REAL ESTATE

MODULE 1

Definition of Real Estate

The legal definition of real estate or real property is land and the buildings on it. Real estate
law governs who may own and use the land.

This simple concept includes a wide range of different legal disciplines. First, real estate
may be either residential or commercial. It can be owned by one person but used by another
through rental arrangements. Land can be bought or sold, and due to its high value, there
are many local laws that ensure real estate transactions are properly performed and
recorded. Land may also pass between family members through estate planning or may be
owned by more than one person.

Finally, state and local governments have rules concerning the purposes for which land
may be used -- for example, each plot of land must be used according to local zoning laws,

TRANSFER OF PROPERTY

Definition of Transfer of Property: – Transfer of property is an act by which a living

person transfers the property in present or in future to one or more living persons or to
himself. The Transfer of Property Act 1882 is an Indian legislation which regulates the
transfer of property in India. Transfer of Property is defined under section 5 of the act.
According to this section, transfer of property means an act by which a living person
conveys property, in present or in future, to one or more other living persons, or to himself
and other living persons. The phrase “living person” includes a company or association or
body of individuals, whether incorporated or not, but nothing in this section shall affect any
law for the time being in force relating to or by companies, associations or bodies of
individuals.

What is the purpose of transfer of property act?

The purpose of transfer of property act is to define and amend the law relating to the
transfer of property by the act of the parties and not by the operation of law. The transfer
of property is a contract, so all requirements have to be met to constitute a valid contract.
Living Person: – In this section ‘ living person’ included “a company or association or
body of individuals whether it is incorporated or not”, but nothing should herein contain
shall affect any law for the time being in force related to companies act.
Property: – Word ‘Property’ has not been defined in the act, but it has a very broad
meaning and it also includes properties of all description. It includes both movable property
(books, water bottles, etc.) and immovable property (ownership, copyrights, etc.)
Transfer: – Word ‘Transfer’ also has a very wide meaning. A transfer can be both of all
the rights and interests in the property or transfer of one or more right in the property.
What is sale under transfer of property act?
Meaning of Sale under Transfer of Property Act: – Sale is defined as the transfer of
ownership of a property in exchange for a price paid or promised or partly paid or part
promised. Sale simply means the purchase and sale of goods and services, the sale
of immovable property is provided under Section 54 of Transfer of Property Act 1882.

Section 3 of the Act is the interpretation clause, which provides the meaning: –
1. Immovable Property: – Immovable property exclude standing timber, growing
crops or grass,
2. Instrument: – It means a non-testamentary instrument. The instrument should
be in writing, a formal or legal document in writing, such as a contract, deed,
bond or lease or anything reduced to writing.
3. Registered: – A register is a book contains records of the facts as they are kept
by the public authority. If the registration is done in violation of the provisions
of the Registration Act, that document cannot be said to be duly registered.
4. Attached: – It is a term that describes the physical union of two independent
structures or objects, which refers to the relationship between two parts of the
structure each having its function.

Section 54 of the Transfer of Property Act

Section 54 of the Act defines the meaning of the ‘sale’ and also specifies how the sale
of immovable property can be done. Here, sale refers to the sale of immovable property
whether tangible or intangible (For example: – easement rights)
A sale under transfer of property act is a transfer of ownership for a money
consideration. It refers to the complete transfer of all rights in the property sold. No rights
in the property sold, are left to the transferor.

Section 54: – Sale ownership is transferred in exchange for a price paid or promised or
part-paid and part-promised.

What is contract for sale?

Meaning of Contract for Sale: – A contract for the sale of immovable property is a
contract which takes place on the settled terms between the parties. In this, the seller
agrees to sell or deliver something to the buyer for a fixed price that the buyer has agreed
to pay. A contract of sale of goods is a contract whereby the seller transfers or agrees
to transfer the property in goods to the buyer for a price. There may be a contract of
sale between one part-owner and another.
What are the elements of Sale?

The elements of Sale are given as follows: –

1. Transfer of Ownership: – Ownership is the aggregation of all rights and
liabilities in a property. When transfer of ownership occurs, all rights and
liabilities in the property is transferred from transferor to transferee.
2. Money Consideration: – Where the ownership of the property is transferred for
money, it amounts to sale, but if it is transferred for something else, it amounts
to exchange.
3. The seller must be a person competent to transfer. The seller should be either the
owner of the property or should have the authority to dispose of it.
4. The buyer must be a person competent to the transferee.
5. The subject matter must be a transferable immovable property which can be
tangible or intangible.
6. There must be a transfer of ownership
7. The transfer must be in exchange for a price. ‘Price’ in the ordinary sense
connotes money consideration for the sale of the property. The price must be paid
or promised or partly paid.

What are the essentials of a Sale under Transfer of Property Act?

The essentials of a sale under transfer of property act are given as follows: –
• Parties i.e., Seller, Buyer
• Competency
• Money consideration
• Conveyance
• Registration

Explanation: –
1. Parties: – In a sale, there must be at least two parties. The person who transfers
his property is known as the transferor/seller/vendor and the person to whom the
property is transferred is known as the transferee/buyer/vendee.
2. Seller: –
o The seller must own the property which he is going to sell.
o The seller should have legal title to it only then he can sell the
property.
o The seller should be competent to contract.
o He must not be a minor person.
o He should not be of unsound mind.
o He must not be statutorily incompetent.
 o The seller may be a natural person / judicial person, for example, a
corporation or any other legal person.
3. Buyer: –
o The buyer must be competent to get the ownership of the property.
o The buyer should not be disqualified from purchasing the immovable
property under any law at the time of sale, for example: under section
136 of the Act, a judge, a legal practitioner or an officer of the court
is incompetent for purchase of actionable claim.
o The seller may be a natural person / judicial person, for example: a
corporation or other legal person.
4. Subject Matter: – The sale under Transfer of Property Act, 1882 specifically
deals with the sale of immovable property. Immovable property includes the
benefits from the land and the things attached to the earth and it does not include
standing timber, growing crops and grass.
5. Competency: – A valid sale requires both the parties i.e., the buyer and seller to
be competent on the date of sale.
6. Money Consideration: – The consideration must only be in money to constitute
a sale. If it is for exchange or some other items then it is not sale. The
consideration for the sale must be paid, partly paid, promised or partly promised.
Therefore price is money but not necessarily money immediately paid in notes
and coins, it includes money which might be already due or payable at a future
date.
7. Conveyance: – Section 54 provides for two ways for transfer of property: –
o Where the property transferred is tangible immovable property of
value of one hundred rupees and upward transfer can only be made
by a registered instrument. Where the property is immovable property
of less than one hundred rupees, it can be transferred either by
registered instrument or delivery of property. The delivery of tangible
immovable property occurs when the seller puts the buyer or such
person as the buyer directs in possession of the property.
o Registration of sale deed: – Where the value of tangible immovable
property is Rs. 100 or more, the sale of such property requires
registration of the deed. Where the property is intangible immovable
property of any valuation, it will require registration to complete the
sale.
8. Registration: – Both section 8 and 54 of the Transfer of property act,
1882 suggests that through execution and registration of a sale deed, the
ownership and all interests in the property passes to the transferee, yet this
will be on the terms and conditions embodied in the deed indicating the
intention of the parties. The intention of the parties can be gathered from the
averments (formal statement) in the sale deed itself or under other attending
circumstances. Where the sale is to be completed only by the registered
 instrument, the ownership is presumed to pass on the execution of the sale deed,
not on the deed’s registration. The sale deed transferring immovable property of
the value of 100 or more it will require registration under Indian Registration
Act 1908.

RIGHTS AND LIABILITIES OF BUYER AND SELLER

The buyer and the seller of the immovable property respectively are subject to the liabilities,
and have the rights, mentioned in the rules following: –
IN SHORT
Before completion of sale:
Sellers liability-

• To disclose material defects[S.55(1)(a)]

• To produce title-deeds [Section 55 (1)(b)]
• To answer questions as to Title [Section 55 (1)(c)]
• To execute a proper conveyance [Section 55(1)(d)]
• To take care of property and title-deeds [Section 55(1)(e)]
• To pay outgoings [Section 55 (1)(g)]
Sellers right-

• Right to take rents and profits [Section 55(4)(a)]

Buyers liability-

• To disclose facts materially increasing value of property [Section 55(5)(a)]

• To pay the price [Section 55(5)(b)]
Buyers right-

• To charge for price prepaid [Section 55(6)(b)]

After completion of sale.

Duties of a seller-

• To give possession [Section 55(1)(f)]

• Implied covenant for title [Section 55(2)]
• To deliver title-deeds on receipt of price [Section 55(3)]
Rights of seller-

• Charge upon property for unpaid price [Section 55(4)(b)]

Buyers liability-

• To bear loss to the property [Section 55(5)(c)]

• To pay outgoings [Section 55(5)(d)]

Buyers right-

• Benefit of increment [Section 55(6)(a)]

1. The seller is bound: –

o To disclose to the buyer any material defect in the property or in the
seller’s title thereto of which the seller is, and the buyer is not, aware,
and which the buyer could not with ordinary care discover;
o To produce to the buyer on his request for examination all documents
of title relating to the property which are in the seller’s possession or
power;
o To answer to the best of his information all relevant questions put to
him by the buyer with respect to the property or the title thereto;
o On payment or tender of the amount due in respect of the price, to
execute a proper conveyance of the property when the buyer tenders
it to him for execution at a proper time and place;
o Between the date of the contract of sale and the delivery of the
property, to take as much care of the property and all documents of
title relating thereto which are in his possession as an owner of
ordinary prudence would take of such property and documents;
o To give, on being so required, the buyer, or such person as he directs,
such possession of the property as its nature admits;
o To pay all public charges and rent accrued due in respect of the
property up to the date of the sale, the interest on all encumbrances on
such property due on such date, and,except where the property is sold
subject to encumbrances, to discharge all encumbrances on the
property then existing.
2. The seller is entitled: –
 o To the rents and profits of the property till the ownership thereof
passes to the buyer;
o Where the ownership of the property has passed to the buyer before
payment of the whole of the purchase-money, to a charge upon the
property in the hands of the buyer, any transferee without
consideration or any transferee with notice of the non-payment, for
the amount of the purchase money, or any part thereof remaining
unpaid, and for interest on such amount or part from the date on which
possession has been delivered.
3. The buyer is bound: –
o To disclose to the seller any fact as to nature or extent of the seller’s
interest in the property of which the buyer is aware, but of which he
has reason to believe that the seller is not aware, and which materially
increases the value of such interest;
o To pay or tender, at the time and place of completing the sale, the
purchase-money to the seller or such person as he
directs. Provided that, where the property is sold free from
encumbrances, the buyer may retain out of the purchase money the
amount of any encumbrances on the property existing at the date of
the sale, and shall pay the amount so retained to the persons entitled
thereto;
o Where the ownership of the property has passed to the buyer, to bear
any loss arising from the destruction, injury or decrease in value of
the property not caused by the seller;
o Where the ownership of the property has passed to the buyer, as
between himself and the seller, to pay all public charges and rent
which may become payable in respect of the property, the principal
money due on any encumbrances subject to which the property is sold,
and the interest thereon afterwards accruing due.
4. The buyer is entitled: –
o Where the ownership of the property has passed to him, to the benefit
of any improvement in, or increase in the value of, the property, and
to the rents and profits thereof;
o Unless he has improperly declined to accept delivery of the property,
to a charge on the property, as against the seller and all persons
claiming under him, to the extent of the seller’s interest in the
property, for the amount of any purchase-money properly paid by the
buyer in anticipation of the delivery and for interest on such amount;
and, when he properly declines to accept the delivery, also for the
earnest (if any) and for the costs (if any) awarded to him of a suit to
compel specific performance of the contractor to obtain a decree for
its rescission.
 Difference between Sale under Transfer of Property Act and Contract for Sale
S.NO. SALE CONTRACT FOR SALE

1. There is a transfer of ownership of the There is an agreement between the parties

property. for the sale of the property with consent.

2. Gives legal title to buyer. Does not generate any interest in the
property.

3. Creates a right in rem. Creates a right in personam

4. Registration is mandatory where the sale is Registration is not required.

of immovable property of Rs. 100 or more.

Case laws of Sale under Transfer of Property Act

1. Nahar Lal vs. Brijnath 1928 AC 385
Judgments of the case: – In this case, the court held that if the registration is done in
violation of the provisions of the Registration Act, a document cannot be said to be duly
registered.
2. Umakanta Das vs. Pradip Kumar Ray, AIR 1983 Ori 196
Judgments of the case: – In this case, the court held that if the sale deed contains a condition
that the price will be paid within one year, provided that possession is obtained within that
time, and if possession is not obtained, the payment of the price will be postponed, or in
the event of the vendee not getting the property, the price will not be paid. In all the above
cases, the deed within the meaning of the section is the sale deed.
3. Raheja Universal Ltd. vs. NAC Ltd., 2012 4 SCC 148
Judgments of the case: – In this case, the court states that a contract for sale of immovable
property or an agreement to sell is a contract that a sale of such property shall be on the
terms settled between the parties. This in itself does not create any interest or charge on
such property.
4. Misabul Enterprises vs. Vijaya Srivastava, AIR 2003 Del. 15.
Judgments of the case: – In this case, the court held that a contract of sale should be based
on a mutual agreement between seller and buyer.

LEASE AND EXCHANGE

Meaning of Lease under Transfer of Property Act: – A Lease of immovable
property is a transfer of a right to enjoy such property, made for a certain time, express
or implied, or in perpetuity, in consideration of price or promised, or of money, a share of
crops, service or any other thing, of value, to be rendered periodically or on specified
occasion to the transferor by the transferee who accepts the transfer on such terms. Lease
under Transfer of Property Act, 1882 deals with sSection 105 to section 117. A lease can
be done only of immovable property.
A lease under transfer of property act, is a contract by which one party transfer the right
to enjoy the land, property, services, etc. to another for a specified time, usually in return
for a periodic payment.
Section 105 of Transfer of Property Act says out the definition of a lease stating that it is a
transfer of immovable property for a particular time period for consideration of which the
transferee has accepted the terms and conditions mentioned in the agreement. The lease is
governed by the Transfer of Property Act, 1882 and it is given from Sections 105 to 117.
Lessor: – In a lease, the right of possession is transferred rather than the right of ownership.
Here the transferor is called the lessor.
Lessee: – The transferee i.e. the one who enjoys the property for a period is called
the lessee.
What are the essentials of lease under Transfer of Property Act?
The essentials of lease under transfer of property act are as follows: –
1. Parties must be Competent: – A lease agreement must enable parties to enter
into a contract. A lessor should be entitled to a property and have full rights over
that property. He must be of sound mind and should not be disqualified by the
contracting law. Also he must be the true and absolute owner of the property
which is grant in a lease.
2. Right of Possession: – In the lease ownership rights are not transferred, only the
possession of the property is transferred. Lease is different from a sale. In lease
there is only a transfer of possession to the lessee whereas the ownership is still
remained to the lessor.
3. Consideration: – A lease must be made of consideration which may be in the
form of premium or rent. In a lease, consideration can be taken in the form of a
rent or premium. The consideration for lease is either premium or rent, which is
the price paid or promised in consideration of the demise. The premium is the
consideration paid of being let in possession, such as Salami, even if it is to be
paid in installments. It can be rent with premium or rent alone or premium alone.
4. Acceptance: – The lessee, who is to receive interest in the property after the
lease, must accept the lease agreement with the time period and the terms and
conditions imposed on the transfer between the parties.
5. Time Period: – The lease is always for a specific time period that is to be
specified in the lease agreement. This can be relaxed at the option of the lessor.
In a lease the right to enjoy the property is given for a certain period or in
perpetuity. However, generally the time period is mentioned in the agreement.
6. Right to Enjoy the Property: – In a lease, right to enjoy the property is
transferred. A lessee having a right to enjoy the property for certain period of
time but he does have right to further transfer that property because in lease
merely possession is transferred not the ownership.
Types of Leases

Absolute and Derivative Lease

Absolute lease or primary lease is granted by a person who has an absolute right over the
property. It can be granted for any number of years or for any time, "Derivative lease or
'sub-lease/under-lease granted by a person who himself has a limited interest in the
property. lt can never extend beyond the time period for which the primary lease was
executed in favour of the lessee.

