The definition of real estate comprises properties, land, buildings, and air rights above and below ground, as well as free gifts of nature associated with the land purchased. As soon as we discuss rights, we must consider how the legislation will be implemented. Real estate legislation is divided into four categories, each with its own set of rules:
Residential Property: Residential property is divided into two categories: new construction and resale. These are the homes where joint or nuclear families live.
Commercial Property: Commercial real estate includes shopping malls, medical offices, hotels, and offices. The primary goal in these areas is to create revenue.
Industrial Property: Manufacturing plants and warehouses are included in this category. They can be used for product development, manufacture, distribution, and storage. Structures utilised for the delivery of commodities are referred to as commercial real estate. Depending on the classification, zoning, construction, and sales are handled differently.
Vacant Lands: The category of empty land also includes working farms and ranches. Undeveloped, early development or redevelopment, subdivision, and site assembly are all examples of vacant property subdivisions.
A mixture of federal (central) and state-specific legislation governs and influences real estate in India. This is because, under Article 246 of the Indian Constitution, ‘Land’ falls under the State List or List-Il of the Seventh Schedule to the Constitution of India, which enumerates subjects over which only States have legislative authority, whereas ‘Transfer of Property other than agricultural land, registration of deeds and documents, and contracts other than for agricultural land’ falls under the Concurrent List or List-III of the Seventh Schedule to the Constitution of India.
In addition, because India is a multi-sect country, rules controlling matters like devolution, inheritance, and so on are usually based on a range of customary ideas and practises applicable to different sects in addition to codified laws. Several judicial declarations on real estate law have been issued by the Indian higher court over the years, which serve as judicial precedents and influence the interpretation of applicable statutes.
Transfer of Property Act, 1882: This act sets forth broad principles for mobile and immovable properties such lis pendens, as well as sale, exchange, mortgages, and leases. In order for this Act to take effect, all states must implement its provisions.
Indian Easement Act, 1882: The legislation governing easementary rights to immovable property is governed by this Act.
Registration Act, 1908 and Indian Stamp Act, 1899: Several acts, such as the Stamp Duty and Registration of Deeds Act, govern the transfer of real estate ownership rights.
The Indian Contract Act, 1872: This Act governs contract law, which covers a person’s legal authority to enter into a contract, as well as the contract’s execution and implementation, as well as its breach and the parties’ remedies.
Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013: This is a statute that governs government purchases of private land for public or private use, as well as government compensation and rehabilitation initiatives.
Land Revenue Codes: Many Indian states have created land revenue regulations to control legislation relating to agricultural land holding, land revenue, tenancy types, and other relevant matters. The stated codes cover the division and categorization of immovable property in a state, transfer restrictions, revenue authorities’ rights and duties, laws, rules, and penalties for breaching such codes.
The Real Estate (Regulation and Development) Act, 2016 (RERA): The purpose of this act is to protect the interests of real estate consumers. The Act established the Real Estate Regulatory Authority and the Appellate Tribunal to speed up the resolution of real estate disputes, and it also requires that all projects and key players in the area be registered. States have adopted RERA rules and regulations to ensure that the Central Act is effectively implemented at the state level.
Foreign Exchange Management Act, 1999 (FEMA) and Foreign Direct Investment Policy (FDI Policy): The Foreign Exchange Management Act (FEMA) and its guidelines regulate the purchase and sale of immovable property in India by foreign entities and non-residents. The unified FDI Policy regulates the permissibility of foreign investment in India’s real estate market, as well as compliance standards and investor exit. The Government of India’s separate ministries, the Department of Industrial Policy and Promotion (DIPP), and the Reserve Bank of India, regulate such foreign investment (RBI).
According to Indian real estate legislation, the Indian Registration Act, 1908, requires the registration of documents linked to the sale of a property. The individual whose name is on the title becomes the legal owner of the property.
The sale deed is the primary legal document that serves as documentation of property sale and transfer. The buyer’s lawyer normally prepares it on green legal paper with the date and place areas left blank for stamping. Because the deed is legally binding, it is recommended to read the tiny language thoroughly before signing it.
For stamping of the sale deed, the buyer must pay stamp duty at a designated bank or approved collection station of the Stock Holding Corporation of India. The fees vary by state, but they normally amount to around 5% of the property’s market value. The stamp papers are available from authorised stamp sellers in person or online.
The bank issues a receipt and stamps the sale deed with the phrase “stamp duty received” once the payment is made.
Following the payment of stamp duty, the documents must be registered with the sub-registrar whose authority the property falls within. The registrar keeps an original copy of the registration that can be resorted to in the event of a dispute. Real estate registration transactions in India cannot be completed electronically. The parties’ physical presence is required. The following individuals are required at the sub-office: registrar’s the seller, the purchaser, and two witnesses.
After the buyer, seller, and witnesses sign the stamped document, the sale deed is registered. The document is then given a unique number and the customer is given a receipt. The sale deed is delivered to the Reader of the Sub-Registrar for verification once it has been registered. He or she will state the required registration fee. The charge is paid with a receipt to the cashier, and the documentation is handed to the Sub-Registrar.
The seller then takes over physical possession of the property to the buyer after returning the documents. Real estate registration transactions in India cannot be completed electronically. The parties’ physical presence is required. The following individuals are required at the sub-office: registrar’s the seller, the purchaser, and two witnesses.
The term “mutation” refers to the transfer of property ownership from the seller to the buyer. Making the buyer the legal owner of the property is critical. It also gives the government the authority to levy a property tax.
The buyer must submit a legally signed application form along with a notarized copy of the Sale Deed to the City Survey and Land Records Department in order to request a mutation. The City Survey and Land Records Document determines the property’s tax value and issues a Letter of Mutation in the buyer’s favour. Under Indian real estate law, the buyer becomes the property’s owner.
All parties involved, including the buyer, seller, and witnesses, should keep these documents on hand. Each party will require their Aadhar Card, PAN Card, or any other government-issued evidence of identity, such as a Voter ID Card or passport, as well as two passport-size pictures.
Other documents required are:
Purchasing real estate and registering it with the appropriate authorities can be a daunting task. Hopefully, this post has clarified the fundamentals of Indian real estate legislation and simplified the steps involved in purchasing your own home. Gaining a rudimentary understanding of the procedure will show you that, while complicated, Indian real estate law is not impossible to navigate
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