Real Estate Laws in India

Investment in real estate in India is governed by several Stale as well as Central

laws. Some of the important Central laws are:

Indian Transfer of Property Act

The Transfer of Property Act governs the transfer of property by various means.
Sales, mortgages (other than by way of deposit of title deeds) and exchanges of
immovable property are required to be registered by virtue of the Transfer of
Property Act. Therefore, all the above documents must be in writing and registered.

Indian Registration Act, 1908

Indian Registration Act is an act to consolidate the enactments relating to the

registration of documents. Registration means recording of the contents of the
document. The object of registration is conservation of evidence and title.

Section 17 of the Indian Registration Act 1908, deals with the documents that are
compulsory to be registered.

Instruments which require mandatory registration include:

(a) Instruments of gift of immovable property;

(b) other non-testamentary instruments which purport or operate to create, declare,

assign, limit or extinguish, whether in present or in future, any right, title or interest,
whether vested or contingent, to or in immovable property;

(c) non-testamentary instruments which acknowledge the receipt or payment of any

consideration on account of instruments in (2) above.

(d) leases of immovable property from year to year, or for any term exceeding one
year, or reserving a yearly rent

There are several documents that are not compulsorily registerable under section 17
of the Registration Act 1908. Some of them require high stamp duty and some of
them do not. Even the ones that require high stamp duty, if they are under stamped,
can be rectified later by paying a penal amount ten times the original amount. Non-
payment of stamp duty does not make the document void or otherwise invalid. The
consequences of under stamping as per the stamp act are:

(1) to make the document inadmissible for the evidence before any authority capable
of receiving evidence of before any public authority.

(2) the document can also be impounded for enforcing the payment of full stamp
value. An under stamped instrument can be admitted as evidence in court, if penal
stamp duty is ten times the value of the original amount, and is paid.
Indian Urban Land (Ceiling And Regulation) Act, 1976

This legislation fixed a ceiling on the vacant urban land that a 'person' in urban
agglomerations can acquire and hold. This ceiling limit ranges from 500-2,000
square meters. Excess vacant land is either to be surrendered to the Competent
Authority appointed under the Act for a small compensation, or to be developed by
its holder only for specified purposes.

The Act provides for appropriate documents to show that the provisions of this Act
are not attracted or should be produced to the Registering officer before registering
instruments compulsorily registrable under the Registration Act.

This legislation was repealed in 1999. The Repeal Act, however, shall not affect the
vesting of the vacant land, which has already been taken possession by the State
Government or any person duly authorized by the State Government in this regard
under the provisions of Urban Land Act. The repeal of the Act, it is believed, has
eliminated the large amount of litigation and released huge chunks of land into the
market.

However the repeal of the Act has not been carried out in all states. Initially the
repeal Act was applicable in Haryana, Punjab and all the Union Territories.
Subsequently, it has been adopted by the State Governments of Uttar Pradesh,
Gujarat, Karnataka, Madhya Pradesh and Rajasthan. Andhra Pradesh, Assam,
Bihar, Maharashtra, Orissa and West Bengal have not adopted the Repeal Act so
far.

Lease

A lease is transfer of an interest in an immovable property which is the subject of the

lease and that interest is the right to occupy and use the property for which the lease
is given for period and on such terms and conditions as agreed between the parties

The essentials of a lease are

• Parties to the agreement;

• The identification of the property subject matter of the arrangement;
• Term of lease,
• Rent,
• Date of commencement and expiry.

A lease of an immovable property can be determined through 8 modes and it is only

by one of these methods that the lease stands determined and the lessor gets back
right of possession of the property;

• by efflux of time limited thereby;

• where the interest of the lessor terminates on happening of an event
• the interest of the lessor terminates on, or his power to dispose of the same
extends to the happening of any event;
• in case the interest of lessor and lessee becomes vested;
• express surrender before the term is over;
• implied surrender;
• forfeiture;
• when the lessee renounces his character.