Amit Shanbaug, ET Bureau Mar 19, 2012, 08.10AM IST
Procrastination can often exact a heavy price. Nearly 15 residents of a housing society at Vikroli, Mumbai, discovered this when they delayed registering their property for more than two decades.
Says 59-year-old Francina D’Souza, society secretary: “When the building was constructed in 1985, 40 of the 55 buyers got their flats registered, but the remaining 15 were duped by a lawyer and didn’t realise that this was necessary.
This came to light only recently when some of the owners wanted to sell their apartments and found it impossible to do so.”The only way out for the 15 flat owners is to register their flats now.
However, the biggest hurdle they will face is that the registration charge and stamp duty will be levied on the current value of the houses. Adding to this burden will be a hefty fine that the owners will have to pay for the delay. The entire exercise will cost the owners lakhs of rupees.
Registering your property should be the top priority when you buy a house as it proves your legitimacy to carry out any transaction. “A person is considered the lawful owner of a property only after he gets it registered in his name,” says Om Ahuja, CEO, residential services, Jones Lang LaSalle India. If you fail to do so, the previous owner or the developer will be considered the legal and rightful owner.
Pitfalls of not registering
The Supreme Court had ruled last year that all property sales would be considered invalid unless the sale deed was duly stamped and registered. “In the absence of the deed of conveyance (duly stamped and registered as required by law), no right, title or interest in an immoveable property can be transferred,” the apex court had held.
Under Section 49 of the Indian Registration Act, 1908, the documents (sale/gift agreement) will not have any bearing on the property and will not confer any transaction rights on the property.
In case of a dispute, you will not have any rights on the property if it is not registered in your name.
Advocate Vinod Sampat, president, Cooperative Societies Residential Users Association, explains that you will need to register the property within four months of the date of execution of the sale deed.
If the value of the property is Rs 10 lakh, you will have to pay a stamp duty of Rs 50,000-1.25 lakh (5-12.5 % of the property value) and a registration fee of 1% or Rs 10,000.
In case of a delay, you can request the district registrar to grant you an extension of another four months.
However, you will have to pay a penalty of up to 10 times the registration fee. “Usually, the penalty levied is 100-300% of the registration amount, but it can go up to the maximum amount too,” adds Sampat.
So, for a house of Rs 10 lakh, the penalty could be an additional Rs 10,000-30,000, while the maximum limit would be Rs 1 lakh. If the property is gifted, the stamp duty payable is lower at 2%, though the registration charges will be the same.
The stamp duty and registration charges will be applicable as per the current year, even though you may have bought the property a few years ago. The one exception to this rule will be if you have inherited the property. Says Sampat: “It is not necessary to pay stamp duty on a property bequeathed through a will.”
When to register
You will have to pay the stamp duty and registration charges for the sale deed and get these documented at the registrar’s office. If you are buying a house that was previously owned, the transaction will also entail a duly stamped and registered transfer deed.
In case the property is mortgaged, the lender will require a no-objection certificate from the housing society. It will then initiate the loan disbursement, depending on the repayment eligibility of the buyer. The registration process can be carried out only after the bank confirms the disbursement to the seller.
The housing society too will need to be informed, otherwise the new owner will neither be able to create a third-party lien nor be able to sell the property.
Some state governments are trying to ease the registration process. For instance, Delhi is the first city where people can register their property online by paying the charges through electronic transfer. Other states are likely to introduce this system.
Source : http://goo.gl/t90Rd