THE IMPORTANCE OF PROPERTY TITLES IN ESTABLISHING OWNERSHIP

This article is written by Urmila Biswas of Department of Law, University of Calcutta (Hazra Campus), an intern Under Lega Vidhiya

ABSTRACT

Property titles play an essential role in establishing ownership rights to a property. It helps an individual to establish ownership rights, but this was not so smooth in the beginning. We can find the evolution of the property titles and land records before independence, during the British regime. The presence of a clear property title also helps to establish rightful ownership of a property, along with simplified financial transactions. The relevance of title verification and relevant and legitimate documents has been discussed briefly. There are different types of problems that we face if we have an unclear title to a property, which would impact the stability in the economy, hinder economic development, and, most notably, create a large number of pending litigations. Can the property titles be transferred or not? This is another issue that has been discussed below. The influence of registration in establishing the ownership rights, the relevance of the Registration Act, 1908 in this regard, along with some of the provisions in the Transfer of Property Act, 1882, which are important for titles to property and they help to prove the real owner to a property. There are different challenges that are faced if a property does not have a clear title. Despite such undesirous circumstances, we have seen the advent of modernization in the sphere of land records and property titles.

KEYWORDS

Property Title, Transfer, Deed, Land Records, Ownership, Registration, Zamindari System, Verification, Mortgage, Lender.

INTRODUCTION

The general meaning of the term’ ownership’ is the authority to make all decisions for a property, along with the right to possession over the property; however, in the view of legal scholars and law students, it refers to the legal right to use a property. We need to know who has the title of the property. The title of the property helps to determine the ownership in Property Law. It is essential to have a clear title to the property so that we can ensure the economic stability in our country. Along with this, it also helps to resolve the problem of real estate, ensuring property development and preventing fraud. In India, the process of maintaining and upgrading land records has been historically slow and uncoordinated. Land records have been maintained with the use of sale deeds, which are essentially records of property transactions. Therefore, all these records have been presumptive and do not guarantee ownership.

CONFERMENT OF CLEAR PROPERTY TITLES

Over the years, we have seen that there has been an increase in immovable property, such as buildings, apartments, factories, flats, and many more. Moreover, the disputes relating to the property have also increased. There are a lot of pending litigations before the court of law, relating to the conferment of property title and establishment of proper ownership. However, the seller of the property cannot confer a better title upon the buyer than a seller himself has.[1] It means that the seller can only confer a lawful title, and the buyer is also entitled to that proportion only. A clear property title ensures that the real owner of the property has the legitimate and lawful right to claim the property.

EVOLUTION OF LAND RECORDS & PROPERTY TITLES

It was before Independence that land was primarily maintained by landlords, and the zamindari system prevailed. In this system, the zamindars used to collect rent from a given piece of land and paid an amount to the government. During that time, the revenue collected was the primary source of income for the government. However, the rent that was to be paid by the cultivators was not regulated. The Zamindars fixed the rent according to their discretion. Thus, the Zamindars arbitrarily imposed excess land revenue according to their will and fancies and tortured the cultivators. [2]

To curtail this unlawful practice, the system of land records was created. The land records primarily contained the details and the measurement of the land, and it also contained the name of the person who was in possession of the property. Thus, we can say that this system of land records set up the pillar for the concept of Property title. Even after Independence, when the zamindary system was abolished, this concept of land records was utilized to determine the ownership of the land. The states took responsibility for the administration of land, and the revenue departments collected and manually listed all the land records with them. Land redistribution methods were used, and a limit was placed on the amount of land that an individual could hold. Various tenancy reforms and land ceiling laws were enforced in many rural and urban areas.

ROLE OF PROPERTY TITLES IN ESTABLISHING OWNERSHIP

A Property title is an official proof of the fact that a person is the owner of a certain piece of land. If we imagine of a situation in which there are no titles to a property, it would lead to a situation where there would be disputes and legal complications in resolving conflicts. A world would be created where every person could challenge the property rights of another person without any valid reason for the same. Thus, it is a fact that a clear title to a property not only ensures legal protection but also rightful ownership. All possible disputes, claims for the property, and future legal complications are quashed by employing a proper title to the property, along with all the relevant legal documents. It also helps to prevent fraudulent property transactions and ensures that no conflicts arise in the future.

