Flat Purchaseby way of Share Certificate Method

Flat Purchaseby way of Share Certificate Method

Co-operative Societies Acts of many states provide for formation of housing Co-operative housing societies.  Karnataka Co-operative Societies Act also permit the formation of Co-operative housing societies.  These societies acquire the land, construct the flats, which are allotted to its members.  The society allots shares to its members.  Such societies need to be registered with registrar of Co-operative societies.

Members are of different category, the member, associate member, and nominal member.  Individuals, Partnership fir, registered company, registered society local authority, State government, central government, public trust, any other corporate body registered under the relevant act, may become member of the co-operative housing society, subject to the rules governing the admission

A minor can also become a member of Housing Society through his guardian;  Certain states have put restriction of membership of family trust.  Hindu undivided family.

Here are different types of Co-operative housing societies.

1.      A society purchases the land or takes on lease, divide into several plots and allots to its members.  The members construct houses, on such allotted lands.  In such cases, the land is owned by the societies and the houses on plots to members.  Such societies are called Tenant ownership type housing societies.

2.      Societies acquire land by sale or on lease and construct the buildings;  flats are allotted to the members.  In such cases, both the land and building are owned by the societies.  These are called tenant Co-Partnership Co-operative housing societies.

3.      Societies are also formed by person who purchase the flats from the builders, under agreement as per flats ownership acts of the respective states.  In this case also, both the land and building belong to the society after the execution of conveyance by the builder in favour of the society.  Such societies are called flat owners Co-operative housing society.

Flat owners  Co-operative societies are of more common.  These societies are very popular in Maharashtra, Gujarat and West Bengal and not so common in Karnataka.

Flat owners Co-operative societies issues shares to its members by which the members gets to right to live, reside and enjoy the flat.  It is to be remembered that the rights and interest of the member in the flat is limited only to reside and enjoy.  Member can transfer only such right.  He is not the absolute owner of the flat.

 On sale of the flat, society transfers the shares to the names of the purchaser, on purchaser complying with the formalities.  After the purchaser is admitted, the purchaser becomes a member of the society and acquires right to reside and enjoy, the flat.

4.      In case of death of a member the society transfers the shares to the name of the nominee;

In the absence of any nomination, the society may transfer the shares to any one of legal heirs on consent given by other legal heirs.  In case of any dispute, the legal heirs may have to obtain letter of administration from a competent court.

The flats are to be required to be occupied by the owners.  in case the flats are let out, the members have to pay non-occupancy charges to the society.

In case of transfer of share to the others, the member has to give a notice to the society along with the consent of the proposed purchaser.  The member may also obtain no-objective certificate from the society for transfer of share.  The managing committee on considering the notice of transfer will call for the following documents:

Application of the transfer of shares along with share certificate.;

Membership application for the purpose of transfer;

Resignation letter from the original member.

Prescribed transfer fee, membership fee, price of the shares premium amount, copy of the stamp duty paid agreement, declaration by both transferor/transferee under urban land (ceiling and regulation) act, 1976, if applicable; various reasons for transfer declaration to use the flat for the purpose of which it is bought, undertaking to discharge all liabilities to the society, no objection letter from the financing agency, if the seller has availed loan.  No objection letters from any other statutory agency, which has given land to the society.  On receipt of these requirements, the application of transfer will be placed before managing committee.  However, only general body has powers to admit a new member.

The affairs of the Housing Society are managed by a managing committee, elected by the member from out of the members.

Generally, the builders/owners sell the flats to the purchasers, but will not covey the land to the societies formed by the purchasers.  In such cases the title of the purchasers is not perfect, since the land stands in the name of the builders owners.

In such cases the owner will be entitled to further FSI if permitted.

 Many states provide in their statutes that the builder/owner should take steps for registration of the Housing Co-operative society and thereafter transfer the land to the society within a time frame.  As per the sections 10, 11 of the Karnataka Flats ownership Act 1972 and Karnataka Flat ownership rules 1975, Rule No. 10, 11, the promoter builder shall submit an application for registration of the society within four months from the date of which minimum number of persons require to form a society have taken flats -  Thereafter the promoter shall convey the land to the society within four months from the date of registration of society.

