While properties are an evergreen area of investment, there are people who seek to buy property for the sake of living too. Whichever the case is, it is only prudent to check and ensure that the property is completely legal, given the amount of Akrama Sakrama and GPA scams that have been reported in the city. Here is an attempt to answer various questions that a buyer might have in mind.
1. Which are the documents to check before a property transaction?
There are two kinds of documents—primary and secondary documents of title. Primary documents of title are the most essential documents related to the property. They show the ownership history of the property being sold.
Some of the secondary documents of title help to corroborate the information mentioned in the primary documents of title. The other secondary documents help the buyer to assess whether the building is compliant with the regulations of various agencies and if it has been built according to plan.
2. General list of documents for all properties
i. Primary documents of title
- Parent deed
This is the Sale deed, Gift deed, Partition deed, Allotment letter or similar, by which the present owner/owners have acquired the title for the property. This document is also referred to as the Mula Pathra and includes the unbroken flow of the title up to the present owner.
Tracing of the title should always begin with the earliest available document, record or order by which a Court or Government or a statutory authority has given the rights to the property to its first owner. Then, documents which identify the subsequent owners of the property through an unbroken sequence of legal acts up to the present owner, i.e. the seller, should be traced.
At times, many of these documents may have been lost over time; in such instances, the buyer should look at the earliest registered document available with the seller and, with the help of a lawyer, trace the title up to the present owner. Since almost all properties in Bengaluru have their roots in agriculture, it is possible for the lawyer to establish whether the property has clear titles and can be legally sold by means of the secondary documents mentioned below.
ii. Secondary documents of title
• Building plan sanction
In case of apartments and individual houses, you need to have a Building Plan Sanction issued by the BBMP, BDA or the village panchayat for properties under their jurisdiction.
For vacant sites in layouts, you need to check for the layout plan sanction, issued by the plan-sanctioning authority. For builder-developed independent homes, apart from the layout plan sanction, you need to have building plan sanction from the BBMP or village Panchayat, under whose jurisdiction the property falls.
The Khata certificate is issued by the BBMP, the BDA or a village panchayat in the name of the present owner or owners. There is no specific mention of the term Khata in the Karnataka Municipal Corporation Act of 1976; this is only an assessment register which compiles all the details of each property in the city. The term Khata is a colloquial term and literally means an ‘account’. Thus, the Khata is an account of every person who owns a property in the city. Each property will have a Khata. Each Khata has two parts: the Khata certificate and the Khata extract.
a. Khata certificate
A Khata certificate is obtained for the registration of any new property after paying the registration fee. This certificate mentions that a particular property number ‘N’ is held in the name of person ‘X’. This certificate is required for applying for a water connection, electricity connection, trade licence and building licence. The Khata certificate is given by the BBMP only to the owner of the property or to his legal heirs, and is used for the purpose of paying taxes.
b. Khata extract
A Khata extract is a document issued by the BBMP that states the name of the property owner, details of the property, such as plot size, built-up area etc. The owner can obtain this document on payment of `100/- along with a requisition letter to the Assistant Revenue Officer at the BBMP’s zonal office for the area where the property falls. Only owners can collect Khata extracts.
The Khata certificate and Khata extract are unofficially together called the ‘A Khata’.
• The ‘B Khata’
In order to include unauthorised layouts, revenue sites and buildings constructed in violation of by-laws into the property tax net, a provision was made under the Section 108A of the Karnataka Municipal Council Act. Under the new provision, the BBMP could collect property tax from such properties. The details of the property tax collected from such a building or apartment or site are maintained in a separate register, called the B register.
Read more on B Khata: B Khata isn’t an assurance of regularising your property
• Encumbrance certificate
The Encumbrance certificate (EC) is a record that shows all the registered transactions pertaining to a property in a particular time period. It is issued by the sub-registrar’s office under whose jurisdiction the property falls. ECs are issued via Form 15 or Form 16. If mortgage, sale or any other deeds with respect to a property are registered in the specified period of time, then Form No. 15 is issued with the details of each transaction. If there have been no registered transactions during the specified period of time, the sub-registrar will issue a Form 16. While buying a property, you should insist on an EC for a period of at least 30 years.