For example, A grants a lease of his house in B's favour tor a period or 10 years. This is an
absolute lease. B, who is inducted into the premises as a tenant grants a sub-lease of the
same premises in C’s favour. This sub-lease would be a derivative lease. It can never
extend beyond the period of 10 years as this is precisely the entitlement of B in the
property. A tenant, who himself has no right to occupy the premises after the determination
of tenancy, such as a statutory tenant has no right to create a Sub-tenancy. He cannot grant
a valid sub-lease in favour of another.

How is a lease under transfer of property act executed?

Section 107 states about lease how made. This section covers three aspects: –

• When there is a lease of immovable property for a period of 1 year or more – it

can only be made by a registered deed.
• All other leases of immovable property – either by registered deed or by transfer
of possession of that property may be made by an oral agreement or settlement.
• When the lease is of multiple properties, requiring multiple deeds, it will be made
by both parties of the lease.
CASE LAWS
State Bank of Hyderabad vs. Nehru Palace Hotels, AIR 1991 SC 2130
In this case, the Court held that a lease entails transfer of right to enjoy such property in
respect of which a lease is made out for a defined time which is express or implied or even
in perpetuity in consideration of price paid or promised to be paid in cash or anything of
value which is to be rendered periodically or on specified occasions.

Bengal A &I Corporation vs. Corporation of Calcutta, AIR 1960 Cal 123 (133)
In this case, the Court held that the subject matter of lease must be ascertained, and clearly
defined. If the land is yet to be ascertained and carved out of a larger parcel of land, there
cannot be a demise. (Demise refers to premises that have been transferred by lease, as
opposed to the ‘retained parts’ which are not transferred but are retained by the landlord.)
EXCHANGE

Exchange (section 118) “when two persons mutually transfer the ownership of one thing
for the ownership of another, neither things or both things being money only, the
transaction is called ‘an exchange’.

In simple terms, exchange means transfer of one thing for another thing and both or either
of these things may be movable or immovable. There may be transfer of A’s cycle for B’s
radio; A’s house worth Rs. 5000/- for B’s land and Rs.5000/-.

1. There must be two different persons who mutually agree and two different
things.
2. The property may be movable or immovable, both movable, both immovable or
one movable and another immovable.
3. Each party is a seller and buyer in such type of transaction.
4. The persons must be owner of things so transferred.
5. A transaction where there is no transfer of ownership, there can be no exchange.
For instance, a family settlement or a partition would not be considered as an
exchange.
6. No price is paid in exchange, the consideration is property and not money.
7. An exchange of immovable property of Rs. 100/- or more can be affected only
by registered deed.
In Misahul Enterprises v. Vijaya Srivastava, AIR 2003 Del 15 case, the Court opined that
a contract of sale like other contracts must be based on a mutual agreement (mutuality)
between the seller and the buyer.

Difference between Sale and Exchange.

1. Sale refers to immovable property only, whereas exchange refers to both

movable and immovable properties.
2. The consideration in sale is price paid or promised and partly paid or partly
promised, exchange on the other hand has the consideration for transfer of one
property in exchange for another property.
3. The seller has the charge from unpaid purchase-money in the case of sale and in
exchange there can be no seller’s charge for unpaid purchase money.
Rights and liabilities of parties to an exchange

Section 120 of the transfer of property act provides that “save as otherwise provided in this
chapter, each party has the rights and is subject to the liabilities of a seller as to that which
he gives, and has the rights and is subject to liabilities of buyer as to that which he takes”
from the above provision it is clear that the rights and liabilities of the parties to exchange
are as same as of the buyer and seller of the sale.

WHAT IS AN ENCUMBRANCE?

Whenever we go to buy a property it is to be insured that the title of the property

is clear and the seller is the owner of the property so that a person does not gets into any
kind of fraud or litigation or buys some disputed property.
For this one must know what is encumbrances what can be the claims of third
party charges. Encumbrance is any type of claim or charge on a property.

An encumbrance is a restriction on the use of funds. It is used in public accounting to make

sure that there are sufficient funds to meet certain obligations. Governments use
encumbrances to avoid overspending on their finances. An encumbrance certificate is also
used in real estate when there is a claim against a property. For example, it is used when
there is a tax lien on the property, making it difficult to transfer the property to a new owner.
The encumbrance restricts the policies that the property needs to abide by, such as zoning
laws or certain types of construction on the land.

TYPES OF ENCUMBRANCES
• FINANCIAL
1. Mortgages
2. Leases
3. Tax Liens
4. Municipal Liens
5. Maintenance Dues
6. Contracter’s Liens
• NON – FINANCIAL
1. Legal Encumbrances such as Deeds, wills, Other Legal Documents
2. Pending documents Physical Encumbrances such as Easements
3. Right of Way, Right to Use Restrictions
4. Zoning Laws, Environmental Regulations
5. Encroachment

What is an Encumbrance Certificate (EC)?

An encumbrance certificate (EC) is mostly used in the real estate industry and
provides confirmation that a property is not subject to any monetary or legal obligation
such as an unpaid loan or other liabilities. The EC is an important document for the
homeowner as it is proof of legal ownership of the property and also allows the owner to
take out loans from banks against the property.

The encumbrance certificate is secured from the local registrar’s office and usually contains
all the transactions relevant to a specific period of time. Moreover, the certificate only
provides information on documents that are registered with the registrar’s office. Hence,
documents such as short-term lease deeds or testamentary documents will not be included
in the transactions on the EC as the documents are not registered under the law.

TYPES OF REAL ESTATE ENCUMBRANCES

An encumbrance is a restriction on the property, i.e., the owner cannot transfer the title to
someone else. Here are some of the most common encumbrances that can be placed on a
property:

1. Lien

A lien is the most common type of encumbrance, and it can be placed on a property to
receive a financial obligation from the homeowner, i.e., a mortgage. The lien remains on
the property until the mortgage is fully paid. It can also include tax liens for unpaid taxes.

2. Deed restriction

A deed restriction places a restriction on what can be done to the property. It is also known
as a restrictive covenant. The restriction can be anything from banning placing a satellite
on the roof to designating where cars can be parked. It can also limit the construction of
anything on the land.

Deed restrictions help create a standard for what the property can be used for and are often
used to protect the value of the property. The restrictions are usually placed on properties
with historical significance.

3. Easement
An easement gives a person or entity the right to use the property even though they don’t
own it. For example, a utility company might obtain an easement to place power grids on
a farmer’s property. A common easement is one that allows the owner of an adjacent
property to use the driveway of another property for access.

Another common easement is one that exists when a common walkway to the beach cuts
through one owner’s property. The easement is on the land, not the property itself.

4. Encroachment

An encroachment exists when a section of one property extends over to an adjacent

property. This can include, for example, a fence that is built along the adjacent property or
a tree branch that hangs over a neighboring property. Usually, the property owner
encroached upon will want the encroachment to be removed, as an encroachment often
makes it harder to transfer their property title to a new owner.

5. License

A license is a right to use another person’s property. The license often comes with rules
that need to be followed. Failure to abide by the rules can result in the license being
revoked. For example, a license might be obtained to host an event on someone else’s
property.

MORTGAGE

Meaning of Mortgage: – A mortgage is a loan that the borrower uses to purchase or

maintain a home or other form of real estate and agrees to pay back over time, typically
in a series of regular payments. The property serves as collateral to secure the loan. A
mortgage is the transfer of an interest in specific immovable property to secure the payment
of funds or to be advanced through a loan, an existing or future loan, or the performance of
an engagement that may give rise to a pecuniary liability.
According to Section 58(a) of The Transfer of Property Act, 1882 mortgage is the transfer
of an interest in specific immovable property for the purpose of securing the payment of
money advanced or to be advanced by way of loan, an existing or future debt, or the
performance of an engagement which may give rise to a pecuniary liability. The transferor
is called a mortgagor, the transferee a mortgagee; the principal money and interest of
which payment is secured for the time being are called the mortgage-money, and the
instrument (if any) by which the transfer is effected is called a mortgage-deed.

Essentials of mortgage
Following are the characteristics of mortgage: –
1. A mortgage can only be affected on immovable property;
o immovable property includes land and profits that arise from things
attached to the earth such as trees, buildings and machinery.
o But a machine that is not permanently fixed to the earth and is able to
shift from one place to another is not considered immovable property.
2. A mortgage is the transfer of interest in a specific immovable property which is
different from sale. As in sale the ownership right of the property is transferred
but in mortgage certain right of ownership get transferred and the other
ownership right will be with the owner only.
3. The purpose of the transfer of an interest in property would be to secure a loan,
resulting in a monetary obligation. Transfer of property for the purpose other
than the above will not amount to mortgage. For example: – property transferred
to liquidate prior debts will not become mortgage.
4. The mortgaged property must be a specific one, i.e., that can be identified by its
size, location, boundaries, etc.
5. The actual possession of the mortgaged property should not always be transferred
to the mortgagee.
6. The owner of the property will get the interest back in the mortgaged property
after the repayment of the debt.
7. If the mortgagor fails to repay the loan, the mortgagee receives the right to
recover the debt from the sale proceeds of the mortgaged property.

KINDS OF MORTGAGE
1. Simple Mortgage [Section 58(b)]: – In simple mortgage the borrower personally
mortgages the immovable property to avail the debt. The lender has the right to sell the
mortgaged property in case of repayment failure. In such type of mortgage, the borrower
needs to sign an agreement stating that if he/she is unable to pay back the borrowed amount
in specified time duration, then the lender can sell the property to anyone to get his money
back.
• The fundamental element of a simple mortgage is the personal obligation to pay on
the part of the mortgagor.
• Possession remains with the mortgagor in the case of a simple mortgage. The
security which is obtained by the mortgagee is of the mortgaged property, not of the
rents and profits accruing from it.
• The mortgagee is empowered to sell the property in the case of non-payment of the
mortgaged money.

2. Mortgage by Conditional Sale [Section 58(c)]: – In mortgage by conditional

sale, there is a condition that on the failure of the repayment of the mortagage money
the mortagagee has the right to sell the mortagaged property, but if mortagagor
 repays his debt then this condition will become void. Under such mortgage, the
lender can put a certain number of conditions which the borrower must follow in
terms of repayment. These conditions may include the sale of the property if there
is a delay in the monthly instalments, an increase in the rate of interest due to delay
in repayment, etc.
3. Usufructuary Mortgage [Section 58(d)]: – In Usufructuary Mortgage, the
property is transferred to the mortagagee, who can get rent or profit from it without
creating any personal liability on the mortagagor in case of repayment failure. This
kind of mortgage gives a benefit to the lender. The lender has the right over the
property for the due course of the loan period, he can put the property on rent or use
it for other purposes until the repayment of the amount. But the main rights lie with
the owner himself.
o The possession of the mortgaged property is delivered to the
mortgagee by the mortgagor as a security for the payment of mortgage
money. The mortgagee is entitled to retain the ownership of the
property till the debt remains unsatisfied.
o The mortgagee is entitled to receive rent and profits accruing from the
mortgaged property till the money is repaid.
o The mortgagor does not take any personal responsibility for the
payment of mortgage money in the case of a usufructuary mortgage.
4. English Mortgage [Section 58(e)]: – In English Mortgage, the mortagagor
binds himself as he specifies a certain date for the repayment of money, and after
the repayment of the debt to the mortagagee, the mortagagor will get his property
back. In this type of mortgage, the borrower has to transfer the property in the
name of the lender at the time of taking money, at a condition that the property
would be transferred back to the borrower once the complete amount is paid
back.
o In an English mortgage, there is a personal liability of the mortgagor
to repay the amount of mortgage debt on a certain date as agreed. An
agreement to pay is an important part of such a mortgage.
o In case of default by the mortgagor, the remedy available with the
mortgagee is to sell off the mortgaged property and recover himself.
o The mortgagee in this form of mortgage gets the right of possession
whether the right of entry is expressed or not, and can retain the same
till the said amount is not paid to him.
5. Mortgage by Deposit of Title Deed [Section 58(f)]: – The mortgagor deposits
the title deed of the property to the mortagagee with the mortagaged property
against the debt to avail. Where a person in any of the following towns, namely,
the towns of Calcutta, Madras, and Bombay, and in any other town which the
State Government concerned may, by notification in the Official Gazette, specify
in this behalf, delivers to a creditor or his agent documents of title to immovable
property, with intent to create a security thereon, the transaction is called
 a mortgage by deposit of title-deeds. In this type of mortgage, the title deeds of
the property are given to the lender. This is a common phenomenon in the
banking mortgage loans. It is done to secure the property.
o In English Law, this type of mortgage is called an ‘equitable
mortgage’ as opposed to a ‘legal mortgage’ because there is just a
deposit of a document of the title without writing or without any other
additional formalities.
o It is not necessary to make physical delivery of documents, a
constructive delivery of documents is sufficient. A valid equitable
mortgage does not require all the documents of title to be deposited
or the documents deposited to show a complete title.
6. Anomalous Mortgage [Section 58(g)]: – A mortgage that does not fall under
any of the above types of mortgage is a divisional mortgage. A mortgage that is
not a simple mortgage, a mortgage by conditional sale, a usufructuary mortgage,
an English mortgage, or a mortgage by deposit of title deeds within the meaning
of this section is called an anomalous mortgage. Such agreement which is made
between the mortgagor and the mortgagee according to their terms and
conditions is called an anomalous mortgage. Where it is not a simple,
usufructuary, mortgage by conditional sale, etc. is termed as an anomalous
mortgage.
o In the case of an anomalous mortgage the rights and liabilities of the
parties shall be determined by their contract as evidenced in the
mortgage deed, and, so far as such contract does not extend, by local
usage.
o Such agreement which is made between the mortgagor and the
mortgagee according to their terms and conditions is called an
anomalous mortgage.
Case laws
1. Noakes & Co. vs. Rice (1902) AC 24
Facts of the Case: – Rice was a dealer who mortgaged his property, premise and goodwill
to N subject to the provision that if R returned the entire amount, the property would be
transferred back to his name or another person. A covenant was attached stating that
whether the amount was due, R would only sell malt liquor by N in his premises. Because
of this covenant, R had difficulty in redemption and did not give him full authority over his
property.
Judgment of the Case: – In this case court held that anything that clogs this right is bad
and they have come up with the concept that ‘once a mortgage is always a mortgage’ and
that the mortgage can never be irrevocable.
2. Stanley vs. Wilde, (1899) 2 Ch 474
Judgment of the Case: – In this case court held that any provision mentioned in the
mortgage deed which has the effect of preventing or obstructing the right to redeem is void
as a restriction on redemption
CHARGE

Meaning of Charge under Transfer of Property Act: – Charge under Transfer of

Property Act is an interest created over an immovable property for securing payment of
the amount which is due to the party. Charge is where the immovable property of one
person, is by an act of parties or operation of law, made security for the payment of money
to another person and the transaction does not amount to a mortgage, the latter person is
said to have a charge on the property.
Hence, every mortgage is a charge but not every charge is a mortgage. A charge under
Transfer of Property Act is an interest created over an immovable property for securing
payment of the amount which is due to the party. The property is not transferred to the
lender and only interest is created. It is neither a lien nor a mortgage but some properties
of both are present in a charge.
Section 100 of the Transfer of Property Act, 1883 defines charge as, Where a person’s
immovable property is, by an act of parties or operation of law, made a security for the
payment of money to another, and this transaction does not amount to a mortgage, the latter
person is said to have a charge on the property; and all the provisions therein contained
which apply to a simple mortgage shall, so far will also apply to charge.
Nothing in this section applies to a trustee’s charge on trust-property for the expenses in
the execution of his trust, and, to save until the time expressly enforced by any law, any
charge will not be enforced against any property in the hands of the person to whom such
property has been transferred for consideration and without notice of charge.

