An Article about "Untapped Potential of low Cost Housing"

Untapped Potential of low Cost Housing

Guide Lines Value are the estimated minimum value fixed by the Government for a property In a specified area for purposes of registrationof sale deed on which stamp duty and registration charges are payable. These are the values fixed by the Department of Registration & Stamps forpurposes of registration of documents. It is needless to say that the guidelines value would vary from one area to another. This is also differentfrom the prevailing market value of the property. 

If the purchase value of a property is more than the guide lines value, the stamp duty and registration charges are to be paid on thepurchase value. The guidelines value would change as and when the value of properties would go up or down at the discretion of the Government. The present guidelinesvalue in Karnataka has been force with effect from 19- April, 2007.

Vicious circle

When the Government increases the guide lines value, the priceof properties begins to soar, when the market value increases, the government enhances the guide lines value and thereby the guide line value and the market value are trying to catch each other in the race.

For many owning a house has become a day dream in view of high cost of land and buildings and with the reduction of their purchasing power due to under- employment and unemployment. At the same time, the property developers are finding it difficult to get buyers for their properties despitetheir voluntary reduction in the value of properties due to market crash on account of global recession. The rise and fall of rates are natural phenomena in any business and the Government should allow sector to have its natural course of settlement.

Social obligation

Government has a social obligation to cater to the housing needsof the public. Such affordable houses need not be small hutment, but should at least have minimum requirements like bedroom, kitchen, toilet, hall etc, with sufficient ventilation. By frequent abnormal increase in Guide lines value, the poor and the middle class people are finding it difficult to purchase the houses. Real estateinvestment is becoming the exclusive domain of rich and influential. The government has a duty to not to fuel the price rise. The Government itself is subverting its social obligations. 

Stamp duty and Registration Charges Stamp duty andregistration charges are very high in Karnataka. As and when the guidelines value increases, payment of stamp duty and registration charges also increases and thereby there is an additional burden on the purchaser of a property. Apart from these charges, the purchaser has to pay sales tax, service tax and charges for transfer of Khatha, power and water connec- tion deposits, etc., and whereas the seller has to pay capital gains tax' in respect of the gain he made in the sale transaction.

Formation of black money

Due to the increase in stamp duty and registration charges. naturally, the parties to a sale transac- tion prefer to disclose the deflated value of the property in the convey- ance deed and avoid payment of higher stamp dutyand registration charges. This, in turn, has lead to accumulation and circulation of black money in the country. Some people may even opt for holding the property by way of General Power of Attorney and by executing an affidavit declaring delivery of possession of the property to the purchaser. Through this method, the people avoid execution and registra- tion of sale document which in turn leads to reduction in the collection of revenue to the State exchequer. State Government should adopt the well established principle that lower the stamp duty and registration charges higher the revenue collection for the State exchequer. 

With the increase in the rate of the Guide lines value of a property in a particular locality, the property owner's liability of municipal tax also goes up and thereby an addi- tional burden is cast on the citizen. Homeloans Banks and Financial institutions were very liberal in extending home loanstill recently. Providing housing loan to people was considered as a national cause in fulfillment of the obligation of providing shelter to a large number of people. However, the quantum of housing loan granted to the borrowers woulddepend upon their repaying capacity. As the price of the properties increase on account of revised guideline values, the borrowers of housing loan may require higher amounts to purchase the properties and their regular income do not match with the requirement of the bank and thereby the borrowers have to curtail their actual housing requirement and may have to be content with a small or substandardproperty.

Capital Gains 

The tax on profit earned on transfer of an immovableproperty has to be paid by the seller. It may be kept in mind that if the value of the property disclosed in the sale deed is lesser than the guide lines value, capital gains tax is payable on the basis of guide lines value. In some cases, the market value of the property is less than guide lines value and the seller may incur loss. Even in such cases, the guide lines value will be taken as thebasis for calculating the capital gains tax and the seller has to pay the tax accordingly. In cases where the declared value of a property in the sale deed is more than the guide lines value, the declared value shall be taken as the basis for calculating the capital gains tax.

