Introduction
Buying or selling property, or investing in real estate, are some of the most important financial decisions in your life, and they are matters that require due legal consideration. Whether you are engaged in the transaction of a property or investment in property, you must understand the underlying legal context and consequences of the transaction to avoid future disputes and financial liability for your decisions. This guide will provide key property legal opinions on important topics related to transactions, due diligence, rights in real estate transactions, rental agreements, and dispute resolution.
Legal Aspects of Property Transactions
1. Title Verification & Ownership Verification
As a buyer, and before you enter into the purchase of any property, it is essential to verify the title to the property so that you can be sure the seller is the owner of the property. Whenever someone is contemplating a purchase of real estate, they should obtain a title report from a qualified legal professional to determine whether the property has any encumbrances, such as a legal or judgment liens, or any other mortgage, that might infringe on your interest in the property after purchase and, in general, whether the property is free and clear of any titles.
2. Sale Agreement & Registration.
A sale agreement should be carefully drafted to provide sufficient detail regarding the terms of the transaction. Once you have agreed to the terms of the sale and you have closed on the sale, the property is required to be registered in a legally enforceable manner at the office of the Sub-Registrar.
3. Stamp Duty and Charges of Registration.
Stamp duty and registration charges will vary across states in India, but the fees or stamp duty are required as part of the process of legalizing the transfer of a property. In general, a charge or stamp duty that is not paid could potentially cause complications to the transaction.
4. Encumbrance Certificate & Mortgage Liabilities
An encumbrance certificate is needed to verify that the property is without any financial liabilities or loans due/obligated on it. Before signing any agreement to purchase, buyers must ensure that the property is not mortgaged.
5. Property Inheritance & Succession Laws
In the case of a property that has been inherited, legal heirs must secure a succession certificate or a legal heir certificate to come into ownership of the property. Having documentation prevents disputes in claiming inheritance.
Property Due Diligence & Fraud Prevention
Conducting due diligence reduces property cycle fraud. The buyer should verify property documents such as property tax receipts, approved building plans, and land records to avoid fraud. Common scams in a property transaction include forged documents, selling the same property multiple times, and unauthorized encroachments. Speaking with a real estate lawyer or legal professional can protect your transaction.
Real Estate Investing: Legal Tariff & Best Practices
1. Choose the Appropriate Property for Investment
Consider the property location, market factors, and legal factors before you invest in either residential or commercial properties. If you are purchasing property registered with RERA, it may provide additional security for your investment.
2. Legal Due Diligence Checks for Safe Investing
Check the Land Title: To avoid issues later, ensure there are no legal issues with the title and that someone else isn't claiming property rights.
RERA Compliance: Under-construction projects are required to register with the RERA (Real Estate Regulatory Authority) register.
Tax Rules and Implications: Knowing your property tax obligations, capital gains tax, and GST on any real estate transaction is important for the investor.
Lease Agreements & Rental Compliance
1. Essential Clauses in Rental Agreements
A rental agreement must clearly define rent amount, duration, security deposit, maintenance charges, and eviction clauses. It should be registered for legal validity.
2. Rights and Obligations of Landlords & Tenants
Both landlords and tenants must adhere to rental laws regarding eviction, maintenance responsibilities, and rent escalation policies.
3. Legal Ways to Handle Rental Disputes
If disputes arise, parties can approach the Rent Control Court or engage in mediation. Legal Prime offers legal consultation for rental disputes.
Resolving Property Disputes
1. Common Property Disputes
Ownership Disputes: Arise due to unclear property titles or inheritance claims.
Boundary Issues: Disputes over property demarcation.
Tenant Conflicts: Disputes regarding rent, eviction, or lease violations.
2. Legal Options for Dispute Resolution
Mediation & Arbitration: A quicker and cost-effective way to resolve conflicts.
Civil Litigation: If mediation fails, legal proceedings in court may be necessary.
Legal Support from Legal Prime: Our experts assist in resolving property disputes efficiently.
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