Can NRIs buy property jointly with resident Indian?

Joint Property - Can NRIs buy property jointly with resident Indian

Some things in this world are still going fine jointly! Take property ownership in India, for instance – especially when we live in a country where the property is still one of the most coveted ways to connect with your roots.

For NRIs, purchasing a property in India is much more than an investment opportunity. It is a way of seeking connections to the native place – and also to find a ‘home’ for oneself. 

It helps if the property ownership is joint with a known relative or friend who is a resident Indian. 

Read: Saving yourself from fraud while buying or selling a property

What do you keep in mind while buying property jointly?

  • As with other things, the purchase of property by NRIs in India is also governed by guidelines issued by RBI. 
  • While the RBI has issued General guidelines for purchase of property by NRIs also, in some cases, special permission from RBI or approval from Government is required before making an investment in the immovable property by NRI.
  • RBI allows NRIs to jointly own a property with another NRI or a resident Indian. 
  • However, in cases where the resident Indian is otherwise ineligible to buy property, then the NRI will also not be allowed to buy the property with that resident Indian (irrespective of the financial contribution of the other person). 

Remember:

  • Residences or commercial property can be bought by NRIs freely. 
  • There is no restriction on the number of properties that can be purchased. 
  • There is no requirement of obtaining any specific permission in such cases and also no need to send any information to RBI for this purchase. 
  • There is no need to file any document with RBI in this regard. 
  • In case the interested NRI is unable to come to India for completing the property purchase, the same process can be carried out by giving a special POA (Power of Attorney) to another person. 

But,

  • For the purchase of any agricultural property or a farmhouse or plantation, NRIs need to apply for specific permission from RBI. 
  • However, NRIs can inherit the same from any resident Indian.

Read: Transfer of Property on the basis of Registered or Unregistered Will

What does the FEMA say?

  • There are no specific guidelines under FEMA for purchase of property by NRI jointly with resident Indians.  
  • An NRI is allowed to sell or gift any immovable property to any resident Indian. 
  • Any property can be gifted to NRI by an NRI other than agricultural property, plantation or a farmhouse.
  • The restrictions which apply to NRIs for purchase of agricultural property, farmhouse or plantation continue even if it is a joint purchase.  
  • The transactions have to be routed through proper banking channels under FEMA and RBI guidelines.
  • For all purposes of investment in real estate, NRIs are treated at par with the PIOs.

Read: How to obtain probate of a Will

What if a person becomes an NRI after buying property in India?

  • In case an individual has bought property in India and acquires an NRI status after that, he can continue holding the property
  • All taxes will apply to the property as per the laws of the country

So Yes! Relax NRIs – You CAN buy property jointly with resident Indians or other NRIs. Make sure you adhere to RBI and FEMA rules regarding the same. 

Saving yourself from fraud while buying or selling a property

Saving Yourself From Fraud While Buying or Selling A Property

It is a bitter fact that there is an occurrence of frauds while buying or selling the property. Misinformation or Ignorance or lack of information on procedures and documentation is the main cause.  However, one can easily avoid these complications. 

Some of such common frauds are:

Imperfect Title – For a buyer, it is significant to ensure that the seller has a clean title and can transfer the ownership rights in the property to the buyer. The title should be free from defects. The imperfect title means there is any encumbrance on the property or the property is disputed.

Multiple mortgages: The seller has mortgaged the house to different banks before selling the same.

Read More: How to obtain probate of a Will

Delayed possession by developers – In case of buying house/flat constructed by a builder, possession of the flat is often delayed. The buyer’s money gets blocked.   

Building not as per the approved plan– The builder does not construct the building as per the sanctioned plan. Necessary approvals from the Government are not taken. The property is not as per the description/advertisement. Sometimes the location of the property may also differ.

Fake Documents– There is also a practice of preparing fake title deeds. Either the signatures are forged or the document (property document) is not valid i.e. proper stamp duty not paid or document not registered as required.