FINANCIAL TRANSACTIONS EMPLOYING CLEAR PROPERTY TITLES

Moreover, a property title also ensures a smooth financial transaction while applying for loans or while keeping a property on mortgage. If we think logically from the side of a lender, it may be a bank, financial institution, or even a private individual. A lender can’t lend based upon uncertainties as to unclear property titles and if there are no legal documents present for the respective property. It is a fact that a lender needs to be shown a proper title to the property and all relevant legal documents to give him assurance concerning the property that he is lending. Transparency in the real estate sector helps the buyers make well-informed decisions. Properties having a clear title and ensuring a smooth transfer of ownership are more attractive to the potential buyers of the property. Buyers also tend to prefer properties having a clear title so as not to indulge in future legal disputes.[3]

PROBLEMS OF UNCLEAR PROPERTY TITLES   

A significant number of pending litigations is only one probable impact of an unclear property title; there are many other consequences as well. Therefore, it is extremely important to have a clear land title, or more specifically, a clear Property title. The contemporary system of keeping land records is almost similar to the one existing before independence; not many things have changed since then.[4] The land records that existed in the Zamindari system provided information like who owned the land instead of providing information regarding the owner. All those land records have been used to determine about who is actually in possession of the land. The transfer of land or property between buyer and seller is recorded utilizing a sale deed in recent times, which also needs to be registered by the government. However, it is to be kept in mind that the registration being done is only concerning the transaction and not in respect to the title of the property. These registrations do not guarantee the Property title, so bona fide transactions do not always provide ownership and can also be brought in front of a court of law.

VERIFICATION OF PROPERTY TITLE & THE RIGHT OF OWNERSHIP

Verification of property title or title verification refers to a process by which the legal ownership of a property is checked. This procedure of title verification is conducted before a property is transferred or given for sale.[5] It is a means of giving assurance to the owner of the property relating to the existence of the proper title of a property. Title verification provides information regarding the name of the owner of the property, all the records of the property are checked, whether there are any pending legal disputes for the property, whether there is any form of past claims of the property, issues of unpaid taxes, hidden debts, liabilities, and many more. If a property passes through all the above-mentioned circumstances, it is given the tag of clear title, and the procedure of Title verification is deemed to be complete. A clear title to a property is the most desirable condition for a buyer, it attracts him to take over the ownership rights of that property. In essence, we can say that it helps the buyer to have all the legal rights for a property after taking over its ownership.  

CAN PROPERTY TITLES BE TRANSFERRED?

The Transfer of Property Act, 1882[6], provides that if a person has a clear title to a property or interest attached to a property, then it can be transferred from one individual to another utilizing a registered instrument or document. Thus, the transfer of property titles is a legal process that can be done through selling, inheritance, or gifting a property. This transfer is done using a deed, which is proof of the ownership of the property. There are various steps involved in the transfer of the property, which include the agreement between the parties, then the title verification of the property is conducted, followed by the drafting of the agreement for sale, and the buyer is generally responsible for the payment of stamp duty. The amount designated as stamp duty needs to be paid before the transfer of the property can take place. After the payment of the requisite stamp duty, the transfer deed is signed by both the buyer and seller, which essentially confirms the transfer of ownership of the property. The execution of the deed is done before the public notary, which is followed by the process of registration of the property. Registration is done by the appropriate department of the government, which makes the transfer legitimate and valid, which preserves the rights and interest of the buyer of the property.[7] Thus, after fulfilling all the mentioned requisites, the transfer of the property is complete after the physical possession of the property is handed over to the buyer.

DIFFERENCE BETWEEN PROPERTY TITLE AND PROPERTY DEED

The term title means the ownership right to a property, while deeds are the documents through which the property is transferred or the title of the property is transferred from one person to another. A title to a property can be held by an individual, or two or more persons, and even by different organizations and companies. However, the deed is used to transfer the ownership rights from the seller to the buyer of the property, which also requires the signature of both parties. While the Property title confirms the ownership of the property, the deed is used to record the change in the ownership of the property.

THE REGISTRATION ACT, 1908 & PROPERTY TITLES

TheRegistration Act, 1908,[8] is a relevant document that guides us through the provision of registration of property, its importance, and all the relevant documents required for the registration of the property. The registration of the property helps to maintain the records of the property as permanent public records. All these public records can be duly used by the buyer to check the previous records of the property; the name of the person mentioned in the registration document can be cross-checked. Moreover, it is to be noted that all the sale deeds about the immovable property or the land need to be registered following the guidelines of the Registration Act, 1908.[9]

IS THE REGISTRATION OF THE PROPERTY TITLE COMPULSORY?     