5.      Another interesting aspect is the charge created on individual flats/apartments by the members.  The right of the member is limited, to reside and enjoy the flat, but they do not have any ownership right.  So the members can mortgage their right to reside, hence such flats cannot be alienated, since the ownership rests with the Housing Co-operative society.  In case of sale, only the right to reside in the flat is transferred to the purchaser, he will not acquire absolute ownership.  So is the case where the flats are mortgaged to the financial institutions by members.  No objection certificate from the Co-operative Society is essential to mortgage the flat.

In case of the transfer of flats by transfer of shares, the Co-operative societies will not register the flats in individual names, and the entire property stands in the name of the Co-operative Societies;  the property is also assessed for tax as a single entry.

Karnataka government is of the view that individual flats should be registered in individual names by regular conveyance deed duly registered and tax assessment should be done flat wise.  

Tracing the title of the flat requires verification of the society records, its byelaws and share certificates.

 Conveyance : Essential for Co-operative Societies

The purchasers must not neglect to acquire the title of the property or flat he/she purchases on a purchase of the flat by acquiring share certificate the purchaser gets only the right to occupy which is not title to the property.  It is observed that the builders themselves do not acquire ownership of land from the landowners.  They enter into development agreement and GPA with the landowners to develop and sell the flats, which is not a good practice.  But some builders acquire ownership from the land owners then start construction which is in a way easier to convey title to the purchaser i.e., from the builders to the purchaser.

Housing societies to witness freedom

The Mumbai scenario of purchasing and acquiring the flat by share certificate is slightly different.  Nearly 60,000 flat owners are having only share certificates.  Maharashtra Govt. has made certain provisions easy for them.

By approving the self-reliant legislation by the cabinet, co-operative societies have been made self reliant, so that there is no dual control on them.  Self-reliant legislature is on the pattern of ‘Atma-Nirbhar’ legislation successfully implemented by Madhya Pradesh.  Under the new legislation the co-operative society can opt to e administered  or continue under the existing act.  If they opt the self-reliant or ‘Atma-Nirbhar’ law, responsibility of the co-operative department will be only to register such societies, while the rest of the affairs will be managed by the society.  ‘Atma Nirbhar’ law provides for setting up machinery for redressal of grievances.  The societies or its members need not approach the co-operative department.

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HOLDING OF PROPERTY BY COMPANY.

                        HOLDING OF PROPERTY BY COMPANY.

A Company is an artificial person created under the Companies Act 1956 with the right of perpetual succession and use of its unique and individual common seal.  It is a legal person different from its members / shareholders and possesses the right to enter into valid contracts for sale, purchase, to hold, to lease out or take on lease and to mortgage immovable properties in its own name.

There are two important types of companies viz; Private Limited Company and Public Limited Company.  Any two persons can form a Private Limited Company though its membership / shareholders are limited to 50; whereas, a minimum number of seven persons are required to form a Public Limited Company.

Under the Companies Act, registration of both Private Limited Company and Public Limited Company is compulsory.  Thereafter a certificate of incorporation is issued on registration by the Registrar of Companies.  The Registrar of Joint Stock Companies issues a certificate for commencement of business to the Public Limited Companies, However, this certificate is not required to form Private Limited Companies.

Memorandum and Articles of Association:

The Memorandum and Articles of Association are important documents 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 inanimate bodies who cannot execute documents themselves, and hence all the official documents belonging to or relating to the company requires its common seal to be affixed on all  documents in addition to the signature/s of its authorized officers to authenticate the company documents.  The common seal is used as a physical impression made upon the documents executed by the companies and is a special seal engraved on a steel block.

Authorized Officers

Officers of the companies may be authorized to represent the company through board resolution passed in Board Meetings of the Board of Directors of a Company or by an authorized committee of the Board.   Such persons, however, are required to affix the common seal of the company in addition to their signature/s to authenticate the company documents.  In case of certain companies the articles of association deal with the common seal.

Immovable Property Transaction:

The Transfer of Property Act mentions that a living person includes a company. and it is taken for granted that all outsiders are aware of the contents of the Memorandum and Articles of Association of a company.  The memorandum and Articles of Association deals with the objectives of the company and the powers and rules regarding governance of the company must be verified to ascertain that the transactions are as per the objectives and are not ultra virus of the powers conferred on a 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.  The Directors, Managing Agents, 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 creation of such a charge by filing Form No. 8. Charges not registered within the stipulated time are not taken into account by the official liquidator appointed by the court to manage and settle the affairs of a company on its liquidation or against any registered creditor.  Such registered charge also serves as a 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, a 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 its creditors.

