Advocate Selvakumar

Best advocate to verify property legal documents in Bangalore,

Monday, 11 May 2015

Confirmation Deed and Cancellation Deed

Confirmation Deed and Cancellation Deed / Supplementary Documents to rectify the mistakes in your deed

It is very common that many a times the main documents of sale, mortgage, lease are drafted by inexperienced and unqualified people, as a result of which defects creep into the documents. This necessitates the requirements of supplementary documents to remedy the mistakes. Deeds of confirmation, rectification and cancellation are some of the important supplemental deeds. We have already dealt with rectification deed. This write up deals with confirmation deed and cancellation deed.

There are two types of confirmation deeds, one of the types is, where a person confirms and assents to the documents of conveyance executed by another person. This becomes necessary, when a person is not made a party to the main document of conveyance either by oversight or by ignorance or by some other reasons.

Another type is very important. Here the party to a document has made some mistake in signing the main document or has failed to admit the execution before the sub-registrar within the prescribed time, and consequently the sub-registrar has refused to register the document as far as the said party is concerned or in some other respect. It is very common though the parties execute the documents, but fails to turn up at sub-registrars office to admit execution, and the registering authority, refuses to register the document. In order to remedy this defect, a deed of confirmation has to be executed from the concerned party, wherein the confirms the execution of principal deed and further adds that the principal deed is valid and binding on him. He also confirms that he has no right, interest, title to the property transferred which belongs to the purchaser/transferee.

As a precautionary measure a copy of principal deed should be annexed to the deed of confirmation and such copy should also be signed by the party executing the confirmation deed. However, whether such a document cures the defects of the main documents is debatable, but such documents would act as promissory estoppel against the party. This would avoid execution of fresh documents, payment of stamp duty and registration charges.

The word confirmation in strict parlance means approbation or assent to the estate already created, by which confirmation party further strengthens and gives legal validity to such estate so far at it is his powers.

The confirmation may be given in variety of ways (1) by acquiescence (2) by limitation (3) by deeds. Confirmations of acquiescence and by limitations are the outcome of operation of law.

The Indian registration recognizes confirmation deeds. Sec. 17(1) provides any deed confirming any interest in immovable property needs to be registered.

The confirmation deed attracts stamp duty. If the main documents is registered or to be registered the corresponding confirmation deed also requires registration.

Deed of Cancellation

Section 13 of Specific Relief Act 1963, deals with the cancellation deeds. There may be certain written documents, which by their nature or by operation of law or by some other reasons are void, violable. Such documents if left as they are and outstanding may harm the interest, right, titles privileges of some party. Such person may institute a suit, praying for cancellation of such written documents, and the court in its discretion if thinks it proper may order for Cancellation of such written document.

There may be documents of contract, which are void as they are against Law Public Policy or violable if they are vitiated by fraud coercion or other similar grounds. The parties to the document may also cancel such documents by mutual consent without referring to the court. An agreement for sale, lease, mortgage, licence, partition, may be cancelled by the parties with consent of all parties.

But at times, the matter of cancellation of document may not be so simple as some parties may want to take undue advantage, or very mature of document may not make it simple task.

A deed of conveyance, which is duly executed and registered, cannot be cancelled by mere deed of cancellation. The proper course would be to execute a reconveyance deed and get it duly registered. But if of fraud, coercions or incase of any disagreement among the parties, the chances of mutual consent to cancel the agreement are very remote. In such cases, the affected party has to seek the intervention of the court by filing suit as per the provisions of section 13 of Specific Relief Act.

If any of the documents are unregistered, it may be cancelled by consent of all the parties by scoring off or by endorsing it about cancellation. But in both cases, all the parties should sign the document for having cancelled.

Cancellation deed attracts the stamp duty as per section 17 of Indian Stamp Act, that is stamp duty is payable only if it is attested by witness. A cancellation deed, which is not attested, attracts stamp duty as per agreement.

If the main deed needs to be registered. Cancellation deed also needs to be registered.

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Best advocate to verify property legal documents in Bangalore,

Saturday, 9 May 2015

OPPORTUNE TIME TO TRANSFER HOME LOAN

Construction/Purchase of House requires substantial funds and repaying in given time; and it attract normal equated monthly instalments. While some other loans are required to repay in less than five years period and such loans attract heavy equated monthly instalments; and this sort of facility is more suitable to avail finance for repairs and renovations.

