Title is a legal term; It means right of ownership of property. The title of the property is the prime concern of everyone at the time of property purchase. Every property has a title. Title is the proof of the right of ownership or the basis of the right of ownership. Title can be created by act of parties or by operation of law.
The title to the immovable property is ascertained by reading the relevant "documents" and "deeds" relating to such property. The word "document" has a very broad import. Under common law 'document' means any substance expressed or described by means of letters, figures or marks for the purpose of recording that matter. Documents relating to property or commercial transactions are generally called instruments or deeds.
Land is a subject under the powers of the state governments under the Constitution of India and hence, property laws in India may differ from state to state. Apart from local laws, several laws framed by the central government also govern the acquisition and ownership of property (including interest in property) by way of purchase/sale, transfer, mortgage, inheritance or gift.
Transfer of property other than agricultural land, registration of deeds and documents come under the Concurrent List. When a person acquires or owns immovable property, the law also entitles him to use, lease, sell, rent or transfer/gift the land. The owner also has the right to mortgage his immovable property as security for the loan.
Here we'll tackle title checks required for a variety of purposes, including sale, lease, sublease and mortgage. For the purpose of brevity, reference to sale shall also include the purposes of lease, sublease, license and mortgage where applicable.
Importance of title verification
1. A title proves ownership. Barring a valid legal dispute, a land title serves as an official record for the ownership of the land. Without the appropriate title, the legal system would not recognize an unfiltered deed or informal contract.
2. All owners can hold their own duplicate title: Each owner of a land title can hold a legally valid copy of the title. The Register of Works will make a note of each owner's copy in the recordkeeping system to confirm the validity of the copy issued by each county. In the case of trust and company-based ownership, an accredited administrator may retain a copy of the title on behalf of the trust or company.
3. Prospective land owners often conduct title searches to uncover potential issues: During a title search, an investigator will look at years of land documents to identify potential issues with land ownership. A title search can prevent new owners from accepting liability for past issues. For example, a property owner cannot sell or transfer ownership rights to a property with unresolved tax issues. An outstanding lien can make any ownership transaction invalid.
Title searches reveal information about property taxes, property deeds contracts, CC&Rs (contracts, terms and restrictions), deed document issues and unresolved ownership claims, and more. If the previous property owner granted the easement or rights to use the property to a company or individual, the search will also reveal these recorded contracts.
While buyers and lenders commonly use title searches during the buy/sell process, many other parties can benefit from a title search. Home builders, businesses and government officials can use title searches for risk management and investment protection purposes.
4. Title Insurance Offsets the Risk Associated with Title Transfer: To mitigate the effects of issues not discovered during the title search, many land buyers invest in title insurance as part of the closing costs of the transaction. Owner's title insurance often provides coverage for damages up to the full value of the title in case an issuer jeopardizes a future claim of ownership. Owner's insurance policies will also cover dispute resolution legal costs, including damages paid to another party to the extent of the policy. 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 loss and legal expenses.
It is clear that title verification is a necessary activity before buying a property.
Property Title Verification Process & Method
The search for property title or legal description is done by the attorney or a title company in most real estate transactions. The Attorney/Title Company must first look at the past records of the property. A property can have a "Chain of Titles". The attorney has to see whether there is any encumbrance on the property.
Sometimes a legal succession certificate is also required to determine the title of the property if there is more than one person as the owner of the property. It is necessary to define the relationship of owners. But this is generally done when the property owner is a deceased person and that person has more than one legal representative. In such a situation, it is necessary to show the relationship between the deceased and his legal representative. It will also have to be checked that no objection has been raised on the sale of the said property.
Mother Deed is necessary to trace the origin of the property. It is a document that helps in further sale of property, thereby establishing new ownership. In the absence of the original deed, certified copies should be obtained from the registered authorities. Mother Deed covers change in ownership of property, whether through sale, partition, gift or inheritance. It is very important that the mother deed records the references to past ownership in a sequence and must be continuous and unbroken. In case of missing sequence, one should mention the text (Preamble) in records, revenue records or other documents from the registration offices. The sequence must be updated to the current owner.
Property title verification is necessary to prevent legal disputes after the sale of property. This is usually done with the help of the buyer's attorney. The attorney will determine by going through the past records of the property. Hence title verification assumes a major importance in the sale of property.