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Duty To Disclose Material Defect In The Property Or Title
By Gajanan Khergamker

It is generally the prerogative of the buyer to find out the defects in a property before buying it and also to make the seller rectify such defects.

However, the rights of the buyer to seek reasonable clarification and raise reasonable doubts have been statutorily recognised by section 55 (1)(a) to (c) of the Transfer of Property Act (TOPA).
It is statutory duty of the seller to disclose to the buyer about the material defect in the property of title.

The defects are of two types, patent defect and latent defect.
Patent defect is one which is apparent and can be discovered by the purchaser with ordinary care. For example, dilapidated condition of the property, use of right of way by the third party etc.
Generally, the patent defects, which are within the knowledge or without the knowledge of seller, are covered by the maxim caveat emptor, and it is for the buyer to know such defects.

Latent defects are those which the purchaser cannot discover with ordinary care. The seller is duty bound to disclose such defects to the buyer. For ex: underground drainage, pipelines laid for public drainage/water supply etc.

Material defect in one which is known by the purchaser he general would not prefer to buy the property or something which is never intended to be brought from the seller in terms of nature of the contract.

What defect constitute a material defect is a question of fact and depends on the facts and circumstances of each case. (Sec 55 (1) (a) of the TOPA).

Verify Title Before Investing In Property
By Gajanan Khergamker

Before investing in property, it is advisable to appoint a legal consultant to inspect the original title documents of the property being purchased. If the title is not clear, there may be a huge number of complications arising in future.

Firstly, no bank would provide a loan against a property without a clear title. It may be difficult to transfer share certificate of the society to your name and selling of property will not be simple either. Here goes a check list of documents that you should verify before buying a property.

You need to have the Conveyance Deed or Sales Deed in place. This is a deed document by which the title of the property is conveyed by the seller to the purchaser. Conveyance is the act of transferring ownership of the property from a seller to the buyer.

This document will help you ascertain whether the property which you are buying is on land belonging to the society/builder/development authority in which the property is located.

And then, there’s the 7/12 extract which is a document issued by the Tehsildar or the concerned land authorities giving details such as the survey numbers, area, date from which current owner is registered as owner.

There’s also the Index II - a document issued by the office of the Sub-Registrar of Assurances which mentions the name of the seller and purchaser of a property for which the document is registered.

The buyer may need to get a Search Report, which is a search of the title of the property is taken for a period of the last 30 years. This search report and title certificate can be obtained from one’s own advocate or if the search has already been conducted by the current owner then one can have his/her advocate inspect these reports to ascertain the title of the property.

If the land under consideration is agricultural and if one intends to develop the said land for residential / commercial / industrial use, then such agricultural land has to be converted to non-agricultural land and a Non Agricultural Order has to be obtained from the Collector of the District where the property is located. With this, one needs to take the latest receipts evidencing the payment of Non Agricultural Tax.

In cases done within the stipulated period then, there should be an order from the concerned authority extending the period.

Apart from these, you need to get a few more documents pertaining to the project / building in place. You need to get a Development Agreement in place. This is an agreement entered into by the builder with the landowner. It contains details regarding the terms and conditions on which the landowner has permitted development of his property. This is where the landowner engages a third party (i.e. the developer/builder) to develop and build on their plot of land. This agreement is generally accompanied by a Power of Attorney in favour of the Developer/builder.

An Approved Building Plan made by the Developer/builder needs to be approved by the Municipal Corporation or the concerned authority. The approved building plans need to be checked necessarily.

There’s also the Intimation of Disapproval (IOD) issued by the local municipal corporation or any other local authority pertaining to any city or district to the developer/builder intimating that the proposed plan submitted by the developer/builder is disapproved to the extent of details mentioned in the said IOD. This Commencement Certificate is given by the municipal corporation permitting the developer/builder to begin construction. This is done once the plans have been approved.

This Completion / Occupation Certificate is given by the concerned authorities to the developer/builder once the said building is complete in all respects and fit for occupation.

A Gift Of Property Invites Stamp Duty 
By Gajanan Khergamker

Very often,a property is transferred by way of a gift and it is very vital to understand the significance of the transaction,as it stands starkly opposed to a sale or a lease.Under the Transfer of Property Act, 1882, a gift is defined as the transfer of a certain moveable or immovable property, made voluntarily and without consideration,by one person called the donor, to another, called the donee and accepted by or on behalf of the donee.

For a property to be categorised as a gift, it is important that it is a voluntary transfer by a donor to the donee; it should be an existing, movable or immovable property; there should be no consideration involved and it should be accepted by the donee. In the absence of any one or more of these requirements, the transaction fails to categorise as a gift.

The transfer of the gift has to be a voluntary action,which means that the consent of the donor should be free in nature and not forced. Section 11 of the Indian Contract Act maintains that a consent is not free, if it is procured by coercion, misrepresentation, mistake, force, fraud or undue influence.

A property transfer, made in consideration of an expectation of moral and spiritual benefit, or in consideration of natural love and affection, is a valid gift. In a particular case (Munni Devi versus Chhoti), a gift deed of the property was executed by a mother in favour of her sole daughter, as she had promised to look after and maintain the mother throughout her life. The court held that the daughters promise to look after and maintain her mother was not enforceable in law,as such. This gift was made on account of natural love and affection and not in consideration of the assurance or
promise of maintenance, by the daughter.

In case of a gift of an immovable property, it has to be a written instrument, duly signed by the donor and attested by at least two witnesses and duly registered. Although non-registration of the gift does not render the gift as void, it cannot be produced as evidence in the court, when it comes to the enforcement of the terms and conditions of the deed. Incidentally,the stamp duty levied on a gift of an immovable property is the same as that of conveyance and is levied on the market value of the property.

Where a gift comprises the donors whole property, the donee is personally liable for all the debts and liabilities of the donor at the time of the gift of the property, provided the donee accepts the gift. If the gift is in the form of two or more separate and independent transfers to the same person for several things, the donee has the liberty to accept one of them and refuse others, although the former may be beneficial and the latter, onerous.