Title clearance of the property is one of the main steps in the process of buying a property. In other words, you are inviting potential legal problems in the future over your purchased property, which may or could result in losing your property or some sort of financial penalty in not having a title clearance of the property. What does ‘title clearance’ actually mean, and more importantly, why is it so important to property buyers?
The phrase title clearance may be broadly viewed to mean the process of verification that the asset is clearly owned by the subject property owner, valid in law, and not affected by disputes or any claims of legal encumbrances. A clear title shows those in which one feels satisfied that the seller actually has a legal right to transfer ownership of property to a buyer. Otherwise, dues, litigations, or even multiple ownership claims are some of the legal complications which the buyer may inherit.
Whether residential or commercial, this is one of the most relevant measures taken to safeguard an investment. In India, this is usually done with the involvement of lawyers-something a buyer really should be made aware of.
What is Title Clearance?
The title clearance will signify deep examination of the legal history and documents of the house to ensure that no litigation is pending or any other sort of mortgage or legal claim related to the house is pending in the court of law. In other words, the title clearance is a legal certification with regard to clearing the right of the seller to sell the property and also ensuring that there is no legal impediment to such sale.
Following are some of the important documents that are screened during title clearance:
Sale Deed: It is a legal document evidencing the sale and transfer of the property.
EC basically conveys that the property has no financial or legal liabilities including mortgage linkage.
Revenue Records: It contains information on payment of property tax and hence, outstanding dues can be checked.
Mother Deed: Original deed containing root of title to an immovable property showing its origin and passage of title from person to person by proper conveyance. Importance of Title Clearance
Smoothening of legal disputes: The title clearance is an assurance to the buyer that he will not have any future legal problems relating to property ownership. Third-party claims are barred and such may be time-consuming with legal battles in court.
Mortgage and Loans: No financial institution provides any loan unless the title is clear of all dues. If there is not a clear title, securing finance may become futile.
Legal Ownership: A clear title means the buyer would be the absolute legal owner of the house, and no dispute related to ownership can come up either in the near or far future.
Resale Value: A house with a clear title commands better resale value and is more attractive to buyers. He would go all confident in buying the house, assured that no dispute would come up over the ownership of this house.
How to Ensure Title Clearance
Title clearance involves several steps and requires heavy documentation as well as much legal checking. The steps that are to be followed for the title clearance are as follows:
- Engagement of Lawyer or Any Legal Expert’s Services
This can be made possible by engaging the services of an efficient attorney dealing with the property. For instance, such an attorney can take up the responsibility of reviewing all documents related to purchase and carrying out a title search on the particular property. They will ensure that all records of the property are authenticated, including previous ownership and encumbrances.
- Mother Deed Examination
It is just the title deed of the property, meaning it needs to reflect its origin of ownership and successive transfers of ownership. Incomplete or lost mother deed would amount to complications in proving the ownership, hence it needs to be proper and clear.
- Check for EC (Encumbrance Certificate)
An EC is the most important document, certifying that the property is free of all financial liabilities like loans, mortgages, or any dues toward the law. The time frame of an EC shall at least be 12-30 years to give a fair history of the property.
- Verify Land Use and Property Tax
Ensure that the usage of land of the property is in conformity with local laws and ordinance concerning zoning. Also, check whether all property taxes are paid in account and no dues pending. Non-payment may cause hindrance in the near future.
- Possession Certificate Obtain a Possion Certificate
A possession certificate proves the fact that the seller is in legal possession of property with undisputed rights over selling the property. These usually come from local municipal authorities or government bodies.
- Check about Litigations
Needless to say, any such property included in an ongoing litigation would automatically get a red signal for any buyer. It would show whether the property remains under any form of litigation or claim in the court. Such properties are to be avoided even if the seller comes up with a good deal.
Conclusion
While these are the major factors governing property buying, the title clearance ensures that the investment is really risk-free from all legal entanglements. The minute examination of legal documents-such as the sale deed, mother deed, and encumbrance certificate-sought from experts in the legal circles can ensure buyers keep away from risks. Remember, necessary precautions in the title clearance process can save you from potential losses and headaches.
The big investment involves the purchase of property, which covers major areas where you will have a clear title. Proper due diligence and advice from the legal experts will make your purchase of property legally sound and free from any dispute arising in the future. You will be in a better position to make decisions with a free mind while buying the property, knowing the title clearance importance.
