You can check whether the transferor is the legal owner of the property and has the authority to transfer ownership, as well as whether the title to the property is free of liens and other flaws, by performing a title verification. Additionally, this verification will help you reduce the risk associated with the transaction. Lets get to know more about it through this article.
What is Title verification?
The rights resulting from legitimate property ownership are what are meant by the term “Title” in the real world. A clear title is irrefutable evidence of ownership.
A thorough title verification search is therefore completed whenever a real estate transaction takes place to ensure a clear and marketable title because a flawed title could get you into legal and financial trouble.
The Patta Chitta 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 the 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.
Importance of Title Verification
- 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.
- 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.)
- 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 BBMP Property Tax issues. An outstanding lien can render any ownership transaction invalid.
Title searches reveal information about Property Tax Chennai, 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.
- 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
What Has to Be Checked and Verified?
-
Ownership Information
Verifying that the transferor is the legal owner of the property and has unambiguous, tradable rights relevant to the property is necessary. This will be ensured by comparing the initial property-related documents to public records kept by the local authorities and making sure they match.
This includes all documents proving ownership and transfer of title, such as sale deed, gift deed, conveyance deeds, wills, partition deeds, etc. If the sale was initiated by a person with power of attorney, that power of attorney needs to be carefully scrutinised.
-
Chain of Title
It is very common for a property to have changed hands and been altered multiple times. As a result, a title verification includes not only checking and verifying the title of the current owner but also the title of previous owners. A list of titles indicates the property’s title history. An examination of the chain should begin with the current owner and end with the property’s original owner for this reason. Every document, from the mother deed to the most recent link deed, needs to be carefully examined.
-
Derivation of Title
It is essential to grasp during which manner the transferor has derived Title with relevance to said property. Usually, a title comes by –
- Sale or purchase
- Will or inheritance
- Gift
- Partition
- Lease
In such situations, it is necessary to confirm the legality of all relevant documents affecting the transferability of property and to determine whether they are properly registered and stamped. These records include recorded sale deeds, conveyance deeds, title documents for both current and former owners, wills, gift deeds, leases, partition deeds, etc.
-
Nature of the Correct of the Transferor
The right of the transferor with regard to property ownership may be unrestricted or restricted. When the owner has unrestricted rights to possession, enjoyment, and disposal, ownership is said to be fundamental; otherwise, ownership is said to be limited. The absolute right to dispose of must be granted to the transferor in order to carry out a legal transfer.
Therefore, it is important to look into the correct transferor’s character while performing title verification. It enables us to determine whether the described property is transferable and whether the transferor has unrestricted authority to transfer the property.
-
Legal Competency of The Transferor
It is necessary to confirm the legal capacity of the current owner and previous titleholders of this property while conducting title verification. To sign a legally binding contract for the sale or purchase of real estate or another type of transfer of immovable property, such as a lease or mortgage, the signer must be of sound mind.
-
Nature of Property and Land Use
Whether the property is privately or publicly owned, its nature must be determined during title verification. Any property that has been acquired by the state may not be further transferred or alienated without obtaining the prior consent of a competent authority; otherwise, such transfers are null and void from the outset.
-
Development & Construction
The process of verifying the title is extended if the property is under construction or has undergone development. Checks must be made to ensure that the development follows the building plan and sanction plan in the manner advised by and in accordance with the municipal authorities.
Along with building, contractors also need to secure a number of licences and permits from pertinent utilities and infrastructure, such as water, electricity, sewage, and environmental compliance.
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.
Conclusion:
The actual value of a property is determined by the Title itself. A property with an improper title has no value; only a transparent title can vouch for the fact that you have the legal right to own and sell the property. Therefore, it is essential to carefully consider whether you possess a clear marketable title before investing in real estate. This determines that your ownership rights are free from any uncertainties, risks, and quiet claim encumbrances and defects. If you face in any difficult in doing this procedure, do connect Vakilsearch, India’s number one legal service provider. They will have the best experts who will do the procedure in hassle free way!
Also read:
