Legal Procedure to Sell a Property in India

Law
27-Aug-2022
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Selling a property is a significant decision that requires careful consideration and planning. In India, the legal procedure to sell a property is governed by various laws and regulations that must be followed to ensure a smooth and successful transaction. The process involves several steps, including property verification, valuation, and agreement drafting, which can be complex and time-consuming.

In this blog, we will provide a comprehensive guide to the legal procedure to sell a property in India. We will cover the essential steps involved in the process and provide insights into the legal requirements and regulations that must be followed. We will also discuss the role of property valuers, lawyers, and other professionals in the sale process and provide tips on how to avoid legal Property disputes and complications.

Whether you are selling a residential or commercial property in India, this blog will provide you with the necessary information to navigate the legal procedure successfully. By following the guidelines and recommendations provided in this blog, you can ensure a smooth and hassle-free sale process and achieve the best possible price for your property.

Sale- as defined under Indian Law.

As per Section 54 of the Transfer of Property Act, 1882, sale of transfer refers "the ownership in exchange for an amount paid or promised to paid or part-paid and part-promised., in a sale, an absolute transfer of all rights in the property sold exists". 

Parties involved in sale of proerty

The sale of a property in India involves several parties, including

  • Transferor: The individual or entity that owns the property and intends to sell it.
  • Transferee: The individual or entity that intends to purchase the property from the seller.
  • Lawyer: A legal professional who reviews and prepares the legal documents required for the sale, ensures that all legal requirements are met, and provides legal advice to both parties.
  • Registrar's Office: The local government office responsible for registering the sale agreement and transferring the ownership of the property from the seller to the buyer.

Legal procedure for selling a property in India

Step 1 - Hire a Lawyer

The first step in selling your property in India is to hire a qualified Property lawyer who specializes in property law. They will help you understand the legal requirements and assist you with the necessary paperwork.

Step 3 - Obtain Property Documents

You need to gather all the necessary documents related to the property, including the sale deed, title deed, tax receipts, property card, building plan approvals, etc.

Step 4  - Conduct a Title Search

Your lawyer will conduct a title search to verify that the property has a clear title and is free from any encumbrances or disputes.

Step 5 - Obtain a No Objection Certificate (NOC)

You may need to obtain an NOC for property transfer from various authorities, such as the housing society, municipal corporation, or any other local body. This is to ensure that there are no objections to the sale of the property.

Step 6 - Draft a Sale Agreement

Your lawyer will prepare a sale agreement that outlines the terms and conditions of the sale, including the sale price, payment schedule, and possession date.

Step 7 - Register the Sale Deed

 The sale deed must be registered with the sub-registrar's office in the jurisdiction where the property is located. You will need to pay the stamp duty and registration fees at this stage.

Step 8  - Handover Possession

Once the sale deed is registered, you can hand over possession of the property to the buyer.

Step 9 - Update Records

You need to update the property records with the new owner's details, such as the mutation entry in the municipal corporation, updating the property tax and other relevant documents.

Documents Required for Selling the Property

The documents required to sell a property in India may vary depending on various factors, such as the type of property, location, and transaction value.

Listed below are the documents you need while selling a property;

  • Title Deed
  • Sale Aggrement
  • Sale Deed
  • Encumbrance Certificate
  • Sanctioned plan
  • Completion Certificate: 
  • Possasion Certificate:
  • NOC from Society
  • Tax receipts
  • Succession Certificate

Title Deed

The title deed is the most crucial document that proves the ownership of the property. The seller must provide the original title deed or the copy of the registered title deed.

Sale Aggrement

A sale agreement is a legally binding document that outlines the terms and conditions of the sale of a property.

Sale deed

The sale deed is a legal document that transfers the ownership of the property from the seller to the buyer. The seller must provide the original sale deed or the copy of the registered sale deed.

Encumbrance certificate

The encumbrance certificate is a document that shows any legal dues or liabilities on the property. The seller must provide the encumbrance certificate for the last 15 years.

Sanctioned plan

The seller must also have a copy of the approved building plan and Certificate of occupancy issued by the competent authority. A sanction plan is a detailed outline plan of the property by the appropriate administration that highlights the area covered, the build-up area, and the open area of the property. 

Completion certificate

The completion certificate is a document issued by the local authorities stating that the construction of the property has been completed as per the approved plans.

Possession Certificate

The possession certificate is a document that proves that the seller has legal possession of the property.

NOC fromSociety

If the property is a co-operative society or apartment, then the No Objection Certificate (NOC) from the society or association is required.

Property tax receipts

The seller must provide the property tax receipts for the last few years to show that all dues have been paid.

Succession Certificate

If a person wants to sell a property that was inherited from a deceased family member, they may need to obtain a succession certificate to prove their legal right to sell the property.