The applicable general rule is that the property of an individual is compulsorily registrable under Section 17[10] of the Registration Act, 1908. The registration of the property serves as a valid legal proof of the rights of the buyer. Without the due registration of the property, the buyer cannot have enforceable rights over the property. However, it must be noted that not all properties are compulsorily registrable, which is provided in Section 18[11] of the Registration Act, 1908. The provision for optional registration is available for properties having land orders, acquisition of the land by the government, or property leased for more than a year, wills, court decrees, and heirship partition. When the property is registered, it ensures that no fraud is committed against a designated property. As registration of the property makes the rights of the buyer of the property visible in front of the common masses, it also prevents multiple unlawful transactions relating to the same property. Thus, the registration of the property helps to secure the ownership rights of the buyer after he has purchased a property, and a clear list of records is put forward.

CHALLENGES TO FORMATION OF CLEAR PROPERTY TITLES

We have seen that before independence, the recording of property titles was not very developed, and records were kept manually. All the records were maintained by the revenue department of the government. These records were not made available to the general public, which deprived the people of information regarding land records. If a person wanted to do a transaction relating to his property, he had to go through all the records manually and cross-check the same on ground level, which is itself a time-consuming and hectic process. However, with the advent of science and technology by the end of the 1980s, a large number of land records was digitized.[12] The Committee on State Agrarian Reforms and the Unfinished Task of Land Reforms (2009) further stated that most of the village maps were prepared during the British regime and have been used till now.[13]

Another significant challenge in the formation of clear titles is the issue of registration. The cost of registering a property was very high, especially during its transfer. The registration cost was accompanied with a stamp duty which stands to be very high. The cumulative amount of registration cost and stamp duty differs in different states, but the amount of fees stands to be very high in our country. There was a report named ‘A Hundred Small Steps- Report of the Committee on Financial Sector Reforms’ where it was stated that India records a huge amount of stamp duty all over the world.[14] The amount of stamp duty is finalized based on the cost of the property; if the cost of the property is very high, the stamp duty levied on it also stands to be high. In the Jawaharlal Nehru Urban Renewal Mission (JNNURM), it was decided that the stamp duty would be brought down to 5% by the end of the year 2018.[15] The previously mentioned measures influenced many states to reduce the stamp duty, like Mumbai, which reduced its stamp duty to 5% as well following the guidelines of the Jawaharlal Nehru Urban Renewal Mission (JNNURM).[16] Thus, we can say that a unified legal framework is the need of the hour to resolve all the above-mentioned challenges.

MODERNISATION OF RECORDS FOR PROPERTY TITLES

The process of modernizing property titles was initiated to ensure that all the existing records were brought to a single computer screen. Along with it, the maps and surveys were digitalized with a capacity-building process. In most of the villages, cities, or blocks, it was observed during surveys that the youths need to be trained. The State Agrarian Relations Committee, which was appointed in 2009, also observed similar facts that the land records need to be updated by strengthening the land management system, and capacity building machinery should be developed.[17] The individuals responsible for the process of upgrading need to be properly trained regarding revenue records, the maintenance of property titles, the creation of the record of rights, maintenance, data handling, and any further technological advancement in the future. It is disheartening that the pace of modernization of land records was very slow for the last thirty years, which was even recorded in the ‘122^nd report on: Ease of Doing Business Report’ (2015)[18]. With the process of modernization in one hand, the arousal of awareness among the people is equally important. The people should be made aware of the property titles, the rights of the owners, and the enforcement mechanisms to deter any form of fraudulent practices.

LANDMARK CASE LAWS

K.K. Verma v. Union of India[19]

In this case, K.K. Verma wanted to take the ownership of an immovable property based on the grounds of mere possession and oral agreement for the same. The Court of law observed that the mere fact of the possession of the property for a long period does not make a person the real owner of the property. This case upheld the importance of the procurement of relevant documents to establish the lawful ownership of a property. The title of the property needs to be proved by using valid legal documents. If an individual is in the possession of the property without a valid title, the person cannot be deemed as the real owner of the property.

R. Hanumaiah v. Secretary to Government of Karnataka[20]

This is another landmark case where the complainant claimed ownership of the property based on past revenue records of the property and also on the grounds of long possession. The state government argued against this stand by stating that the land, which is the matter of contention in this case, is a government property. The apex court held that revenue records are only meant for financial purposes and not for the purpose of the right of ownership over a property. Ownership can be proved by using legitimate titles and relevant legal documents, not just employing entries in land revenue records.