Due to the reduction of rates by the RBI, the normal lending institutions / Banks are bound to reduce the interest rates on home loans, as such, this is the most opportune time to transfer the loans to exploit the benefit of low interest rates.

1.Low interest rates are based on tenure of the loan. Some financial institutions link it to the amount of loan. Borrowers who have availed loans at higher interest rates, may examine the following parameters:

(a) balance outstanding;

(b) balance repayment period;

If the balance repayment period is less than five years, they may transfer the loan to an institution which charges less than 9%. They may choose to pay the same EMI, which they were paying earlier, so that loan gets closed earlier resulting in considerable savings in interest. If not affordable, they may also agree to repay the loan in 5 years with reduced EMI.

In case, the balance repayment is more than five years, examine the balance outstanding and the EMI affordable; and in such case, if the balance repayment period is more than 10 years, transfer the loans, where less interest is charged.

2.While transferring the loans, consider the method of interest calculations. There are various methods like:

- Annual reducing;

- Half-yearly reducing;

- Quarterly reducing;

- Monthly reducing; and

- Daily reducing methods.

Shifting from annual reducing to daily reducing in the present low interest period is prudent to derive maximum benefits.

3.Timing of transfer:

Benefits may not be maximum, unless the transfer of loan is properly timed.

The borrower should ascertain the type and date on which interest is charged. In case of annual reducing method, the interest is charged on 31st March every year. In case of monthly reducing, generally interest is charged to loan on 5th of every month. As such, transferring the loan on the day on which the interest is charged or slightly earlier is advisable.

4. For closure penalty and admission charges:

Penalty of generally 1% on the outstanding balances is charged on loans transferred. Similarly processing fee/admission charges are levied on incoming loans. Compare the charges with the interest saved before requesting for transferring the loans.

Finally one has to decide whether to prefer floating rate or fixed rate on transfer. As the interest rates have been reduced, fixed rate seems to be a better option, so that one may shift to floating, in case of further reduction.

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Friday, 8 May 2015

COMMENCEMENT AND OCCUPANCY CERTIFICATES FOR THE FLATS

COMMENCEMENT AND OCCUPANCY CERTIFICATES FOR THE FLATS

The Completion Certificate and Occupancy Certificate from the Planning authority are essential for any construction as per the provision of law. These certificates evidence that the Commencement and Completion of the building are as per the approved plan and in compliance of Locals laws. Every body heard about the word Commencement Certificate and Occupancy Certificate.’ But practically, most of the persons who are the owners of the buildings have not at all seen how the Commencement Certificate and Completion Certificate will be. The Commencement certificate is one of the most essential documents for the Apartment Construction. Only a few builders who are developing the mega project are obtaining Commencement and Completion Certificates. Generally, for small Apartment owners, getting completion certificate is not possible because of the deviation and violation in the building construction. Some of the Financial institutions and MNCs tenants are insisting on the Commencement Certificate and the Completion Certificate from the owners of the building.

COMMENCEMENT CERTIFICATE:

After the approval of the building plan, the owner shall give notice to the authority of the intention to start work on building site in writing. Further, the owner shall give notice to the authority on completion of foundation or footings before erection of walls on the foundation. Within 15 days from the date of receipt of such notice, the Engineering wing / authority shall inspect the site to verify as to whether the foundation work for the building conforms to the sanction plan or not. If the foundation work is according to the sanction plan, the authority will issue commencement certificate within the prescribed period from the date of the inspection. In any case, the construction shall be proceeded according to the sanctioned plan as if the permission for the commencement of the work is deemed to have been accorded.

Further, the authority will verify as to whether the building has been constructed in all respects as per the sanctioned plan of the building, complied with Building bye-laws, including other relevant permissions or clearances obtained from the other departments. If everything is in order, Engineering Department will issue the Commencement certificate.

OCCUPANCY CERTIFICATE:

Problems with respect to issuance of Occupancy Certificate arises on account of violation of Building laws, which is almost 95% of building in Bangalore facing the problem. Though common people have spent their hard earned money on the project with a dream of owning a house, they are unable to get the occupancy certificate because of the deviations in construction of the building. Whereas, the Builders having a good connection, escape through various loopholes in law and extended their saleable area.

