Useful Tips to Transfer a Property

Useful Tips to Transfer a Property

When we transfer a property, one thing we need to ensure is that the act of transfer is complete. The legal formalities are fulfilled, and the rights and interests are transferred as desired.

Transfer of property 

It is an act by which one person transfers the rights and interests in a property to another. There is a change in ownership. It is done by executing a conveyance deed which may be in the form of:

  • Sale deed
  • Gift
  • Relinquishment deed
  • Will

Each conveyance deed has some legal requirements. It is valid only if the stipulated conditions are fulfilled.

Read: Corona crisis and stay at home – check your property documentation!

The decision to transfer a property needs to be taken prudently, keeping in mind the following tips: 

 Legal Assistance:  

The transfer of ownership involves precise documentation and payment of stamp duty/registration charges. All the documentation part must be handled cautiously. It is advised to take the assistance of legal professionals to avoid issues later. 

Registration of deed:

The registration of transfer deed can be optional or mandatory as per law. If it is compulsory, the deed is valid only if registered. The process of registration helps to:

  • Create evidence of ownership
  • Records the transaction for future references

The registered document of transfer is like a title deed and reflects the ownership.  

Read: Tax Benefits Of Real Estate

Contents of the deed:

The transferor can transfer all the rights or limited rights in the property. The contents of the transfer deed are, therefore, significant. They define the extent and scope of the transfer. 

Market Value of the property:

Let the professionals assess the correct market value of the property. It helps to get the right price for the property in case of sale. The sale price of the property is the primary factor to decide the stamp duty charges. 

Right of the transferor:

The transferee must ensure that the transferor has the right to transfer the property. It is essential if the owner himself is not present to execute the deed. If the transfer is through the power of Attorney, the authority should be clear and unambiguous. 

In case of Joint ownership of the property, it is significant to understand the rights of the co-owners. A co-owner generally executes a relinquishment deed to give up the share. The other co-owners get a right to that share in the property.

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

Payment of dues:

The deed must mention whether the transferor or the transferee will pay the dues of the property. All the taxes must necessarily be paid to avoid any legal trouble. 

The motive of the transfer:

The transfer deed is executed as per the purpose of the transfer. A gift deed is executed if the property needs to be transferred to relative out of love and affection. If the property is desired to be transferred as per preferences, executing a Will is the option. The sale deed is a common method to transfer property, but it involves tax payment.

Thus, to transfer property, one must decide wisely after analyzing all available options.

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Selling a Property through a General Power of Attorney – Is it even valid?

Selling-a-Property-through-a-General-Power-of-Attorney-–-Is-it-even-valid

Sale of property means transferring the title in the property for a sale consideration. The seller transfers the ownership rights in the property to the buyer. 

A sale deed is the primary legal document which evidences the sale of a property. The sale transaction is complete when the sale deed is executed and registered as per law. When the property is purchased through General Power of Attorney, the title over the property is not complete until the sale is duly registered.

What is a power of attorney? 

Power of Attorney is an authorization in writing given by a person (grantor/ donor/principal) to another person (attorney/agent) to act on his behalf. Principal confers authority on his agent to perform specified acts on his behalf. 

Read More: Checklist for selling property in India

PoA can be general or special. When power is granted for a particular task or limited purpose, it is special PoA. 

The General Power of Attorney is not specific. It contains broad authorization to perform a variety of tasks. It can be given to finalize the terms of the sale and to sign the deed on behalf of the buyer/seller.

Selling a property through GPA. 

In sale through GPA, the seller executes an agreement to sell vide which he confirms the receipt of payment and delivers the possession to the buyer.

  • Power of attorney is not a sale deed. It is merely an authorization. It is not a document conferring any title in the property. Nor any right or interest in the property is transferred to another person. 
  • If the property has been purchased through Power of Attorney, the title is not complete. The purchaser is not the owner legally. There has to be registered sale deed in existence for completing the transaction.

Read More: Selling property in India? Here are some reminders!

Sale of property by NRIs using General Power of Attorney

NRIs generally issue power of attorney to their Indian relatives, friends or family members. They cannot be present physically in India for all transactions.

