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Towards Smoother Transactions by V Law Partners 6 july 2012


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This was presented by V Law Partners for South Mumbai Realty Club's Legal Workshop - 'Towards Smoother Transactions'

Towards Smoother Transactions by V Law Partners 6 july 2012

  1. 1. A Legal Perspective V Law Partners 207, Marine Chamber,43, New Marine Lines, Mumbai 400020Email: Tel: +91 (22) 6123 9000
  2. 2. Content of V Law Partners
  3. 3. Movable Immovable Tangible Intangible Movable Property - Sale of Goods Act 1930 Immovable Property - Transfer of Property Act 1882 Content of V Law Partners
  4. 4.  Sale of Immovable Property ( S. 54) Mortgage of Immovable Property ( S. 58) Lease of Immovable Property ( S. 105) Exchange of Immovable Property ( S. 118) Gift of Immovable Property ( S. 122) Content of V Law Partners
  5. 5.  Sale is a transfer of ownership for a price paid or promised or part-paid or part-promised as a considerationEssentials of Sale Competence of Parties to sale Sale consideration Passing of the title Handing over possession Content of V Law Partners
  6. 6.  Mortgage is a transfer of an interest in specific immoveable property for the purpose of securing the payment of money advanced by way of future debtEssentials of a Mortgage Specific immovable property Consideration Transfer of an interest Competence of Parties Content of V Law Partners
  7. 7.  Simple Mortgage - The possession of the mortgaged property is not transferred from mortgagor to mortgagee Mortgage by Conditional Sale - The mortgagor apparently sells the property to the mortgagee on certain conditions Usufructuary Mortgage- The possession of the mortgaged property is transferred to the mortgagee. Mortgagee receives rent, profit, interest, etc English Mortgage - Mortgagor binds himself to repay the borrowed money on certain date and transfers the property Mortgage by deposit of Title Deeds - The mortgagor delivers the title document of the property to the Mortgagee Anomalous mortgage – Mortgage not by any of the above Content of V Law Partners
  8. 8.  Lease is transfer of right to enjoy such property made for a certain time in consideration of a price paid or promisedEssentials of Lease Competence of Parties Details of property Duration of lease Consideration / Security Deposit / Rent Sub – lease / Assignment Content of V Law Partners
  9. 9.  Exchange is a mutual transfer of property by two personsEssentials of Exchange Ownership of one property for the ownership of other There must be two persons involved in the transaction The ownership is transferred not in exchange of money, unlike a transaction of sale The principles applicable to sale transactions are also extended to property exchange Content of V Law Partners
  10. 10.  Gift is transfer of certain existing property made voluntarily without considerationEssentials of a Gift Transfer to be voluntary and without consideration Gift is to be from donor and accepted by donee Acceptance of the gift to be made during the life time of donor The donor and donee must be living persons Subject matter of gift must be certain existing movable or immovable property Content of V Law Partners
  11. 11.  Land Flat/Office in a Co-Operative Society Flat / Office from a Developer/ Builder Content of V Law Partners
  12. 12. 1. Check for encumbrances at the office of Sub-Registrar of Assurance Legal ownership document such as 7/12 extract, mutation entries is in the name of the owner, issued by the Revenue Record Department A title report of land for last 30 yrs without encumbrances from a reputed lawyer & public notice Property be transferable and heritable & not forest land Transfer is between competent parties Object or consideration for the transfer is lawful Transfer has been made and completed in the manner prescribed by law Documents with regard to payment of taxes and other bills If the seller is a Company search is required in the office of the Registrar of Companies to verify whether there is any charge on the property /if a firm thenLaw Partners of firms Content of V registrar
  13. 13. ¬ Drafting &Execution of the final sale deedi Payment of Stamp Duty on the final Sale Deed after adjudication by stamp officei Registration in the office of Sub-Registrar of Assurancest Application to the Land & Survey Office for mutation of the sale of the propertys A board resolution is required effecting the Sale for company as party and with the name of the authorised signatory Content of V Law Partners
  14. 14. 1. Procedure and perusal of documents before Purchase Seller’s share certificate issued by the society Previous chain of the Conveyance deeds in original Certificate of Title from an Advocate and public notice Receipt of the sub registrar of assurances where the conveyance has been registered A NOC from the society for the transaction and induction of the purchaser as member in the society A set of transfer forms duly filled by the parties in accordance to the bye laws of the society Last receipt for the out goings bill paid to the Society and electricity bills Content of V Law Partners
  15. 15.  Member shall give 15 days notice of his intention to the Secretary of the Society in the prescribed form Meeting of the Committee after the receipt of the notice to check eligibility to transfer his shares and interest u/s 29(2)(1) In event of ineligibility/eligibility secretary of the Society to inform the member within 3 days
