Before we go into the detail of real estate sector of law, it essential for
us to understand the India legislatures governing the same. Real estate in India
is regulated and governed by a combination of Federal and State- Specific laws.
The main reason behind is cause is with accordance with Article 246 of the
Constitution of India which states that 'Land
' is the subject matter of the
List-II of the seventh schedule of the Indian Constitution while on the other
hand the jurisprudence of the Transfer of Property Act, Contracts, Registration
of deeds and documents etc. come under the List III or the concurrent list.
Before we go into the legal compliances of the real estate, it is essential to
understand the key legislations which govern the real estate in India.
Key Legislations governing the real estate in India:
- Transfer of Property Act, 1882
- Indian Easement Act, 1882
- Registration Act, 1908 and Indian Stamp Act, 1899
- The Indian Contract Act, 1872
- Right to Fair Compensation and Transparency in Land Acquisition,
Rehabilitation and Resettlement Act, 2013
- Land Revenue Codes
- The Real Estate (Regulation and Development) Act, 2013
- Foreign Exchange Management Act, 1999
Meaning of Real Estate
Real Estate sector is defined as the property, land, building and air rights
above land and underground rights below the land which would also include the
free gifts of nature which are associated with that area that has been
When we talk about rights, there comes the application of the law. Real
estate being vast in nature, uses different legislations and the scope of
the same is divided into four main types:
- Residential Property: - Residential Real estate includes new
construction and resale homes. These are the properties in which a joint
or a nuclear family resides.
- Commercial Property: - Commercial real estate consist of shopping
centers, medical shops, hotels and offices. The main operation in these
areas are to produce income.
- Industrial Property: - includes manufacturing buildings and
property, as well as warehouses. The buildings can be used for research,
production, storage, and distribution of goods. Some buildings that
distribute goods are considered commercial real estate. The
classification is important because the zoning, construction, and sales
are handled differently.
- Vacant Land includes vacant land, working farms, and ranches. The
subcategories within vacant land include undeveloped, early development
or reuse, subdivision and site assembly
Legal Compliance in order to buy the properties as mentions above.
When an individual aims to buy a property or venture into any property-related
adventure, it is essential to ensure that the documents related to a property
are finalized and legal compliances are full filled in order to ensure that you
are protected from any future legal hassles. The following is the list of
documents one needs to be particular about.
It is one of the most pertinent things to check for. It is essential to
understand that no one, can transfer better title than he himself has. A seller
cannot transfer his property to a prospective buyer if the title isn't perfect
and free from any encumbrances or defects. A person who claims himself as the
seller can't so sell his property if the property is not in his name and he
doesn't hold any good title over the same. The title search of a property can
take place at a Sub-Registrar's office. The buyer is entitled to receive all
title documents of the property and the title document can be asked for
properties that are extremely old, title documents that are prepared thirty
years prior to the date of the title search need to be traced. The title should
be free of any disputes over the ownership of the property. The title deed lets
buyers ascertain ownership rights. The seller should be the actual owner of the
property. Before buying the property, one should also ascertain whether the
seller has the ownership of the property or just has its development rights.
It is essential to know whether the property is free from any legal dues
whatsoever. It is advisable that at the time to the title search, one even looks
into the status of legal dues of the property and that to ensure that there are
no debts associated with the same. Encumbrances over the property can be
searched for at the Sub-Registrar's office. The office would provide all the
background about the property concerned, as to whether there is any mortgage, or
any third-party claim, liens it can be looked into.
Care must be taken when buying or investing in a mortgaged property. An
encumbrance certificate or an EC would have a record of all the transactions
done during a stipulated period of time over the property concerned, for which
the EC is sought. The sale deed in duplicate needs to be submitted for obtaining
an EC. A form needs to be filled for obtaining the Encumbrance Certificate and
submitted to the nearest Sub-Registrar office.
At times you might come across sellers or builders of properties claiming
certain infrastructural development at the place where the property is situated.
Tall claims like a shopping mall will be built, schools would be constructed,
highways and metros would be constructed often hold no ground and they are
merely said to entice more and more buyers. Before buying a property, one should
closely scrutinise the master plan of the area concerned and ascertain for
themselves whether these claims would actually see the light of the day. These
master plans of the area can be procured from the local town planning department
of your city. You should also make it a point to carefully check the land use
zone as per the master plan for the property.
House Plan Approval
It is essential that you ensure that the place where desired property is located
has been approved and also verify whether the building plan has been approved or
not. You should also check to see whether any building bye-laws are violated.
The building planning and the layout should be in accordance with the guidelines
of the National Building Code of India. The layout also needs to be in
accordance with the norms of GRIHA (Green Rating for Integrated Habitat
Agriculture to Non-Agricultural Land Conversion Certificate
It is important for one to ensure that the plot you desire to buy is not
classified as agricultural land. Any land which is designated as an agricultural
land can't be used for residential purposes, if it is so done, then it will be
rendered illegal. Therefore, if there reasons to believe that the plot you are
purchasing used to be an agricultural property, ensure that you are provided
with a conversion certificate issued by the appropriate revenue authorities. A
conversion certificate is needed to change the purpose of land use from
agricultural to non-agricultural. The town planning department of the concerned
city needs to issue a No objection Certificate for use of agricultural land for
Land Use Certificate
It is essential to know that constructing a property for residential purposes in
a commercial zone is illegal. One need to apply to the development authorities
of respective city to verify if the residential property that you are planning
to buy is in the residential zone and not in the commercial, agricultural or
industrial zones. Residential properties shouldn't be bought for commercial
purposes without the approval of the urban development authorities. If you buy
that a plot for residential purposes in a commercial zone and that too without
the approval of the authorities concerned and your plot is being demolished by
No Objection Certificate
No objection certificates should be obtained wherever necessary. The seller
should provide you a copy of the urban non ceiling no-objection certificate and
NOCs for water, electricity etc. as well.
This certificate is essential for any construction of a property to commence.
This is issued by the town planning department after scrutinizing the building
layout, plan, superstructure etc. The builder should have all the necessary
sanctions before he sets out to construct.
Property Tax Receipts
Tax receipts should be checked to ensure whether the seller of the property has
paid all tax accruing on the property for the past 3 years to the authorities.
One as a potential buyer should ask for previous receipts of property tax if you
are buying a property that is being resold.
Before executing a sale deed, the buyer should ensure that the property has
a free title. Sale Deed is one of the most important legal documents. It is a
proof that states that the property has been sold and the ownership of property
has been transferred from the seller to the purchaser. Before executing a sale
deed all charges like property tax, electricity and water charges, maintenance
and housing society charges Importance should be given to the fact that a sale
deed needs to be compulsorily registered.
Khata Certificate/ Extract
Khata when translated to English means “account”, it is essentially the account
of a seller or the owner of the property. A Khata extract is essential for
buying property. This is of prime importance for not only transferring a
property but also for the registration of the new property. Completion
Certificate (CC), Power of Attorney, Probated Will, Occupancy Certificate (OC)
etc. are few the other legal documents that are essential at the time of buying
According to be what is to be noted is that, that the presence of too many acts
governing the same sector causes a lot of delay in order to get the paper work
done and hence there arises a delay to fulfil the interests of the individual
potentially interested in order to acquire the property. This obviously delays
the addressing of the issue and too many middlemen lead to corruption and
further illegal activities. Further to conclude my opinion about this sector is
that it is the ever-growing sector of law with a massive scope, growth and
development but what is essential is a one act inclusive of all existing acts.