User friendly measures 

The general public have no clear cut guidelines as to the documents which are required to be submitted at the time of registration along with the sale deed. This should be made known to the public by giving wide publicitythrough and electronic media. Not only this, the address, telephone number of the sub- registrar offices and their jurisdiction may be displayed at prominentpublic places for information of the public. The Government should implement user friendly measures, reduce the stamp duty and registration charges to come within the reach of poor and middle class. Introduction of the onlineregistration system will also be useful to the public.

Since there is global recession presently, the State Governments should fall in line with the property developers and commercialbanks and without delay reduce the guidelines value which were fixed. when the property values were at their peak since there is considerable slash in the value of properties and the property developers are offering discounts and free-bees to market their unsold properties while at the same time the purchasingpower of the people has come down. When all the concerned are trying to lift the real estate sector from collapse, the State Governments' delaying in reducing the guidelines value is unfair and can be termed as a failure ofsocial obligation cast on them.

An Article About "RENTAL AGREEMENTS"

RENTAL AGREEMENTS

It would not be easy to let out the property and feel free from litigation unless there exists a properly drafted rental agreement. Therefore, it is better to know the salient features of the rental agreements before any property are let out.

Rental agreements in the legal terminology are known as Lease Agreements. The person who transfers the property is called the 'Lesser', and the person who accepts the transfer of property is called the 'Lessee'.

According to section 105 of the Transfer of Property Act, 1882, a lease of immovable property is a transfer of the right to enjoy such property, made for a certain time, express or implied, or in perpetuity, in consideration of the price paid or promised, or of money, a share of crops, service or any other thing of value, to be rendered periodically or on specified occasions to the transferor by the transferee, who accepts the transfer on such terms. In short, a lease is a transfer of a right to enjoy the property of the lesser by the lessee for certain time, during which period the lessee is put in possession of the property upon payment of lease money or rent.

Elements of a good lease

The essential elements of a lease are (1) parties, (2) subject matter, (3) terms of lease (4) consideration or rent and (5) duration of lease. A lease transaction involves commitment by both the landlord and the tenant which are complimentary to each other - the landlord agreeing to let out his property to the tenant in consideration of the alteration.

paying him the rent and the tenant agreeing to pay to landlord the rent in consideration of the landlord allowing him to use the leased premises. A lease is that form of encumbrance which consists of a right to possession and use of property owned by some other person. It is the outcome of separation of ownership and possession.

A tenancy is created not only by an express contract but also by implication by the conduct of parties. Acceptance of rent by the landlord clearly establishes existence of tenancy. A lease of immovable property may be affected either under a registered instrument or under an unregistered instrument. However, in cases where the lease is from year to year or for any term exceeding one year or reserving a yearly rent the lease is to be made only under a registered instrument of lease[Sec.107 of T.P.Act] and the lease agreements for a period less than one year do not require registration.

One Year Period

It is a common practice to terminate the lease agreement at the end of every eleventh month and enter into a fresh Lease Agreement since if the rent is paid on yearly basis or if the period of lease exceeds one year, then it is mandatory to register the lease agreement under sec.17( d) of the Indian Registration Act, 1908. 

Contents

An agreement of lease should be drafted carefully and properly to protect the rights of both the parties and to avoid any misunderstanding at a later date. It should be fair to both the Lessor (landlord) and the Lessee (tenant). It should invariably mention the parties name and address, description of the property, duration of lease, monthly rent payable, date of payment of monthly rent; clause for enhancement of rent on renewal of lease, amount of interest-free refundable security deposit, penalty clause in case of default in payment of rent, liability of the lessee for damages to the property and the fixtures and fittings, notice period in case of premature termination of lease; date of commencement of lease and the date of expiration of lease; notice period and manner in which the notice will have to be served etc.

Obligations of the Lessor 

The first and foremost duty of the lessor is to abide by the terms of the lease agreement in letter and spirit and to ensure that the lessee is allowed to enjoy the leased premises without interference. He hall have to ensure that all the basic and civic amenities are provided to the leased premises. It is the responsibility of the lessor to carry out major repairs to the leased property to make it habitable and pay municipal and other taxes due on the property. The Lessor should ensure that the leased premises is not used for any immoral or unlawful purposes nor allow storing of any hazardous and inflammable materials like explosives, etc. Lessor shall issue receipts for the earnest money deposit and for the rents received by him in respect of the leased property. 

