How to do Property Purchase – what are the Precautions?

July 30, 2024
real estate news

How to do Property Purchase – what are the Precautions?

Purchasing a property/land requires utmost care. One has to examine and find out the title of the
seller or nature of his right. A seller can sell only what he possesses.

Purchasing a property/land requires utmost care. One has to examine and find out the title of the
seller or the nature of his right. A seller can sell only what he possesses. Therefore, if a seller has
the proper and valid title, on purchase you will get the valid title. If the seller’s title is defective, you will
get only a defective title. The simple reasoning is that he can sell what he has, and nothing more.
When buying a property, legal due diligence is essential to avoid getting entangled in legal issues
later. Here are some of the precautions you can take before finalizing a property deal.
Check the antecedents of the vendor(s) – We all verify title deeds and all connected documents
before buying the property. However, we fail to verify the antecedents of the vendor(s). It is better to
verify the character and antecedents of the vendor(s) beforehand. If the vendor(s) are habitual
offenders and involved in real-estate offenses or other crimes, then it is better to drop the idea
of buying the property from them, notwithstanding whether the title is perfect or not. If the
vendor has a good background, and his character and reputation are unquestionable, then the
transaction will be very smooth. Even, in the future, if there is any dispute regarding the title or any
other issue about the property, then you are dealing with a respectable person in
society; and you need not spend your valuable money and time on unnecessary litigation. You
are not facing any embarrassment in the shape of physical or verbal abuse. The issues can be
resolved through gentlemen’s agreement without involving external forces.
Check the title of the property-The title of the property forms the foundation of any contract.
According to the Indian Contract Act, no seller can pass on to the purchaser a better title than
what he already possesses. Therefore, the title of the seller must be clear and free from any
encumbrance. Before you buy a property, verify the title of the seller. A search of the records at
the sub-registrar’s office may be carried out for documents that may affect the property and may
have been registered. The report will show the recorded owner of the title of the property and
changes in the title of the property. If the land is agricultural then adangal/pahani/ khata of
that land or/and Pattadar Passbook and Title Deed can be requested from the seller. Assessment
Register Ledger entry (called Khata in some parts of the country) is a supporting
document of title. It is the entry of the present owner in the municipal/panchayat records relating
to house properties. The absence of an Assessment Register entry in the name of a current owner
can be rectified at any time by applying for mutation. This has become important because it is
required for loans, title opinions, electricity meter name changes, etc. Assessment Register Ledger
entry is changed after a sale deed is executed, or after a property is inherited through a will, gift,
partition, etc. if applied and requested for a mutation.
Verify the title of the seller-The vendor may have acquired his title either by purchase, by
inheritance, by partition, by gift, by settlement or by grant. To find out the source of the title there
must be some document like.
Right of Purchase Sale Deed
Inheritance Entries in revenue records, and predecessor’s title
Partition Deed of partition
Gift deed
Settlement deed
Grant order
Release deed
Mulgeni Deed of Mulgeni or permanent lease
Personal inspection of property under sale (site/building/flat/agricultural land) – Buyer beware is
the golden mantra in immovable property transactions. Therefore, the entire onus lies on the
purchaser to verify the title, ownership, and possession of the property. He must take all
reasonable steps to ensure that he is purchasing the property from the right person and also the right
property. The most important precaution is undertaking a personal inspection of the property
under the sale. During the personal inspection, the buyer shall inquire with the neighbors
regarding the ownership and possession of the property, disputes if any, character of the
vendor(s), charges/mortgages on the property, joint owners of the property or part of the property, etc. This is the most important aspect of title verification, therefore, at least three
persons from the buyer side should take up this task. They shall make discreet inquiries with
various persons in and around the property like elders of the locality, longstanding property
owners/tenants, workmen, etc. It is easy to undertake the inspection of sites and buildings in
densely populated areas. It is also easy to inquire in villages where the people could identify
persons by name. But it is difficult to inquire in the suburban, newly developing, and agricultural
lands converted as plots – where no habitation exists.