Though EC is helpful in ensuring a clear and marketable title for the property, it does not provide the complete picture. Certain documents/transactions need not be registered, and these are not shown in the EC. Such documents and transactions include unregistered wills, unregistered power of attorney, unregistered agreement of sale and unregistered mortgages. Apart from these, litigation in courts and tax liabilities are also not shown in ECs. So while buying a property, do not rely solely on ECs for a clear title and look at other secondary documents.
• Commencement certificate
The Commencement or clearance certificate (CC) is given by the engineering department of the BBMP for the properties under construction in the city limits. Once the building licence is obtained and the foundation and peripheral columns have been constructed, the builder has to apply for the CC. Only after a CC is issued can a builder legally proceed to construct the complete building. Note that BBMP will not issue an OC on completion of the building, if the builder had not taken a CC at the beginning. See OC section below.
• Occupancy certificate
The Occupancy certificate (OC) is obtained at the end of the construction and is proof of plan sanction compliance. Once the builder applies for the OC, BBMP is supposed to conduct an inspection to confirm that the construction is compliant with the sanctioned plan.
Note: Thousands of apartments in Bengaluru do not have OCs and yet are occupied. One reason for this is that re-sale of flats and buildings with no OCs is not barred. Enforcement of OC is weak.
• Compounding fee receipt
If the construction varies from the sanctioned plan, this is an important receipt which shows that a compounding fee has been paid to the BBMP for regularising any deviation from the sanctioned building plan.
• Conversion certificate
This Conversion certificate (popularly known as DC conversion certificate) is issued by the Deputy Commissioner. It certifies that the property has been converted from agricultural land to a residential property.
• Tax paid receipts
These are receipts issued by the BBMP, BDA or village panchayat, recording the payment of taxes for the property.
• PTCL endorsement
The buyer can ask the builder/seller to get a Prevention of Transfer of Certain Lands Act (PTCL) endorsement. Either the Tehsildar or DC can issue this document. This is to ascertain that the property is not on land granted to person/persons belonging to the SC/ST communities.
• Land acquisition
The buyer can ask for an Endorsement from the Special Land Acquisition Officer of the BDA, BBMP, National Highways Authority of India (NHAI), the Karnataka Industrial Area Development Board (KIADB), Karnataka Housing Board (KHB), Bangalore Mysore Infrastructure Corridor Project and others, confirming that there are no acquisition proceedings underway with respect to the property being purchased.
• Family tree
This document shows the genealogical tree in the form of a flow chart, with the names and age of the members of the family of the present and past owners of the property being sold. It also indicates whether the persons mentioned in it are living or dead; it is certified by the Village Accountant or the Revenue Inspector.
• General power of attorney
A general power of attorney (GPA) is a notarised document which empowers another person to act as your legal representative. A GPA executed by a person living outside India should be notarised in the country of origin and stamped in India within four months of being notarised. Within India, it is enough if the GPA is notarised. GPA had to be registered earlier; however, the Supreme Court has ruled that it is sufficient if the GPA is authenticated by a notary public.
As a buyer, you need to ensure that the GPA is valid, not revoked and is provided by the person who has the legal right to give the same.
3. Documents for scrutiny for apartments
i. Joint development agreement & GPA
In recent times, the most popular method for building apartments is by way of a Joint Development agreement (JDA). This is an agreement signed between the landowner and the developer, where the landowner gives the land to the developer to build and sell apartments; in return, he gets a fixed set of apartments to sell. The landowner issues a GPA to the developer.
ii. Sharing agreement
The Sharing agreement shows the landowner’s share and developer’s share in a JDA. This helps the buyer clarify whether the apartment/property for sale belongs to the developer’s or the landowner’s share and check the validity of the seller.
iii. Call for inspection of original documents
Although the builder usually has all the original documents in his possession, he may have pledged the property to a bank as collateral. In this case he may not have the originals. If so, the builder has to provide a No-objection certificate (NOC) from the bank prior to the registration of the property, stating that the money goes towards paying off the loan and the property in question is free of mortgage. When buying the landowner’s share of the property, this scrutiny is slightly less crucial since the landowner’s share is typically free of mortgage in most JDAs.