The lessor shall refund the security deposit received from the lessee when once the lease has come to an end. He shall not unfairly make deductions while refunding the security deposit on grounds of repair to the leased property. The lessor is bound to disclose to the lessee any material defect in property with reference to its intended use which the former is and latter is not aware and which the latter could not with ordinary care discover. The lessor is also bound on the lessee's request to put him in possession of the property.

Obligations of the Lessee 

During subsistence of the lease, the lessee has a right to enjoy the leased premises without interference from the lessor or by any person on his behalf. The lessee shall pay to the lessor the monthly rent for the leased premises on the agreed date. He shall also pay the electricity and water bills on or before due dates to the concerned authorities and furnish a copy of the receipt received by him from such authorities to the lessor for his records. The lessee shall always keep lessor informed about the additions or alterations that the leased premises may require to enable the lessor to attend to such work. 

The lessee shall not make any structural alterations to the premises or cause damages to fixtures and fittings during the subsistence of the lease. The lessee is under a legal obligation not to use the leased premises for immoral or illegal purposes nor for storing the hazardous and inflammable materials like explosives, etc. The lessee is under obligation to use the leased premises for self use and not to sub-let the same unless the lease agreement has a provision for sub- letting. 

He shall not cause any nuisance to the co-tenants, maintain the premises in a habitable condition, and on completion of the lease period, hand over the leased premises to the lessor without creating any nuisance upon receipt of the earnest money deposit. If the lessor fails to make any repairs, within reasonable time after notice, the lessee may make the same himself and deduct the expense of such repairs with interest from the rent, or otherwise recover it from the lessor. 

If the lessee comes to know of any recovery proceedings in respect of the leased property, or of any encroachment, or interference with the lessor's right in respect of the leased premises, he is bound to give notice thereof to the lessor.

General grievance 

The following grievances are generally encountered by the lessee and the lessor:

N on-refund of security deposit 

Some lessors (landlords), for obvious reasons, fail to pay back the security deposit to the lessees (tenants) upon termination of the lease agreement or make unreasonable deductions from the security deposit. Generally, the landlords who mainly depend upon the rental income and who would have utilized the security deposit for their personal needs, fail to refund the security deposit as per agreement. 

Thus, when the tenant issues notice indicating his intention of vacating the leased premises or when the lease period expires, some landlords would start dodging till they get the security deposit from another new tenant. It is the common practice that tenants prefer to continue to occupy the leased premises till they get back the security deposit since they feel that to get back their security deposit from the landlord upon vacating the leased premises could be a difficult task. In the absence of payment of monthly rent from the tenant during this period, the landlords resort to adjust the rent against the security deposit till the security deposit wipes out.

Supreme Court expresses anguish against violation of regulatory laws by property developers

Supreme Court expresses anguish against violation ofregulatory laws by property developers

The Supreme Court has come down heavily on State governments and politicians for giving support to builders for construction of illegal andunautho- rized structures and later extending protection from demolition in thename of compassion and hardship. 

It was observed by the Hon'ble Supreme Court that despiterepeated judgments by the Supreme Court and the High Courts, the builders and other affluent people engaged in construction activities, who have over the years have shown scant respect for the regulatory mechanism envisaged in municipal and similar laws, as also the master plans, zonal development plans, sanctioned plans, etc, have received encouragement and support from the state apparatus. 

Whenever orders are passed by courts, those in power have come forward to protect the wrong doer either by issuing administrative orders or enacting laws , for regularization of illegal and unauthorized constructions in the name of compassion and hardship.

Expressing its anguish, the Bench observed that the economically affluent people and those having support of the political and executive apparatus of the state have constructed buildings, commercial complexes, multiplexes, malls, etc, in blatant violation of the municipal and town planning laws, master plans, zonal development plans, and even sanctioned building plans. In most of the cases of illegal or unauthorized constructions, the officers of the municipal and other regulatory bodies turn a blind eye either due to the influence of higher authorities of the state or for other extraneous reasons.

The Hon'ble court further held that no compromise should be made with the town planning scheme and no relief given to the violator on grounds that they have spent a substantial amount on construction of the buildings.

