Saturday, September 5, 2015

INVESTMENT IN PROPERTY FREE FROM LEGAL INFIRMITIES




The advent of Apartment culture has not made a dent in the preference and desire of the people  to own an independent house. The ancient Bangalore was known for its bungalows, with vast open space, lawn and garden. Presently, the preference has come down from palatial bungalows to independent house due to escalation in the cost of land.

There are different types of sites based on its origin and formation. Broadly these sites could be classified as BDA sites, BMP sites, Housing Co-operative Society Sites, City Municipal Council sites, B.M.R.D.A. approved layout sites, Gramathana sites and revenue sites.

Now-a-days, getting layout plans approved by the BDA or BMRDA is a Herculean task. Before seeking such an approval, it is necessary to make sure that these lands fall within the residential zone as enunciated under Zonal Regulations. There-upon, necessary application has to be submitted to the concerned authority along with other relevant documents seeking approval for conversion of land use. Upon payment of charges for conversion, as per assessment   Layout plan is  to be submitted for approval of the competent authority who upon examination of all the documents and on his being satisfied with the compliance of the procedure will release the conversion order. Though the time limit prescribed for completion of the procedure for release of conversion order is four months generally it takes at least 8 months to 1 year.

BDA SITES

Bangalore Development Authority (BDA) is one of the Town Planning Authorities which acquires agricultural lands for formation of layouts by following the procedure prescribed for such acquisition and upon payment of compensation to the land owners. Sites of different dimensions are formed by the BDA on such lands these sites are allotted to the eligible applicants upon calling applications through public notice, And after careful scrutiny of the applications received.

Secondary purchase of these sites is considered to be the best since the origin and title of such property is always good, clear and marketable. Examination of documents such as allotment letter, possession certificate, amount paid receipts, absolute sale deed executed by BDA or the erstwhile CITB in favour of the Allottee, Khatha transfer certificate in favour of the allottee, latest tax paid receipts and Encumbrance certificates from the date of allotment till date are necessary.  

Earlier, BDA/CITB was allotting sites on lease-cum-sale basis, according to which the property was not permitted to be alienated for a period of ten years from the date of such sale by the BDA/CITB to the allottee and the allottee was expected to construct a house within and period of two years from the date of such allotment. In such a case, the allottee does not get absolute title over the property till the execution of absolute sale deed by the BDA in favour of the allottee. Therefore, purchase of this type of property is not recommended till the BDA executes   absolute sale deed in favour of the allottee on completion of the lease period.

Although the procedure of allotting sites on lease-cum-sale basis with restrictions on the sale of property for a period of ten years was dispensed with by the BDA for few years, the same has been again re-introduced recently inasmuch as the sites formed in Arakavathi Layout are allotted on lease-cum-sale basis preventing the allottees from disposing of the same during the lease period.

A word of caution:  As there are many instances of tampering with the documents in possession of some of the vendors, it is advised that the intending purchaser of these sites may make doubly sure as to the genuineness of the document and the valid title of the vendor. It is, therefore, impressed upon the intending purchaser of the property allotted by the BDA to check the genuineness of the documents and nature of the site with the development authorities before making such secondary purchase.

SITES OWNED BY PRIVATE INDIVIDUALS WITHIN THE BMP AREA:

The sites owned by the private parties situate within the jurisdiction of Bangalore Mahanagara Palike (BMP) fall into this category. Before finalizing the deal for purchase of these sites, it is absolutely necessary to trace the origin and flow of the property by scrutinizing the successive deeds of transfer to know the valid title of the vendor.  Apart from this, Khatha Endorsement, Khatha Certificate, Khatha Extract, Latest Tax paid receipt, Encumbrance Certificates for the relevant period and the records of city survey office are to be verified. 


The main object of Housing Co-operative Societies registered under Societies Registration Act is to acquire lands to form layout for allotment of house sites to its members by observing all the mandatory requirements. Layouts formed by Co-operative Societies require approval of the local planning authority. The sites are allotted by the Society generally to its members with a non-alienable condition for a specific period, which varies from society to society. However, with the written permission from the society, the property can be mortgaged or sold. As the sites in the layout formed by the Housing Co-operative Societies are allotted only to its member, it is necessary for the intending purchaser of such sites to minutely go through the   Bye-laws of the society and the terms and conditions of allotment.  Verification of letter of allotment, absolute sale deed, Khatha, Tax paid receipts and encumbrance certificates are also necessary.   Further, it is also necessary to scrutinize Layout Plan approved by the competent authority, order of release of sites and BDA Khatha certificate.