What are the requisites of a charge under transfer of property act?

The requisites of a Charge under Transfer of Property Act are as follows: –
• A charge does not regard any transfer of an interest in the immovable property;
• The property should be specified and it should be made security for the payment
of money. A clear and accurate specification of the property is mandatory for the
creation of charge.
• In order to constitute a charge, the form of words is immaterial; it is not necessary
to use any technical terms;
• A charge must be created in favour of a particular person specifically named;
• A charge may be created orally, although if it is created by an instrument in
writing, it must be registered unless made by a will or unless the amount secured
is less than one hundred rupees;
• A charge cannot be created on a future contingency. A charge created by a person
on the unknown and uncertain share which one of his heirs may succeed to is
invalid as a charge;
• A charge on the future property is valid and operates on such property when it
comes into existence;
• A charge could be assigned;
 • A charge cannot ordinarily be split up by apportioning liability amongst various
persons.
What are the essentials of a valid charge under transfer of property act?
There are some essentials which need to be fulfilled to create a valid Charge under Transfer
of Property Act: –
1. Immovable Property: –
o The charge must be made against an immovable property which may
be a present or future property belonging to the borrower.
o It is nothing but a tool to create security that may be enforceable in
court.
o To create charges against immovable property, it is necessary that it
must be in writing.
o Most important thing to keep in mind is that there should be a clear
intention to use the property as a security for the payment of money.
o If the immovable property is not owned by the person to whom the
payment is due, the charge cannot be created.
o For example: – A wife sought in a maintenance suit to construct a
charge on the property of the house. The court considered that since
the property was neither constructed nor owned by the husband, no
charges can be made against such property.
2. Does not amount to a Mortgage: –
o A charge is not a mortgage because there is no transfer of property
nor is any right transferred, but a personal obligation is created or the
right to pay out of a specified property is generated.
o It is specifically noted in section 100 that a charge is not amount to
mortgage, although all provisions that apply to a simple mortgage will
also be applicable to charge. In simple mortgagee, the mortgagor is
not required to give possession of his property to the mortgagee.
Under a mutual agreement, it is decided that if the mortgagee fails to
pay the money within the stipulated time period, the property can be
sold in accordance with the law. In a simple mortgage there is a
transfer of an interest in the property, but there is no such transfer in
charge.
o A charge is a wider term because it also includes a mortgage i.e. each
mortgage is a charge but each charge is not a mortgage.
3. The Charge created by an Act of Parties: –
o Here, parties themselves create a charge by entering into an
agreement. No special form of words or language is required to create
a charge.
o This would be sufficient to create a charge if it can be seen from the
document that there is a clear intention to use that property as a
 security for the payment of the money, without transferring any right
or interest in the property.
o The Charge Holder’s remedy is only against the charged property.
o For example: – ‘A’ inherited a property from his grandmother. He
receives a certain amount of rent from the property. Now on his own
volition (choice), he made an agreement to pay a certain portion of
the rent to ‘B’. Here, ‘B’ will have a charge over the said property.
4. Charges arising by Operation of Law: –
o A charge can also be made by operation of law. This means that the
charge is made without the will or intention of the parties, but the law
enforcers them to perform certain obligations.
o For example: – ‘B’ made the full payment of the purchase money in
advance to ‘A’. But ‘A’ neither transferred the property nor registered
it in the name of ‘B’. Here, ‘A’ charge will be created by the operation
of law over the said property in favor of ‘B’.
Exceptions: –
Section 100 provides two exceptions under which no charge can be made. They are as
follows: –
• The charge which is made on an immovable property which is also a trust
property in favor of a trustee for incurring expenses in the execution of his trust
i.e. maintaining the trust property.
• If a property, on which a charge was made, is brought into consideration by a
person without any notice of the said charge, such charge cannot be enforced
against him.

DIFFERENCE BETWEEN CHARGE AND MORTGAGE

S.No. Charge Mortgage

1. Defined under section 100 of transfer of property Define in section 58 of transfer of

act. property act .

2. Interest is made in the property to pay off the It involves the transfer of an ownership
loan and there is no transfer of any interest. interest in an immovable property.

3. It is created either by an act of the parties or by It can be created by an act of the parties.
the operation of law.
4. Registration is mandatory only when it is made Registration should be under the transfer
by the act of the parties. of property Act. It is mandatory.

5. Time is infinite and can continue forever. The time is fixed in a mortgage.

6. Right in personam i.e. enforceable against a Right in rem i.e. enforceable against the
person. world.

7. It can be in oral and written form. It must be in writing.

Key Differences Between Charge and Mortgage

The difference between charge and mortgage can be drawn clearly on the following
grounds:

1. The term mortgage alludes to a form of charge, in which the ownership interest in a
particular immovable property is transferred. On the other hand, Charge is used to
mean the creation of right over the assets in favor of the lender, for securing the
repayment of the of the loan.
2. The mortgage is created out of the act of the parties concerned, whereas charge is
created either by the operation of law or by the act of the charger holder and charge
creator.
3. A mortgage requires compulsory registration under the Transfer of Property Act,
1882. Conversely, when the charge is created as a result of the act of the parties
concerned, registration is must, but when the charge is created by operation of law,
no such registration is needed at all.
4. The mortgage is for a specified term. Unlike charge, which continues forever.
5. A mortgage carries personal liability, except when it is specifically excluded by an
express contract. As against this, no personal liability is created. Nevertheless, when
the charge comes into effect due to a contract, then personal liability may be created.

1. JK (Bombay) Private Ltd vs. New Kaiser-I-Hind Spinning and Weaving Co

Ltd 1970 AIR 1041, 1970 SCR (3) 866
In this case court held that however in the case of a charge, there is no transfer of interest
or any of its interest, but only the creation of the right of payment out of the specified
property, a mortgage accomplishes the transfer of property or an interest. No particular
form of wording is required to create a charge and it is necessary that there should be a
clear intention to create security of property for payment of money in the praesenti (at
present time).
 2. Raychand Jivaji vs. Basappa Virappa Bellary (1940) 42 BOMLR 1113
In this case court held that it would be sufficient to create a charge if it can be seen from
the document that there is a clear intention to use that property as security for the payment
of money, without transferring any right or interest in the property.

CODIFICATION OF REAL ESTATE LAW

REAL ESTATE (REGULATION AND DEVELOPMENT) BILL, 2013

Highlights of the Bill

• The Bill regulates transactions between buyers and promoters of residential real estate
projects. It establishes state level regulatory authorities called Real Estate Regulatory
Authorities (RERAs).

• Residential real estate projects, with some exceptions, need to be registered with
RERAs. Promoters cannot book or offer these projects for sale without registering
them. Real estate agents dealing in these projects also need to register with RERAs.

• On registration, the promoter must upload details of the project on the website of the
RERA. These include the site and layout plan, and schedule for completion of the real
estate project.

• 70% of the amount collected from buyers for a project must be maintained in a separate
bank account and must only be used for construction of that project. The state
government can alter this amount to less than 70%.

• The Bill establishes state level tribunals called Real Estate Appellate
Tribunals. Decisions of RERAs can be appealed in these tribunals.

REAL ESTATE (REGULATION AND DEVELOPMENT) ACT, 2016

The Real Estate (Regulation and Development) Act, 2016 is an Act of the Parliament of
India which seeks to protect home-buyers as well as help boost investments in the real
estate industry. The Act establishes Real Estate Regulatory Authority (RERA) in each state
for regulation of the real estate sector and also acts as an adjudicating body for speedy
dispute redressal.

The Real Estate (Regulation and Development) Act, 2016 (Act) received the assent of the
President on the 25th March, 2016. It extends to the whole of India except the State of
Jammu and Kashmir.\

It came into force from 1st May, 2016 with 69 of 92 section notified, by notification in the
Official Gazette, appoint.
Salient Features of Real Estate (Regulation and Development) Act, 2016

• Applicable on Commercial and residential Real Estate projects.

• Establishment of Real Estate Regulatory Authority (RERA) and Appellant Authority
at state and Union Territory Level.
• Bar of jurisdiction courts from entertaining complaints with respect to matters of the
bill.
• Mandatory registration of Real Estate Projects and real estate agents. (No sale before
registration).
• Public disclosure of project details at RERA site. Such as layout plans, status of
statutory approvals, name and address of real estate agents, contractors, architect,
structural engineer etc..
• Act provides for arranging Insurance of Land title, which benefits both the consumers
and developers if land titles are later found to be defective.

MODULE 2

RERA

The real estate sector has been one of the top-most contributors to the country's Gross
Domestic Product (GDP) and employment creation. Surprisingly, inspite of being
such an important part of the economy, the real estate sector was unregulated for
numerous years. In order to regulate the aforesaid unorganized sector, the Indian
Parliament passed a legislation called as The Real Estate (Regulation and
Development) Act, 2016 ("RERA") which was made effective on May 1, 2016.

A batch of writ petitions was filed by real estate developers and individual plot owners
in the Bombay High Court. They claimed that RERA is unconstitutional as its state-
wise implementation and appointing state-level authority is arbitrary. They also
challenged Section 3 of the RERA which mandates developers to register their new
and ongoing real estate projects.

The Bombay Court held that RERA is constitutional. A bench of justices consisting
Rajesh Ketkar and Naresh Patil stated that "RERA needs to be closely monitored in
years to come. RERA is not a law relating to only regulatory concerns but its object
is to develop realty sector particularly incomplete projects."

RERA is a central legislation though land is a state subject on which only the state
government is empowered to frame laws. Hence, RERA being a central legislation, is
adopted by each state government in India in its respective state assembly and has
also framed its respective rules and regulations to implement RERA in its territory.
REGISTRATION OF REAL ESTATE

Registration under Real Estate (Regulation and Development) Act, 2016

• Area of land is more than 500 sq. mt. or number of apartments more than 8. (States &
UT can notify more stringent criteria)
• Where requisite approvals and commencement certificate has not been obtained prior
to commencement of this act.
• Where the project does not involves only renovation, repair or re-development and
involves re-allotment or marketing of the project.
Note: if the real estate project is to be developed in PHASES, then registration shall
be taken for each phase

Exceptions for registration under Real Estate (Regulation and

Development) Act, 2016:
• Where the area of land does not exceed 500 sq. mt. or 8 apartments. Central
Government may notify lesser area or apartments for different states or Union
territories.
• Where the promoter has received completion certificate prior to commencement of this
act.
• For the purpose of renovation or repair or re-development which does not involve
marketing advertising, selling and new allotment of any apartment, plot or building as
the case be, under the real estate project.

Process of Registration under Real Estate (Regulation and

Development) Act, 2016:
• Application along with fee to the authority before booking or selling or offer of sale in
the real estate project. The application shall accompany certain specified documents
• The Authority shall within 15 days grant registration subject to the provisions of this act
and will provide a registration number, Login id and password for accessing the
website of Authority and to recreate his web page and to fill details of the proposed
project.
• If the Authority fails to grant registration within 30 days, the Project shall be deemed
registered.
• Registration is valid till the completion of the project as mentioned in the application

Registration of Real Estate Agent under Real Estate (Regulation

and Development) Act, 2016
• No real estate agent shall facilitate sale or purchase of any plot, apartment or building
without obtaining registration.
• Application for registration shall be made to Authority accompanied by fee and
documents, within such time as may be prescribed.
• Authority within the period as may be prescribed, grant single registration for the entire
State or Union Territory.
 • Such Registration No. shall be quoted on every sale facilitated by him.
• He shall also not facilitate sale of any project which is not registered under this act.

In terms of Section 3 of RERA, the following real estate projects are not required to be
registered:

1. Where the area of the land does not exceed 500 square meters or number of
apartments does not exceed 8 (eight);
2. Where the Promoter has received completion certificate for a real estate project prior
to commencement of RERA; and
3. Where the work involved is limited only to renovation or repair or re-development
and does not involve marketing, advertising, selling or new allotment of any
apartment, plot or building.

In addition to the registration of real estate projects, every Real Estate Agent is also required
to get itself registered before facilitating the sale / purchase of any real estate project or part
of it, by making an application along with requisite information / documents and fee.

Application for registration under RERA

In terms of Section 4 of RERA, an application required to be made by every Promoter along
with the prescribed fee for registration of its real estate project and shall be inter
alia accompanied with the prescribed documents including:

1. An authenticated copy of the approvals and commencement certificate obtained

from the competent authority;
2. Sanctioned plan, layout plan and specifications of the proposed real estate project
as sanctioned by the competent authority; and
3. A declaration by the Promoter supported by an affidavit inter alia stating:
• that the Promoter has a legal title over the land on which development is
proposed;
• the details of all encumbrances on such land;
• the time period within which the Promoter undertakes to complete the real
estate project;
• that the Promoter would deposit 70% of the amount realized for the real
estate project from the allottee(s) from time to time in a separate bank
account.

Validity of registration under RERA

The registration granted shall be valid for a period declared by the Promoter for completion
of the real estate project or phase thereof as submitted in the affidavit along with the
application for registration.
The registration granted by the Authority may be extended by it upon receipt of application
from the Promoter in this regard in the following circumstances:

1. Force Majeure: war, flood, drought, fire, cyclone, earthquake or any other calamity
caused by nature affecting the regular development of the real estate project.
2. Other than force majeure: The Authority may extend the registration to a
maximum period of one year if it feels that the circumstances and reasons for
extension of the case are reasonable.

Revocation of registration
RERA stipulates various compliances with respect to a real estate project. If the same are
not complied with, the registration of an already registered real estate project may get
revoked. The Authority may revoke a registration on the basis of a complaint received
or suo motu by the Authority by giving 30 days' notice in writing to the Promoter of such
real estate project stating grounds of proposed revocation and instructing him to show cause
as to why the registration should not be revoked. On the basis of the Promoter's reply to the
show cause notice, the Authority may allow the real estate project to be registered or
alternatively, may cancel the registration.

A show cause notice proposing the revocation may be issued on the following grounds:

1. If the Promotor defaults in doing anything required under RERA;

2. If the Promotor violates any terms and conditions of the approval granted by the
Authority;
3. If the Promotor is involved in any kind of unfair practice or irregularities such as
any misrepresentation or false representation and / or publication of any
advertisement / prospects of services that are not intended to be offered; and / or
4. If the Promoter indulges in any fraudulent practices.

Consequences of non-registration
In case of non-registration of the real estate project, Section 59 stipulates a penalty of up to
10% of the estimated project cost and in case of continued default, an additional fine up to
10% of the estimated project cost or imprisonment up to 3 (Three) years or both.