DEVIATIONS AND VIOLATION:

Wherever any construction is in violation of the sanctioned plan, the Commissioner may, if he considers that the violation are minor viz., only when the violations is within 5% of (1) the minimum set back to be left around the building (2) the maximum plot coverage (3) permissible floor area ratio and maximum height of the building and that the demolition under the Act is not feasible without affecting the structural stability, regularise such violations by issuing sanction of the modified plan with a levy of suitable fee to be prescribed. The Commissioner shall come to such conclusion only after recording detailed reasons for the same. Violations under the provision shall not include the buildings which are constructed without obtaining any sanctioned plan whatsoever and also violation, which are made inspite of the same being specifically deleted or rejected in the sanctioned plan.

CONSEQUENCE OF DEVIATION:

In general, builders and occupants are not much bothering about the Commencement Certificate and Occupancy Certificate. It is advisable to insist for the Completion certificate from the builders. Only after the receipt of completion certificate, the title will be perfected. However, the officials are not bothering at the time construction and they would not issue the completion certificate after completion of the building. People in Bangalore in general are not bothering about the completion certificate.

However, certain cases of demolition of unauthorized floors, deviations were happened very recently at Brigade Road Street and Richmond Street, in Bangalore.

Deviation is a vicious circle, which only the government can break. Government must initiate immediate remedial action to stem the root. The authorities shall not be very rigid in granting completion certificates. If the builder has deviated a little more than the allowed percentage, the authorities may impose the huge penalty and regularize the building.

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Thursday, 7 May 2015

Violation of building byelaws

Violation of building byelaws

Bangalore is one of the fastest growing cities of India. The reasons for such a fast growth could be attributable mainly to the development of I.T. hub, pleasant climatic conditions and better educational and employment opportunities. Because of high influx of people to the city, there is a great demand for house and house sites in Bangalore. This, in turn, has lead to the steep rise in the property values here.

Building byelaws are introduced to regulate construction activities, to prevent construction of buildings in a haphazard manner and to provide better civic amenities. Zoning regulations are also introduced with the same motive and to regulate the land use, control of density of population and to develop the city in an orderly way. However, these building bye-laws and zonal regulations are not strictly followed by the people presumably on the ground that the restrictions imposed are nothing but hindrance in exploitation of the property to the full extent and thereby they construct their buildings at their will. In so doing, they do not mind to forego certain prescribed civic amenities such as having broader roads, playgrounds, parks and other civic amenities.

Broadly, we may classify the violations into three categories viz., violation of Floor Area ratio, violation of site set back and violation of plot coverage. Violation of any one of these three violations would deprive the land owner of completion certificate.

Floor Area Ratio

Floor Area Ratio (F.A.R) is prescribed separately for intensely developed area, moderately developed area and sparsely developed area. Earlier, F.A.R. used to be high in more intensely developed central areas in view of land values and lower F.A.R. in the suburbs where land values are less. But presently it is on the reverse pattern and the policy is to fix less F.A.R. in the central area to enable decongestion and higher F.A.R in the suburbs to encourage development where the traffic and other problems are less.

Non-adherence of sanction plan restrictions and set back

The building bye-laws prescribe for certain set backs on sides of the building to facilitate the people to have proper light, ventilation, privacy and to save them from dust and traffic noise. While framing the building bye-laws, the civic authorities also keep in mind the future land requirements for broadening roads. It is noticed that people violate building bye-laws by way of additional floor construction, site set back construction, providing stair case on the site set back area, balcony area to be converted into living rooms.

Land use

The Zonal Regulations of the Comprehensive Development Plan of Bangalore prescribe different land uses like; residential, commercial, land for civic amenities etc., for systematic development of the locality. But, it is noticed that the residential buildings situated along the main roads and the roads nearer to commercial area are developed and utilized as commercial property. Even several industries also do crop up in these localities in gross violation of zonal regulations. Similarly, residential or commercial buildings do crop up in civic amenities sites meant for parks, play grounds, schools, green belt areas etc.

Sanction Plan for additional constructions

If a part of the building is constructed with deviations, the owners of such property hesitate to approach the plan sanctioning authorities whenever they intend to put up further construction on the property for approval of sanction plans for the reason that deviations will be noticed during inspection by these authorities and thereby proceed to make further construction without the sanction plan. Such people try to develop rapport with the concerned municipal authorities and put up additional constructions without sanction plan.

