Considering the booming and fast-growing real estate sector, people wish to make investment into it for higher return. But the fact is investing in real estate including agricultural land, residential and commercial plots, flats, houses, shops or commercial complexes is a big task as well as a big risk. Because, an inappropriate decision may drag you into a huge monetary loss, legal disputes, mental stress, so on and so forth. Therefore, guidance of experts and proper title search of the properties while making a decision for an investment or acquisition is very much required.
Actually, title search is the legal due diligence of the properties.
Meaning of Legal Due Diligence:
- Legal means related to Law
- Due means proper
- Diligence means any act done precisely
Title search is a scrutiny of all aspects relating to a property with a view to uncover all legal risks involved and to provide the buyer an extensive insight into the nature of the property and risk involved in purchasing the same or investing into it.
Title search is conducted mainly to identify and verify the ownership and title over the property, any encumbrances over the property, any litigation over the same, and pre-existing claims over the property, and related approvals and licenses which are necessary.
Scope of the title search or due diligence:
Scope of any title search or due diligence of the property may vary depending on the purpose and type of investment plan. However, primarily following questions should be kept in mind while undertaking title search or due diligence of the properties:
- Who is the real owner of the property?
- Are the ownership rights freely transferable?
- Is the owner in possession of the property?
- Is the property subject to any encumbrances such as easements, mortgage, lease, charge, arrears of property tax etc.
- Is the property subject to any litigation or compulsory land acquisition proceedings?
- Is the property fit for intended use?
- If it is a building, is it constructed as per the local laws, building plan, environment permission, and completion certificate with occupancy certificate have been obtained?
Steps for undertaking title search or due diligence:
- First to check who is in possession of the original ownership documents
- Review of latest ownership document along with complete chain of title documents.
- Review of revenue records relating to the subject property including Khasra, Khatauni, encumbrance certificate etc.
- Search at the Sub-Registrar Office to cross check and verify the genuineness of the title documents.
- Review of Plans, approvals and licenses, if any.
- Litigation searches
- Search on the Ministry of Corporate Affairs portal if the property belongs to a company.
- Search on the Central Registry of Securitisation Asset Reconstruction and Security Interest of India portal.
Conclusions:
A comprehensive title search can mitigate the risks involved in investment into the real property and title search report will place an investor into a clear position to make an appropriate decision whether to go ahead with the deal or not, whether the property is suitable for investment and acquisition or not. Therefore, an Expert Professional should be engaged for undertaking title search of the property. If anyone needs any kind of help or legal advice on this issue or in general, please feel free to contact me at any time. My Number is 9818865693 and email is adv.jeetkumarsingh@gmail.com