In terms of the provisions of Section 31 of the RERA legislation, any aggrieved person may
file a complaint with the Authority against the Promoter for violation of the provisions. The
Authority has been entrusted with very wide powers under RERA in relation to any non-
compliance on the part of the Promoter including levy of penalty as well as taking such
other remedial measures or safeguards as may be deemed fit by the Authority. The same
may include granting of interim order(s), refund of consideration amount received by the
Promoter from various allottee(s), change in the developer / Promoter, etc., on a case to
case basis.
STAMP DUTY

Stamp duty is an indirect tax levied on various kinds of instruments and transactions like
bills of exchange, conveyance deed, mortgage deed, lease deed, promissory notes, transfer
of shares, immovable properties, etc. by the state governments.

Stamp duty is an ad valorem tax payable on the value of an instrument used for various
transactions- commercial or otherwise. The Indian Stamp Act, 1899 ("Act") enacted to
prescribe and provide for the collection of proper stamp duty on an instrument is based on
the chargeability of instrument and not of the transactions, notwithstanding the fact that
different instruments may pertain to a single transaction.

1. Government tax on legal documents usually in the transfer of assets and property.
2. Collected by State as per Indian Stamp Act 1899.
3. It is generally 4% to 10% of property value in different states.
4. Usually paid by Buyer/Transferee unless otherwise mutually agreed by parties.
5. Stamp Duty paid & registered document is a proper legal document that can be
submitted as evidence in court.
6. One can collect a duplicate document from Sub- Registrar office in case of loss of
original document

TYPES OF STAMP DUTY

In India, two types of stamp duties are used namely:

• Impressed Stamps : It is usually done by the process of embossing or engraving.

Labels are affixed by the officer concerned and in the banks by the franking
machines.

• Adhesive Stamps : It is usually stuck to the instruments by any form of adhesive

and it is of two types:

(a) Postal Stamps – Stamps used for transacting with the post office,

(b) Non-Postal Stamps – They usually have a wider application as they can
be in the form of court fee stamps, notarial stamps, revenue stamps, share
transfer stamps, etc.

By whom is it payable
Section 29 of the Act provides us with the persons liable to pay for the stamp duty. It differs
for various instruments and are as follows:
In the absence of an agreement to the contrary

1. Administrative Bonds, Agreement relating to deposit of Title deeds, Pawn

or Pledge, Bills of Exchange, Bonds, Bottomry Bond, Debenture, Further
Charge, Indemnity-Bond, Mortgage-deed, Promissory-note, Release, etc –
By the person drawing, making or executing such instrument.
2. The policy of insurance other than fire-insurance – By the person affecting
the insurance.
3. Conveyance by the grantee, lease, or agreement to lease – By the lessee or
intended lessee.
4. The counterpart of a lease – By the lessor.
5. Instrument of exchange – By the parties in equal shares.
6. Certificate of sale – By the purchaser of the property to which such certificate
relates.
7. Instrument of partition – By the parties thereto in proportion to their respective
shares.

CANCELLATION OF ADHESIVE STAMPS

Any person affixing any adhesive stamp to any instrument bears an adhesive stamp which
is not cancelled shall be deemed to be unstamped.

MANNER OF CANCELLATION

Single Line Drawn:- A Stamp can be cancelled effectually merely by drawing a solitary
or single line across the stamps. (Mahadeo Koeri v. Sheoraj Ram Teli)

In Hafiz Allah Baksh v. Dost Mohammed, it was held that if it is possible to use the stamp
even after drawing a line, it will be considered as an effectual cancellation.

Diagonal Line :- In Melaram v. Brij Lal, it was held that a very effective method of
cancellation of stamps is drawing of diagonal lines across the stamp with the ends of the
lines extending on to the paper of the document.

Cross :- If an illiterate person marks a cross on the stamp it would amount to effectual
cancellation (Kolai Sai v. Balai Hajam)

Section 35 of the Indian Stamp Act, 1899, lays down that if an instrument chargeable with
stamp duty is not duly stamped, then it shall not be admitted in evidence for any purpose,
nor shall it be acted upon, registered or authenticated by any such person having authority
to receive evidence or by any public officer. However, such instrument can be admitted in
evidence on payment of the deficient duty, together with a penalty of a sum of equal to ten
times such deficiency.

EFFECT OF DEFICIENT STAMPING

• Instruments which are unduly stamped will get impounded(section 33): If an

instrument is brought before an authority entrusted with the duty to examine such
documents and the instrument is found to be unduly stamped then they are supposed
to impound the instrument.[The word ‘impound’ means the seizing of documents
which infringe law in some way.]
• Instruments not duly stamped are not admissible as evidence (section 35): Any
instrument which is not duly stamped is not admissible as evidence. In order to make
such an instrument admissible as evidence, the duty which is chargeable on the
document will be levied or, in case of insufficient stamping, a penalty of ten times
the value of duty has to be paid.

• After the agreement has been accepted as evidence, objection can’t be raised
as to its admissibility (section 36): After a document/instrument has been accepted
as evidence, no objection can be raised in a court proceeding questioning the
insufficient stamping of the instrument except under section 61. Section 61 will be
discussed eventually in the course of this article.
• State governments may make rules regarding ‘improperly’ stamped
contracts(section 37): The state governments have been given the power to make
rules regarding improperly stamped instruments under the Act. Any instrument
which is “improperly” stamped(and not insufficiently stamped), after charging the
requisite duty, may be certified as a duly stamped instrument.
• Inadequate stamping due to accident (section 41): The gist of this section is that
if you realize that your instrument is not sufficiently stamped ‘by accident’ then you
can approach the collector within 1 year from the date of stamping and try to pay
the remaining duty for the instrument. If the collector is convinced that it was an
honest mistake, he shall receive the remaining duty without impounding the
instrument. [‘Collector’ referred to here can be anybody from the district collector,
Deputy Commissioner or anyone the government appoints on this behalf. section
2(9).]
• Prosecution of people trying to evade payment of stamp duty(section 43): This
section basically says that if it seems that a person wanted to evade the payment of
stamp duty, he shall be taken to court for offending the Stamp law.
• Penalty shall be charged if you try to execute an inadequately stamped
document(section 62): In this section, a person who tries to execute a
 document/instrument which is not duly stamped, shall be liable to pay a fine of upto
500 rupees.
• Penalty for trying to defraud the government(section 64 & 27): This section
actually deals with penalty for not complying with section 27. Section 27 says that
the duty calculated from the value of the consideration in the transaction has to be
truly mentioned. Otherwise, it shall be considered an attempt to defraud the
government. So, even if a document is unduly stamped, it can be charged with a
penalty under section 64. A fine upto 5000 rupees is payable under this section.

DEVELOPMENT AGREEMENT

A development agreement is a legally binding contract between a property owner or

developer and a local government, often including terms not otherwise required through
existing regulations. These agreements can specify various elements of the development
process ranging from phasing of a larger master-planned community, to tax-sharing for
retail development, to critical infrastructure responsibilities. Development agreements are
sometimes used in combination with a planned unit development (PUD) in the form of a
binding PUD agreement that specifies the negotiated terms of the development, but the two
tools may also be used independently.

For hazard mitigation purposes, development agreements can be used to guarantee that a
proposed development reduces risk to hazards by requiring it meet certain use
requirements, site development standards, conservation practices, or long-term
maintenance provisions not already required by land development regulations.
Development agreements can also be used as an incentive.

What is the purpose of the development agreement?

Crafting the purpose and goals will solidify the reasons why a development agreement is
necessary and helps facilitate a process where the expectations for both parties are clearly
articulated. This step should also act as a screening process for whether the purpose of the
development agreement is consistent with a comprehensive plan or other policies generated
by the jurisdiction.
Documents Required:

The Following Documents are Required for Development Agreement :

1. Sale Deed/Title deed /Mother deed/Conveyance Deed

Description of Property Document: A sale deed acts as the main legal property document
for evidencing sale and transfer of ownership of property in favor of the buyer, from the
seller. Further, it also acts as the main property document for further sale by the buyer as it
establishes his proof of ownership on the property.
Normally sale deed is executed after execution of sale agreement. Sale deed confirm that
terms and conditions detailed in the sale agreement as agreed upon between the buyer and
the seller are complied. It is mandatory to register the Sale Deed in Sub Registrar office in
whose jurisdiction property is located. It is mandatory to register sale deed within 4 months
from the date of execution else you need to pay penalty or it stands invalid.
Why it is required: To establish the ownership of seller on title of property
Mandatory: Yes. All previous Sale Deeds are required in original
Required in Original: Yes
Required For: Property Purchase + Home Loan

2. RTC Extracts

Description of Property Document: R.T.C is issued by the Village Accountant. It

contains details of the extent of land in a survey number or a sub-survey number, the extent
of kharab land therein, the names of the present and previous owners, their respective
holdings and names of the tenants. It also include details like the kind of soil/crop, any
mortgages, charges made on the properties contained therein, the status of land (whether
Inam land or not), the conversion order number, date in case any property converted therein
from agricultural to non-agricultural use, the references to mutation and inheritance
certificates where there is any change in ownership etc.
Why it is required: To establish the Title of Land, if the property is located on converted
land e.g. converted from agricultural to non-agricultural use
Mandatory: No
Required in Original: No
Required For: Property Purchase

3. Khata Certificate and Extracts

Description of Property Document: Khata means an account and Khata is an account of

a person who has property in the city. There are two types of Khata: Khata Certificate and
Khata Extract. In different states it is known by different names. It is basically an entry in
record of local municipal committee and indirectly confirms that apartment is constructed
as per approved plan.
Khata certificate is required for two reasons: For registration of a new property and for
transfer of any property. Khata can be obtained from the Assistant Revenue officer (of the
respective area). This certificate is must have for any property owner.

Khata Certificate is obtained for any new registration after paying the tax. Khata certificate
is issued stating that a particular property No ‘N” is in the name of person X. This certificate
is required to apply for water connection, electricity connection, trade license and building
license. The Khata certificate is given only to the owner of the property or to his family
members. No one else can take it on his behalf.

Khata Extract is seeking details from the assessment register. The extract is required to get
trade license, or to buy a particular property. It is an extract from the assessment register
about any particular property. It has the details of the property in a particular format with
the name, size of the property, use of the property (commercial purpose, residential), annual
value, when assessed last. An extract is the only way to get these details of any property.

Why it is required: For transfer of property

Mandatory: Yes
Required in Original: Yes
Required For: Property Purchase + Home Loan

4. Mutation Register Extracts

Description of Property Document: Mutation Extract issued by the Village Accountant
or Tahsildar contains the extract from the mutation register or inheritance certificate with
details of previous owner, the present owner, the mode of acquisition of the property, the
total extent of the property and the order stating that the Khatha of the property may be
transferred to the name of the present owner.
Why it is required: To establish the Title of Land if the property is located on converted
land e.g. converted from agricultural to non-agricultural use
Mandatory: No
Required in Original: No
Required For: Property Purchase

5. Joint Development Agreement

Description of Property Document: An individual landowner and a builder may enter
into a JDA. The key feature of a JDA is that the landowner will contribute land and the
builder will undertake development activity on it. Depending upon the land price, the joint
development ratio is decided among the parties. In most of the cases, the builder will agree
to allot X no of flats to the landowner and there is no exchange of money between
landowner & builder. In consideration of this, the landowner will part with his share of land
in favor of the builder or his nominee. He also allow the builder to construct apartment on
his land and sell the agreed number of flats.
Why it is required: To establish whether original title of property rests with the Builder
or with Landowner
Mandatory: Yes
Required in Original: No
Required For: Property Purchase
6. General Power of Attorney

Description of Property Document: A “power of attorney” is a legal instrument whereby

one person gives another person the authority to act on his or her behalf as his legal
representative and to make lawful binding legal and financial decisions on his behalf
including Sale or Purchase of Property on Buyer or Seller’s behalf.
Why it is required: To establish whether the previous Sale or Purchase was carried out by
authorized person on Seller or Buyers behalf
Mandatory: Yes (If any of previous Sale/Purchase were executed through GPA)
Required in Original: Yes
Required For: Property Purchase + Home Loan

7. Building plan sanctioned by the Statutory Authority

Description of Property Document: The building plan approval process relates to the
issue of permission for the construction of buildings based on specific set of rules and
regulations.
Why it is required: To establish whether the property is authorized or unauthorized
Mandatory: Yes
Required in Original: No
Required For: Property Purchase

8. NOC from Electricity Deptt/Pollution Control Board/Water Works/ Air Port

Authority

Description of Property Document: Before starting the construction, builder requires

NOC from all key Govt Departments. In some states NOC from at least 19 departments are
required ranging from Pollution Control Board to Fire & Safety etc. For example If builder
does not get NOC from Electricity Deptt then in all probability, buyer will not get electricity
connection thus 100% dependency on generators. It will increase maintenance bill
drastically.
Why it is required: To ensure Govt approvals are in place
Mandatory: Yes
Required in Original: No
Required For: Property Purchase

9. Supplementary agreement / Ratification Deed (if any)

Description of Property Document: Supplementary agreement captures any extension,

change or modification in certain clauses of Principal Agreement. Many a times changes
are required in principal agreement and only way to execute the same is through
Supplementary agreement. Just check whether any supplementary agreement is executed
against Principal agreement.
Why it is required: To avoid any future shock on modified clauses which you might not
be aware of & is not included in property documents.
Mandatory: Yes
Required in Original: No
Required For: Property Purchase

MODULE 3

LAND CLASSIFICATION
• Residential Land: Residential land, as the name suggests, is a plot of empty land
which is used for housing purpose after dividing the same into different sections.
In general, this type of land is used for individual housing.
• Industrial Land: Industrial land is a piece of land which is used for setting up
industries. These pieces of lands are usually bigger in size and are located in the
outskirt areas, away from the residential localities.
• Commercial Land: Commercial land is meant for commercial purposes such as
space for offices, warehouses, showrooms, shops and retail outlets, and so on.
These areas are usually closer to the locality.
• Agricultural Land: In India, more than 50% of the total land mass is agricultural
land. As the Indian economy is significantly dependent on agriculture, there are a
number of agricultural land spaces across the country. These pieces of land
usually lie in the less developed belts.

LAND RECORD
“Land records” is a common term used for all such information and data related to details
of the land or property such as sale deeds, tax documents, rental documents, registration of
lands, record of rights, mutation register, tenancy and crop inspection register, spatial
records, transaction records etc.

Briefly, it can be said that the land records is a blend of mainly three types of data records:

• Transactional Data: When any property or land is sold, a sale deed is formulated
which is signed by the both parties i.e. buyer and seller. It basically contains details
about the said property or land such as its area and its market price including all the
details about the past transactions. Such deed is then registered under The
Registration Act, 1908 and further sent to tehsil/taluka office to record the transfer
and change the title in the land records. This process is popularly known as
Mutation.
 • Textual Data: Textual data includes record of rights, mutation orders etc. Such data
reflects how rights on said land or property such as ownership rights, long-term
lease hold or tenancy related rights are acquired. It broadly contains:

✓ Details of all such persons who have acquired any right over the said
property heretofore;
✓ What was the nature of such rights and to what extent they were exercisable;
✓ Details about the rent and revenue paid for the property;
✓ Details related to any loan taken on such property.

• Spatial Data: A periodic survey is conducted by Survey and Settlement Department

to determine geographic and geo-referenced data which includes:

✓ Purpose for which land is being used; whether it is agricultural, residential

or commercial;
✓ Boundary particulars of the property and details about its surrounding area;
✓ How the property is connected with roads;
✓ Land topology;
✓ Water sources nearby etc.