  16. 16.  To submit an application for transfer of his/her shares and interest in the capital/property of the society, in the prescribed form, along with the Share Certificate To submit an application for membership of the proposed transferee in the prescribed form To give valid reasons for the proposed transfer To discharge all the liabilities of the society To pay the transfer fee To remit entrance fee payable by the proposed transferee
  17. 17.  To pay the amount of premium at a rate to be fixed by the general body meeting not exceeding Rs. 25,000/- whichever is less No additional amount by way of donation, etc. will be taken unless it is paid voluntarily by the member
  18. 18.  Settlement of dispute between society, committee, secretary, members etc has to be instituted in Co-operative court u/s 91 of the Co-operative Societies Act Party aggrieved by the decision/order of the Co-operative may within two months from the date of decision appeal to Co-operative Appellate Court u/s 97 of the Act
  19. 19.  Procedure and perusal of documents before Purchase A legal opinion certifying that the land owner, builder or developer has a clear marketable unencumbered title to the property and public notice The original deed of conveyance of land conveying the undivided interest in land, common areas and facilities A 7x12 extract A copy of the latest tax paid receipt A completion certificate and occupation certificate The sanctioned building plan/license Verify draft agreement for sale Ensure the conveyance is executed in favour of society/company Content of V Law Partners
  20. 20.  M. Rent Control Act applies to any premises let or given on license for residence or business purpose Excluded premises are of govt. local authority, banks etc. Act will not apply if the premises let or sub let to banks, PSU’s, MNC’s and Pvt. or Public Ltd. companies having paid up capital of Rs. 1 cr. or more
  21. 21.  License has been defined in Section 52 of the Indian Easement Act 1882 Section 7(5) of the Maharashtra Rent Control Act, 1999, defines a "licensee" Licence is mere right to use and occupy the premises for a limited duration for a paid consideration Content of V Law Partners
  22. 22.  A license is a personal right granted to a person to do something upon immovable property of the grantor and does not amount to the creation of interest in the property itself It is purely a permissive right and is personal to the grantee It creates no duties and obligations upon the persons making the grant Content of V Law Partners
  23. 23.  Essentials of a License A license is not connected with the ownership of land / property but creates only a personal right or obligation A license cannot be transferred or assigned License is purely permissive right arising only by permission, express or implied, and not by adverse exercise or in any other way It only legalize a certain act which would otherwise be unlawful and does not confer any interest in the property itself Decisions of the Supreme Court in Associated Hotels of India Ltd. vs. R.N. Kapoor summed the concept of License as above Content of V Law Partners
  24. 24.  A lease gives an exclusive interest in the property whereas license does not A lease can be assigned to a third person while a license being a personal right cannot be so assigned A lessee can bring an action for trespass in his own name but a licensee cannot do the same Licensee must do so in the name of the licensor after obtaining his permission Content of V Law Partners
  25. 25.  Transferability is a feature of lease whereas a License is not transferable A license is revocable unlike a lease Death of either party does not affect a lease & legal heirs of the leaseholder can step into shoes of the lessee A license is terminated by death of a party A leasehold creates a heritable right but not the license Content of V Law Partners
  26. 26.  In the case Delta Int. Ltd. Vs S.S Ganeriwala the Supreme Court has held :- In order to find a license or a lease the real test is to ascertain the intention of the parties from the document If absence of document a person being in exclusive possession, a lease is construed Prima facie in absence of any rights or interest for the premises it would be held as license Content of V Law Partners
  27. 27.  U/s 33 of the Act court of small causes Mumbai has exclusive jurisdiction over the matters relating to the Rent Act in Mumbai Elsewhere the court of the Civil Judge Junior Division have the jurisdiction to entertain suits relating to Rent Act Appeal u/s 34 of the Act shall lie from a decree or order made by court of small causes Mumbai to a division bench of the same court
  28. 28.  U/s 38 (a) of the Rent Act a suit or proceedings shall be heard and disposed expeditiously within a period of 12 months from the date of service of summon U/s 38 (a) of the Rent Act an appeal against a decree or made by the court shall be heard and disposed of within a period of 6 months from the date of service of notice of appeal
  29. 29.  In case wherein a tenant is in breach of the lease agreement or expiry u/s 16 of the Rent Act a landlord may recover possession of the premises On expiry or on valid termination a licensor is entitled to recover possession of premises given on license u/s 24 of the Rent Act provided agreement should be in writing and shall be a conclusive evidence
  30. 30.  A practice prevalent that a Leave & License Agreement was/is entered for a period of 11 months Bombay Rent Act (old) did not provide for giving a residential premises on Leave & License basis prior to 1.2.1973, however the same were executed Lease of immovable property for a term of one year & more is required compulsorily registered under Section 17 (d) of the Indian Registration Act.