The Hon'ble court while permitting the authorities todemolish the unauthorized Shanti Sports Club of India at Masudpur in Delhi, observed that it is high time that the executive and political apparatus of the State took a serious view of the menace of illegal and unauthorized constructions and stop their support to the lobbies of affluent class of builders and others,else even the rural areas of the country will soon witness similar chaoticconditions.

The Bench dismissed the petition filed by the club challenging the decision by the authorities to demolish the premises, as it was constructed on land acquired by the government in 1965. The Hon'ble courtobserved that in the last four decades, almost all cities, big or small, hasseen unplanned growth. 

In the 21 st century, the menace of illegal and unauthorizedconstructions and encroachments has acquired monstrous proportions and everyone has been paying a heavy price for the same.

Supreme courtdecisions

Lease of Immovable property In SATISH KUMAR V. ZARlF AHMED & ORS [1997] INSC 192 the Hon'ble Supreme Court of India has, inter alia, observed as under: The question that arises is : whether a lease of immoveableproperty from month to month or for 11 months is a compulsorily registerabledocument, though it was reduced to writing as an instrument defined under Section 2(14) of the Stamp Act? A conjoint read ing of the first part of section 107 read with Section 17(1) (d) of the Registration Act, does indicate that a lease of immoveable property from year to year, or for any term exceeding one year or reserving a yearly rent should be made only by a registered instrument and all other instruments, though reduced to writing and possession is deliv- ered thereunder, are not compulsorily registerable instru- ments.

 

Registration of SaleDeed 

In DHARMA NAIKA v. RAMA NAIKA&ANR [2008] INSC 133 the Hon'ble Supreme Court has inter alia observed : The only question that needs to be decided in this appeal is whether the sale deed, which was executed and registered after the commencement of the Karnataka Scheduled Castes and Scheduled Tribes (Prohibition of Transfer of Certain Lands) Act, 1978 [Act for short] which came into force with effect from 1 st of January, 1979 in respect of which sale the agreement for sale was executed before the commencement of theAct, would be hit by the provisions of Section 4 of the Act. 

Dismissing the appeal, the Hon'ble Supreme Court came to the conclusion that after the commence- ment of the Act, if any transfer is effected or any person acquires any granted land by transfer, without the previous permission of the Govern- ment, such transfer shall be null and void and no right, title or interest in suchland shall be conveyed or be deemed ever to have conveyed by such transfer. 

The Hon'ble court further held that so far as the facts of the present case are concerned, admittedly, the transfer was effected after the commencement of the Actby a deed of sale dated 13th of October, 1986 without the previous permission of the Government. That being the position, the Hon'ble court held that such transfer must be held to be null and void and no right, title or interest in such land shall be con- veyed or be deemed ever to have conveyed by such transfer.

An Article about "All About Dividing Family Property"

All About Dividing Family Property

Properties and human beings are inseparable. With progress and social change over the ages the urge to own property, wealth has acquired demonic proportions. In the present day world, immovable properties are the most valued assets one can possess.

The desire to own material possession reared its head in the inquisitive mind of the Stone Age man. Thus women, children came to be hisfirst personal assets followed by immovable properties. While literacy and social outlook have elevated the status of women and children, there has been no change worth the name as to the status of immovable property as the personalasset of the human being. So long as this state of affairs continues, problems relating to property transfer will persist. From Stone Age to cement age, it has been a long haul.

What is Partition?

Partition is division of property held jointly by co-owners. When a property is divided each member becomes the sole owner of his portion ofthe property. Each divided property gets a new title and each sharer gives up his or her interest in the estate in favour of other sharers. Therefore, partition is a combination of release and transfer of certain rights in the estate except those which are easements in nature.

Partition is neither a gift nor a transfer of property. It merely breaks a joint right into several rights. It is not acquisition of property orexchange of property. It is a combination of release and conveyance of the rights of the property in favour of individuals. And therefore it can be effected orally. Partition is not transfer but when it assumes the form of transfer,the intention may be to hoodwink the creditors.

The basic character of joint Hindu family is that eachmember has inherited title to the property by birth. Each member has joint title to the entire property and that joint enjoyment of the title is converted by partition into separate title of the individual co-owner for his enjoyment. Therefore, it is now an established fact that partition is not transfer, buttransformation of joint property.

