REAL ESTATE LAWS
Real Estate Laws in India are governed by both State-specific laws and Federal laws. This is because, according to the Constitution of India, ‘Land’ falls under the State List while ‘Transfer of property and registration of deeds and documents’ falls under the Concurrent List. Due to this, the process of buying and registering a property can seem complicated. First, let us understand the basics of real estate law in India.
The purchase of property in India falls under RERA.
The Real Estate (Regulation and Development) Act, 2016, and the body under it, the Real Estate Regulatory Authority or RERA governs the development, marketing, and sale of real estate projects. It was established with the aim to protect the interests of the consumers in the real estate sector. It established a mechanism for speedy dispute redressal through the Real Estate Regulatory Authority and the Appellate Tribunal. It also mandates the compulsory registration of projects and key players in the real estate sector.
Indian real estate law does not envisage a system of land registration. Rather, the concept of registration is related to the documents under which the title is transferred from buyer to seller. Any instruments and documents relating to land are required to be registered in accordance with the Registration Act, 1908. The system of registration of documents is well defined in India with robust government machinery that registers and maintains these documents.
The Indian Stamp Act, 1899 governs the payment of stamp duty relating to land. It forms a major component of costs involved in property registration and is to be paid to the state governments by the buyer. Since it is collected by the state government, the rates vary from state to state. In most states, stamp duty is paid in terms of a percentage of the total transaction value.
The other act that comes into play in buying and selling of property is the Transfer of Property Act, 1882. As per the Transfer of Property Act, a ‘sale’ is the transfer of ownership in exchange for a price paid or promised or a price part-paid and part-promised. In the case of tangible immovable property, the transfer can only be made by registered documents, as enumerated in the Registration Act, 1908 which is mentioned above. Under Section 55 of the Act, the seller has a duty to disclose to the buyer any material defect in the property or in the seller’s title of which the seller is, and the buyer is not aware and which the buyer could not, with reasonable care, discover. Misrepresentation gives the buyer the right to compensation or indemnity from the seller.
Though the seller discloses all information about the property as well as his title, the buyer should exercise due diligence and check the title of the seller. That was a brief introduction to the Real Estate Laws in India. Now let us talk about the documents that a buyer should check before purchasing the property.