When a property is purchased by paying the total price to the seller in terms of the sale deed, it is pertinent to know whether such deed legally holds good or not. If the sale deed is neither registered nor duly stamped, the title of the property will not pass from the seller to the purchaser. Hence, it becomes relevant to remember key points on registration and stamp duty, so as to claim absolute ownership over your property.
(1) Payment of adequate Stamp Duty: The Stamp Duty is nothing but resource to generate revenue for the State. Each State is governed by its own Stamp Act, the rate applicable for each type of document vary from state to state.
If the sale price mentioned in the sale deed is less than the market value or the guidance value for the property, the Sub-Registrar can refer it to the District Registrar for re-valuation and upon finding the property being under-valued, the deficit Stamp duty can be recovered with penalties.
In addition to that, if you are entering into an unregistered agreement to sell with the buyer, and the document is not properly stamped, then you cannot legally enforce such document, as document with deficit stamp duty is not considered admissible as evidence in courts unless you pay ten times more the stamp duty applicable on that document as penalty.
(2) Registration of the Document: Registration refers to a process when upon signing the document by the Parties, it is brought before the Sub-Registrar office to give its authentication by assigning it a unique number known as the “Document Registration Number“, taking the thumb impression and the photo of the parties, putting its seal and signature and maintaining it for public record. There is certain amount of registration fee paid on each document, which shall complete the formalities required for registration.
(3) Who can present document for registration: The document is only to be presented by the persons who are party to the deed or by the third person who is authorized to represent on behalf of the Party.
(4) Advantages of Registration:
- once the document is registered, it is a proof that the actual document is drawn between the parties.
- the document becomes the public record, if in case the parties loose the original document, but still can apply for the certified copy of it, henceforth, the missing of originals does not nullify your rights acquired in terms of the document.
- the registered document confers a secure and transparent way of establishing ownership over the property.
- a registered document protects from unnecessary claims and future hassles.
(5) Certain Documents require compulsory registration: Section 17 of the Indian Registration Act, 1908, requires certain documents by which right is transferred in an immovable property from one person to another to be registered mandatorily such as sale deed, release deed or gift deed etc. Further to add, if a loan is taken on the Property by way of a registered mortgage deed, upon payment of the loan amount, it becomes mandate to obtain a discharge or NOC or a receipt from such financial institute and register the same.
(6) Consequence of not registering document: Our prevailing laws such as Indian Registration Act, 1908 and Transfer of Property Act, 1882 does not recognise such unregistered owner to be the rightful owner of the property, the objective is very clear:
- firstly to bring on public record the owner’s name, which shall prevent false claims and litigations over the property;
- secondly to ensure the assured title of the property is transferred to the new owner, which bars the old owner to make any subsequent transfers.
- thirdly the registered documents are available for the public, which eases the compliance related to the property such as payment of taxes, cess, charges etc.
Compulsory Registration differs in various States:
The requirement of mandatory registration of the document also varies from one State to other State, for instance:
In Karnataka, the prevailing real estate practice is that the builder enters into Agreement to Sell for selling the undivided share (UDS) in the land and Construction Agreement to build an apartment, both the documents attracts stamp duty but are exempted from being registered compulsorily, however, the Sale Deed in terms of which the title passes from the builder to the buyer is a mandatory document for registration.
To the contrary, in the State of Maharashtra, agreement to sell for selling an apartment, is mandatorily registered as per the Maharashtra Ownership Flat Act, later on the Sale Deed is executed in favour of the Apartment Association/Society, which in turn issues share certificate to the Agreement holders denoting their respective share in the Apartment complex.