The reason for violation of building bye-laws and sanction plans by the people is that most of the land owners / builders want to exploit their land to an optimum extent because the residential and commercial properties do fetch high return. Presently, in Bangalore there is a steep rise in land value, say Rs.5,000/- per sq.ft. on an average.

In a large number of cases, deviations and violations take place with the active support of the officials and the local politicians. Only in rare cases when it is brought to the notice of the competent authority of deviations, action would be initiated by the concerned authorities against which action the land owners knock the doors of the courts and in many such cases courts do grant stay. Thereupon, the building owners do enjoy the property for long period despite violation of the bye-laws since it would take long time for the court to dispose of the matter.

Remedies

Violation of bye-laws, deviations of sanction plan, zonal regulations etc., cannot be allowed to be continued for long since it is an unhealthy trend. Therefore, the following suggestions may help in curbing violations of the bye-laws etc.

User friendly bye laws

The building byelaws and zonal regulations of the Comprehensive Development Plan should be user friendly and acceptable to the majority of the public. Further, the byelaws should not consist of too many technical jargons but should be simple to enable the common man to understand and follow. Byelaws should be suitable to the local conditions failing which there would be violation of such laws.

Strict enforcement

When once user friendly building byelaws with simplified procedure for sanction of building plans are introduced, there should be deterrent punishment if the property owners deliberately deviate from the sanctioned plan or construct their buildings without the sanction of the competent authority. It may be kept in mind that unless strict enforcement of the zonal regulations and building bye-laws is carried out in letter and spirit, there is every likelihood of people violating even the user friendly byelaws.

Accountability of Engineers

Construction of a building generally takes not less than a year. During this time, frequent visit by the concerned area engineer and supervisor to find out whether the construction is according to sanction plan etc., would prevent violations of the regulations by the land owners. Instead of this, the municipal authorities conduct raids after several years of such construction putting the people to a great hardship and embarrassment. To avoid such a situation, strict enforcement of visit by the concerned engineer must be introduced and if any deviations are noticed later on, the concerned engineer should be made accountable for allowing such deviations and action initiated against him for dereliction of his official duty.

Imposition of heavy penalty for deviations

As a one time relief, for the existing buildings all deviations in building bye-laws, plans and zonal regulations could be permitted with different slabs of penalty for such violations. The higher the violation, more the penalty. Once user friendly bye-laws are introduced, there should be no leniency whatsoever and every deviation should be punished with severe penalty.

The building byelaws need revision whenever there is change in the C.D.P. of the city. The committee constituted to prepare the byelaws should comprise of not only the experts in the field but also the different sections of the public so that the matter could get debated from different angles before arriving at a conclusion. Thereupon, the draft byelaws should be circulated amongst the public to solicit the views and suggestions from people of different walks of life. The print and visual media can play a greater role in this regard. A team of technical officials consisting of town planners, architects, and civil engineers can be formed to educate the people on the need for adherence of the byelaws while at the same enlightening the public of the punishment for violations. Similarly, area committees consisting of revered citizens and the representative of the residents welfare associations may be constituted to monitor violations.

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Wednesday, 6 May 2015

ABOUT A SALE DEED

ABOUT A SALE DEED

Sale Deed is also known as conveyance deed. This is the document by which the seller transfers his right to the purchaser, who, in turn, acquires an absolute ownership of the property. This document is executed subsequent to the execution of the sale agreement and after compliance of various terms and conditions detailed in the sale agreement.

Before the execution of the sale deed the title of the seller is to be established beyond doubt. Copies of the documents of title must be scrutinized by an advocate, well versed and experienced in property dealings.

If there is any encumbrance on the property, such encumbrance is to be cleared by the seller at his cost.

All statutory payments like property tax, water and power charges and any other payments due on the property should be cleared before the execution of the Sale Deed. Any previous charges or mortgage should be clear before execution of the Sale Deed.

Clearances, and permissions required to be obtained by the seller should be obtained prior to execution of the sale deed.

Latest encumbrance certificate of the property, subsequent to the date of the sale agreement up to the proximate date of sale deed should be obtained, and such certificate should be of nil encumbrance.

