Transfer of property - III

LEGAL ANGLE

The objective of parting with valuable consideration for acquiring rights in property can be broadly divided into the following: The right to exclusive use and occupation of property, and the right to further transfer and exploitation of property.

The first right may be acquired in perpetuity by acquiring ownership rights, or for a limited period by acquiring lease or licence rights. The second is critical from the point of view of an investment into a valuable asset.

Historically, property is acquired as an investment and adds to the wealth of the owner. Property can be left to one's heirs, used as collateral to raise money, or sold to raise money.

A person acquiring rights to property often fails to fully appreciate the second objective, which results in thoughts of saving stamp duty, not registering the required document, or in some cases not even completing one's title by availing of some "shortcuts" as described in the previous article.

As it happens, the rectification of lacuna in obtaining title may result in significantly higher costs and effort at a later stage, and can even result in the loss of property itself.

This could happen pursuant to a claim by the seller, or his successors, who still retain some rights in case of an incomplete transfer laying claim to rights in the property and demanding further consideration; it may be that the document cannot be introduced in evidence in a legal proceeding in which the property is in issue if stamp duty is not paid on the document, at which time the Court can impound the document and have it adjudicated for payment of proper duty and penalty and require such payment; it could be that title never passes if the document is not registered, or if the lessors (in case of lease) consent is not obtained as required in terms of the lease in question.

Hence, it is worthwhile paying that little extra when acquiring the rights in the property by ensuring clear title, and paying duties, charges and taxes involved in obtaining complete title.

(Anand Desai is partner with Mumbai-based law firm DSK Legal. He will address queries, which can be sent to real.estate@business-standard.com )