MUTATION
Mutation, also termed as ‘Dakhil Kharij’, is the process of recording the change/transfer in
the title of ownership after the property has been transferred or sold. Once mutation is done,
the same is recorded in the land revenue department, which eventually helps the authorities
to fixate upon the tax liability.
Mutation, contrary to popular belief, in not a one-time affair. It should ideally be done every
six months so as to ensure that no fraudulent transactions concerning the property are being
given effect to.
Mutation is required every time a change/transfer of ownership is given effect to. The same
could be done in the following ways:
✓ Sale/purchase of property – In such a case, the documents that would be required
are a copy of the registered sale deed, application for mutation with the court fee
stamp, latest property tax clearance documents, indemnity bond on stamp paper, etc.
✓ Inheritance of property (intestate succession or through a will) – A copy of the
death certificate along with documents establishing the relationship between the
deceased and the claimant, a copy of the will, property tax clearance documents, etc
would suffice.
 ✓ Power of attorney – In the concerned case, the documents for mutation would be
that of a copy of power of attorney papers, affidavit, and indemnity on a stamp paper,
property tax clearance documents, etc.
The value of stamp paper in the aforementioned instances would vary from one another.
Types of Mutation
Mutation is of two types:
✓ Mutation of Agricultural land – Mutation, in the case of agricultural lands, unlike
non-agricultural lands, has a bearing on the title of ownership of the land in question.
The transfer of ownership will not be regarded legal, until and unless the mutation
process has been duly completed and the same has been recorded in the revenue
records.
In case the concerned piece of land is acquired by the Government, compensation would
be given to only those people whose names have been registered in the records.
✓ Mutation of Non-agricultural land – In such a case, the non-mutation of land will not
have a bearing on the title of the property, but will most certainly affect the owner’s
liability to pay municipal tax and may even tamper with their water supply and
electricity connection. A few examples of non-agricultural lands are independent
houses, flats, residential complexes, etc.
Procedure of Mutation
• The procedure starts with the submission of the application for mutation with the
Tehsildar of the area along with a non-judicial stamp paper of the required value.
The aforementioned documents too need to be submitted as per the case.
• Once this is done, a proclamation asking for objections to the proposed mutation is
issued, stipulating the last date for such objections.
• The statements of the parties are also noted and then matched with the contents of
the submitted documents to look for any discrepancies. If no objection or
discrepancy is found, the proposed mutation is sanctioned.
• If any objection is received or a discrepancy is found, the matter is referred to the
Revenue Assistant of the area and the particulars of the objections are duly noted.
If the concerned parties are not satisfied with the order, an appeal can be filed before
the Additional Collector (the concerned Deputy Commissioner) within 30 days of
the concerned order.
• This is a generic procedure, as the intricacies with regards to the procedure and
documents vary from one state to the other.
Difference between Registration and Mutation
Registration, essentially, is the process of getting the title of ownership of land legally
transferred in the name of the buyer. Mutation, on the other hand, is what follows the
process of registration. Getting a land mutated means that the registration has been duly
recorded in the revenue records.
• While registration does confer title of ownership and acts as a proof of the same, it
is not so in the case of mutation.
• For instance, in the case of In Sawarni (Smt.) Vs. Inder Kaur (1996), the Supreme
Court held that the mutation of a property in the revenue record does not create or
extinguish title, nor does it have any presumptive value on the title. It only enables
the person in whose favour mutation is ordered to pay the land revenue in question.
• The same was upheld in the cases of Balwant Singh & Anr. Vs. Daulat Singh (dead)
by L.Rs. & Ors. (1997), and Narasamma & Ors. Vs. State of Karnataka & Ors.
(2009).
• The Supreme Court, once again, in the case of Smt. Bhimabai Mahadeo Kambekar
(D)Th. LR Vs. Arthur Import and Export Company (2019), upheld the same.
• Therefore, it can be concluded that the mutation entries are only for revenue
purposes, to ensure that the taxes and revenues associated with the land are being
paid regularly without any default.
• Finally, registration of property is legally binding, but mutating the same is not.
FREEHOLD PROPERTY

Freehold property can be defined as any estate which is "free from hold" of any entity
besides the owner. Hence, the owner of such an estate enjoys free ownership for perpetuity
and can use the land for any purposes however in accordance with the local regulations.
Sale of a freehold property does not require consent from the state and hence requires less
paperwork, thus, making it more expensive than leasehold property.

Freehold property is inheritable and there are no restrictions on the right of the property
owner to further transfer the property. In a free hold property, there is no encumbrance to
the absolute title of the property. A free hold is not akin to a condominium wherein the
owner of the individual unit pays a maintenance charge. Free hold property can be inherited
by a legal guardian. A freehold property can be transferred by registration of sale deed.

LEASEHOLD PROPERTY

As the name suggests, a leasehold property is one that is leased to another for a specified
period of time. The difference between a leasehold property and a simple rental property
is that the lessee of the leasehold has granted ownership rights to others for the term of
the lease – which may be anywhere from 99 years to 999 years. In general, this means
the resident who has purchased the rights to live on the leasehold property does not have
to worry about the property reverting to the owner any time soon. At the same time, the
buyer of a leasehold property does not own the property in the way the buyer of a
freehold property does. Transferring ownership of a leasehold property requires an
understanding of the leasehold situation.

Buyers of leasehold properties can obtain mortgages and purchase the property as they
would a freehold property. The lender will recognize that this is a leasehold property, and
if there is still significant time remaining on the lease, the leasehold is unlikely to be a
concern. The full information about the time remaining on the lease must be provided.
Provide the new owner with the leasehold agreement, as well as all contact information
for the landlord. The landlord technically owns the property, even when the new buyer
has a mortgage on it, so the new buyer needs to be aware of who the owner is.
Give the new owner any lessee requirements for residing on the property. In most cases,
leasehold properties are transferred the same as freehold properties. In some cases,
however, the landlord might require monthly or annual maintenance payments, as well as
specific resident requirements for living on the property. The buyer of a leasehold
property owns the right to live within the property, but he does not own the right to make
substantial changes to it. The landlord still has the legal ownership of the property’s
structural and external walls, and the new owner needs to be aware of what changes are
allowed to be made. If a significant repair needs to be made, the landlord is responsible
for approving and/or making that repair.

RESTRICTIVE COVENANTS

A restrictive covenant, also known as a negative covenant, is any type of agreement in a

contract or obligation that either restrict the buyer from taking some action or which
requires they abstain from a specific action.

In bond obligations (debentures), restrictive covenants disallow issuers from activities such
as taking on new debt or other corporate actions.

In real estate transactions, restrictive covenants are binding legal obligations written into
the deed of a property contract, usually by the seller. These covenants can be either simple
or complex and can levy penalties against buyers who fail to obey them.

A restrictive covenant may be contrasted with a positive covenant, which is a clause in an

agreement that requires parties to take certain actions. rather than preventing actions.

KEY TAKEAWAYS
* Restrictive covenants require a real estate buyer to either take or abstain from specific
actions.

* They can pertain to everything from what colors you can paint your house to what kind
of roof you may put on it to how many tenants may live in a building.

* Buyers who fail to meet restrictive covenants can incur penalties.

* Sometimes restrictive covenants can be removed via payments to sellers, who must report
such payments as capital gains income.

Examples of Restrictive Covenants in Real Estate

Restrictive covenants on a property can govern how it is used by the occupants. For
example, a restrictive covenant on a residential property might bar any business activities
from being conducted on the property. This could preclude the occupant from running a
home-based business or having a home office on the premises.

Architectural guidelines set in restrictive covenants may limit renovation plans for the
property. The buyer of the property may be required to maintain its original appearance or
to keep the property in a certain color scheme or style that is comparable to neighboring
properties.

For example, a property in a certain area or neighborhood may be under restrictive

covenants to adhere to a specific type of roofing code and exterior color to maintain
aesthetic consistency in the neighborhood. Property owners could be barred from placing
commercial signs or signs of any type on the premises, and flagpoles on the property may
be limited to a certain height.

EASEMENT

A right is the right of an owner to own or occupy land which gives him the right of
beneficial enjoyment on the land of another person which he does not have. Such a right is
given to the owner of land so that he can fully enjoy his rights in his property.

Therefore a real estate has certain rights which are associated with the enjoyment of another
real estate without which the property cannot be easily and fully held and enjoyed. For
example, in the right way, sunlight, water, sewage etc.
ACQUISITION OF EASEMENTS BY PRESCRIPTION

Prescription shows the effect of time constraints on creating some new rights and then
destroying the old rights. The term by prescription means that the acquisition of a title or a
right by the owner of the property in the manner prescribed by law. A person can acquire
property or certain rights over a property to show that he is in possession of the property or
has been enjoying the rights for a long time.

Therefore, if there is a need to prove its title after prolonged, uninterrupted and continuous
occupation or to exercise certain rights over real estate it will cause hardship and will cause
injustice. The law, therefore, recognizes an easement by prescription.

Section 15 of the Indian Easement Act, 1882 talks about that in order to obtain a prescribed
right of accessibility in relation to the use and use of light or air for a building or assistance
from a person’s land it is enjoyed peacefully without any ease should go. Interruption for
twenty years. No right of way or any other facility would have been enjoyed as peacefully
and openly as a right without hindrance for twenty years.

Principle involved

The principle described in the prescription doctrine is that to give legal recognition to rights
and the titles that have been long enjoyed. Even if the enjoyment of that such right or the
title was wrong at the time of its establishment, the law uses to consider it expedient to not
to disturb such kind of enjoyment. The law recognizes this right to prove that the origin of
the title will cause unnecessary hardship to a person.

Illustration

The plaintiff demonstrates that he was enjoyed peacefully and openly for twenty years on
the right. B, the defendant proves that A has admitted on one occasion during twenty years
that the user was not right and asked him to enjoy his leave right. This lawsuit would be
dismissed because the right did not enjoy the rights for such twenty years.

Essentials of easement by prescription

• Peaceably enjoyed

The Indulgence should be without any violence and that should not be subjected to the
frequent quarrels or physical or any legal obstruction by the owner. No relaxation by the
prescription can accrue under a non-peaceful enjoyment.
 • Openly enjoyed

The need for open enjoyment means that the dominant owner must either have actual
knowledge of the practice of accessibility by the dominant master or possess the means of
knowledge for which creative knowledge can be attributed to him.

• As of Right

This expression means that the enjoyment of spontaneity should be without violence,
without theft, and also without permission. This implies that rest should be enjoyed as a
right.

• Without interruption

Relaxation should be enjoyed without any hindrance which may have been caused by some
kind of hindrance due to the function of the servant owner. As a result of such interruptions,
the pleasure of easement must be effective. The principal owner must have notice of the
obstruction and fact of that person in making or authorizing such an obstruction. It is not
necessary that some oral or any written notice must be given by the servant owner to the
principal owner.

• For twenty years

An uninterrupted period of 20 years of only would establish an easement by prescription.

The period of 20 years is extended to thirty years if the government gets the benefit of
service. In Manikkan v. Kamala [AIR 1987 Ker. 72], the court held that if the branches of
a tree dominate the neighbouring land, then no right can occupy the land which they lay
hands on. The owner of such a tree does not acquire any rights over the neighbour’s land,
simply because the tree branches are continuously spread over the neighbouring soil for a
long period of time. No right can arise by prescription to continue the nuisance.

Rights that cannot be acquired by prescription

The following four rights under Section 17 cannot be acquired by prescription-

• A right that leads to the total destruction of the subject of right, or property on which
it was acquired, liability will be imposed
• Right of free passage of light or air over open space on the ground
• Surface water – no water that is flowing in a stream and not permanently collected
in a pool, tank, or otherwise.
• The right of underground water is not passing in the defined channel
TITLE SEARCH

A title search is an examination of public records to determine and confirm a property's

legal ownership, and find out what claims or liens are on the property. A clean title is
required for any real estate transaction to go through properly.

A title search is usually performed by a title company or an attorney, often on behalf of a

prospective buyer who may be interested in making an offer on the property.

The process may also be initiated by a lender or other entity that wants to verify ownership
of the property, and determine what claims or judgments against the property may exist
before approving a loan or other credit that uses that property as collateral.

When performing a title search, the attorney or title company will conduct research using
public records and legal documents to identify the vested owner, the liens or other
judgments on the property, the loans on the property, and the property taxes due.

While it is possible for a prospective buyer or another individual to conduct a title search
on their own, this is not recommended. Legal documents can be confusing, and navigating
records at the courthouse can be a tricky process. It would be easy for an inexperienced
person to overlook something important.

KEY TAKEAWAYS

• A title search is the process whereby the ownership and claims on a piece of real
property are evaluated before a transaction can take place.
• In order for most real estate transactions to occur, its title must be found to be clean
- i.e. free of liens, back taxes, or other claims.
• Title insurance is often purchased to protect against a financial loss that may occur
if a title is found to have issues.

Special Considerations

A clear title is necessary for any real estate transaction. Title companies must do a search
on every title in order to check for claims or liens of any kind against them before they can
be issued. A title search is an examination of public records to determine and confirm a
property's legal ownership, and to find out whether there are any claims are on the property.
Erroneous surveys and unresolved building code violations are two examples of blemishes
that can make the title "dirty.“
 Title insurance protects both real estate owners and lenders against loss or damage
occurring from liens, encumbrances, or defects in the title or actual ownership of a
property. Unlike traditional insurance, which protects against future events, title insurance
protects against claims for past occurrences.

A basic owner's basic title insurance policy typically covers the following hazards:

• Ownership by another party.

• Incorrect signatures on documents, as well as forgery and fraud concerning title
documents.
• Defective recordation (flawed records or record-keeping)
• Restrictive covenants (terms that reduce value or enjoyment), such as unrecorded
easements.
• Encumbrances or judgments against property, such as outstanding lawsuits or liens.

DUE DILIGENCE

Property purchase in India require significant amount of due diligence to ensure that what
you are buying carries a perfect title and the property is free from any charge. As the cost
involved in purchase is high, its always good that all property buyers get due diligence of
property done by a qualified expert.

Due Diligence in respect of property is thorough Research and review of all the property
papers before investing/ Buying/Selling/Leasing of a Property. It is a process where you
are taking the necessary and reasonable steps and this may include, but is not limited to,
conducting search in Registrar Office and reading through various Acts and Regulations.

It is recommended to approach an expert for due diligence There are different aspects to
Due Diligence and can depend upon the Type of Property, i.e, Ready to buy, under
construction, Resale, Redeveloped Properties etc.

The documents are to be reviews changes according to the property. There are many acts
that come into force while buying/Selling of property such as, i.e Transfer Of Property Act,
1882, , Registration Act, 1908 and respective state laws (for example in Maharashtra
Maharashtra Apartment Ownership Act, 1970, The Maharashtra Co-Op Society Act, 1960)
etc.

Personal Laws also come under force in case of death of the owner and succession of the
property. Here the documentation review and due diligence process gets complicated by
oneself. A common man may not be aware of all these laws, and a transaction which looks
simple can be invalid in the eyes of the law.
It is common for property purchaser to take opinion from individuals with vested interest,
however, its important that the opinion is based on the documentation and through review
of documentation, law and relevant regulations. Any wrong decision can risk the property
ownership and loss of money invested in purchase of property.

Not everything that looks simple and fair is actually that way and the same can be trusted
with someone who has experience. There are many things from which a legal adviser can
protect you, when dealing in real estate transactions.