 

There are some properties which cannot be dividedphysically. If physical division is not possible, partition can still be effected by paying cash or other assets to a sharer in lieu of his or her share in the property. Such situation arises when the division of an estate is considered to be dangerous and unreasonable and when such division dilutes the inherent value of the property, or when the immovable property is too small fordivision.

The instrument of partition is a document by which the co-owners of a property agree to divide the property among themselves by oralagreement or written agreement or by arbitration or through court. If a document of release shows that the executants are to get cash or other assets, the document is an instrument of partition. The basis of partition is equality. The parties shall share the property equally. 

If there is no agreement among the co-owners for amicable division of the property, the only alternative is to sell the property by mutual consent or by court decree and distribute the sale proceeds among the co-owners. Any of the co-owners may also enforce partition through Court.

In a partition suit a court may have decreed partition ofthe property in the interest of the co-owners. But if it is found that the sale of the property and distribution of the proceeds to the co-owners is more beneficial, the court can at the request of the shareholders direct sale of theproperty and distribution of the proceeds to the co-sharers.

There are three types of co-owners: Joint tenants or tenants-in-common; Hindu Joint Family owners or co-partners; partners of a partnership firm. 

Under the Hindu Law in general everyone being a co-owner in a joint ownership has a right to claim his share and such right cannot be denied to him if the property is held as joint tenants. Since joint tenancy is unknownto Indian law, there is not much difference between joint tenancy owners andtenants-in-common. 

Christians and Muslims hold properties as tenants- in-common or as joint tenants and partition of such immovable property can happen by mutual consent or by partition deed or by court decree or arbitration.

Partition in Hindu law covers two aspects. One is the division of the status of the members and the other is the division of the joint familyproperty. In the former ca e, the members are divided according to their standing in the joint family and in the latter case division of joint family propertyinto separate shares. Share of a member depends on the status he enjoys in the family. These are interlinked.

Partition must be according to law. If a minor gets less shares than he is entitled to in law, the partition is defective and he can re-open the same when he attains majority. If a member gets more than his sharein a property, the excess received will be treated as a gift. 

It is not necessary that all co-owners agree to partition. When a member desires partition, the property is divided into two portions one for the separating according to his status and share and the rest jointly held by others. Though oral partition is allowed under Hindu Law, it is not preferableas it may give rise to disputes particularly with respect to immovable properties. It is advisable that oral partition should be reduced into writing. Also, the Income Tax Act does not recognize oral partition of a Hindu Family property unless the Income Tax Officer is satisfied with the facts and this is possible only when it is recorded in partition deed.

Effects of Partition 

When a property is divided into more than two parts, the co-owners of the different portions shall agree to hold their portions separately as absolute owners and each of them shall make a grant to release his share from portions given to others.

Necessary covenants in a partition deed are about encumbrances on the property, quiet enjoyment, custody and production of title deeds, easements of necessity, payment of rent and taxes and performance of other conditions of lease, if any, etc. Partition of joint property is not an exchange. If it is reduced into writing, it must be registered in the case of immovableproperties. Deed of partition requires registration. 

Mere writing of previous partition does not require registration. Mere list of properties allotted to different co-owners does notrequire registration. Unregistered deed of partition though not admissible in evidence to prove the fact of partition, can be used to prove that a particular property was allotted to a particular co-owner as his share. Partition means collapse of joint ownership. It destroys the harmony of joint ownership and of possession. A large property falls into pieces over a generation or two. 

The land is very much there in bits and pieces in the name of different owners. Stamp duty The Stamp Duty payable on partition varies from State to State. In Kamataka, it depends on nature of property. In case ofpartition of movable property, it is Rupees Two Hundred and Fifty for eachshare. If the property is converted for non-agricultural purpose or meant for non-agricultural use, it is Rupees One Thousand for each share within jurisdiction of Municipal Corporation, Urban Development Authority, Municipal Councils or Town Panchayats and Rupees Five Hundred per share in other areas. 

The partition of agricultural land attracts stamp duty of Rs. Two Hundred Fifty for each share. In case an agreement of partition is executed and the partition follows in pursuance of such agreement, the stamp duty payable on partition deed is reduced to the extent of duty paid on agreement; but shall not be less than Rupees Fifty. The partition should not be mistaken with partnership. Partnership is coming together of persons, whereas partition is parting of persons.