Procedural aspects to be borne in mind:

The Companies Act under Section 293 has restricted the powers of the Board of Directors to convey property belonging to the Companies whereby the 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.  Likewise 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 only exception is to temporary loans taken by the company from its bankers in the ordinary course of its 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 or mortgages its properties in excess of its paid up capital and free reserves.  Where a 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 dispose 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 the 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.

Foreign Companies

The Foreign companies who enter into any kind of transaction in India, are governed by Foreign Exchange Management Act, 1999.  According to the FEMA, a company registered outside India, which has established a branch Office or other place of business in India 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 the requirement of the applicable laws, rules, regulations and directions in force for the time being in force.  Such company has to file form III with RBI within 90 days of acquiring such property.  Such company is also permitted to mortgage its immovable property as security to an authorized dealer for borrowing.

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Confirmation Deed and Cancellation Deed.

ConfirmationDeed and Cancellation Deed.

It is very common that many a times the main documents of sale, mortgage, lease are drafted by inexperienced, unqualified people, as 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 document 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 executes 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 he 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 documents 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 mean approbation or assent to the estate already created, by which confirming 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 immoveable 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 document, 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 which consent of all parties.

But at times, the matter of cancellation of document may not be so  simple as same 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 the original deed of conveyance  is executed on account of fraud, coercions or incase of any disagreement among the parties, the chances of mutual  consent to cancel   agreement are very remote. In such cases, the affected party has 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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Women’s Property Rights

Women’sProperty Rights

Earlier women did not have any rights to the property and they were at the mercy of the male members of the family. Joint Hindu Family, an unique institution acted as refugee home of many women, widows. With the disappearance of the Joint Hindu Family, the plight of women worsened.

Successive governments have enacted various laws improving / conferring property rights to women.

Hindu women’s rights to the property act 1937 dealt with the rights of Hindu widow, on her husband dying without making any will.

In such cases, the widow or widows are entitled to the share of the property as that of a son. But her interest in the property, Hindu Women Estate is limited interest.

Karnataka Hindu Law Women’s rights act 1933 conferred a limited rights to the property, to the women. This limited right is called limited estate, which do not have right of disposal of the property by sale, will.

Women had full estate rights, that is absolute power including of disposal by sale / will in Stridhana property. Stridhana includes, ornaments, apparel, gifts received, property acquired by her savings made.

The Hindu Succession Act 1959, brought out revolutionary changes in property rights of women. Section 14 of the Hindu Succession Act, confers absolute rights to the to the female in any property possessed by female Hindu acquired. The rights are of full nature including unfettered rights of disposal of property.

The property covered under the section 14 of the Hindu Succession Act is both movable and immovable, which is acquired by inheritance, devise, partition, in lieu of maintenance, arrears of maintenance, gift, property acquired by her own skill, purchase, prescription, or in any other manner and also Stridhana held by her before the commence of this act. This absolute right operates retrospectively, since the Section 14 refers to the properties acquired before or after the commencement of the act.

Another area which was improved upon is Co‑parceners property. Co-parceners property is a Hindu undivided family property. The member of Hindu Undivided property are called co-parceners who attains the right in the property by birth. They are all related to the head of the family. This Co‑parceners include relatives within four degrees including Kartha. Earlier females were not member of co-parceners hence were denied succession to the ancestral property. Many States, Karnataka, Andhra Pradesh, Maharashtra, Tamil Nadu, Kerala have amended the Hindu Succession Act 1956.

Amendment to Hindu Succession act by Karnataka has come into effect from 30-07-1994. This act gives women equal status as that of a Male. She becomes a member of Co‑parcenary by birth in the same manner as that of a son.

On partition of the co-parcenary property, she is entitled to the equal share as that of a son. The property so acquired on succession is capable of being disposed by her, through will or any other testamentary disposition.

In certain cases the ancestral house might be the co‑parcenary property. Such houses are generally wholly occupied by the member of the Joint Hindu Family. In such cases, the female member cannot force a partition of such ancestral house unless other male members in occupation of the house opt for partition.

But the unmarried daughter, a married daughter deserted or separated from her husband, or a widow are entitled to a right of residence therein.

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Easements

Easements

There are several villages in the midst of agricultural lands. There are houses surrounded by other houses. Inhabitants of these places have one common disadvantage – they do not have direct access to the road. To reach the public road they have to pass through someone else’s property.

