Real estate in India is heavily regulated by numerous sets of legislation, as well as centuries of case law. This article will provide a summary of real estate law in India including the main types of real estate transactions engaged in in India, as well as pertinent legislation and the role it plays in the real estate industry in India.
Real estate transactions in India
Abiding by the regulations contained in the Transfer of Property Act is essential for parties involved in real estate transactions. In India, transactions can take the form of sales and purchases, leases, mortgages, gifts or exchanges.
Sales of property in India
Section 54 of the Transfer of Property Act provides for transfers of immovable property from one party to another pursuant to a sale agreement and in exchange for valuable consideration.
The requirement of valuable consideration, usually money at a fixed price, is essential. Such price is usually agreed upon and fixed by the parties prior to the execution of the sale agreement.
If the value of the property is less than one hundred rupees, the transfer can be made by way of registration with the relevant authority, or by the vendor putting the purchaser in possession of the property in accordance with an agreement between the two parties.
In most cases, however, the value of the property exceeds 100 rupees, in which case an instrument of transfer must be lodged with the relevant authority in accordance with the Registration Act 1908.
Section 58 of the Transfer of Property Act allows the use of immovable property as security for a loan. A mortgage can be perfected by the execution of a mortgage deed.
In certain towns including Calcutta, Madras and Bombay, a mortgage is perfected by depositing the title deeds to the mortgaged property with the mortgagee or creditor.
Section 60 of the Transfer of Property Act provides for the right of redemption, which the mortgagor has the moment the debt has been repaid after it becomes due. The mortgagee must then return the mortgage deed and all title deeds, and reconvey the rights to the mortgaged property back to the mortgagor.
Alternatively, Section 60A allows the mortgagor to specify a third party to whom the property should be reconveyed upon redemption.
Leases in India
Leases granting the right to immovable property for a specified period of time are provided for in Section 105 of the Transfer of Property Act. Valuable consideration, usually in the form of a fixed price, is a requirement for such a lease, and such consideration may be given at regular intervals or otherwise as agreed by the parties.
Section 107 of the act stipulates that any lease providing for a term of more than one year must be in registrable form and registered with the relevant authority. Lease agreements for a term of not less than one year are granted more flexibility and can be made through oral agreement or through a registered document together with a grant of possession from the lessor to the lessee.