CITY MUNICIPAL COUNCIL SITES: (CMC SITES)

There are 7 City Municipal Councils and one Town Municipal Council around Bangalore.  Sites formed within the limits of these Municipal councils are mostly owned by private individuals.  Therefore, extra precaution and care is required to be taken for tracing the origin and title of the property and the genuineness of such documents. In this type, sites are carved out in the layouts formed on converted agricultural lands. The municipal councils would collect betterment charges for providing necessary civic amenities. Therefore, it is necessary to verify whether there exists an order for conversion of land use and whether betterment charges are paid in addition to other title documents as stated above.

Presently City Municipal Councils have stopped collecting betterment charges from 29/05/2003 and issuing Khatha certificates. Thus, no person can construct his house in the absence of Khatha and the approved plan by the CMC.


These are the layouts formed by private parties. Many land developers have formed layouts in and around the city. It is necessary to verify all the relevant documents along with title deeds for a period of not less than 43 years. Apart from the above, a thorough verification in the concerned Municipal offices regarding conversion order and layout plan approved by the competent authority is necessary. 

GRAMATHANA SITES:

These are residential sites, which has the origin traceable in village Panchayath areas. These sites  can be identified from the Khaneshumari number assigned to them. In fact, the origin of the Gramathana sites does not relate to any survey number. The very fact the property is assigned Gramathana number along with survey number, would go to show that such sites are not original Gramathana sites. The sites of this nature are very few. 

Original Gramathana sites can be identified by examining old village survey maps available in survey department. In addition to this, verification of the village records and form No. 9 and 10 is also necessary. Form No. 9 denotes Gramathana site and form No. 10 denotes the building which confirms that the particular property is original Gramathana site or not. But many village Panchayat issue form No. 9 & 10, though they are not original Gramathana sites. Many such sites fall in green belt area, where construction of residential buildings is restricted. Government has put restrictions on issue of license for construction of houses by village Panchayath beyond their approved Gramathana area,


These are the sites formed in agricultural land. Such land cannot be used for any purpose other than agriculture. Formation of layouts is not permitted on agricultural land. Anyone who purchases revenue site is purchasing a site which cannot be used for non-agricultural purpose.

 Further, Selling and purchasing of agricultural land has certain restrictions and any purchase in contravention of this restriction is null and void and the purchaser will not get any title.  

Generally, most of the Revenue sites fall under Green Belt Area. As per zonal regulations, green belt area is meant only for agricultural purpose. The Revenue records such has Pahani and Mutations of these lands remain in the name of the original owner even after it is sold to others.


In recent times, a large number of layouts are formed in the outskirts of Bangalore which are approved by BMRDA. After submission of application for layout approval, BMRDA will sanction and release only 60% of the sites in favour of the owner and the remaining 40% of the sites will be released only after necessary infrastructure and civic amenities such as sanitation, electricity, water etc are made available in the layout. If the site which is yet to be released is purchased, though such sites are registered, in the long run it will invite unnecessary problems.  Therefore, verification of all the relevant documents including origin, flow of title and present status of the owner is a must even in respect of BMRDA sites.

ZONAL REGULATIONS:

In order to promote public health, safety and the general well-being of the community, reasonable limitations on the use of land and buildings are insisted upon with the sole motive that the development of the city takes place in accordance with the land use plan as contained in the Comprehensive Development Plan [CDP].  Generally, CDP is valid for a period of 20 years from the date of preparation of the plan. 

The following are the classification of land uses for various zones:

Residential 
Commercial (retail and wholesale)
Industrial (light and service industries, medium industries and heavy industries)
Public and semi-public utilities and services.
Parks and open space and playgrounds (including public recreational area)
Transportation and communication.
Green-belt area’s

To enable them get a valid title of a residential property, it is necessary for the purchasers of house sites to ascertain whether the property under consideration falls within the category of residential zone or not. 

RESTRICTIONS ON BANK LOAN:

The Reserve Bank of India has very recently expressed its displeasure in not strictly adhering to the   guidelines issued by it with regard to grant of housing loans by certain commercial banks. Therefore, most of the Banks are now insisting on clear and marketable title of the borrower before sanction of the loan.  The Purchaser of a property with defective title would not get a valid title over the property.  He also would be deprived of any financial assistance from banks for construction of house thereon. 

As the investment in purchase of immovable property is very huge and many times it is the life-time savings of the purchaser, it is always better to take all the precautions before finalizing the transaction.  Utilization of services of an experienced advocate in property matters would go a long way.

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