INDIA Law and Practice Contributed by: Vivek Chandy, Archana Tewary, Kumarmanglam Vijay and Brijita Prakash, JSA
To promote industries, state governments have intro - duced various schemes and formed nodal agencies to act as single points for providing various clearances for land acquisition and establishing industries. 2.3 Effecting Lawful and Proper Transfer of Title Documents governing rights/transfer of title to immov - able property are registered before the jurisdictional Sub-Registrar of Assurances (SRA). Registrations are mandatory for instruments evidencing transfer of title/ interest in immovable property exceeding INR100 in value. Once registered, documents become part of the public records. Such transfers also require the payment of duties (stamp duty, registration fee and cess) and are recorded by the revenue departments. A will need not be registered under Indian law. Where transfer is effected through succession, revenue records (which are public) are updated to reflect the inheritance. Insurance companies in India do offer title insurance, although establishing title is often complicated. Meas - ures are being taken to simplify the way title can be verified, and governments are taking steps to digitise title records. 2.4 Real Estate Due Diligence Tracing title to property is often complicated, as records are not centrally located and are maintained by different governmental departments. Antecedent documents in each state are often in vernacular. Typi - cally, title due diligence for the preceding 30-40 years is conducted on properties proposed to be purchased. When conducting due diligence, one may not discover all litigation (if the litigation is not entered in revenue records), mortgages by deposit of title deeds and unregistered contracts (which do not require registra - tion under the Registration Act) that have a bearing on the title of the property, so it is important that litiga - tion searches on the e-court websites and physical searches in the court records (wherever necessary) are also conducted. Taking possession of original title deeds at the time of sale is also critical, as they can be used to mort - gage/encumber a property. Where original title deeds
are not available, one must ensure there has been no mortgage/encumbrance by deposit of title deeds by the sellers or their predecessor-in-interest. Public notices in local papers inviting claims in respect of the property are often issued before proceeding with real estate transactions. Buyers can also conduct a survey of the land to confirm the measurement of the available land. For developed properties, in addition to title due diligence, buyers must also review various approvals, permissions, and compliance with laws (regarding development and usage of the properties) laid down by the respective states. Tax-paid receipts should also be checked. Some companies offer the use of emerging technolo - gies in title due diligence; however, given the difficul - ties in accurately tracing title, the use of such tech - nologies may currently be limited. 2.5 Typical Representations and Warranties Under TOPA, unless otherwise agreed between the parties, a seller is (i) bound to disclose any material defect in the property/seller’s title and (ii) deemed to have represented that the interest which the seller pro - fesses to transfer to the buyer subsists and that the seller has power to transfer it. In most transactions, representations and warranties are comprehensive, except in “as is, where is”-basis transactions (which happen in the case of distressed sales). Seller title warranties are unlimited in both duration and amount of damages. Lately, there have been a few instances where sellers have asked to limit their liability, though this is not market standard. Customary remedies would be available to enforce indemnity claims through arbitration or litigation, with arbitration being preferred. R&W insurance is slowly becoming more popular due to reduced premium costs; however, please see 2.3 Effecting Lawful and Proper Transfer regarding title insurance. 2.6 Important Areas of Law for Investors The most important areas of law for an investor to consider when purchasing real estate are:
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