  31. 31.  Bombay Rent Control Act of 1947, has been repealed and replaced by the Maharashtra Rent Control Act, 1999 Article 36 A dealing with stamping of Leave and License was inserted in Bombay Stamp Act w.e.f. 01.05.01 Amendment was carried out in Article 36 A of Bombay Stamp Act wherein 11 months was substituted to 12 months and 33 months to 60 months w.e.f 07.05.2005
  32. 32.  Maharashtra, Gujarat, Karnataka, Kerala and Rajasthan have their own Stamp Act Rest of the states are governed by Indian Stamp Act 1899 Content of V Law Partners
  33. 33.  Bombay Stamp Act Schedule 1 Article 25 – Conveyance (approx 5%) Article 36 Lease -(depends on term, deposit and rent – approx 5%) Article 36 A – Leave and License The terms of the Leave and License Agreement should not exceed 60 months with or without renewal clause If the terms exceeds 60 months with/without renewal clause stamp duty for a lease is payable Content of V Law Partners
  34. 34.  For the purpose of calculation of stamp duty Any consideration in the form of premium, advance, security deposit or by whatever name called, shall for the purpose of market value, be treated as consideration passed on The renewal period, if specifically mentioned, shall be treated as part of the present lease Content of V Law Partners
  35. 35.  Non-payment of stamp duty does not make the document void or otherwise invalid The consequences of under stamping as per the Stamp Act are: the document can be impounded for enforcing the payment of full stamp value. Penalty @2% per month but not exceeding twice the amount of duty Content of V Law Partners
  36. 36.  Section 17 of the Indian Registration Act 1908 deals with documents that require to be compulsorily registered Other non testamentary instruments which purports to operate create, declare, assign, limit or extinguish any right, title & interest in immovable property of value Rs. 100 or upwards Under Section 4 of the Maharashtra Ownership Flats Act, 1963 promoter is responsible to execute a written agreement and to get the agreement registered under the Registration Act 1908 Content of V Law Partners
  37. 37.  Section 55 (1) of the Maharashtra Rent Control Act, 1999 - any agreement for Leave and License or letting should be in writing and registered under the Registration Act, 1908. Section 55 (2) imposes the responsibility on the landlord of getting such agreement registered Content of V Law Partners
  38. 38.  Any contravention to the provision of Section 55 of Rent act will attract a imprisonment of 3 months or fine of Rs.5000 or both Effect of Non – Registration u/s 49 of Registration it makes the document inadmissible in evidence before any authority capable of receiving evidence or before any public authority. Content of V Law Partners
  39. 39.  To facilitate a smooth deal Check title documents Clear terms of appointment, exclusivity / brokerage Check time to show premises and be on time Advise client to consult lawyer and CA Meet client’s requirement in a timely manner Check stipulated stamp duty and provide proper registration to the instrument Be humble Don’t forget to congratulate Content of V Law Partners
  40. 40. THANK YOU