There are several acres of sprawling agricultural lands for which water has to come through adjoining lands. In some remote areas people collect water from a distant water body. To reach the water source they have to walk over a long stretch of land, which does not belong to them. The owners of such lands cannot deny use of their lands.

The Easements Act of 1882 clearly says that it is the privilege of the people to use the land out of necessity, which the owners cannot deny. Easement is right to use another’s property. It is a right, which the owner of a particular land enjoys over an adjacent property, which he does not possess. It is the right over a property belonging to someone else and not to the person claiming easement.

The landowner who will benefit from the property which is not his own and over which he has a right is called dominant heritage or dominant tenement and the owner of such a land is called the dominant owner. Dominant because the owner has control over the use of that particular land which he does not possess.

Whereas the landowner who cannot enjoy his own land over which another owner has a right is called servient heritage or servient tenement and the owner of such a land is called servient owner. Servient or subordinate because he has to abide by the requirements and convenience of the dominant owner. In fact, whether he likes it or not, it is a burden brought to bear on him by grant, by custom or by prescription.

X has a piece of land. Y has the right of way over it. Here X is the servient owner and has the servient heritage. Y is the dominant owner and he has the dominant heritage.

Servient Heritage means an inherited property over which the dominant owners have a right to use it to their advantages. Dominant Heritage means inheriting a right over another’s property without owning it.

The title to easement may be by grant, by custom or by prescription. An easement can be acquired by grant. The deed may be separate or the grant may be included in a deed relating to the dominant heritage. For example, X sells his land to Y and by the same deed he may grant a right of way to Y for such land for another land of his.

Grant is given by an agreement executed by the grantor in favor of the grantee for a consideration. The grant becomes effective when the grantee has the right to enter upon the grantor’s land.

Prescription means getting a right by continuous assertion of the right, which has been in use for a long period of time. According to the Indian Easements Act, for example, the inhabitants of a building enjoying the access and use of air and light as a right continuously for over 20 years have the right to enjoy them without any condition or restriction.

Easement by virtue of custom is a legal right acquired by the power of law through continuous use of a land over a long period of time. Therefore the right of way continues to exist by grant, prescription or by virtue of custom.

The dominant owner has the right over the property of the servient or subordinate owner. It is a privilege enjoyed by the dominant owner over the property, which he does not own. The servient owner cannot enjoy his own property. He cannot do anything on his own land and he is bound to suffer for the advantage of the dominant owner.  If at all the servient owner does something on his own property, the dominant owner has the right to prevent it.

In an easement there must be a dominant owner and a servient owner, it must be for the advantage of the dominant owner, it may be permanent or temporary, or for a limited period of time or seasonal or for a specified event or out of necessity, the owners must be two different persons and it must be capable of forming the subject matter of a grant.

There are several type of easement. Right of way, right to air and light, riparian rights, right to build, right to uninterrupted flow of water are a few.

Easements, which are the subject matters of agreement between the parties, are for right of way, right to air and light. Some easements are acquired by grant and others prescription and custom. We are dealing with easements, which form subject matters of grant.

Creation of an easement does not mean transfer of property. In the same manner, surrendering an easement right does not imply transfer of property. Easement can be made, altered and released. Easement right cannot be created or modified orally. It must be in a written form. However, easements by prescription and custom need not be in writing.

Right of way

Private right to certain individuals by grant, rights to certain classes of people like inhabitants of a village by custom and common rights dedicated for the benefit of all, are three classes of rights of way.

The private right of way is the means of access to and from a dominant heritage by way of grant. If a seller sells one of his adjoining properties to the purchaser, the seller reserves the right of way for passage running across the property sold. In this case the seller reserves the right of way in the sale deed in favour of the purchaser.

If the purchaser has no right of way to access the road, the seller will grant to the purchaser a right of way over his property. Here the purchaser of the plot has to execute a separate deed in favor of the seller granting a right of way. A right of way for the benefit of the public at large is normally acquired by prescription. A private right of way can be either permanent or periodic or for a particular time during the day only, or seasonal or for a limited time, for to and fro movement of human beings, cattle and light vehicles.

The deed of grant must clearly mention the purpose for which easement is granted. By the deed of grant the subservient owner gives full and free right to the dominant owner and his successors a passage wide enough for movement of people and vehicles between the dominant owner’s premises and the public road against a price consideration. To make matters very clear a map with the properties and the passage marked in different colors must be annexed to the document of grant.