All the persons having interest in the property should be made parties to the deed. Particular attention needs to be paid in case of purchase of properties from a Limited Company, Partnership Firm, Hindu Undivided Family, Trust, Power of Attorney Holder and Minor.

Draft Sale Deed

A draft Sale Deed, containing full details of the parties, advance amount paid, mode of balance amount payable, receipt of the balance amount by the seller, handing over the original documents of the property, handing over the possession of the property, handing over the authorization letter to transfer power and water meters, signing of the application for transfer of khatha, title of the seller of the property, indemnifying the purchaser in case of defect in the title, easement rights, will be prepared by the purchaser’s advocate. Such draft Sale Deed should be captioned as draft Sale Deed and shall be signed by the purchaser’s advocate.

A copy of the draft Sale Deed will be given to the seller for his approval. The seller and his advocate will verify the draft sale deed and approve it, or may suggest suitable deletions, additions or amendments. The purpose is to bring forth the correct intention of the parties to the Sale Deed.

On approval of the draft Sale Deed, the same has to be prepared on a quality or a document paper. In Karnataka it may be prepared on good quality paper like bond paper or green paper and the stamp duty may be paid by way of demand draft or pay order or cash. The exact amount of stamp duty should be ascertained from the Sub Registrar office. Purchaser is liable to pay the Stamp duty as per value stated in the documents or as per the Sub- Registrar office value whichever is higher.

Execution

After the Sale Deed is prepared all the parties to the deed shall execute it by affixing full signatures. Each page should be signed by all the sellers. Any overwriting, cancellations, erasures and additions have to be authenticated by full signatures of the parties.

The execution of the Sale Deed requires to be witnessed by two witnesses. The witnesses shall give their full particulars and addresses.

Sale Deed of immovable property of value more than Rupees one hundred needs compulsory registration. The duly executed sale deed should be presented at the jurisdictional sub-registrar office. All the parties, including the confirmation witnesses shall be present at the time of registration and admit the execution. Purchaser also has to be presented for the execution of the documents at the Sub Registrars office. In case the purchaser is not in position to be present before Sub Registrar, he can give Power of Attorney to any of his persons to sign and present the documents on his behalf. In case seller signs the Sale Deed, it is compulsory that through the registered Power of Attorney holder only can represent for him to present the documents before the Sub-Registrar.

Registration

In Karnataka, the Sub-Registrars office, take the photos of purchaser, vendors, witness and also their thumb impressions and print the same on the Sale Deed.

The vendors has to produce all the original documents pertaining to the property to the purchaser. If the property is divided into one or more portions, the seller has to give certified copy or Xerox copy of the documents to the purchaser and has to give declaration to that effect. Generally, the larger portion holder should get the original documents.

There is a time limit for presenting the documents for registration. The time limit is four months from the date of execution. Thereafter a grace period of another four months is allowed on payment of penalty. The maximum penalty is ten times of registration charges.

At times, the registering authorities may dispute the stamp duty paid. In such cases, the purchaser has an option of paying the additional stamp duty by way of cash or payorder. The purchaser may contest it in which case the Sub Registrar will do the pending registrations and send it to the Registrar of Under Valuation to arrive at proper Stamp Duty.

Parties have to quote their Income Tax Permanent Account Number in case the transactions are done in cash for the property which values more than Rs 5,00,000. Parties, who have not yet been allotted Permanent Account Number, will have to file Form No.60 or Form No. 61 in case of Agriculturists.

The purchaser’s advocate has to take all precautions while preparing Sale Deed. It is a most important document and decides the fate of the purchaser. The purchaser has to preserve the Sale Deed very safely.

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Friday, 1 May 2015

Holding of Property by Company

Holding of Property by Company

Company is an artificial person created under the Companies Act 1956 with perpetual succession and common seal. It is a legal person different from its members / shareholders. It possesses all the powers to enter into valid contracts, sell, purchase, hold, lease and mortgage the immovable property. It has a legal entity.

There are two important types of companies. They are private limited company and public limited company. Any two persons can form a private company and its membership / shareholders are limited to 50. A minimum number of seven persons can form a public limited company.

Under the Companies Act, the registration of both private limited company and public limited company is compulsory. The certificate of incorporation is issued on registration. The registrar of Joint Stock Companies issues the certificate of commencement of business to the public limited companies. This is not applicable to private limited companies.

