Different Modes of Acquiring Property

Introduction

The Title Deed is that document in terms of which the present owner claims his absolute ownership over the property. Now, lets take a scenario where seller A wants to sell his property X to the buyer B, now B approaches to the bank C for the grant of loan, the bank C will first verify the title deed and also prior deeds to establish the passing of the title from the original owner to the present owner A,  if there are legal issues such as any suit pending or there are other legal claimants of property X who still have not released their rights in favour of A, then in such case the bank C can decline loan for B.

The above illustration is only to give a fair idea on how title and related property documentation are the most integral part of property ownership.

Definitions of title deed and an overview of different types of title deed

The Transfer of Property Act, 1881 elaborately reveals the acquisition and transfer procedures for the property. However, there is no rule of thumb as such which connotes that person must acquire the property by adopting particular method, it is by custom and general practice itself that is being followed and seen in our society for acquiring rightful ownership over the property.

1. Assignment Agreement: A contract in terms of which the person who has acquired certain interest in the property agrees to transfer and assign his entire right, title in the property to another person on certain consideration. This document you would typically find when the builder enters into an agreement to sell the apartment with the buyer, later buyer wants to quit from such agreement, then the buyer generally by way of the Assignment Agreement assigns his rights and also the obligations to the new buyer.
2. Court Decree: If there is any case filed before the court by one party (plaintiff) claiming right over certain portion or the entire property against the other party (defendant), in such case the court may allow the claim or reject it based on the evidences produced. By the court’s order and the decree, if any person acquire title for the Property, it is to be recorded and registered.

3. Gift Deed: In terms of this document the ownership is transferred from the owner (the Donor) to the other person (the Donee), without consideration based on love and affection, generally within the family members. On such document the stamp duty and registration fee is minimal, however registration is mandatory.
4. Exchange Deed: When two parties in the deed agrees to exchange their properties by transferring the ownership, right, title and property between them with or without consideration.
5. Partition Deed: Where the property or properties are in joint possession of the family members, when the they decided to divide their shares in the properties, they are required to confirm such arrangement by executing a registered partition deed.

6. Release Deed: This document is entered between the parties, when one party agrees to release and relinquish his right over the property to the other party by executing a registered document.
7. Sale Deed: This document transfers ownership, right, title, share, interest and possession from one person to another, on the consideration paid or promised to be paid
8. Transfer Deed: This document by which ownership of a registered property (such as land or securities) is conveyed from its seller to its buyer.

9. By Will: When a person (testator) wishes to bequeath his properties to someone after his death, he records it in writing and put his signature in front of the witnesses. So the transfer of property happens in the name of the beneficiary upon the death of the testator. Will is not required to be compulsorily registered.
10. Settlement Deed: This sort of documentation is usually used when there are some long pending issues related to the property being resolved and the term of settlement needs to be recorded in the document.

11. Share Certificate: This document certifies that the particular apartment owner holds certain shares corresponding to his right in the apartment, which he has acquired by way of an agreement to sell executed by the builder, in this kind of property transaction, the sale deed is executed by the builder in favour of the society which is formed for the welfare of apartment owners, the society in turn issues share certificate in favour of the apartment owners.

12. Lease Agreement: When Government Development Authority forms a layout, it allots sites to the allottees by issuing Allotment Letter and a Possession Certificate. It also enters into a Lease Agreement with the allottees to grant lease of the site, in a state like Karnataka, there is a definite lease period of 10 years, upon completion of the lease period the Government Authority conveys the site in favour of the original allottee by executing Sale Deed.   

Different Means of acquiring Property: directly from the Builder, Second Sale, Settlement within the family members.

Property Purchased Directly from the Builder (First Sale):

On the piece of land when the builder decides to form a residential building or the layout, he is actually in look out for the buyer in his scheme, so the builder offers to the buyer that he will sell some portion of the land i.e. undivided share in the land (UDS) and shall also construct apartment corresponding to the (UDS). Later, upon completion of the apartment, the builder executes the sale deed in favour of the buyer, this kind of sale for the newly constructed apartment is usually referred as the ‘First Sale’. So this is one way of acquiring property.

Property Acquisition by way of Second Sale:

It implies that the property is ready to move in, it already has the first owner and the property will be sold from the first owner to the second buyer. The seller and the buyer can get into the Memorandum of Understanding initially, wherein they can set forth the terms and the conditions.

Later, the buyer can enter into an Agreement to Sell with the seller and then finally the title deed to be executed by the seller in favour of the buyer. There are instances where the buyer pays the entire consideration and take General Power of Attorney (GPA) wherein there are specific clauses for authorization to the agreement holder to sell the land on behalf of the seller. The Supreme Court in its land mark judgement “Suraj Lamps & Industries Pvt. Ltd. versus State of Harayana in its Special Leave Petition No.13917/2009 dated 11/10/2011, has categorically clarified that the GPA is not a title document, it only empowers attorney to represent when the owner in his absence. This judgement is in the light to discourage such practice where to save on the stamp duty usually the buyers take possession of the land and the GPA.

In addition to that only mere GPA and no title deed is a risky affair, as reason being very obvious, if the owner dies to whom the attorney has paid the consideration, in absence of the title deed the legal ownership of the property has not passed to the attorney/buyer, and legally upon death of the person the property vest with his legal heirs.

Property Acquisition within the Family Members:

As mentioned above, upon death of the owner, the property is inherited by the remaining legal heirs in equal proportions. For instance, A has bought the property along with his father being the co-owner, now upon death of the father, A will not become the entire owner of the property, his absolute ownership will be limited to the half portion. If A’s father has one more son and the wife, then in that case for the other half portion, A, his mother and his brother will have 1/3^rd each in the property. For A to claim absolute ownership on the Property, his mother and brother needs to surrender and release their rights and title in the other half portion of the Property by way of a registered Release Deed or Gift Deed in favour of A.

When the properties are brought by the joint funds then by all means they are considered to be the joint family properties, the only way to claim individual ownership is only to divide it by a registered Partition Deed. Further, it is pertinent to remember that the daughters have the equal ownership on the ancestral property of the father and grandfather as per the Hindu Succession Amendment Act, 2005, so it is the legal practice being adopted these days that in case the daughters are not made party to the Partition Deed executed earlier before the statute came into force, their shares are given by way of a Release Deed or the Settlement Deed.

Conclusion

Having a good marketable title over the property is the most challengeable task. This daunted task is only achievable when the proper analysis of the mode by which the person claiming to be the owner has acquired rights in the property is done. Further, by the proper legal documentation and execution of the registered title deed, the gaps in the previous title can be fulfilled, which shall strengthen your better claim and perfect title to the property, which will also save you from unwarranted claims and litigations.