Friday, April 4, 2014



Regular readers of newspapers everyday come across notices published, regarding purchase of immovable properties. We shall understand the basis, scope of such notices.

Any purchaser of immovable property has to exercise proper care and diligence to ensure that property to be purchased by him is free from encumbrance, charge, and lisp ends. Any lapse on the part of purchaser in exhausting all means, source to know that whether the property is encumbered or free of any encumbrance would land him on trouble. The Section 55 of Transfer of Property Act, makes it mandatory that the seller is bound to disclose any material defect in the property or in the seller’s title there to, which the seller is aware and the purchase is not aware. But the seller is obliged to disclose such information, if buyer could not discover with ordinary care. As such buyer should verify, search, all avenues available to ascertain that the property agreed to be sold is free from any encumbrance.

Deemed Notice:

Transfer of property Act puts some onus on purchaser, and in certain cases, the purchaser is deemed to have notice of some encumbrances.

Section 3 of Transfer of Property Act defines the notice. “A person is said to have notice of a fact, when he actually knows the fact, but also when he should have known the fact by diligence search enquiries without gross negligence. The Section explains that when any transaction relating to immovable property, is required by law and accordingly the document has been registered, any person acquiring such property, any part of the property any share or interest in the property shall deemed to have information of registered document from the date of registration. The Section further states that, if any person is in actual possession of such property agreed to be sold, the purchaser is deemed to have notice of encumbrance. Even if the agent of the purchaser acting on behalf of purchaser, has the knowledge of any encumbrance on the property, the purchaser is deemed to have such notice.

Types of Notices:

Accordingly there are three kinds of notices:

1.    Actual notice when a person has the knowledge of actual fact.

2.    Constructive notice, where the information is available on proper enquiry and search.

3.     Notice to the agent of the purchaser, where the information is given or received to the agent in the course of his ordinary duties, whether he communicates it to his principal or not. Notice to the active partner of a firm has the effect of notice to the firm.

Purchasers’ Obligation:

Most of the encumbrance may be discovered by verification of records at jurisdictional registrars’ offices and other documents. It is obligatory on the part of all purchaser to verify the title as recorded in registers of jurisdictional registrar’s office and any omission will amount to negligence. Just relying on encumbrance certificate issued by registering authority is not enough. The registration of a document operates as notice.

As discussed earlier, the actual possession of property by a person other than the seller also operates as notices of title. So the purchaser should invariably inspect the property and ascertain that it is in possession of the seller or the occupant will vacate the property before registration and the seller has every right to get it vacated. There are various instances, where properties are leased, but lease deeds are not registered. Specific Relief Act 1963, under Section 19 also recognizes the possession as a notice.

It is the duty of the purchaser to make out the clear marketable title of the property. The advocate of the purchaser has to trace out from various sources any pending litigation. Proper enquires should also be made as to the claims of dependents under Hindu Adoption and Maintenance Act 1956.

Public Notice:

After exhausting all the means referred, the purchases should also give a public notice of his intention to purchase the property and call for any objections from any persons having claim over the property. There may be subsisting encumbrance, which are not registered and which cannot discovered like prior agreement to sell which is not registered. So a public notice is necessary. The purchaser may publish the notice generally after sale agreement is executed. The notice has to be published in two dailies one in English and another in local language, which have wide circulation in the area where property is situated.        

A notice is an announcement or information, sometimes works as caution. The notices prescribed under various Acts, have definite language and form. In most of other cases there is no hard and fast rule about forms. The requirements of a notice are it, must be certain clear with definite information to bound the party who issues notices and to enable the other to act upon it.

The notice contains the intention of the purchaser to purchase the property; the execution of the sale agreement and also the description and detailed schedule of the proposed property. The notice should invite people having interest in the property to file objections, if any, with documentary evidence, with the purchaser or his advocate within a stipulated time.

The notice should also state that in case no objections are received within the stipulated time, the sale process will continue treating the property as unencumbered and no objections will be entertained thereafter.

Notice to the public is only a precautionary measure and it is not binding on any one having interest in the property. They may ignore the notice and many might not see the notice at all. The public notice serves as a notice to the general public that `the purchaser is a bonafide purchaser of the property. Interested parties may prefer to lodge objections within the stipulated time.

Objections received may be verified along with the document in possession of such people claming interest to ascertain genuineness. Based on quality of interest/the proforma of the notices should be verified by the purchaser’s advocate. Any advocate though well experienced in tracing the title cannot make out any prior agreement, any mortgage by way of deposit of title deeds, pending cases. Public notice may help the purchaser if there is any claimant for the property. If any claimant fails objections the purchaser may request the seller to solve the problem before completing the sale process or may cancel the deal.

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