a house.