Legal Considerations to Keep in Mind Before Selling Your House
Selling anything is a tedious task, let alone selling a house. What are the requisite documents for sale? What is the correct procedure? Are there any risks involved in the process? If one does not have answers to such questions, selling a house can become an ugly affair.
Law relating to Sale of Houses
Houses are a tangible piece of immovable property. The main legislation which governs the sale and transfer of property in India is the Transfer of Property Act, 1882 (hereafter referred to as "TPA"). Chapter III of TPA deals with the sale of immovable property.
Sections 54 and 55 of the TPA are of enormous relevance in our context. Let us discuss the crux of these provisions under the following headings:
Rights and Liabilities of the Seller - Section 55 of TPA
There are several rights and liabilities mentioned for both the buyer and seller. There are rights and duties regarding the seller, before and after selling his/her property. Let us discuss them under the following headings:
Before Sale of Property
The duties of a seller before selling his/her property are as follows:
- Disclosing any defects in the property to the buyer.
- Producing before the buyer, on their demand, all the legal documents as to the seller's property title.
- Answering all the buyer's questions about the property.
- Taking care of the property and all the relevant documents in the period between the date of contract and the date of delivery of the property.
- Paying all the rents, government fees, dues, etc., up to the date of sale of the property.
People Also Read This: Online Property Registration
After-Sale of Property
There are a few duties of the seller after the sale of the property. They are as follows:
- The seller is bound to deliver the possession of the property after the sale to the buyer.
- Through the contract with the buyer, the seller's interest has professed to transfer to the buyer will exist, and the buyer will have the right to transfer the same.
- If all of the purchase money has been paid by the buyer, the seller is bound to deliver all documents of title relating to the property in the seller's possession.
Documents required for selling your house
As already mentioned above, under TPA, the seller is mandatorily required to produce all the relevant documentation before the buyer. A bunch of property-related disputes arises due to the lack of proper documentation. Thus, it is crucial from both the seller's and buyer's perspectives to give the requisite attention to the documentation of the deal.
- The documents required for the selling of a tangible immovable property (such as a house), are as follows:
- Letter of allotment: This is the document that conferred the allotment of the property which is in possession of the seller, who had purchased this property from a relevant society or authority.
- Sale Deed: All the original sale deeds from the previous owners of the property who have handed it down to the current owner (the seller). This helps in tracing the property title chain. The seller should have an original sale deed. It is compulsory under the law that the seller needs to have all the previous agreements.
- Sanctioned Plan: The seller also needs to have the approved building plan and occupation certificate by the local municipal authority or any other competent authority.
- Society Documents: The seller must seek the permission of the relevant competent authorities (development authority or society) before selling the house. For example, if the seller lives in a gated community, then he/she must obtain a NOC (no-objection certificate) from the housing society or governing body.
- Encumbrance certificate: This certificate is required as an indication of free title. This is because while buying a house or apartment, the buyer wants to ascertain no legal dues.
- Sale Agreement: Lastly, but most importantly, after both the parties have arranged the documentation, the terms and conditions for the agreement for selling the property can be laid down. This agreement shall be the blueprint and precede the execution of the sale deed and hence is extremely important.
The procedure of selling your house
We've already discussed the documentation process, one of the most important parts of the procedure. There are other practical and/or legal aspects to the procedure, which includes the following:
- Valuation of Your house: Make a good estimate of the value of your house. For this purpose, you can either consult a real estate agent or self-assess the property by researching the prevailing market rate in the society or locality where your house is located.
- Find a buyer: The next step is to find a person who is ready to buy your house.
- Intimate your intentions to the governing body: As mentioned already, you must seek approval from the housing society where the house is located by getting a NOC.
- Prepare the house: You can now stage your house for potential buyers to visit. For this purpose, ideally, you should vacate the house and do renovation or repair work on the same.
- Finally, list the property: Now, you can finally list the property for sale on online platforms or seek the help of brokers who can help you find buyers.
People Also Read This: When seller is not signing your property transfer papers: Deemed Conveyance is your option
Every seller needs to know such intricacies before proceeding to sell their house. Unless the seller is well-informed regarding such details, they can be taken for a ride by the buyer. The whole idea is to avoid being in that position as a seller.