Fraud by Impersonation: The person presenting himself as the owner of the property is not the actual owner. The documents are signed forging the signatures of the actual owner.

Home equity frauds– In simple words, home equity frauds means a fraud where the fraudster hacks the information about the true owner and reroutes the loan amount to his account by forging the signatures of the actual owner.

Read More: Transfer of Property on the basis of Registered or Unregistered Will

Misuse of power of attorney: A POA granted to execute a sale deed can be misused. It is better to get the same verified from a lawyer to avoid any dispute later.

How to avoid them:

Information and knowledge is the key to avoid any property related frauds. Some steps can be:

To verify the Credentials of the developer/builder:

If the builder/company is reputed, it can help to ensure that necessary approvals have been taken and promises made are not fake. Possession will not be delayed as the developer has maintained a good track record.

Checking the revenue records:

There is a mention of the lien/mortgage over the property in the revenue records. The same can be verified to ensure that property is free from encumbrances and title is clear.

Buying a resale property:

Collect the encumbrance certificate from the office of the Sub Registrar as it helps to verify that the title is clear. EC also contains the name of the previous owner. Also, check the tax payslips. Try to verify that all dues have been paid.

Read More: How to file a partition suit for a property in India

Buying a house in a society:

Check that the society is registered and there is a resident welfare association in place.

Buying a house from a builder:  

It is better to check that the project is registered with RERA. It helps to ascertain that all necessary approvals are in place and construction is as per norms. Moreover, possession will be granted as per promise.

From Seller’s point of view certain precautions are:

  • Buyers generally ask for original ownership documents. Sellers must possess the same
  • Seller must have Approved building plan or occupation certificate from the local authorities
  • Sellers must ascertain the identity of the buyers especially if the buyer is executing the conveyance deed using a power of attorney
  • Proper valuation of the property to quote the correct price

Taking legal advice:

Property transactions are complex. To avoid the occurrence of fraud, the parties must take legal advice and ensure proper documentation.

 Investment in the property must be taken seriously. The casual approach may land you in trouble.

What is mutation of property and why it is important for buyers?

What is mutation of property & why it is important for buyers

From a buyer’s point of view, it is imperative that the property he intends to buy has a clear and undisputed title. The onus to verify the title of the property is on the buyer. It requires well-maintained land record/municipal records where all the past transactions related to the property title are duly recorded. It is possible if mutation is done diligently.

There are certain documents which establish property ownership:

  • Registered documents transferring the title, e.g. sale deed
  • Survey documents
  • Land records
  • Property tax receipts

Apart from the registration of documents, there is mutation also, which reveals the owner of the property. Registration is a proof of ownership, but mutation is essential as it records the ownership with the authorities.

What is mutation?

Mutation means entering the name of the owner of the property in the revenue records maintained at the local level by the State. Whenever a property is transferred,i.e. there is a change in the ownership, the name of the new title holder is reflected in the revenue records when mutation is done.

The Government maintains the record as the same enables the authorities to tax thereal property owner.

When is mutation required?

Mutation is required whenever there is a change in ownership effected by:

Is it necessary to get the mutation done?

There are two types of mutation:

  • Mutation of agriculture land
  • Mutation of non– agriculture land

In case of agriculture land, mutation is necessary as the title passes to the new owner, only after mutation. If the Government acquires such land, the compensation is paid only to the person who is the owner as per land revenuerecord.

In case of non-agriculture land, the title of the owner is not affected if mutation isnot done. However, for payment of municipal tax, electricity connection, waterconnection, mutation becomes necessary.

How is mutation done?

An application is made to the Tehsildar with court fee stamp affixed on it. The documentation and fee for mutation differ from State to State.

What is the importance of mutation, especially for a buyer?

