Uncovering Hidden Risks: The Importance of Title Verification in Real Estate

Introduction and Overview of title verification:

Similar to how a background check assists the state in making sure a person's criminal history is clear, title verification is an essential procedure for potential homebuyers to make sure the property is free of any liens. Buyers can steer clear of possible legal issues after the acquisition by carrying out careful title verification and due diligence, which will ensure a smooth and safe transaction.

Importance of title verification:

Before understanding the through procedure of title verification, let’s know about the importance of verification. So majorly title verification is essential for majorly 5 reasons which include:-

1.Buyers Protection: It protects buyers from purchasing a property with a defective title or from hidden risks and liabilities.

2.Seller protection: Title verification helps sellers build trust with potential buyers and attract more buyers.

3.Legal protection: Title verification protects both buyers and sellers from legal disputes and complications.

4.Access to financial assistance: Title verification can enhance a buyer's eligibility for financial assistance.

5.Smooth transactions: A transparent and robust land titling system facilitates smoother property transactions and investments.

Documents required for title verification:

For the purpose of document verification, the following documents are required:

1.Sale deed

2.Encumbrance certificate

3.Mother deed

4.Building plan approval

5.Khata certificate

5.Noc from authorities

Step by Step guide for title verification:

The process of title verification is crucial and includes multiple steps:

1. Check the title deed: The title deed is the most crucial document to have when purchasing a property. It ought to be lawful and accurate. Verify if the seller is the legitimate owner and has the authority to sell the property. Additionally, make sure the property is free of any difficulties or unpaid obligations.

2. Examine the certificate of encumbrance: The Encumbrance Certificate reveals any financial or legal issues with a property. To make sure the property is clean and free of previous problems, it is essential to obtain this certificate from the sub-registrar's office.

3. Verify invoices for property taxes: Verify that the property taxes are current and paid. This demonstrates that the property is formally registered with the local authority and that there are no outstanding taxes.

4. Examine the authorized building plan: Verify if the local government has approved the building's plan and design. This attests to the property's compliance with all applicable municipal building codes.

5. Get a NOC, or no objection certificate: To make sure there are no objections to the property transfer, obtain a NOC from the appropriate authorities, such as the municipal corporation.

6. Hire an attorney: Appoint a qualified attorney to examine everything. They will ensure that all documents are accurate and in order and assist in identifying any possible legal issues.

Due diligence:

It is the process of obtaining sufficient correct information about a property to assist in identifying any facts or conditions that may impede a good, clear, and marketable title, as well as understanding the rights and liabilities of all interested parties.

Things to be verified during due diligence:

1.Owner's Records: Confirm that the seller has the rightful ownership of the property.

2. Ownership Chain: Examine the past and present owners' title histories.

3.Derivation of Title: Recognize the method by which the seller obtained the property (gift, inheritance, sale, etc.)

4.Documentation: Examine and confirm pertinent papers, including: Sale deed, Conveyance deed, Title documents, Wills, Gift deeds, Leases and Partition deeds.

5.Capacity of Seller: Verify that the seller has the unfettered authority to sell the property.

6.Legal Competence of Seller: Verify that both the seller and the prior owners were competent to sign paperwork.

7.Property Type and Land Use: Find out whether the property is public or private and whether there are any transfer limitations.

8.Building and Development: For properties that are being developed or under construction, confirm that the building plan and sanction plan comply Approvals from municipal authorities.

Things to keep in mind:

1. It is the buyer's responsibility to verify the title's validity.

2. According to the Limitation Act of 1963, private properties have a 12-year statute of limitations for legal action, whereas government-owned properties have a 30-year statute.

3. It is assumed that a document is legitimately performed if it is thirty years older.

4. Depending on the transaction, a search for the previous 12 years might be adequate.

Pro tip:

Get to know your seller: You must be aware of the person you are dealing with before you can verify the paperwork. Use a PAN, Aadhaar card, etc. to clearly identify that person. Examining the seller's history and the properties he has worked with in the past becomes relevant. Check for reviews on social media and in the press. Getting input from prior clients is also helpful when making your choice.