Land is a subject falling within the powers of the State Governments under the Constitution of India and hence, property laws in India may differ from State to State. Besides the local laws, several laws enacted by the Central Government also govern acquisition and ownership of property (including an interest in property) through purchase/sale, transfer, mortgage, inheritance or gift. Transfer of property other than agricultural land, registration of deeds and document fall in the Concurrent List. When a person acquires or owns an immovable property, the law also give him/her the right to use, lease, sell, rent or transfer/gift of the land. The owner also has a right to mortgage his immovable property as a security for loans.
Herein we shall deal with investigation of title required for various purposes including sale, lease, sublease and mortgage. For the purpose of brevity the reference of sale shall also mean to include purposes of lease, sublease, license and mortgage where applicable.
Title is a legal term; it means the ownership right to property. Title of property is the prime concern of everyone at the time of purchasing of a property. Every property has a title. Title is the evidence of the right of ownership or the ground of right of ownership. Title can be created by act of parties or by operation of law.
Title to immovable property is ascertained by perusing relevant “Documents” and “Deeds” pertaining to such property. The term “Document” has very wide import. Under general law ‘document’ means any matter expressed or described up on any substance by means of letters, figures or mark for the purpose of recording that matter. The documents relating to property or commercial transactions are generally called Instruments or Deeds.
Importance of Title Verification
1. A title proves ownership. Barring a valid legal dispute, a land title serves as an authoritative record for land ownership. Without the appropriate title, the legal system will not recognize an unfiled deed or informal contract.
2. All owners can hold their own duplicate titles: Each owner of a land title can hold a legally valid copy of the title. The register of deeds will make a note of each owner’s copy in the recordkeeping system to confirm the validity of each county-issued copy. In the case of trust and company-based ownership, a recognized administrator may hold a copy of the title on the trust’s or company’s behalf.
(Access to a copy of the title can facilitate land negotiations and prevent disputes.)
3. Prospective land owners often conduct title searches to uncover potential issues: During a title search, an investigator will look at years’ worth of land documentation to identify potential issues with land ownership. A title search can prevent unsuspecting new owners from accepting liability for past issues. For example, a property owner cannot sell or transfer ownership rights of a property with unresolved tax issues. An outstanding lien can render any ownership transaction invalid.
Title searches reveal information about property taxes, property work agreements, CC&Rs (covenants, conditions, and restrictions), issues with deed documentation and unresolved ownership claims, and more. If a past property owner gave a company or person easement or property usage rights, the search will also reveal these recorded covenants.
While buyers and lenders commonly use title searches during the buying/selling process, many other parties may benefit from a title search. Home builders, businesses, and government officials may use title searches for risk management and investment protection purposes.
4. Title insurance offsets the risk associated with title transference: To minimize the effects of issues not discovered during a title search, many land buyers invest in title insurance as part of the closing costs of a transaction. Owner’s title insurance often provides coverage for losses up to the full price of the title in the event that an issued jeopardizes a claim to ownership in the future. Owner’s insurance policies will also cover dispute resolution legal costs including damages awarded to another party up to policy limits. Lender’s title insurance protects the lender’s agreement with the borrower. In the event of a land dispute, the policy will cover the lender’s losses and legal expenses.
It is clear that the Title Verification is an essential activity before buying a property.
Procedure of Title Verification for Property
A search of the Title or legal description of the property is undertaken in most real estate transactions by the Attorney or a Title company. The Attorney/Title Company has to first go through the previous records of the property. The property might have “Chain of Titles”. The Attorney has to see whether there is any Encumbrance on the property.
Sometimes a Legal Heirship Certificate is also essential to determine the Title of the Property if there is more than one person as the owner of the property. It is essential to define the relationship of the owners. But this is generally done if the Owner of the property is a deceased person and that person has more than one legal representative. In such a case it is essential to show the relationship of the deceased and his legal representative. It also has to be checked whether any Objection has been raised on the Sale of the said property.
Mother Deed is essential to trace the origin of the property. It is a document that helps in the further sale of the property, thereby establishing the new ownership. In case of absence of the original Mother Deed, certified copies should be obtained from the registering authorities. Mother Deed includes the change in ownership of the property, be it through sale, partition, gift or inheritance. It is very important that the Mother Deed records the references to previous ownership in a sequence and should be continuous and unbroken. In case of a missing sequence, one should refer to the records from the registering offices, revenue records or the recitals (preamble) in other documents. The sequence should be updated until the current owner.
Title verification of a property is essential in order to prevent legal disputes after the sale of a property. It is generally done with the help of the Attorney of the Buyer. Attorney will determine by going through the previous records of the property. So Title verification holds a major significance in the Sale of a property.