4. Documents for scrutiny for properties with an agricultural past
i. Pahani or RTC
The Pahani is a revenue record of tenancy and cultivation (RTC) that describes the rights, tenancy and crops details for the property, such as owners’ details, area of the land, land revenue details, water rate, soil type, nature of possession of the land, liabilities, crops grown etc. Ideally, the seller should have the RTCs from 1969 to date, and all the mutations should be mentioned in the RTCs.
ii. Record of rights and index of lands
This document contains details such as the extent of the property, names of the owners etc. Although this document has been discontinued by the Revenue department, it is useful in the tracing of titles. There are reports that it is being unofficially issued, however.
iii. Mutation extract
The Mutation Extract is akin to an ‘agricultural khata’ and is issued by the village’s official accountant or Tehsildar. It contains an extract from the mutation register with relevant details, such as those regarding the previous owner, present owner, the mode of acquisition of the property by way of sale or inheritance, and the total extent of the property.
iv. Tippani and Podi extract
Tippani is a hand-drawn sketch from the records of the Survey department with respect to a property contained in a single survey number that is not bifurcated into sub-survey numbers issued by the Survey department. For instance, Hissa Podi extract refers to a sketch showing fragments within a survey number with sub-survey numbers such as 159/1, 159/2 etc.
v. Akarband extract
The Akarband indicates the total extent, boundaries and classifications of the property. This is issued by the Survey department.
vi. Village map
This document shows a clear map of the village in which the property is situated.
5. Documents for scrutiny for BDA sites
Whenever government acquires a land for development of a layout, the previous title is extinguished by law and title starts from the BDA’s acquisition of the property. The following documents should help in ascertaining the validity of the property papers.
i. Primary documents of title for BDA properties
• Allotment letter: Issued by the BDA in favour of the present owner if he/she is the original allottee
• Possession letter: Issued by the BDA in favour of the present owner recording the handing over of the possession of the property to the present owner.
• Lease-cum-sale deed executed and registered in favour of the allottee by the BDA.
• Absolute Sale Deed executed and registered in favour of the allottee by the BDA with respect to the property after 10 years from the date of the original allotment.
• Building Sanction Plan issued by the BDA (or by the BBMP if the building was constructed after it was handed over to the BBMP by the BDA) where a building has been constructed on the property.
The secondary documents of title for BDA sites are Khata, Tax paid receipts and EC, which have been explained in the list of general documents.
A thorough scrutiny and verification of the above-mentioned documents will enable you to ensure that the property that you are acquiring has a clear, marketable title and will help you to avoid fraudulent sales and lengthy litigation.
6. Buying a BDA site sllotted as compensation to original owners in return for land acquisition to create the layout
The BDA’s process of forming residential layouts from what is usually agricultural land includes an incentive scheme. This is to make it easy for landowners to voluntarily surrender land. For every acre that the BDA acquires, the landowner is to be given a 60 × 40 site.
In principle, this scheme works out well for the landowner because of the substantial change in land values once the layout is created and the market value appreciation of residential plots over time. However, this is where the process is different from that of a BDA site allotted to a regular applicant.
i. For the sake of convenience, the BDA registers it in the name of the Khatedar.
ii. Unlike the normally allotted BDA sites, where all previous titles and titular claims are extinguished and the new allottee becomes the owner, in the case of the compensatory sites, the situation is different. The land would typically be ancestral land, and many individuals can claim rights over the property, such as heirs, minors, etc. Note that this ‘ancestral’ status carries forward into the compensatory site as is.
iii. In some cases, if the original landowners were illiterate or short of cash even to register the compensatory site to transfer it to their name from the BDA, they would have then drawn up sale agreements with third parties or brokers. In such cases, it has been observed that sometimes the owners have gotten into agreements even before they are allotted the sites.
iv. These agreement holders then carry out the rest of the site acquisition formalities. They sometimes pay the money for the registering the site itself.
All this would have happened by the time you run into such a site, when you are prospecting.
What you need to do
Such sites can be identified through the allotment letter of the BDA itself, so always insist on seeing the allotment letter. A compensatory/incentive site will be mentioned as such. Note that you will not be able to spot the difference between a normally allotted BDA site and a compensatory site from a site plan map stone which is sometimes located at key street intersections in the layout. The allotment letter is needed.
If you are buying such a site, you need to obtain the same documents which will trace title claims, presence of minors, etc. as in the case of buying sites on land with agricultural roots, described earlier in this section. Bring the entire owner’s family tree into the scrutiny process.
Ask about prior agreement holders, and flush them out.