Rights & Duties of Seller and Buyer

The rights & duties of a seller and buyer are based on the contract. When there is no agreement, the rights and responsibilities of Seller and buyer will be governed by section 55, Transfer of Property Act. The Transfer of Property Act is as under:

Duties of Seller Before Sale

  • The Seller must disclose all the material defects to the buyer related to the property, which the buyer is unaware of, so that he can sort that out.
  • The Seller must show all documents relating to the property to the buyer if he asks for those documents.
  • The Seller must answer all the questions the buyer put before him concerning the property.
  • The seller must take care of the property and all title documents from the date of the contract of sale to the delivery date.
  • The Seller must pay all the charges and rent, dues, or government fees up to the date of sale.

Duties of Seller after-sale 

  • After selling the property, the Seller has to give possession of the property to the buyer.
  • The Seller must contract with the buyer regarding the interest the Seller professes to transfer to the buyer and that he has the power to transfer the same.
  • Once the buyer has paid the purchase amount, the Seller must deliver all documents relating to the property in the Seller's possession or power to the buyer.

Seller’s Rights before Sale 

  • According to Section 55 (4) (a), A Seller has the right to receive all the profits and rent from the property before its sale.

Seller’s right after-sale

  • The seller has the right to charge the property if any amount is unpaid by the seller. As per Section 55(4) (b), if the price remains unpaid, the seller cannot refuse delivery of power or can claim back the power if it is already delivered to the buyer. Still, the seller has a right to recover the unpaid purchase amount from and out of the property.

Duties of Buyer before Sale

  • According to Section 55(5)(a) of the Act, the buyer must disclose to the seller all the facts as to the extent of the seller's interest in the property, which he feels that the seller is not aware, or which can materially increase the value of the such claim."
  • According to Section 55(5) (b).- The buyer must pay the Seller the agreed price of a property.

Duties of the buyer after Sale 

  • According to Section 55 (5) (c) – The buyer must bear the loss arising from the property's destruction, injury, or decrease in value not caused by the seller where the property owner has passed to the buyer.
  • According to Section 55(5) (d) – The buyer is obliged to pay the outgoings, such as rents, revenue, government dues, or taxes.

Buyer's right before Sale.

According to Section 55(6) (a), the buyer is have 

  • The right to have the property for the purchase money adequately paid by him in anticipation, not the delivery.
  • Interest on the such purchase money.
  • The cost awarded to him to obtain a decree for its recession if he denies accepting delivery.

EXCEPTION TO THIS RIGHT: "It is not applicable when the buyer has improperly declined to accept delivery of property."

Buyer's right after Sale.

  • According to Section 55 (6) (a), the buyer is obliged to get all the benefits of any property appreciation or increase in the value, rent, and profits thereof.

Conclusion

Selling a property requires complete attention as you do all the required homework before zeroing in. Let us say the same approach must be taken when you’re planning to sell a property. Else selling this might turn into the ugliest affair you can ever see. The seller should discuss with prospective buyers and appraise them off any charges they may incur during the transaction.

In Rest the Case, we are here to help you sell your propery. Call us today and share your needs.

Frequently Asked Quetions

Q: What is the stamp duty and registration fee in India?

Answer: Stamp duty and registration fees vary depending on the state or union territory in which the property is located. Generally, the stamp duty is a percentage of the property's sale value, while registration fees are a flat fee.

Q: Can a property be sold without registration?

Answer: No, a property cannot be sold without registration. The sale deed must be registered with the sub-registrar's office to make the transfer of ownership legal and valid.

Q: Can a property be sold by an attorney or representative of the owner?

Answer: Yes, an attorney or representative of the owner can sell the property, but they need to provide appropriate legal authorization documents to prove their authority to act on behalf of the owner.

Q: Can a property be sold if it has a pending loan against it?

Answer: Yes, a property can be sold if it has a pending loan against it. However, the loan must be repaid or transferred to the buyer as a part of the sale process. It is essential to disclose any pending loans or mortgages to the buyer before finalizing the sale agreement.

Q: What is the role of the sub-registrar's office in property registration?

Answer: The sub-registrar's office is responsible for registering the sale deed and verifying the authenticity of the documents submitted for registration. They also collect the stamp duty and registration fees and issue a certified copy of the sale deed after registration.

Q: Can the sale agreement be prepared without a lawyer?

Answer: While it is possible to prepare a sale agreement without a lawyer, it is not recommended. A sale agreement is a legally binding document that outlines the terms and conditions of the sale, and it is essential to ensure that it is drafted correctly to avoid any legal disputes in the future.

Q: Can a property be sold if there is a dispute or pending litigation?

Answer: It is not advisable to sell a property if there is a dispute or pending litigation. It is essential to resolve any disputes or litigation before selling the property to avoid legal complications in the future.