The Memorandum and Articles of Association is an important document of a company. The memorandum refers to the objectives and powers of the company and articles of association deals with the powers, duties, liabilities of the Board of Directors, share holders/members and rules and regulations governing the management of the company.

Common Seal: Companies are not physical persons who can sign. Common seal is the physical form of the company. The common seal is used as a physical impression made upon the documents executed by the companies. This is special seal engraved on steel block. This is to supplement the signature of the corporate officers and to authenticate company documents.

Authorization by a resolution of the Board of Directors of the company or by an authorized committee of the Board is necessary to affix the common seal. In case of some companies the articles of association deal with affixing of the common seal.

Immovable Property Transaction: The Transfer of Property Act mentions that a living person includes company. It is taken for granted that all outsiders are aware of the contents of the Memorandum and Articles of Association of a company. The Memo random and Articles of Association deals with the objectives of the company. The powers and rules regarding governance of the company must be verified to ascertain that the transactions are as per the objectives and are within the powers of the company.

The Articles of Association specifically deal with powers of the directors regarding sale, purchase and mortgage of immovable property.

The company may also execute Power of Attorney under its common seal empowering any person to execute deeds on its behalf.

Director, Managing agent, Secretary, Treasurer, Manager or any authorized official may also authenticate the documents on behalf of the company, and it need not be under the common seal.

Any charge created by the company on its property needs to be registered with the Registrar of Companies within 30 days of such creation of charge by filing Form No.8. Charges not registered within the stipulated time are not taken into account against the liquidator of the company on liquidation, or against any creditor.

Such registered charge will serve as notice to all persons dealing with the property.

The Registrar of Companies maintains the Register of Charges and it is open to the public for inspection. This is different from the details maintained at sub-registrar office and mentioned in the Encumbrance Certificate. It is necessary to inspect the Register of Charges while transacting with the company Apart from the Register of Charges maintained by the registrar, the company is also bound to maintain a Register of Charges on its properties. This is open for inspection by the members of the company or creditors.

The Companies Act has restricted the powers of the Board of Directors on conveyancing in some cases. Section 293 of the Companies Act deals with these restrictions.

Consent of the general body of the company is mandatory to sell, lease or otherwise dispose of the whole or substantially the whole undertaking of the company. Like wise the consent of the general body of the company is necessary to borrow in excess of the aggregate of the paid up capital and free reserves. The Board of Directors cannot authorize this type of transaction without the prior consent of the general body. The only exception is temporary loans taken by the company from its bankers in the ordinary course of business.

So, while transacting with the company it is necessary to ascertain that the property is not whole or substantially whole part of the undertaking of the company and if the transactions involve whole or substantially whole part of the undertaking, the consent of the general body is obtained. However, where the ordinary business of the company is selling / leasing this restriction will not apply.

Similar caution needs to be exercised when the company borrows on mortgage of its properties in excess of its paid up capital and free reserves. If the company is in liquidation, only the liquidator, with the sanction of the court, can sell its property in the name of the company.

The Board of Directors by a resolution in the board meeting has to authorize the sale, lease, mortgage or otherwise disposal of the property / purchase of the property. The resolution by the Board of Directors is necessary even in cases where general body has consented.

Unless the Memorandum and Articles of Association empowers the Board of Directors to sell / purchase/ otherwise deal with immovable properties, any resolution passed by the Board of Directors in this regard will not be binding on the company. At times, it so happens that some of the directors have interest in some transactions. Such interested directors are not allowed to participate in the discussions and vote. Otherwise, the resolution is void.

If the resolution prescribes affixing of the common seal on the documents, it has to be followed in the manner prescribed in the resolution.

Copy of the resolution passed by the Board of Directors, certified by the Chairman and counter signed by the Secretary should be obtained, which should be part of the documents.

The dealings with and by a foreign company are governed by Foreign Exchange Maintenance Act, 1999.

According to the FEMA 1999, a company resident outside India, which has established in India, a branch, office, other place of business, for carrying on any activity in accordance with Foreign Exchange Management Regulations, 2000, excluding liaison office, can acquire an immovable property in India which is necessary for carrying on its activity after complying with all the applicable laws, rules, regulations and directions in force for the time being, such company has to file form IPI with RBI within 90 days of acquiring such a property. Such company is also permitted to mortgage the immovable property as security to an authorised dealer for borrowing.

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