Registering a property in India is a significant legal step that solidifies ownership rights while ensuring the protection of interests for both buyers and sellers. This process encompasses a series of crucial documents, steps, and charges that are vital for a legitimate property transaction to take place.
Is it compulsory to register property?
Section 17 of the Registration Act, 1908, mandates that transactions involving immovable properties, where the consideration is above INR 100, should be mandatorily registered. Property registration is typically done post the sale deed has been executed and stamp duty has been paid on the transaction. Registration charges differ from state to state. The registration charges of the state where the property is situated apply.
How to prepare for Property Registration?
You should set right the following property registration details, prior to proceeding with the registration of your property:
a) Check the title deed, sale deed, and other required documents, that you have signed during the transaction.
b) Check if all utility bills, property bills etc. about the property have been paid.
c) Check if the property is not encumbered by any mortgage.
d) Pay the stamp duty as per the stamp duty rates prevalent in the state where the property is situated.
Process of Property Registration
Property registration operates under the guidance of the Registration Act, of 1908, typically executed at the local Sub-Registrar Office covering the property's jurisdiction. The process unfolds through several critical stages:
1. Title Deed Verification Buyers must ascertain the property's clear title, ensuring there are no disputes or legal claims. This involves examining the ownership history, checking for existing liabilities, and confirming the seller's legitimacy to transfer the property.
2. Stamp Duty Payment Before registration, buyers must settle the stamp duty, varying across states. The amount is calculated based on the property's value or the guidance value, whichever is higher. This duty, set by the State Government, stands as a significant cost in property registration.
3. Document Preparation: Legal experts or conveyancers prepare property registration details such as the sale deed. This deed contains vital property registration details, buyer, seller, sale amount, and other pertinent terms and conditions.
4. Sub-Registrar Office Visit: Both the buyer and seller, accompanied by witnesses, visit the Sub-Registrar Office to execute the sale deed. This document is signed by both parties in the presence of the Sub-Registrar or an authorized official.
5. Verification and Registration The Sub-Registrar examines the property registration details such as vital documents and registers the property if all legal requirements are met. Registration involves paying nominal fees based on the property's value.
6. Encumbrance Certificate Issuance: Post-registration, buyers can obtain an encumbrance certificate from the Sub-Registrar Office, verifying the absence of pending legal dues on the property.
National Generic Document Registration System for Property Registration
NGDRS is an initiative of the government of India. It provides for a common system through which property registration across the country can be carried out. NGDRS is useful for registrars, buyers, sellers, etc. One can also find out the circle rates of land on NGDRS, calculate property valuation and perform other associated tasks with regard to property sale and purchase.
Essential Documents for Property Registration
Documents for property registration should be submitted within four months from the date of execution of the sale deed. If there is a delay in the submission of documents, you can send an application to the sub-registrar citing the reasons for the delay. The sub-registrar may allow the submission of documents beyond the limit, but a penalty may need to be paid. The following documents will need to be submitted:
a) Passport-size photographs
b) Government ID card
c) Current property register copy
d) Power of attorney (if applicable)
e) Municipal tax bill
f) Proof of property ownership (can be the executed sale deed)
g) Payment receipt of stamp duty and registration fee
h) No-Objection Certificate
Costs Involved in Property Registration
Expenses during property registration encompass stamp duty, registration fees, legal charges, miscellaneous fees, and property valuation costs if necessary.
Stamp duty refers to the fee imposed by the state government when you transfer the ownership of your property to someone else. It's a charge you pay while registering property documents, essential for the legal validation of the property transfer. This duty varies across states and is compulsory according to Section 3 of the Indian Stamp Act, of 1899.
Stamp duty serves as validation for your property agreement in the eyes of the law. A document stamped with the paid stamp duty indicates your lawful ownership of the property. Legally, without paying this charge, one cannot rightfully claim ownership of the property. Hence, it's crucial to settle the full stamp duty amount.
Different cities across India have varying stamp duty charges, as well as registration charges. These charges range from 1% to 8% of the property's total value, depending on the location. The stamp duty is calculated as a percentage of the property's market value, with old properties often incurring lesser duty than newer ones due to depreciation.
Several factors affect the stamp duty charges:
1. Property's Age Older buildings usually attract lower stamp duty charges due to their depreciated value, while newer ones face higher charges.
2. Owner's Age and Gender Senior citizens and women may benefit from reduced stamp duty charges as offered by certain state governments.
3. Purpose of the Property Commercial buildings generally incur higher stamp duty than residential properties due to additional amenities and floor space requirements.
4. Location: Properties situated in urban or municipal areas may face higher stamp duty compared to those in suburban or rural locations.
5. Amenities: The government may charge extra for specific amenities present on the property, including lifts, swimming pools, gyms, community halls, etc.
Understanding these factors helps in estimating and preparing for the stamp duty charges involved in property registration. It's important to consider these aspects to facilitate a smoother and legally compliant property transaction.
Property registration in India is a critical legal process ensuring the legitimacy of property transactions while safeguarding the interests of both buyers and sellers. It involves submission of property registration details such as documents, and specific charges. Understanding these procedures, documentation requirements, and associated costs is vital for a seamless and legally sound property transaction in India. Seeking guidance from legal experts or conveyancers can greatly aid in navigating the complexities of property registration.