In case of transfer of property by sale, an NRI must mention the reason for issuing the PoA. It must contain the relation of the NRI with the agent. The instrument authorizes the execution and registration of the sale deed to complete the sale transaction. The document itself is not a sale deed.

Why people use GPA to sell the property

  • People use it for sale of the property to evade stamp duty and registration fees.
  • General Power of Attorney is used to sell a property even if the title of the seller is not clear. 
  • In the case of agriculture land, if the property is to be sold for residential purpose, it has to be converted. The landowners sell this land using GPA without conversion.
  • To avoid payment of tax on capital gains earned on transfers.   
  • In the case of flats which are allotted on a leasehold basis, sale of flat is permissible only after the expiry of a specified period. Thus the transfer of unit through GPA is widespread as it is done before expiry of such period. 

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

Do it the proper way:

All transactions through Power of Attorney holders are not wrong in law. Genuine transactions are permitted. POA is used to carry out the assigned tasks.   

In a sale transaction, the title gets transferred to the buyer only if the sale deed is executed and registered as per law. Registered sale deed ensures verification of the title and prevents dubious transactions.

General Power of Attorney is not a substitute for sale deed.

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What is a Sale Deed? Legal Importance and Registration Process

What is a Sale Deed Legal Importance and Registration Process

A sale deed is one of the significant documents in property transactions

What is a sale deed?

A sale deed is a legal document that describes the sale of a property between the parties  (buyer and seller). It is proof of ownership.  It transfers the rights in the property from the seller (transferor) to the buyer (transferee).

Following rights are transferred to the buyer:

  • Right to sell
  • Right to use
  • Right to lease/mortgage

It is essentially a contract and therefore, all the legal requirements of formation of a contract must be fulfilled.

Also Read: How to cancel Illegal Registration of ancestral property

Legal Importance: Registered Sale deed is a legally binding document.

Proof of ownership:

Once the process of executing the sale deed is completed, the ownership in the property gets transferred to the buyer. The buyer gets absolute right over the property, and he gets the title of ownership.

Details of the parties and the property – help the investor and the parties

Sale deed contains the following elements:

  • Name, father’s name/husband’s name and address of the parties
  • Address of the property, area of the property –full description
  • Payment of sale consideration-mode and time
  • Delivery of Possession
  • Encumbrances on the property –loan, mortgage etc.
  • Compliance of Statutory requirements
  • Statutory payments like utility charges, property tax etc.
  • Clause of Penalty or compensation in case of default
  • Date of execution of deed with registered deed number, serial number, book number, page number etc.

This information is helpful –

  • It avoids ambiguity as the parties are clear about their obligations and rights
  • It guides an investor before finalizing his decision to invest in the property in case of resale.

 Resale –

A sale deed facilitates the resale of the property. It is a primary document conferring the title on the buyer. This title can be transferred by him further based on the deed.

Also Read: What benefits budget 2019 has for NRIs

Process of Registration:

As per the Registration Act 1908, the sale deed needs to be registered compulsorily.

  • The deed is drafted and typed on a non-judicial stamp paper.
  • The buyer has to purchase the stamp paper. Value of the stamp paper depends upon following:
  1. Value of the property –  Sale consideration and Value of the property as per circle rate is compared. Amount of stamp duty is based on higher of the two.
  2. Stamp duty rate applicable is the rate prevalent in the State where the property is located.
  • The sale deed has to be signed by both the parties on every page. The attestation by two witnesses is also required to complete the formation of the deed.

Also Read: What To Do If Your Property Possession Has Been Delayed?

Registration: – The sale deed is registered at the office of the sub-registrar having jurisdiction over the location of the property.

  • The parties seek an appointment with the Sub Registrar’s office. There is provision for online appointment also.
  • The parties need to be present physically at the office of the sub-registrar on the date of appointment. The seller presents the original documents. The Sub Registrar verifies the same.
  • The parties can also mark presence through the power of attorney holder. 
  • The witnesses to the sale deed are also present.
  • The photographs of the seller and the buyer, their thumb prints and signatures are put on the sale deed.
  • All the parties must possess the ID proofs.
  • The buyer pays registration fees
  • Registered sale deed can be collected at the time given.

In few states, property registration is permitted online also. The parties appear before the authority for final signatures and registration of the document.