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.

Sale of property in India by NRIs

Sale of property in India by NRIs

Once you have made up your mind to sell your property, you need to decide whether you want to visit India to sell your property or you want someone else on your behalf to sell your property in India.  In case your relative or a friend or a broker/advocate can do the same for you, it will be done through a Power of Attorney for sale of the property. POA can be executed from abroad also.

Secondly, hiring a lawyer for sale of property helps to put your documents in place so that you do not face any legal problem while selling your property.

Who can buy the property if the seller is NRI?

NRI can sell any residential/commercial property in India. Buyer can be an NRI or a resident Indian, but in case of agriculture property, the buyer can be a resident Indian only, although NRI can acquire agriculture land through inheritance.

Which property can be sold?

The property acquired by NRI by way of purchase/gift/inheritance, all can be sold.

General precautions and safeguards for every seller:

1. Ensure that you have a clear title – Title means you have the legal ownership of the property and the right to sell the same. The title is ensured by possessing the relevant document showing the ownership with the seller. Title verification is crucial to provide the hassle-free sale of the property.

2. Relevant documents in possession – NRI must possess a valid passport as identity proof and a PAN card.

Buyers through their attorneys insist for the documents which establish the ownership of the seller and to ensure that the seller has all the relevant documents in possession to facilitate a smooth sale of the property.

Some of the documents are Sale deed, land records, tax receipts, Mother deed, Encumbrance Certificate, Building Approval plan, Completion certificate, Letter of allotment, Society documents etc.

3. Approval of local bodies: Local bodies/Municipal Corporations which have jurisdiction over the area where the property is located, issue occupation certificate and approved building plan. These are also relevant documents as property with buildings erected without approval from local bodies is considered as a property with the latent defect which can jeopardise the selling plans of the seller.

4. Tax implications – There are certain tax implications for selling property in India. If the property is sold within three years of acquiring it, profits earned are considered as short-term capital gain and taxed as per the slab rate. If the property is sold after three years of acquisition, the profits are long-term capital gains and taxed at a flat rate of 20% after indexation. Owners can claim exemptions in case of long-term capital gains. Buyer deducts TDS.

5. Repatriation – NRIs can repatriate the sale proceeds to the country of their residence subject to conditions. The sale proceeds shall not exceed US dollar 1 million in a financial year. Repatriation is done through official dealers/NRE/NRO accounts. Permission of RBI is required if the property sold was inherited from a person resident outside India.

6. General tips for sale: Seller must ensure that there is:

  • Proper valuation of the property
  • Correct pricing as per Market trends
  • Effective Advertisement of sale

Hiring a lawyer for selling the property to avoid disputes and litigations and to ensure proper documentation

7. Hiring a lawyer to prepare a sale deed – The last leg of the sale process is preparation a sale deed/Agreement to sell. A good advocate well versed with the property matters must be engaged to prepare this vital document which evidences the sale of the property. Sale deed has to be registered as per the applicable laws of registration.

8. Legal Advice for sale of property: NRI must be guided by a legal expert for sale in India so that he is saved from fraudulent property dealers and sale is made appropriately with proper documentation.

Reserve Bank of India issues guidelines for acquisition/sale/tax/repatriation in case of property matters of NRIs under the name Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations, which are amended from time to time.

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.