CONCLUSION

With the help of all the discussions that have been done before, we can conclude that Property titles cannot be segregated from the concept of ownership. They are supplementary and complementary to each other; a good title to the property establishes the legitimate ownership of the property. However, the procedure of maintaining records to the title of the property is a burdensome process indeed. The development of science and the advancement of technology have also made all these records available on a digital platform, ensuring that data can be updated at any time. Not only the process of upgrading digital records but also the issue of accessibility of records of title of property has been resolved. Now, people can avail all the records of the title of the property at any time, without any requirement of the presence of property transaction in any form. In the last few years, we have seen improvements in the process of registration of documents, the availability of transparent records of title to the property, the safeguarding of rights to the property, and cooperation between governments and individuals with the goal of sustainable development for securing a prosperous future for all.

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[1] Title Search of a Property in India – Meaning, Importance, and its Process, India Law Offices LLP, (7^th September 2024),https://www.indialawoffices.com/legal-articles/title-search-of-a-property-in-india-meaning-importance-and-process, (Last Visited: April 6, 2025).

[2] Prachee Mishra, Roopal Suhag: Land Records and Titles in India, PRS Legislative Research (September 2017), https://prsindia.org/policy/analytical-reports/land-records-and-titles-india, (Last Visited: April 6, 2025).

[3] Godrej Properties Limited, Property Title: Understanding Property Titles and Documentation in India, Godrej Properties (April 19, 2024), https://www.godrejproperties.com/blog/property-title-understanding-property-titles-and-documentation-in-india, (Last Visited: April 6, 2025).

[4] Report of the Committee on State Agrarian Relations and the Unfinished Task in Land Reforms, Department of Land Resources, Ministry of Rural Development, (December 2009),  http://dolr.nic.in/agrarian.htm, (Last Visited: April 6, 2025).

[5] Godrej Properties Limited, Property Title: Understanding Property Titles and Documentation in India, Godrej Properties, (April 19, 2024), https://www.godrejproperties.com/blog/property-title-understanding-property-titles-and-documentation-in-india, (Last Visited: April 6, 2025).

[6] Transfer of Property Act, 1882, No. 4, Acts of Parliament, 1882 (India).

[7]Property Transfer Process in India, Bajaj Finserv (18^th November 2024), https://www.bajajfinserv.in/property-transfer-process ,(Last Visited: April 6, 2025).

[8] Registration Act, 1908, No. 16, Acts of Parliament, 1908 (India).

[9] Supra 8.

[10] Registration Act, 1908, § 17, No. 16, Acts of Parliament, 1908 (India).

[11] Registration Act, 1908, § 18, No. 16, Acts of Parliament, 1908 (India).

[12] Land Records and Titles in India, PRS Legislative Research, https://prsindia.org/policy/analytical-reports/land-records-and-titles-india,(Last Visited: April 6, 2025).

[13] Committee on State Agrarian Relations and Unfinished Task of Land Reforms, Ministry of Rural Development, Volume I,  http://www.rd.ap.gov.in/ikpland/mrd_committee_report_v_01_mar_09.pdf, (Last Visited: April 6, 2025).

[14] A Hundred Small Steps- Report of the Committee on Financial Sector Reforms, Planning Commission, Government of India, (2009), http://planningcommission.nic.in/reports/genrep/rep_fr/cfsr_all.pdf, (Last Visited: April 6, 2025).

[15] Revised Guidelines: Jawaharlal Nehru National Urban Renewal Mission, Ministry of Urban Development, (February 2011), http://jnnurm.nic.in/wp-content/uploads/2012/10/Guideline-2011.pdf, (Last Visited: April 5, 2025).

[16]World Bank: Business Ready, http://www.doingbusiness.org/~/media/WBG/DoingBusiness/Documents/Annual-Reports/English/DB16-Full-Report.pdf, (Last Visited: April 5, 2025).

[17] Land Records and Titles in India, PRS Legislative Research, https://prsindia.org/policy/analytical-reports/land-records-and-titles-india,(Last Visited: April 6, 2025).

[18] 122nd Report: Ease of Doing Business, Standing Committee on Commerce, (21^st December,2015), http://164.100.47.5/newcommittee/reports/EnglishCommittees/Committee%20on%20Commerce/122.pdf, (Last Visited: April 5, 2025).

[19] K.K. Verma v. Union of India (1954 AIR 44).

[20] R. Hanumaiah v. Secretary to Government of Karnataka (2010) 5 SCC 203.

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