The type of due diligence of property depends on the following:

(i) the risk profile and objectives of the purchaser

(ii) the type of property involved
(iii) nature of the real estate transaction
(iv) the time frame for completion of the transaction; and
(v) whether the purchaser is looking at obtaining loan from Financial Institution.

Type of Due Diligence/ Title Search:

Depending upon the nature of the transaction, the property involved and the objective of
the participants, a due diligence can be divided into two broad categories:

• Full Search:

A full search is usually done while giving a title certificate of the property in instances of
sale/ resale/ long term lease transactions and for transactions that involve obtaining of
financing by mortgaging the property in question. In a full search, the search regarding
status of ownership of the property is generally conducted for a period preceding thirteen
(30) years (or more) from the date on which the seller in question came to acquire the
property.

It also includes a detailed search of all aspects relating to the history of that property such
as the status of encumbrances over the property, the status of disputes relating to the
property, the applicable regulations and the status of compliance of such applicable
regulations relating to the property in question.

• Limited Search:

A limited search is generally conducted in transactions where the property is taken on lease
for a short term (usually under 9 years). In such instances, the period for which the
preceding ownership of the property is traced is generally restricted to fifteen (15) years (or
less) from the date on which the current owner of the property came to acquire the property.
Unlike full searches, in a limited search, the search relating to the history of the property
may be limited to restricted aspects such as recent title history, encumbrances on the
property, disputes related to the property etc.

Steps involved in conducting such due diligence/ title search:

In order to conduct a title search/ title verification, the following aspects would require to
be examined:

i. Legal capacity of the present owner of the property (whether the person is legally
capable of entering into a binding contract for sale or lease of the property or for
mortgaging the property);
ii. Nature of current owner's right over the property, and whether such right is
transferrable;
iii. Source of right or title of the current owner;
iv. Legality of the construction;
v. Encumbrances over the property; and
vi. Whether the property is a part of any acquisition process.

LAWS APPLICABLE TO APARTMENT OWNERS

What is a by-law in an Apartment Society?

By-laws are the guidelines, which have provisions relating to the affairs of the apartment
association. It refers to a local/private law made by an organisation for its own government.
The role of by-laws:
Each apartment association will have an apartment bye- law which contains certain details
like the name of the association, the address, the date of formation, jurisdiction aspects and
so on. The bye-laws contain various particulars which relate to the business hours of the
association along with the objects and activities of the association.
The importance of by-laws:
Bye-laws are required by the managing committee of an Apartment Owners Association
(or Residents Welfare Association) to ensure proper maintenance of the apartment complex
and to resolve the issues that the residents face in a timely and effective manner. Solving
the issues is not easy. It is quite a difficult task to convince the society to agree to the chosen
rules and regulations. All of the related issues are solved through a set of rules known as
the bye-laws. Every apartment complex adopts the bye-laws from the moment it is
registered. The bye-laws govern the day-to-day functioning of the apartment complex and
it is considered as the constitution of an apartment complex.

An apartment by-law will include:

• An apartment owners association can be registered under the society act or a Flat
Owners Act.
• An apartment association must consist of at least 10 people, over 18 years of age.
 • All the owners are obliged to pay monthly assessments imposed by the association
and abide by the rules of conduct.
• The registration of an association involves the drafting of memorandum and bye-
laws.
• The memorandum shall contain the name of the association and the objects of the
association apart from the names, addresses and occupations of the members of the
committee which is the governing body.
• The names of persons or officers who can sue or be sued on behalf of the association.
• Particulars of the person or officer who can give directions with regard to the
business of the association.
• It is mandatory that the bye-laws should have details about the enrollment of
members, qualification for membership, restrictions and other conditions along with
the entrance fee.
• The deadline date for the payments and the fee.
• A list of delayed payments and penalties.
• Rules about eviction of members and the circumstances under which members can
be evicted along with the particulars of rights, obligations and privileges of the
members.
• The bye-laws should have the particulars relating to the manner in which the
business of the association has to be carried out.
• A list of qualifications of members to hold office, the term and other conditions for
appointment/reappointment should be mentioned.
• Every apartment owners association shall make own bye-laws at its first meeting
for the administration of the affairs in relation to the apartments and the property
relating thereto.
• People who have purchased apartments and executed a deed of apartment shall
automatically be the members of the association and will pay the membership fee.
Each apartment owner shall receive a copy of the bye-laws.
• The affairs of the association shall be governed by a board and elected by the
members by simple majority in the general body meeting.
• The principal office bearer of the association shall be a President, a Vice-President,
a Secretary and a Treasurer, all of whom shall be elected by and from the board.
The board may appoint an Assistant Secretary and an Assistant Treasurer.
• One third of the members of the board retire annually.
• The office bearers shall hold office until their successors have been elected and hold
their first meeting.
• The first meeting of a newly elected board shall be held within ten days of election.
• The administration of every property shall be governed by bye-laws, a true copy of
which shall be annexed to the declaration.

How can one make a model By-law?

• Make a draft or model bye-law for the association.
 • Getting it approved from the general body.
• Proceed for the registration of the association.
• On successful registration of association bye-law becomes effective for
association.
Why does an apartment association need a by-law?
• The primary responsibility of the managing committee is to ensure proper
maintenance of the apartment complex and to resolve related issues which
residents face.
• Convincing the members to act in the interest of the society is no less a
challenge either as almost every resident is aware of their rights but few accept
their responsibilities.
• They are needed for the smooth functioning of a society and many consider
them to be the constitution of an apartment complex.
• They are critical for the efficient working of a society and are mandatory for
an Apartment Complex Association.
Amending by-laws:
• Bye-laws may be amended by the association in a duly constituted meeting.
An amended bye-law will be effective if it is approved by the owners
representing at least two-third of the total number of units in the building.
• A modified or an amended bye-law shall be valid only if an amendment to the
declaration is made.
Procedure for amending a by-law:
• Conduct a general meeting on an annual basis.

• A resolution will be passed by a majority of the 3/4th of the members who are
present.
• The two-third of members should not be less than one-third of the total
members in the society.
• Every change in the memorandum of the association as approved shall be
filed with the registrar within 30 days. Such change shall not have effect until
it has been registered.
• The committee should also submit four copies of the existing bye-laws along
with the resolutions passed by the annual general meeting.
• The registrar will register the amendment upon satisfaction that the
amendment does not contravene any act or rules that guide the functioning of
a co-operative society.
 • The Registrar will issue a certificate of registration along with the certified
copy of the amendment.
By-laws for keeping pets
According to the Constitution of India, an apartment should not ban the keeping of animals
in an apartment, with Section 11 (3) mentioning about the Prevention of Cruelty to Animal
Act, 1960. It is also against article 51 A (g) of the Indian Constitution wherein, it is the duty
of every citizen to have compassion towards animals, living creatures and improve the
natural environment.

MODULE 4

MODULE 4

LAND ACQUISITION LAWS

Land Acquisition is simply the process by which the Government can acquire private
land. This may include any other private property. It is usually done for the purpose of
public work building infrastructure, urbanisation, development and industrialisation.
Government can also acquire land for private firms for setting up factories or other
industrial setups. Purchase of land is a contract between willing buyer and willing seller,
while in case of land Acquisition the land owner has no choice. This is the reason right to
property is not a fundamental right.

Land acquisition by a state is rooted in the concept of Eminent Domain. As per this doctrine,
the state can do anything in public interest. It is based on two Latin political concepts –

- Welfare of public is paramount

- Public necessity is greater than private necessity

The idea of Land Acquisition in India is based on Eminent Domain. The state has the right
to acquire any private property for the public use. Right to property was a fundamental right
till 1979 when the 44th amendment reduced it to a constitutional or legal right. As per the
amendment, “no person shall be deprived of his/her property save by the authority of law”.
Hence remedy in case of right to property in India is available through High court and not
the supreme court. No law that deprives the right to property can be challenged. However
as per the constitution, no land can be acquired by the state without compensation. Land
Acquisition is a concurrent subject.

Land Acquisition in India occurs in three ways

- Acquisition through Land Acquisition Act 2013

- Through various other Acts
- Through negotiation
Also called Land Acquisition Act 2013, Right to Fair Compensation and Transparency in
Land Acquisition, Rehabilitation and Resettlement Act, 2013 is the main law that regulates
land acquisition and establishes rules and regulations for granting compensation,
rehabilitation and resettlement to the affected people in India. The act replaced the Land
Acquisition Act, 1894. It is the principle law concerning land acquisition and compensation
to the land owners. The law followed the massive industrialization and liberalization in the
country. The law was brought in due to absence of cohesive law for compensation and fair
rehabilitation.

Some features of the Land Acquisition Act 2013 are:

- No consent from owners is required for land acquired for public purposes.
- Consent from 80% of affected families is required for land acquired for private
companies and from 70% for private-public projects.
- The act requires Social Impact Assessment to be done before acquiring any land.
SIA will assess if potential benefits would outweigh the social cost.
- The owners will have to be compensated for the land and have to be rehabilitated
and resettled if needed.
- There is an urgency clause in case of national defence and natural disasters
- The act forbids land acquisition when the land is a multi crop irrigated area.
- If the land is not used in five years it returns to the owners

Right to fair compensation and transparency in Land Acquisition, Rehabilitation, and

Resettlement Act, 2013

The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and
Resettlement Act, 2013 (also Land Acquisition Act, 2013) is an Act of Indian Parliament
that regulates land acquisition and lays down the procedure and rules for granting
compensation, rehabilitation and resettlement to the affected persons in India. The Act has
provisions to provide fair compensation to those whose land is taken away, brings
transparency to the process of acquisition of land to set up factories or buildings,
infrastructural projects and assures rehabilitation of those affected. The Act establishes
regulations for land acquisition as a part of India's massive industrialisation drive driven by
public-private partnership.
With effect from January 1, 2014, the Central Government passed Right to Fair
Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement
Act, 2013 (“New Act”)” repealing the century-old colonial Land Acquisition Act 1894
(“Old Act”).

Main features of RFCTLARR Act

• Public purpose: It defines various types of “public purpose” projects for which,
Government can acquire private land.
• Consent: Prior-consent shall be required from 70% of land losers and those working
on government assigned lands only in the case of public-private partnership projects
 and 80% in the case of private companies. This consent also includes consent to the
amount of compensation that shall be paid.
• Compensation: It proposes the payment of compensations that are up to four times
the market value in rural areas and twice the market value in urban areas.
• R&R: This is the very first law that links land acquisition act and the accompanying
obligations for resettlement and rehabilitation.
• Retrospective operation: To address historical injustice the Bill applies
retrospectively to cases where no land acquisition award has been made.
• Return of unutilized land: Land not used can now be returned to the original
owners if the state so decides.
• Share in the sale of acquired land increased: The share that has to be distributed
among farmers in the increased land value (when the acquired land is sold off to
another party) has been set at 40%.
• Income-tax Exemption: All amounts accruing under this act have been exempted
from income tax and from stamp duty.
• Strict restrictions on the multi-crop acquisition: The acquisition of agricultural
land and multi-crop land has to be carried out as a last resort. There will be definite
restrictions on the extent of acquisition of such land in every state to be determined
by the States concerned.
• Acquisition only if necessary: The Collector has to make sure that no other
unutilized lands are available before he moves to acquire farm land.
• Share in developed land: In case their land is acquired for urbanization purposes,
20% of the developed land will be reserved and offered to these farmers in
proportion to the area of their land acquired and at a price equal to the cost of
acquisition and the cost of development.
• Fishing rights: In the case of irrigation or hydel projects, affected families may be
allowed fishing rights in the reservoirs.
• Time-bound social impact assessment: The Bill mandates a social impact
assessment of every project which must be completed within a period of six months.
• Appraisal of social impact assessment report by an expert group:
o The government has to constitute an independent multidisciplinary Expert
Group
o The Expert Group shall include two non-official social scientists; two
representatives of Panchayat/Gramsabha. /Municipality or Municipal
Corporation, two experts on rehabilitation and a technical expert in the
subject relating to the project.

TOWN PLAN
Town and Country Planning Organization was set up by Pandit Jawahar Lal Nehru in
1955 to formulate the first master plan for Delhi.
The growth of urban population in India soared up from 17.6 percent in 1955 to 32.4
percent in 2016! The Town and Country Planning Organization (TCPO) has been
contributing to this remarkable transfer of people from rural to urban cities in the last 20
years
TCPO aimed at balancing the urban growth by dispersing the population in smaller urban
centres
Also called Urban Development, Town and Country Planning involves formulating
master plans for the development of cities. Town and Country Planning Organization was
set up by Pandit Jawahar Lal Nehru in 1955 to formulate the first master plan for Delhi.
Instruments of Urban Planning such as progressive land policy, functional land use, zoning
regulations, etc. have been working in collaboration for the growth and development of
cities, considering the social, cultural, economic, political, ecological and physical factors
of the population. The government spends hundreds of crores for the planning and
development of towns. Let’s have a look at how this has transformed our country.
First Five-Year Plan (1951-56) was initiated owing to a substantial increase in urban
population during World War 2 mainly for housing and rehabilitation of refugees from
Pakistan. As a result, a number of rehabilitation towns and colonies were set up in cities
like Delhi, Bombay, Ahmedabad, Uttar Pradesh, Haryana, Punjab, and Calcutta. It was the
same period when the city of Chandigarh was created which came to be known as “the
modern India”. Second Five Year Plan (1956-61) introduced the concept of Regional
Planning and emphasized the importance of master plans. It called for the construction of
Housing for low-income groups. This gave rise to Town and Country Planning legislation
and institutions were set up for the preparation of master plans in different states.

The following developments since the establishment of Town and Country Planning
Authority must be noted.

1.Urban Population:
The growth of urban population in India soared up from 17.6 percent in 1955 to 32.4
percent in 2016! The Town and Country Planning Organization (TCPO) has been
contributing to this remarkable transfer of people from rural to urban cities since 20 years.
It is forecasted that by 2030, one-third of the population would be living in urban areas.
For a fact, India today has the second largest urban population in the world.
2. Prevention of Growth of Slums:
Local Authorities were strengthened to efficiently enforce the implication of building
codes and municipal by-laws. As a result, slums in various cities were cleared and people
were rehabilitated, increasing the urban population further.

3. Master Plans
Authorities such as Delhi Development Authority (DDA), Mumbai Metropolitan
Regional Development Authority (MMRDA) and Madras Metropolitan Development
Authority (MMDA) were set up in order to create and implement master plans. These
Master Plans featured designing of land use with future perspective, decent housing for
everyone, modernized Central Business District, efficient highway and transportation
systems and adequate community facilities with residential areas divided into the
neighbourhood. This concept defeated the traditional mixed-land use norm prevailing in
India. Huge amounts were invested in the development of cities like Gandhinagar in
Gujrat and Bhuvaneshwar in Orissa.
4. Balanced Urban Growth:
TCPO aimed at balancing the urban growth by dispersing the population in smaller urban
centers. This was done to prevent the concentration of population in metropolitan cities
like Delhi, Bombay, Calcutta, and Madras. This led to the establishment of Housing and
Urban Development Corporation (HUDCO) in 1970 to provide loans to Urban
Development Authorities and State Housing Boards, for housing and development
projects.

5. Controlled Land Prices:

Priority was given to the development of cities with the population ranging between
50,000-3,00,000, according to the Task Force. Besides, the sites and services scheme for
making serviced land available to the poor was launched. Amidst all these developments,
the land prices were spiralling. To control this, measures like differential taxation on land,
higher taxes on vacant lands, conversion taxes on change of land use and increased stamp
duty on transfer of lands were introduced.

