In recent
times, dealings in real estate in Bangalore have been at the peak. Predominant
reason for this is the growth of IT sector and the eagerness of the people to
invest their money in real estates in and around Bangalore. As the Real Estates
require huge investments, the purchaser has to take necessary precautions
before investing his money to save himself from future complications. If the
property transferred suffers from any defect in the title of the vendor, the
purchaser does not get good and marketable title. Therefore, the purchaser has to make doubly sure
before finalizing the deal, that the vendor has got a valid and marketable
title.
The term
“Marketable title” means a title which is clear and free from reasonable doubts
and is a title good against everybody.
Thus, it is the title which establishes full ownership of the vendor to
the property intended to be conveyed, without reasonable doubt. A buyer is not
bound to complete the sale if there are defects in the title to the
property which are material and latent.
The defect to be material, it is to be of such a nature that if the purchaser
were aware of it he would not have entered into the contract of sale at all.
A title is
said to be doubtful when the vendor does not have any conclusive evidence to
prove the ownership. The defects in title are generally latent defects which
can be found only on investigation of title by perusal of documents, by an
eminent advocate, carrying out searches
of Government Departments and Municipal
records and by making reasonable enquiries. The vendor is bound to disclose
such latent defects known to him.
1. Where the
doubt arises by reason of some uncertainty in law itself;
2. Where the
doubt pertains to the application of some settled principle or rule of law.
3. Where a
matter of fact upon which a title depends is either not in its nature capable
of satisfactory proof or is capable of
such proof but yet not satisfactorily
proved.
The ownership
of the vendor to the property intended to be sold, must be the property traceable from the previous title
deeds commencing from the Deed which can be considered as a good root of title
and for this purpose at least 30 years
previous title would need to be verified. The property should have already been
properly transferred from all
predecessors-in-title and no third person other than the Vendor should have any
right or claim thereto.
Thus, for
example, if ‘A’ has sold the property to B and if it is found that the property
under sale belonged to a Hindu Joint Family property and ‘A’ has sold it
neither for legal necessity nor after
obtaining the consent from Co-Parceners, then the property sold to ‘B’ is said
to be defective.
The following are a few
instances where the title cannot be termed as defective:
-An omission
to disclose a prior agreement for sale by the Vendor is not a defect in title.
-Title by
adverse possession is marketable and not a defective title, if proper title by
such possession can be successfully made out. A title may be good although there are no Deeds but there must
have been such a long uninterrupted possession, enjoyment and dealing with the
property as to form a reasonable presumption that the title is absolute .
-Loss of
title deed is not a defect, if the loss can be explained satisfactorily.
Defect in
property is different from the defect in title. A defect in the property only
prejudices the purchaser in the physical enjoyment of the property but the
defect in title exposes the purchaser to
adverse claims. This difference has been enunciated in Section 55 (1) (a) of
the Transfer of Property Act, which provides that the vendor is bound to
disclose to the purchaser any material defect in the property or in the
vendor’s title. The defects in property are generally patent defects which can
be seen on an inspection of the property
and the Vendor need not disclose the same so long as the same does not lead to
defect in title.
In investigating
title and in considering whether the title is marketable and free from
reasonable doubts, it is necessary to find out the root of the title. Documents
are considered as root of the title. A good root of title is a document
purporting to deal with the entire property conveyed, which does not depend
upon the validity of any previous instrument and without inviting any suspicion
on the title of the Vendor. It may also
be described as a document of transfer of property showing nothing to cast any
doubt on the title. An instrument, the effect of which depends on some earlier
document is considered as an instrument with insufficient root of title. In
India, there is no law which stipulates statutory period for examination of
root or commencement of title. However, it is advisable to investigate the
title for a minimum period of 30 years unless the circumstances warrant
production of documents beyond 30 years.
Though our
law makes it obligatory on the part of the vendors to disclose the defects in
title before the sale of a property, purchasers have also to exercise due diligence and investigate the
title of the property before purchasing the same, to avoid future complications.
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