Central laws governing Real Estate in India
Indian Contract Act, 1872
This legislation specifies when a party can be said to have
the capacity to contract. A contract pertaining to realty can be entered into,
among others, by an individual (who is not a minor or of unsound mind),
partners of a firm, a corporate body, a trust, a sole corporation, the manager
of an undivided family, and a foreigner. All the requirements of a valid
contract, i.e. consideration, intention to contract and validity under the law
of the land must be satisfied
.
Transfer of Property Act, 1882
This lays down the general principles of realty, like
part-performance and has provisions for dealing with property through sale,
exchange, mortgage, lease, lien and gift. A person acquiring immovable property
or any share/interest in it is presumed to have notice of the title of any other
person who was in actual possession of such property.
Registration Act, 1908
The purpose of this Act is the conservation of evidence,
assurances, title, publication of documents and prevention of fraud. It details
the formalities for registering an instrument. Instruments which it is
mandatory to register include:
(a) Instruments of gift of immovable property;
(b) Other non-testamentary instruments which purport or
operate to create, declare, assign, limit or extinguish, whether in present or
in future, any right, title or interest, whether vested or contingent, to or in
immovable property;
(c) Non-testamentary instruments which acknowledge the
receipt or payment of any consideration on account of instruments in (b) above.
(d) Leases of immovable property from year to year, or for
any term exceeding one year, or reserving a yearly rent
Sales, mortgages (other than by way of deposit of title
deeds) and exchanges of immovable property are required to be registered by
virtue of the Transfer of Property Act. Evidently, therefore, all the above
documents have to be in writing. Section 17 of the Act provides for optional
registration. An unregistered document will not affect the property comprised
in it, nor be received as evidence of any transaction affecting such property
(except as evidence of a contract in a suit for specific performance or as
evidence of part-performance under the Transfer of Property Act or as
collateral), unless it has been registered. Thus the doctrine of part
performance dealt with under Section 53 A of the Transfer of Property Act and
the provision of Section 49 of the Registration Act (which provide that an
unregistered document cannot be admissible as evidence in a court of law except
as secondary evidence under the Indian Evidence Act) together protect the buyer
in possession of an unregistered sale deed and cannot be dispossessed. The net
effect has been that a large number of property transactions have been
accomplished without proper registration. Further other instruments such as
Agreement to Sell, General Power of Attorney and Will have been
indiscriminately used to effect change of ownership.
Special Relief Act, 1963
This Act is only to enforce individual civil rights. A
person dispossessed of immovable property without his consent (other than in
due course of law) can recover possession by a suit filed within six months
from the date of dispossession. Unless the contrary is proved, in a suit for
specific performance of a contract, the Court shall presume that a contract to
transfer immovable property is one in which monetary compensation for its
non-performance would not afford adequate relief. The Court could also grant a
permanent/ mandatory injunction preventing the breach of such contract and
award damages.
Urban Land (Ceiling and Regulation) Act (ULCRA), 1976
This legislation fixed a ceiling on the vacant urban land
that a ‘person’ in urban agglomerations can acquire and hold. A person is
defined to include an individual, a family, a firm, a company, or an
association or body of individuals, whether incorporated or not. This ceiling
limit ranges from 500-2,000 square metres (sq. m). Excess vacant land is either
to be surrendered to the Competent Authority appointed under the Act for a
small compensation, or to be developed by its holder only for specified
purposes. The Act provides for appropriate documents to show that the
provisions of this Act are not attracted or should be produced to the
Registering officer before registering instruments compulsorily registrable
under the Registration Act.
The objective of acquiring the excess vacant land could not
be achieved because of intrinsic deficiencies in the legislation itself. The
provisions under Sections 19, 20 and 21 of the Act have together proved
counter-productive to the objectives of the legislation. So far, only 19,020
hectares could be taken possession of by State Governments and Union
Territories and the remaining land was locked up in various litigations2. This
has only helped push up land prices to unconscionable levels and practically
brought the housing industry to a stop.
This legislation was repealed by the Centre in 1999. The
Repeal Act, however, shall not affect the vesting of the vacant land, which has
already been taken possession by the State
Government or any person duly authorised by the State
Government in this regard under the provisions of ULCRA. The repeal of the Act,
it is believed, has eliminated the large amount of litigation and released huge
chunks of land into the market. However the repeal of the Act has not been
carried out in all states. Initially the repeal Act was applicable in Haryana,
Punjab and all the Union Territories. Subsequently, it has been adopted by the
State Governments of Uttar Pradesh, Gujarat, Karnataka, Madhya Pradesh and
Rajasthan. Andhra Pradesh, Assam, Bihar, Maharashtra, Orissa and West Bengal
have not adopted the Repeal Act so far.
Land Acquisition Act, 1894
This Act authorises governments to acquire land for public
purposes such as planned development, provisions for town or rural planning,
provision for residential purpose to the poor or landless and for carrying out
any education, housing or health scheme of the Government. In its present form,
the Act hinders speedy acquisition of land at reasonable prices, resulting in
cost overruns.
The Indian Evidence Act, 1872
Under the Act, whenever the status of any person as the
owner of a piece of immovable property of which he is shown to be in possession
is questioned, the burden of proving that he is not the owner lies on the
person who asserts that he is not the owner.
State laws governing real estate
While each state has its own set of laws, which govern
planned development, rules for construction and floor-area-ratio (FAR) or
floor-space-index (FSI) and formation of societies and condominiums, two laws
that exist in every state, are the stamp duty and rent laws. Stamp Duty is
being covered in a later section
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