6. Equitable Distribution
Urban Land (Ceiling and Regulation) Act, 1976 was introduced to prevent the urban land
to be concentrated in the hands of a few. This ensured equitable distribution of land
among all social classes. The ceiling was fixed on the possession of urban lands in areas
like Mumbai and Delhi.

7. Catering to Small towns:

The scheme of Integrated Development of Small and Medium Towns was launched with
the objective of promoting development in towns with a population less than 1,00,000, by
providing infrastructural and basic services. This further led to small scale employment,
water supply schemes, drainage and sanitation facilities, medical facilities, parks, and
playgrounds, etc. in 231 towns.

MASTER PLAN

With rapid urbanization and growth of the city, urban planning has received a major
importance. This planning is done at various hierarchies to integrate a large region with a
small area so that the development is done at a same pace. There are many legal documents
made to promote development. Master plan is one such document which provides rules and
guidelines for a planned development both at present and future.
Urban areas have grown in both size and complexity over the decades and became
unmanageable in most of the places. The need of having a mechanism or a way to regulate
this growth was felt and thus methods were devised to regulate or “shape” this growth.
Having master plan is one of such attempts. Other methods include development places
called as “City Development Plan”, Town Planning Schemes, Land Use Plans, Zonal Plans,
various other “spatial” plans made by concerned authorities.
What is a Master Plan?
It is an instrument to work out land and infrastructure requirements for various urban and
rural uses, and allocate land for various uses to result in harmonious and sustainable
distribution of activities so that towns / cities are provided with a form and structure within
which they can perform all their economic and social functions efficiently and effectively.
The purpose of a Master Plan is to promote growth and guide and regulate present and
future development of towns and cities with a perspective of 20-25 years.
Basic Characteristics of Master Plan
• It’s a Physical plan: the plan is fundamentally a guide to the physical development
of the community;
• It is long ranged: involves long term planning;

• It is comprehensive: encompasses all the functions that make a community work,

such as transportation, housing, land use, utility systems, and recreation. Moreover,
the plan considers the interrelationships of function;
• Guide to decision making: for the planning board, the governing board and mayor
or manager;
• Statement of public policy: The plan translates community values, desires, and
visions into land use and development principles that can guide the future growth
of your community.
Concept of Master Plan
Master Plan is comprehensive that is it integrates various aspects of planning like housing,
transportation, infrastructure etc.
• Multidisciplinary in nature: it encompasses various disciplines of studies like
social aspects, economics, environment, engineering, architecture etc.;
• Master plan is a long-term document. It clears out the vision for prospective year
for the city and plans out development for future;
• Master plan focuses on rational use of land that is demarking land for the use most
optimal for the activity at a place. It efficiently uses resources to meet the present
and future requirements of the citizens;
• Master plan should consider the environmental and costs related to it. The proposals
for development should be environmentally sustainable.;
• Master Plan is based on inclusive planning. It considers all sections of people in
society in development proposals and focuses on affordability.;
• Master plan gives restrictions on ecologically sensitive areas, on heritage sites and
traditional built up areas and gives special norms for these places.;
• Master Plan leads to a balanced growth of the city. It prevents concentration of a
particular activity at one place and takes into account efficient distribution of
facilities, infrastructure, networks and housing and follows neighbourhood concept
of development.
Process of Master Plan preparation

• Legal Process
 A statutory backing is needed to prepare any legal plan so that it can be implemented
on ground. It is governed by principles, statutes, and codes which is derived from
the state. Various legislations which provide legal backing are: Development
authority act; urban improvement trust act; Town and country planning act. The
need for statutory backing is that it gives power to exercise police power and power
of eminent domain. Any construction which does not follow master plan can be
given court notice and demolished. Most of the planning processes taking place
follows rational planning model.

• Technical Process
It includes the framework of working in order to prepare a plan starting from
defining goals to monitoring. Master Plan preparation is based on the “Systems view
of planning” which involves instrumental rationality. The stages and steps followed
by a particular authority or the concerned plan making body might differ.
Complexity of the city and the organisation itself has a direct impact on the process
adopted.
• Public process
Involving community in plan preparation is one of the most important components
in plan making as they are better verse of their local issues and solutions. In India
public participation is in the form of public hearing. This process is also called
as “Public Participation” or “Public Hearing”. The whole aim of having a master
plan growth of area for the residents of the place thus it becomes essential to take
their views, objections and suggestions into account.

• Management process
Planning process is to be managed taking care of the resources like time manpower,
internal organization of departments and working relationships and coordination
among various departments and planning agencies. The number of stakeholders at
times are numerous as in case of metropolis where the division of work is precise
and given to different “boards” or other subdivision of concerned departments. This
classification makes it integral to take into account all the concerned departments
and agencies and thus their management.

Weakness of Master Plan

Master Plan is a future plan document which uses the present data or maybe past data for
future projections. So, it is outdated by the time it gets implemented; Usually no physical
surveys are conducted each time a master plan is made; It is a rigid document.; Lack of
implementation on time; Lack of actual public participation; Often the coordination
between various agencies is missing which leads to poor
DEVELOPMENTAL AUTHORITIES

In India, Development Authorities have come into existence, out of the need to tackle
growing housing problems and poor infrastructure. It was envisaged that the development
authorities will help to plan, implement & co-ordinate development activities in a structured
way. After the constitution of urban development authorities, the actual implementation of
urban projects and master plans has started.

Several urban development authorities have been established by various state governments
to provide housing, infrastructure, and amenities to its ever-growing population.

The first to come up was the Delhi Development Authority (DDA) in 1957, for the Delhi
metropolitan area. Similarly, the Haryana Urban Development Authority – HUDA in 1977
and the Maharashtra Housing and Area Development Authority (MHADA) in 1976 was
established to accelerate the process of planned development.

Delhi Development Authority (DDA)

The Development Authority in Delhi – DDA known as Delhi Development Authority was
constituted in 1957 under the provisions of the Delhi Development Act. The primary
objective of DDA is to promote and secure the development in Delhi.

Under section 6 of the Delhi Development Act, 1957, DDA has provided a charter with the
following objectives:

• To formulate a Master Plan for the development of Delhi and work accordingly;
• To possess, manage and dispose of land and other property;
• To carry out building, engineering, mining, and other operations
Over a period of time DDA has not only undertaken housing projects but has also developed
commercial complexes, sports facilities, public transportation systems, parks &
playgrounds.

The Authority believes in “Green Delhi” and works with the objective to protect the
environment by retaining green belts and forests. Realizing the importance of Delhi`s place
in national development, DDA along with other state authorities is playing a vital role in
the development of the National Capital Region (NCR).

U.P. Development Authority

Rules and Function of Development Authority

The Objects of Authority

The objects of the Authority shall be to promote and secure the development of the
development area according to the plan and for that purpose the Authority shall have the
power to acquire, hold, manage and dispose of land and other property, to carry out
building, engineering, mining and other operations, to execute work in connection of supply
of water and electricity, to dispose of sewage and to provide and maintain other services
and amenities and generally to do anything necessary to expedient for purpose of such
development and for purpose of incidental thereto:

Provided that save as provided in the U.P. Urban Planning and Development act nothing
contained in this Act shall be construed as authorizing the disregard by the Authority of
any law for the time being in force.

The function of the Authority is governed by:

1. Uttar Pradesh Urban Planning and Development Act 1973.

2. U.P. (Regulation of Building Operations Act) 1958.

3. Decisions of Development Authority’s Board.

4. Other By‐laws prepared.

5. Allotment Rules for plots and houses.

Development Authorities: Issues & Challenges

Since their inception, development authorities have undergone various changes to cater to
the dynamic needs of growing cities. Post liberalization of economy (after 1992) saw
increased demand for industrialization, commercial activities, and infrastructure. Through
efficient planning & better utilization of available resources, they have been able to play
greater role in urban development by implementing various development projects such as
housing, roads, flyovers, metro rail, etc. Also, the focus is on the green initiative to provide
a clean & healthy environment to its population.

As India is fast developing the economy, rapid development is essential to fuel the growth
engine. To do this, smart planning and quick implementation of development activities are
of prime importance.

Unfortunately, multiple agencies are involved in the development of the same area, city,
and region. Lack of clear division of responsibilities often leads to a multiplicity of the role
and over-lapping functions resulting in wastage of time and resources, thus duplication of
work & long delay in project implementation.

Various agencies involved in city development are as follows:

• Development Authority.
• Municipal Corporation /Municipality.
 • Town Planning Agency.
• State industrial corporations.
• State housing & urban development agencies.

Involvement of multiple agencies often leads to poor coordination. The multiplicity of

authority and lack of coordination results in poor decision making & delay in the
implementation of development plans. This poses a big challenge before development
authorities in fulfilling their objectives in the most effective and efficient way.

EASEMENTS

Meaning and nature of Easements

The concept of easement has been defined under Section 4 of The Indian Easements Act,
1882. According to the provisions of Section 4, an easementary right is a right possessed
by the owner or occupier of the land on some other land, not his own, the purpose of which
is to provide the beneficial enjoyment of the land. This right is granted because without the
existence of this right an occupier or owner cannot fully enjoy his own property.

It includes the right to do or continue to do something or to prevent or to continue to

prevent something in connection with or in respect of some other land, which is not his
own, for the enjoyment of his own land.

The word ‘land’ refers to everything permanently attached to the earth and the words
‘beneficial enjoyment’ denotes convenience, advantage or any amenity or any
necessity. The owner or occupier referred to in the provision is known as the Dominant
Owner and the land for the benefit of which the easementary right exists is
called Dominant Heritage. Whereas the owner upon whose land the liability is imposed
is known as the Serviant Owner and the land on which such a liability is imposed to do or
prevent something, is known as the Servient Heritage.

Illustrations-

1. ‘P’ being the owner of certain land or house has a right of way over Q’s house,
adjacent to his house, to move out of the street. This is known as right of
easement.
2. A voluntary dedication of right by ‘X’ to the public for passing or re-passing
over a surface of certain land is not a right of easement.
 3. X’s right to go on his neighbour Y’s household for fetching water from the well
for the purpose of his own household is a right of easement. Here, the way to
the well is through Y’s land only. Hence, X has an easementary right to pass
through Y’s household.
In the words of great jurist Salmond, easement is that legal servient which can be
exercised on some other piece of land specifically for the beneficial enjoyment of one’s
own land. Right of easement is basically a form of privilege, the integral part of which is
to do an act or prevent certain acts on some other land for enjoyment of one’s own land.

Other examples of right of easement includes-

• Right of way
• Right to discharge rainwater
• Right to sunlight etc
ESSENTIALS OF EASEMENTS

1. Dominant and Servient Heritage

For the enjoyment of right of easement, necessary existence of two properties i.e dominant
and servient heritage is a must. This is because as per the definition, it is the right
exercised by the owner or occupier of one land for enjoying the benefit of his/her land, over
the land of some other person. Dominant and servient heritage cannot be one. Thus, the
existence of two properties and that to be separate from each other is essential.

2. Separate owners

For exercising the right of easements, owners of the two properties shall be different and
not a single person.

3. Beneficial Enjoyment

The object of easements is that the dominant owner enjoys it in a way which includes
express and implied benefits.

4. Positive or Negative

Easements can be both positive or negative. Former refers to a right through which the
dominant owner does some act to exercise the right over the land of the servient owner.
Whereas, the latter denotes an act of prevention. In a negative easement the dominant owner
prevents or restricts the servient owner from doing certain act or acts.

In a right of easement an owner of dominant heritage can do an act or prevent the servient
owner from doing something but he cannot bind the servient owner to do something for
him.

The easementary right exists only when two heritages are adjacent to each other. It is a right
in rem, which means a right available against the whole world. Easement as a right is
always annexed to the dominant tenement. It is a right of re-aliena which means a right
over a servient tenement and no on one’s own land.

Classification of Easements
Section 5 of the The Indian Easements Act, 1882 classifies the easements as follows–

• Continuous or Discontinuous

Continuous easements are the one whose enjoyment may be continued without the
intervention of any human conduct or act of a man. There is no interference by a man and
it adds special quality to the property.

• Apparent or Non- Apparent

An apparent easement is one the existence of which can be seen through a permanent sign.
It can be visible by a careful examination and on reasonable foresightedness. It is also
known as express easement. An inspection is required to check the existence of a right.

Whereas, a non-apparent easement is just opposite of what apparent easement is. This kind
of easement is not visible through an inspection. There is no permanent sign as such. The
right is in use but is not visible and thus, is known as an invisible easement.

ENVIRONMENT CLEARANCE

The environmental clearance process is required for 39 types of projects and covers aspects
like screening, scoping and evaluation of the upcoming project. The main purpose is to
assess impact of the planned project on the environment and people and to try to
abate/minimise the same.
The process consists of following steps:

• Project proponent identifies the location of proposed plant after ensuring compliance with
existing siting guidelines. If project site does not agree with the siting guideline, the
proponent has to identify other alternative site for the project

• The project proponent then assesses if the proposed activity/project falls under the
purview of environmental clearance. If it is mentioned in schedule of the notification, the
proponent conducts an EIA study either directly or through a consultant. If the project falls
in B category, the project goes to state government for clearance which further categorise
into B1 and B2 projects. B2 projects doe not require preparation of EIA reports.

• After the EIA report is ready, the investor approaches the concerned State Pollution
Control Board (SPCB) and the State Forest Department (if the location involves use of
forestland). The SPCB evaluates and assesses the quantity and quality of effluents likely to
be generated by the proposed unit as well as the efficacy of the control measures proposed
by the investor to meet the prescribed standards. If the SPCB is satisfied that the proposed
unit will meet all the prescribed effluent and emissions standards, it issues consent to
establish (popularly known as NOC), which is valid for 15 years.

• The public hearing is a mandatory step in the process of environmental clearance for
certain developmental projects. This provides a legal space for people of an area to come
face-to-face with the project proponent and the government and express their concerns.

The process of public hearing is conducted prior to the issue of NOC from SPCB.

• The project proponent submits an application for environmental clearance with the MoEF
if it falls under Project A category or the state government if it falls under project B
category. The application form is submitted with EIA report, EMP, details of public hearing
and NOC granted by the state regulators.

• Environmental appraisal: The documents submitted by an investor are first scrutinised by

a multi-disciplinary staff functioning in the Ministry of Environment and Forests who may
also undertake site-visits wherever required, interact with the investors and hold
consultations with experts on specific issues as and when necessary. After this preliminary
scrutiny, the proposals are placed before specially constituted committees of experts known
as Environmental Appraisal Committees and these committees meet regularly to appraise
the proposals received in the Ministry.

• Issues of clearance or rejection letter: When a project requires both environmental

clearance as well as approval under the Forest (Conservation) Act, 1980. Proposals for both
are required to be given simultaneously to the concerned divisions of the ministry. The
processing is done simultaneously for clearance/rejection, although separate letters may be
issued. If the project does not involve diversion of forest land, the case is processed only
for environmental clearance.

Once all the requisite documents and data from the project authorities are received and
public hearings (where required) have been held, assessment and evaluation of the project
from the environment angle is completed within 90 days and the decision of the ministry
shall be conveyed within 30 days thereafter. The clearance granted shall be valid for a
period of five years for commencements of the construction or operation of the project.

PUBLIC HEARING

Involvement of the public is one of the fundamental principles of a successful EIA process.
It not only provides an opportunity to those directly affected by a project to express their
views on the environmental and social impacts of the proposal but also brings about
transparency in the environmental clearance system. Nearly all EIA systems make some
sort of provision for public involvement. This could be in the form of public consultation
(or dialogue) or public participation (which is a more interactive and intensive process of
stakeholder engagement).