The dominant and servient owners have certain rights and obligations to maintain and preserve the easement. While exercising his right over the property of the servient heritage, the dominant owner has responsibilities to preserve the easement. His acts and deeds shall not put the servient owner in to inconvenience. Being the actual user he shall rectify the damages if any caused by his acts at his own expense.

The servient owner is not obliged to do anything for the advantage of the dominant heritage. He has no liability whatsoever to construct a way for the use of the dominant owner or to carry out repairs in case of any damage to the passageway. As the holder of the property he is free to use the servient heritage in any manner he likes, but his acts shall not dilute the right of the dominant owner.

Air and Light

Easements of air and light arise only in the thickly populated cities and towns. Earlier buildings were constructed at random often ignoring the conveniences of the nearby inhabitants.  Virtually no space was left in between the buildings hindering airflow and natural light to the smaller houses. The inhabitants of houses who were getting fresh air and natural light suddenly found these denied to them because of a multistory building nearby.

Haphazard constructions are now a thing of the past. Presently, buildings are constructed in a well-planned manner. Leaving minimum space between two buildings for free flow of air and natural light is now mandatory.

Therefore, any one who comes into possession of a servient heritage has to carry the burden of easement for all times to come for the benefit and enjoyment of the person who comes into possession of the dominant heritage. This sort of ‘master-servant’ relationship cannot be severed as long as such properties co-exist.

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Recent Amendments on Karnataka RentControl Act

Recent Amendments on

Karnataka RentControl Act.

The Karnataka Rent Act, 1999 and Rent Rules, 2001 provide for the regulation of rent and eviction of tenants and other related matters. It aims at balancing the interests of the landlord and the tenant and to encourage future construction activities.

The Act does not apply to the buildings belonging to State and Central Governments. Co-operative Societies, Market Committee, Mujarai, or religious and charitable institutions, wakf building, tenancy created by government grant and to the premises whose rent is more than Rs. 3500 for month in part A of first Schedule i.e. areas within the limits of cities under Corporation Act within 3-kilometer radius and more than Rs. 2000 for month in other areas and the premises constructed or renovated for a period of 15 years and non­residential buildings less than 14 squares and also group of buildings exempted by State Government.

According to the Act, Family means wife or husband or dependent/s of the person; Landlord means a person is entitled to receive the rent of the premises on his own account or on behalf of any other person; Tenant means an occupier of a premises belonging to another for rent.

The tenancy agreement shall be in writing. If there is no agreement, the tenant and the landlord shall enter in to an agreement of tenancy and deposit a copy of it before the prescribed authority. If an agreement is not filed with regard to the tenancy then the tenant and the landlord shall file the particulars about such tenancy before the Controller.

In case of death of tenant the tenancy shall devolve for five years from the date of death of the tenant to his or her successors, namely, his wife/ her husband, children, parents and widow daughter-in-law in that order, provided they were the dependants living with the tenant in the premises and they do not own or occupy any other premises in the same locality. However non-dependents who were living with the tenant and those who own premises in the same area may also continue possession of the premises for one year from the date of death of the tenant.

The rent payable is either the rent agreed to between the tenant and the landlord or the enhanced or the standard rent. Standard Rent is the rent calculated on the basis of ten per cent per annum on the aggregate amount of the cost of construction and the market price of the land comprised in the premises on the date of commencement of construction which will include the cost of electrical fittings, water pumps, overhead tanks, water sewage and other fixtures and fittings. The Controller, the prescribed authority, is empowered to fix the Standard Rent.

­The amount paid to the Government for the purchase of the premises, shall be . the construction cost which can be increased up to 30% for expenditure incurred by the owner.

Besides the rent, the tenant is liable to pay amenity charges up to 15%, maintenance charges @ 10% of the rent and pro rata property tax (i.e. the difference between previous a and present year property taxes) are payable by tenant.

The landlord can increase the rent to the extent of 10% if he has incurred expenditure for the improvement of the premises. But he cannot collect unlawful charges from the tenant or from his dependents. The tenant can pay decreased rent if there is decrease or diminution of accommodation.

As regards revision of rent, the landlord shall give notice to the tenant of his intention to revise the rent of the premises and recover it as long as it is lawful. The landlord shall be entitled to recover from the tenant the amount paid by him towards the electricity and water charges, which is ordinarily payable by the tenant.

It is the duty of the landlord to keep the premises in good condition and it is the bounden duty of the tenant to keep the premises in good and tenantable condition. The landlord or the person authorized by him has the right to enter and inspect the premises after giving sufficient notice to the tenant.