Since the onus to verify the title of the property is on the buyer, mutation is of greatsignificance to him. It is essential to get the mutation done because:

  • The Government looks into the land records to verify the actual owner for imposing taxes and for awarding compensation.
  • Mutation shows possession of the property.
  • Mutation is vital for further sale of the property.
  • Mutation helps to prevent the fraudulentsale by seller to more than one buyer.
  • Mutation helps the buyer to ascertain that the property is free from    encumbrances or if there is any liabilityto be incurred by him. 

However, mere mutation does not confer any title. Mutation is invalid if the document transferring the title is not registered as required in law.

It is important to note that mutation is not a onetime process. It needs to be doneregularly to ensure that the property record is clear.

It is always advisable to take legal help from lawyers to effect any transfer of property to avoid legal ramifications later and to ensure that all legal formalities are complied with. Lawyers can provide legal advice and assistance in case of mutation or for cross-checking the revenue records in case of purchase/sale of any property.

Filing partition of property with joint owners in your absence can become a nightmare, Beware!

Filing partition of property with joint owners in your absence can become a nightmare Beware

Life is very hard for some people. When a person goes through a lot of financial hardships, getting a property worth crore of rupees is nothing less than bliss.

Can we imagine cases, where people are not even aware that they are being duped by their own siblings or close relatives ?

We were approached by a person who had gone abroad many years ago. After the demise of his father, he and his mother had faced a lot of hardships in life. Their relatives informed them they have some property in India and they are filing the partition of the same to give them their share. They were happy to hear the news and gave the power of attorneys to do all the partitions on their behalf.

Since they never been to India from a long time so they had no idea about the actual value of the land and property. They were shown a rosy picture by their relatives and they fell into the trap. Anyhow somebody told them about our firm and they came for a free legal consultation just to check on whatever they are being told by their relatives is correct or not.

Our team did all the appropriate research work. We carried massive search to inquire if any joint ownership existed in the client’s father’s name. We ultimately got the success. The property was found. Partition was done among the co-owners and shares were transferred to legal heirs but to our shock the whole partition was biased. Their relatives took all the expensive chunks to themselves and gave them the least valued portions.

We immediately took the actions and devolved all the partition their relatives had done. It was a massive work that our team did by making several applications and explaining the ill intentions their relatives had. After that, we filed the new partition where everybody got the fair share of the land and property.  The family received their rightful share worth crores of rupees.

How do you approach partition of joint property?

Immovable Property is generally owned jointly. Joint property means a property where more than one party is the owner of the property.

Arising of disputes is inevitable in such properties. Partition is a solution. It is a division of property as per the share of each co-owner. Partition of joint property can take place by:

  • mutual understanding among co-owners
  • demanding one’s share

For partition, we need to know our share in the joint property. Share can exist due to inheritance or through some title document (sale deed, will etc). In the absence of clear title, other documents like land records, tax receipts, survey documents, help to prove a title.

What about certified copies of the documents related to property?

If a party has no document available with him, he can file for inspection of documents in the Registration Office where the property is located and get the certified copies of certain documents.

  • Shares in joint property:

Till the time property is joint, shares of co-owners are undivided. After partition, each co-owner gets a share in the joint property as per his entitlement according to the law.  Law of inheritance is also applicable when partition takes place. Each co-owner becomes the absolute owner of his property (share). He is free to dispose of the property.

  • Partition deed for smooth partition:

A partition deed, drawn in a clear and unambiguous manner, executed on a stamp paper is required to be registered at a place where the property is situated.  Names of the parties and their respective shares need to be clearly mentioned. It must carry the date from which the partition will be effective

  • Partition by Family Settlement Agreement:

The partition can take place through a family settlement agreement. It is drawn on the same lines as a partition deed but does not require any registration or stamp duty. It need not necessarily be a written document, can be oral based on mutual understanding.

  • Partition by filing suit in court:

Here, the court determines the share of each person and property is divided accordingly. It is filed in the court which has the jurisdiction in the area where the property is located.

Why do you need expert guidance?

Generally, the partition is not very easy as the shares in the property are not well defined.  A partition deed executed under expert guidance and legal advice helps to sail through such problems.