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I often have a running joke that I tell people at parties (funny, i stopped getting invites after telling this joke). It looks a bit like this: “IIf you or someone you know does not have an ownership dispute, they are not Indian.” With 67% of (civil) court cases dealing with real estate disputes, this is certainly no joke.
Property was supposed to be an asset, but the sad truth is that it has become a liability compared to other asset classes. With 7.2 million court cases blocking the development of an (estimated) $200 billion in real estate, one must be disappointed with society’s lack of will and political will to solve a long-standing problem of fellow citizens.
The genesis of all these questions is the model that India has adopted. If we look at the UK and Singapore, they followed a conclusive titling system, which means the government verifies the seller and the property before authorizing the transaction. Since the government has confirmed that the seller is the owner, the relevant agency provides a unique title deed to the buyer. India, however, has a deemed ownership system where the government is not responsible for purchases/sales, and it is up to the buyer to check whether the seller is the owner. Many people assume that a bill of sale is actually a title. But I digress; let’s move on to the more practical task: should I buy a property knowing all these skeptical facts? Absolutely. Earth is not made daily and technology is unlikely to change so soon. I have yet to read a scientific or economic paper discussing the downward movement of land prices once Elon Musk colonizes Mars.
Now, with all that said, keep in mind the importance of diving deep into property records before making a purchase. The first step in this process is to retrieve a Congestion Certificate (CE). In some states, this is also called a certificate of non-encumbrance (don’t ask me – ask the government). A CE displays the current owner of the property along with the transaction chain going back 20-25 years in some states. Essentially think of the CE as a skeleton providing guidance on all documents to be collected and provided for legal advice which can be retrieved using a survey number attached to the property. There are apps today to make EC available on your tips; however, those in the more adventurous and masochistic phase of life can visit the local Sub-Registrar’s Office (SRO) for an expedition of a lifetime to retrieve the EC. Who doesn’t want to stand in line under the hot sun? Raise your hand.
Now, if the reader thinks the procedure outlined above is sufficient to ensure ownership verification is complete, I hate to be the bearer of bad news. A potential property buyer should also visit the revenue office to ensure that property tax receipts, electric bills and water bills are also under the same owner name. Apparently our departments value their independence and have decided to operate siled systems without integration to maintain common ownership profiles. Say what you want, but in this system, at least no one can hack into a department to change property records.
Having completed the pilgrimage to the sacred departments of registration and revenue, we now head to the lawyer’s office for legal advice after submitting all the necessary documents requested. Legal advice is mandatory for real estate transactions and even loans from financial institutions. Once the legal opinion is obtained and the purchase of the property is complete, I wish I could inform the dear reader that his wonderful journey is over, but it is not. A legal opinion is similar to the “comfort letter” which the RBI recently banned. Although the lawyer stating that the title is clean is one thing, it will not protect you against future litigation. You must like lawyers, right? For this reason and to keep stray animals and humans away, it is essential to fence the property, put up a name sign and, if valuable, employ a security guard with a DC camera on site. Also, be sure to update all income documents to reflect the change in ownership. After all that, hope for the best and prepare for the worst. Good luck and good real estate research!