Must Know Real Estate Laws for Every Buyer and Seller

A transaction in real estate involves an incredibly massive financial deal wherein most of the complexities get entangled as a legal complexity. To buy or sell would signify that such a property transaction is of extreme importance in understanding the legal framework beforehand before selling or purchasing any property. By viewing this critical legal know-how alone, the interests of the transaction can be protected and conducted with a smoothness. Real estate law can often be quite tough and threatening. Still, knowing the critical know-how would ward off many dangers. Here is a summary of some of the key real estate laws that every buyer and seller must learn before making that sale.

 

1. Transfer of Property Act, 1882

 

The Indian real estate deals have very deep roots in the Transfer of Property Act, 1882. The Transfer of Property Act has discussed the transfer of interest or rights in property by one person to another. It has considered such outstanding issues like sale, mortgage, lease, gift, and exchange.

It has always clarified the transfer of ownership rights and obligation of transferring sellers and buyers. For example, the buyer would have a right to inspect the property, and the seller has an obligation to disclose material defects. Title transfer and how legal rights to property are transferred from seller to buyer is also controlled under this law.

 

 

2. The Real Estate (Regulation and Development) Act, 2016 (RERA)

 

The Real Estate (Regulation and Development) Act, 2016, otherwise referred to as RERA, is legislation that protects the interest of homebuyers and adds much more transparency to India’s real estate belt. This includes mandatory registration of a project with the Real Estate Regulatory Authority and makes public disclosure of all the essential information relating to such project like the total units approved status completion date, etc.

 

Agri benefit for buyers: RERA makes developers responsive to the customers. For example, the buyer can ask for compensation or cancellation of the deal if a developer fails to maintain the promises made in the beginning of the project .

 

 

3. The Indian Contract Act, 1872

 

Generally, all the contracts made for the purpose of exchanging real estate are valid contracts. The Indian Contract Act, 1872 deals with various issues regarding the creation of and consideration of a contract. All of these, such as offer and acceptance, among others, come under this head.

It makes the agreement of sale, whereby terms are laid down such as the amount of sale, the condition of the property, and schedule of payment amongst others, binding upon both buyers and sellers. If the parties contradict or are held not to have paid the concomitant amount or are held not to have transferred ownership, this act gives contractual remedies such as specific performance or damages.

The sale agreement must be drafted with all the terms and conditions, which have to be incorporated so that there is no further dispute-scenario.

 

4. Registration Act, 1908:

 

Registration Act, 1908: Under this registration act, property transactions in India are registered. When a person buys any type of immovable property for a consideration of Rs. 100 or more, then under this enactment, such type of property transaction will compulsorily need to be registered under the Registrar of Assurances. Under law, when a sale deed is not able to gain registration, then that sale deed would be void.

This ensures that there is an official putting of the name of a buyer on the title of the property. According to the law books, a seller has a clean and clear record of selling. Registration of property grants legal sanctity to the transaction and saves both parties from any disputes in regard to ownership in future times.

 

 

5. The Stamp Duty Act

 

Stamp duty is a direct payment to the state government in case of selling or buying a property. Under the Indian Stamp Act, 1899, stamp duty is collected in every single transaction pertaining to property; the rate differs in each state and is calculated as a percentage of the value present in the sale deed for the property.

Stamp duty needs to be paid so that the fees and delays in the registration of the property do not take place. The payment of stamp duty turns out as effective evidence of the legal transaction of the said property.

 

 

6. The Benami Transactions (Prohibition) Act, 1988

 

The Benami Transactions (Prohibition) Act, 1988 prohibits property transactions which are made in the name of someone else and are colloquially called benami. Title of a property is considered to be held benami if it is held by a person but not in his name due to the resultant effect of concealing the identity of the owner. It was recently amended in 2016 with an aim to put an end to money laundering and black money in the real estate sector.

Properly, there must be transparency in the property transaction between the buyers and sellers. There will not be any confusion in handling the sale. There is a possibility that there could be invocation of the Benami Act followed by legal action under the act. Confiscation and penalties are effective.

 

Avoid benami transactions. Violation can lead to imprisonment also.

 

7. Land Acquisition Act, 2013:

 

Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation, and Resettlement Act, 2013 is implemented when lands are bought for development. The act reveals what the government can do with the acquisition of lands for public purposes or industrial development. This act ensures that fair compensation is administered to rehabilitate and resettle landowners.

Any land sale must not be when the notice of acquisition is under issue. One should determine his title of the land if any legal dispute or acquisition claim.

 

8. Income Tax Act, 1961 – 80C and Capital Gains Tax

 

In a property deal, both the buyer and the seller are equally applicable to the Income Tax Act, 1961. Under Section 80C, the buyer gets the deduction of the principal repayment up to Rs. 1.5 lakhs that he makes in home loan. The selling party would have to bear the capital gains tax on the resultant income that he generates from the sale of property. The capital gains tax could thus be termed as either short-term or long-term, depending on the period, in years, that the property has stayed in possession.

 

 

Conclusion

Laws relating to real estate are indeed very well-guarded in order to protect the interests of both the buyer and the seller. This can result in smooth and legally valid transactions if the major ones are known, such as the Transfer of Property Act, RERA, and the Stamp Duty Act. This is sure to bring confidence into this really complex path of real estate transactions, be it buying your first home or selling an investment property.

This needs to be taken to a notch higher whereby you, as an individual taking part in such a legal transaction, need to understand what your rights and obligations are so you may protect your interest, thus averting probable legal conflicts arising from that real estate transaction. Better still, before you tie yourself up in a real estate transaction, it’s proper to ask around for the advice of a legal expert or lawyer who specializes in real estate law to ensure all laws and regulations governing such transactions are complied with.