During the course of tenancy, the tenant shall not carry out any demolition or alteration work in the premises   without   the   written consent of the landlord failing which it shall be treated by the landlord as damage done to the premises let out to the tenant.

The landlord shall be violating the law if he cuts off electric and water supply to the client without sufficient reason. If the tenant is deprived of the essential services, he may approach the controller to redress his grievance.

Tenant cannot claim any payment for relinquishing / transferring / assigning tenancy. An application may be made to the Controller with in 2 years to fix standard rent even for sub-tenant with the assistance of Valuers. Interim rent/charges may be fixed or increased during pendency of case.

Tenant has to pay rent before the 15th and later with 12% interest and the landlord has to issue receipt against such rent and refusal to do shall attract a fine which will be twice the rent amount paid for the premises. The landlord is duty bound to refund the excess rent received to the tenant.

Tenants may deposit rents/ charges with the Controller within 21 days of due date otherwise it is invalid unless the landlord has withdrawn the amount. Landlord shall withdraw the amount deposited by the tenant within 5 years.

Every intermediary or estate agent shall register in Form 8 with 100 rupees as fees and obtain certificate, valid for 5 years, and renew it every 5 years with the concerned Controller. Every intermediary/estate agent shall file information and returns within 30 days.

The Court, District Judge or High Court shall make recovery of any premises in favour of the landlord against the tenant on the ground, inter alia, that the tenant has defaulted in payment of rent and other charges legally recoverable from the tenant within two months from the date of issue of notice demanding payment of rent. The Court can, by an order, direct the tenant to vacate the premises if he fails to pay the landlord or deposits the amount into Court within one month from the date of the order, an amount calculated on the basis of the rent last paid for the period for which the arrears of rent and other legally recoverable charges and the rent for the subsequent periods

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Purchase And Transfer Of Immovable Property In India By NRl

Purchase And Transfer Of Immovable

Property In India By NRl

Acquisition and Transfer of Immovable Property in India by Non-Resident Indians (NRIs) and persons of Indian Origin:

Various countries regulate the transactions in immovable property by their Non-Residents and persons of its origin with certain restrictions because such transactions have considerable impact on the economy.

In our country, earlier, the Foreign Exchange Regulation Act 1973 (FERA) was regulating transactions in immovable property by Non-Resident Indians and persons of Indian origin. This is replaced by Foreign Exchange Management Act, 1999 (Act 42 of 1999) (FEMA), which came into force from 1-6-2000. FEMA has authorized the Reserve Bank of India to form guidelines with regard to acquisition of immovable property by Non-Resident Indians and persons of Indian origin and the guidelines dated 3-5-2000 stipulated by RBI called Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations 2000 came into force from 01-06-2000.

Any acquisition / transfer of immovable property in India other than detailed below requires RBI prior approval. Those Guidelines refers to the acquisition of immovable property in India by Indian citizens residing outside India and persons of Indian origin residing outside India.

FEMA defines a person residing outside India as a person who is not a residing in India, this category includes

1       Indian citizens who reside outside for employment carrying on any business, vocation or any other purpose indicating indefinite period of stay outside India.

2.            Indian citizens employed abroad with foreign government, international agencies like UNO, IMF, World Bank etc.

3.            Employees of Central and State Governments deputed abroad for temporary assignments or posted to their offices. This includes Indian diplomatic missions.

An Indian citizen who goes abroad on student visa and takes up appointment on completion of studies will be regarded as a person residing outside India only from the time they take the job abroad.

Non-Resident Indians are not regarded as residents in India during their short visits to India for holidays, business, etc.

A person of Indian origin means a person at any time holding Indian passport or who or either of whose father, grandfather was a citizen of India, by virtue of Constitution of India or Citizenship Act 1955. However, citizens of Pakistan. Bangladesh. Sri Lanka, Afghanistan, China, Iran, Nepal, Bhutan, does not fit into this category.

Acquisition/ Transfer of Immovable Property by an Indian citizen residing outside India:

Indian   citizens  residing outside India are prohibited from acquiring, agricultural, plantation property and farmhouse and also from transferring agricultural, plantation property, farmhouse to a person residing outside India, who is a citizen of India, or to a person of Indian origin residing outside India. They may acquire any immovable property in India and transfer property other than agricultural, plantation, farmhouse to a person outside India, who is an Indian citizen or a person of Indian origin residing outside India.