Most EIA processes are undertaken through public consultation rather than participation.
Public consultation refers to the process by which the concerns of the local people regarding
the adverse impacts of a project are ascertained and taken into account in the EIA study.
This concept was legally introduced in India in the form of ‘public hearing’ in 1997. Since
then the public hearing process has been conducted as a mandatory step of environmental
clearance for most projects and activities.

The public consultation process ensures an equitable and fair decision-making process
resulting in better environmental outcomes. The type of consultation, whom to consult
during EIA activities, when and how to do so and who should do it all vary significantly
from project to project. This depends on the needs of the project. However, it is an
important component for all kinds of project. This is because public consultations help allay
the concerns of the local community, and reduce inaccurate information in the EIA report.

Ideally public consultation should start from when the idea of the project is conceived and
continue throughout the course of the EIA. The five main stages when public involvement
can take place in the EIA process are screening, scoping, impact analysis and mitigation,
review of EIA quality, and implementation and follow up.

In India, the role of the public in the entire environment clearance process is quite limited.
Public consultation happens at a very late stage when the EIA report is already prepared
and the proponent is about to present it to the review committee for clearance. This means
that the EIA study is unable to take into account the concerns and issues important to public.
Even if the members of the community raise certain issues in the public hearing process,
they have no means of knowing if it actually gets addressed in the final EIA report as they
have no access to it. There are several weaknesses in the public hearing process as it exists
now. Instead of becoming a participatory forum it has become a mere procedure.

There was a chance to address some of these weaknesses in the new notification and give
more teeth to the entire public hearing process. However, there is very little improvement
in the new notification, instead it has now added a provision which makes it possible to
completely forego the public hearing process if the situation is not conducive for
conducting hearing as felt by the local administration. This provision can be misused to
further limit the role of the public in the entire process.

There have been several cases in the past that have shown that the public hearing process
has failed to meet its objective of effectively involving people in the clearance process.
Several means have been devised to keep the public away such as poor circulation of notice,
politics, etc.

SAFETY AND DISASTER MANAGEMENT PLAN

India has been traditionally vulnerable to natural disasters on account of its unique geo
climatic conditions. Floods, droughts, cyclones, earthquakes and landslides are regular
phenomenon.

A disaster is defined as a serious disruption of the functioning of the society, causing wide
spread human, material or environmental losses which exceed the ability of the affected
society to cope using its own resources. Risk is a measure of the expected losses due to
hazard of a particular magnitude striking in a given area.

Risk can be reduced in two ways:

A. Preparedness: It encompasses all those measures taken before a disaster event which
are aimed at minimizing loss of life, disruption of critical services and damage when the
disaster occurs. Thus, preparedness is a protective process which enables governments,
communities and individuals to respond rapidly to disaster situation and cope with them
effectively.

B. Mitigation: It encompasses all measures taken to reduce both the effect of hazards itself
and the vulnerable conditions in order to reduce the losses in future disaster.

Emergency Response Plan (ERP)

The overall objective of an Emergency Response Plan (ERP) is to make use of the
combined resources at the site and outside services to achieve the following:

• To localize the emergency and if possible, eliminate it;

• To minimize the effects of the accident on people and property;

• Effect the rescue and medical treatment of casualties;

• Safeguard other people;

• Evacuate people to safe areas;

• Informing and collaborating with statutory authorities;

• Initially contain and ultimately bring the incident under control;

• Preserve relevant records and equipment for the subsequent enquiry into the cause and
circumstances of the emergency;

• Investigating and taking steps to prevent reoccurrence

The ERP is therefore related to identification of sources from which hazards can arise and
the maximum credible loss scenario that can take place in the concerned area. The plan
takes into account the maximum credible loss scenario - actions that can successfully
mitigate the effects of losses/ emergency need to be well planned so that they would require
less effort and resources to control and terminate emergencies, should the same occur. Main
hazards identified for the project include hazards pertaining to fires in buildings and fire in
diesel storage areas, earthquake and LPG leakage and an ERP pertaining to these is
described in the following section.

CARPET AREA

Carpet area is the area that can actually be covered by a carpet, or the area of the
apartment excluding the thickness of inner walls. A Carpet Area is the area calculated
from wall to wall inside the house and Built up area is the carpet area + area covered by
the thickness of walls+ balconies etc.

Carpet area does not include the space covered by common areas such as lobby, lift,
stairs, play area, etc. Carpet area is the actual area you get for use in a housing unit.

So when you are in search of a house, look at the carpet area and then make your
decision, because that is the number that will give you an idea of the actual space at your
disposal.

Focusing on the carpet area will help you understand the usable area in the kitchen,
bedroom, living room, etc. Nowadays, many builders do not even mention carpet area at
first and usually charge on the basis of built-up area or super built-up area. Carpet area is
usually around 70% of the built-up area.

COVERED AREA

The covered area is the actual area of an apartment which is also considered as
Gross area.
Built up area of a property unit that is covered by roof and supported from ground,
measured at any floor level.

It includes:

- Covered Floor area

- External and Internal Walls
- Utility Ducts and Recesses that are covered.
- Supported Balconies, parches.

Excludes:

- Cantilevered Balconies, Parches etc.

- Other Cantilevered structures – Lofts, Sunshades etc.
- Projections of terrace not forming a storey – Towers, Domes etc.

SETBACK

Setback can be explained as the minimum open space required around any building or
structure. Municipal regulations provide that a specific distance should be maintained
between a building and the boundary of the plot on which the building is being constructed.
This distance is necessary to ensure so that the structure stays away from roads, water
bodies or other buildings. Setbacks are required at the front, rear and sides of buildings and
the specifications vary from one area to another.

What is the importance of a setback?

• To ensure all buildings receive adequate natural light

• To ensure sufficient ventilation

• To protect entities such as water bodies located close to a building from being
adversely affected by the construction and human inhabitation

• To protect one building from the shadow of another, which would otherwise
obstruct adequate provision of ventilations and sunlight

• To protect buildings from noise-causing elements, such as nearby industries,

airports or highways

• To ensure easy access to the buildings

MODULE 5

Real Estate (Regulation and Development) Act, 2016 (RERA):

A recently promulgated legislation, RERA seeks to curb the shortcomings of respective
Ownership Acts prevailing in each state. A centre enacted legislation, RERA seeks to
provide uniform laws throughout the states, for protecting the interest of home buyers and
seeks to increase transparency in functioning of construction companies and reduce the
chances of default or misappropriation of funds by Builders.

RERA provides for establishment of following authorities/Tribunals:

• Real Estate Regulation Authority ("RERA Authority") in each state;
• Real Estate Appellate Tribunal in each state.
It seeks to provide for establishment of authorities/tribunals for providing mechanisms to
flat purchasers/home buyers for expeditious Redressal of complaints under the Act.
It basically and broadly provides for remedy for following breaches/contraventions by
Promoter/Real Estate Agent:
• Inviting/Offering for sale etc. without registration of project by
Promoter/Developer;
• Acting as agent or inducing/facilitating purchase by Home Buyer without
registration as Real Estate agent or project being registered with Real Estate
Authorities;
• Any unfair practice being adopted by Promoter/Developer/Real Estate Agent;
• Violation of terms and conditions by Promoter/Developer subject to which approval
granted by Competent Authority;
• Adoption of fraudulent practice by Promoter/Developer;
• Violation of any provisions of the Act/Rules/Regulation.
CONSUMER PROTECTION ACT, 1986 (CPA):
CPA enacted to provide speedy Redressal mechanism to "CONSUMERS" under the CPA
by establishments of Forums at District, State and National level. CPA only applies in case
of CONSUMER alleges Unfair Trade Practice or Deficiency with respect to Goods or
Services. Each of the terms are well and broadly defined under the Act. The home buyers
were also included within the purview of the Act by interpreting the word "Services" under
the Act to include construction, since construction is also a service. Otherwise, transactions
in Immovable Properties are outside the ambit of CPA since they are not goods within the
meaning of the Act. Hence transaction relating to sale /exchange of Immovable Properties,
specific performance of the same, claim for damages for non-performance of agreement of
sale is outside the purview of CPA since Immovable Properties are not "goods" within the
meaning of the CPA.
INSOLVENCY AND BANKRUPTCY CODE, 2016 (IBC):
IBC was one of the most successful pieces of legislation promulgated by the Parliament to
provide a uniform code for Insolvency Resolution of all persons whether Individual,
Partnership Firm or Corporate entity. It contains different chapters for Insolvency of
different types of persons. For Corporate Entities it provides for Corporate Insolvency
Resolution Process (CIRP) for 6 months to provide an opportunity to revive the Corporate
Entity if Financial Creditors of the Company by requisite majority so agree by approving
Resolution Plan and to prevent further erosion of capital and if possible, to appreciate the
capital of the Company. If CIRP fails, the Company goes into liquidation and liquidation
in done in the manner provided in the IBC.

By virtue of recent amendment in August 2018, the Allottee's of project are considered and
are deemed to be Financial Creditors within the meaning of the Act. Hence they are entitled
to maintain Insolvency Application and in case of admission of Insolvency Application by
other Creditors, Financial or Operational, are entitled to participate and vote in meeting of
Committee of Creditors that is constituted.
Comparing Remedy Under Rera Vs CPA Vs IBC On Certain Parameters From Home
Buyers Perspective:

Sr. Basis RERA CPA IBC

No.
1. Time RERA has been It takes about It takes about 6 Months
formed recently 5-6 Years for for adjudication of
and it takes on Redressal of Insolvency Application
an average Grievance or and to admit the same
couple of years adjudication by Adjudicating
for Redressal of of dispute by Authority.
Grievances. Consumer
Forum.
2. Who can File? A A Consumer Since by recent
Purchaser/Home i.e., a person amendment in August
Buyer or who satisfies 2018, the Allottee of
prospective the Project is considered a
purchaser/Home requirement Financial Creditor, any
Buyer offered under Section person whether an
flat can file 2(d) of CPA Individual or Corporate
Complaint can file Entity can file an
irrespective of complaint. Insolvency Application
the fact that such Thereby only under Section 7 of IBC.
person is a person, Also, allottee who is
Corporate Entity typically competent to file
or Individual. Individual Application in my view
who enters can be both purchaser
into under Redevelopment
agreement for or existing
purchase of tenant/owner/occupant
Flat can file of Flat/Apartment.
complaint
when he
purchases the
same for his
 individual use
and residence.
3. Application/Complaint Complaint is to Complaint is Insolvency Application
to be filed before whom be filed before to be filed is to be filed before
Real Estate before Adjudicating Authority
Regulatory Consumer i.e.
Authority Forum having
established in territorial and a)National Company
each state by pecuniary Law Tribunal having
respective State Jurisdiction to territorial jurisdiction
government hear over the place where
where the Complaint. registered office of
project is Corporate entity is
situated. situated in case of
Corporate Entities;

b)Debt Recovery
Tribunal in the
territorial jurisdiction
of which individual
resides, carries on
business or personally
works for gain.
4. Appellate Structure A. Real Estate a)District a. National Company
under the Act. Regulatory Forum; Law Tribunal;
Authority; b)State b. National Company
B. Real Estate Forum; Law Appellate
Appellate c)National Tribunal;
Tribunal; Forum; c. Supreme Court.
C. High Court; d)Supreme *A writ petition under
D. Supreme Court. Article 226 & 227 can
Court. be preferred in
*A writ exceptional
petition under circumstances against
Article 226 & the decisions of the
227 can be Company Law
preferred in Tribunals.
exceptional
circumstances
against the
decisions of
the Forums.
5. Accessibility There are District NCLT is typically
typically as of Forums are constituted for each
now, one or two established in state and presides at
Real Estate every district one place in the state or
Regulatory of the State. one NCLT is
 Authority Furthermore, commonly empowered
offices in each State and is having
state which has Commission jurisdiction over two
constituted the presides in states.
Authority under capital of each
the Act. state and
sometimes
has benches in
other parts of
the State.
National
Commission
presides at
Delhi and has
circuit
benches in
various parts
of the Country
which are
rotating.
6. Execution/Reliefs Real Estate The Once, NCLT admits
provided Regulatory Consumer the Insolvency
Authority Forum has the Application, IRP
typically power to comes into the picture
exercise its execute its to manage the affairs of
power by way of own orders. the Company and in
an order to This makes case of failure of
impose fine, execution of Corporate Insolvency
deregister the orders also an Resolution Process
project, include expeditious ("CIRP") (In case of
the promoter in affair in Developer being a
list of defaulters, comparison to Corporate Entity),
direct regular suits Liquidation would be
completion of or execution commenced. NCLT
project in of orders monitors the entire
manner passed by process and time to
provided in various time, various reports
consultation Courts/Quasi- are required to be filed
with State Judicial with NCLT. In other
Government and Forums. Also, cases,liquidation would
pass appropriate since scope of be commenced by
orders incidental Consumer DRT.
thereto. Act is limited,
*Since Home the relief and
Buyers are consequently
particularly is execution is
interested in comparatively
completion and an
 handing over expeditious
possession of affair.
their flats,
RERA
Authority
provides for
stages wise
utilisation of
moneys paid by
them and a
separate account
to be maintained
for the purpose.
In case of
default to
complete project
or other non-
compliances,
RERA provides
for various
measures to
complete the
project and
empowers the
authority for the
same for that
home buyers are
not kept in lurch.
Also, it tries to
penalise
builders by
aforesaid
measures so that
they are
prevented and
discouraged
from
undertaking
further projects
when they do
not have
requisite
resources.

ANALYSIS OF PROVISIONS RELATING TO GRANTING OF RELIEFS UNDER

THE ACTS:
a. If person is a consumer and seeks performance of statutory obligation or
compensation in respect thereof, then Consumer Forum is a better and effective
remedy especially in case where Developer has financial ability to pay. Also, he
may file a complaint with RERA to blacklist Developer and other reliefs which
RERA can provide but consumer forum cannot.
b. If a person is not a consumer, then RERA would be more appropriate remedy.
c. If a person is not a consumer and seeks specific performance of statutory obligations
from Developer, his only remedy would be to file a regular suit. However, for
compensation and other reliefs he may approach RERA.
d. If Person, whether consumer or not, is seeking only return of his money, especially
when Developers financial position is deteriorating, then Insolvency Application
before NCLT would be appropriate remedy more so when its redevelopment of
property that does not involve many flat in sale component.
e. Also the more the project is closer to the verge of completion, RERA would be a
more effective remedy especially if Flat Purchaser/Home Buyer desires to obtain a
Flat and vice-versa coupled with the consideration that RERA can also provide
compensatory reliefs.
f. Insolvency can always be availed as an alternative remedy when a Flat Purchaser
feels that financial position of Developer is deteriorating and Developer will not be
able to complete the project and return the money with interest to be able to prevent
further deterioration. It will help to obtain recovery of maximum amount of money
invested along with Interest. Completion of project may take several years due to
various practical difficulties that may arise in the completion of project. Also
execution of order for payment of money will not have any fruitful result if
Developer does not have financial ability to pay it.
g. In terms of execution, Insolvency since being process to liquidate the assets of entity
or person will be a more lucrative remedy in case there is high probability that
Developer may not be in position to return the money invested. Consumer Forum
since having power to enforce their own orders also provide great remedy in case
where builder has completed construction but delayed possession or not complied
with statutory obligation to obtain reliefs in respect of both.
h. The Flat Purchaser/Home Buyer can always initiate criminal proceedings against
Developer against fraud or other criminal offences or acts committed by it.