They can transfer any immovable property to a person residing in India, including agricultural, plantation property, and farmhouse.

Acquisition/ transfer of immovable property in India by a person of Indian origin residing outside India:

A person of Indian origin, residing outside India cannot acquire agricultural plantation property farmhouse but acquire any other immovable property. However, such an acquisition must be out of the funds received in India by way of inward remittances from outside India, or from the fund of Non-Resident account maintained in compliance of FEMA Act and RBI regulations.

He is also permitted to accept the immovable property except agricultural, plantation property, farmhouse as a Gift from a resident in India; an Indian citizen residing outside India; a person of Indian origin residing outside India. He is also entitled to inherit any immovable property from a person residing outside India, provided that a person residing outside India has acquired such immovable property as per the provision of law in force at that time.

He is also permitted to inherit the immovable property from a person residing in India.

He is not permitted to transfer by way of sale the agricultural, plantation property farmhouse to persons residing in India but can transfer other immovable property by way of sale.

However, restrictions on transfer by way of sale or gift of agricultural, plantation property farmhouse does not apply if it is transferred to a person residing in India who is a citizen of India.

He is permitted to transfer a residential or commercial property as a gift to a person residing in India or to an Indian citizen residing outside India, or to a person of Indian origin residing outside India.

Repatriation of Sale Proceeds:

Prior permission of Reserve Bank of India is required to repatriate the sale proceeds of immovable property outside India, by a person residing outside India, or his successor. The authorized dealer is permitted to allow repatriation of the sale proceeds of immovable property in India except agricultural plantation property farmhouse outside India to an Indian citizen residing outside India or to a person of Indian origin on following conditions.

1.            The acquisition of the immovable property by the seller was in compliance of law and regulations in force.

2.      The property was sold after three years from the date of acquisition or from the date of payment of final installment of sale price whichever is later.

3.      The amount to be repatriated does not exceed the amount paid for acquisition in foreign exchange received through normal banking channels or funds held in foreign currency Non-Resident account or equivalent to foreign currency on the date of payment if acquired through Non-Resident external account.

4.      If the sale proceeds are of residential property repatriation should not be more than two properties.

There is complete prohibition against acquisition or transfer of immovable property in India by the citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Nepal, and Bhutan without the prior permission of Reserve Bank of India. However, they may acquire or transfer immovable property on lease, which should not be beyond five years.

Acquisition of Immovable Property for permitted activities:

Reserve Bank of India has accorded permission to a person residing outside India to acquire immovable property in India, for the purpose of carrying on business or other activities in India on the following conditions:

1.      The purpose is to open a branch or other place of business.

2.      The business or the activities is established in India as per Foreign Exchange    Management (Establishment in India of Branch or   Offices   or   other   place   of business) Regulation  2 000.

3.      The office is not a Liaison Office.

4.      There   is   need   to   acquire immovable property to carry on the activity.

5.            There is strict compliance of all applicable laws, rules, regulations and direction in force.

6.      The person files Form No. IPI within ninety days from the date of such acquisition.

7.      The immovable property acquired is transferred by way of mortgage to an authorized dealer as security for any amount borrowed.

Housing loan in rupees to a Non-Resident

Non-Resident Indian or a person of Indian Origin residing outside India is eligible to a housing loan to acquire residential accommodation in India subject to the following conditions:

1.         Loan to be availed from an authorized dealer or Housing Finance Institution approved by National Housing Bank.

2.         Amount of loan, margin to be met, and repayment period will be as applicable to a person residing in India.

3.     The loan proceeds are not allowed to be credited to Non-Residential External (NRE) /Foreign Currency Non-Resident (FCNR) / Non-Resident-non-repatriable account of the borrower.

4.         Loan should be fully secured. The acquired property will have to be given as security by equitable mortgage if needed, other assets of the borrower to be given by way of lien.

5.         The repayment of loan, interest and other charges shall be by the borrower from out of remittances outside India through normal banking channels. This may be from the funds of the borrower in his Non-Resident External (NRE)/Foreign currency Non-Resident (FCNR) Non-Resident Non-repatriable (NRNR)/Non-Resident-ordinary (NRO)/ Non-Residential Special Rupee (NRSR) account in India. The rental income of the property acquired may also be used for repayment.

6.         The interest charged to the loan shall be in conformity with RBI National Housing Bank directives.

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