The process of property transactions is set to get smoother, convenient, relatively more reliable and easy to scrutinise. Amendments to the Registration Act, 1908, that have been tabled in Parliament, will allow people to register such documents in any part of a State, irrespective of where the property is located. It will enable verification of power of attorney documents, and prevent fraudulent transaction of public property.
The boom in real estate values in recent years and a corresponding increase in the number of fraudulent property transactions had generated pressure to amend the Act.
The misuse of power of attorney provisions in particular has been a cause of concern. The power of attorney is an instrument by which the owner of a property can transfer to an agent authority to sell or undertake specified activities. At present, it is not mandatory to register such a document. In the few cases where these are registered and entered in ‘Book 4,’ a register maintained by the Sub Registrar’s Office (SRO), the details are not available for public scrutiny. When a potential buyer looks up the encumbrance certificate, power of attorney particulars do not show up.
The proposed amendments will make it mandatory to register all power of attorney documents. It will permit public scrutiny of ‘Book 4.’ States such as Tamil Nadu implemented these changes a year ago.
The existing Act does not provide any enhanced security to public property. Anyone can now claim ownership and effect a transaction. Even if a registrar has suspicions, he or she cannot refuse registration. For, courts have held that all documents submitted must be registered: the Act does not provide powers to do otherwise. This is set to change.
Under the new provisions, a registrar could insist on checks, such as no-objection certificates from the government and charitable institutions, before registering a property related to such organisations. “This is a welcome measure and will protect vulnerable property,” said C.H. Gopinatha Rao, a former president of the Institute of Valuers.
Another significant change concerns the place of registration. Registration can now be done only in the SRO in whose territorial limits the property is located. The revised Act will allow this to be done in any SRO in a given State. This move is a logical offshoot of computerisation of land records.
However, the experience in Bangalore indicates that this leap would require more commitment from the State government. It is more than two years since the Karnataka government launched ‘Anywhere Registration’ in Bangalore. The government is yet to extend the scheme to other parts of the State. “The delay is because we are evaluating the positives and negatives of our experience in Bangalore,” a top official in the office of the Inspector-General of Registration and Commissioner of Stamps said.
Apartments
When a new apartment is sold, only the undivided share, what is referred to as UDS, of the land is registered. Thus, the buyer pays stamp duty and fee only for a fraction of the value involved. Under the proposed Act, construction and other development agreements that come with the transaction have also to be compulsorily registered. On the one hand, this will enhance revenue to the State On the other hand, it will marginally raise property costs. States such as Karnataka have already made it compulsory to register development agreements.
The proposals have evoked mixed response from the industry and farmers, for example in West Bengal. While the industry welcomes them, activists such as Anuradha Talwar, associated with the Paschim Banga Khet Majoor Samity (West Bengal Agricultural Workers Samity) say that, considering the complexity of holdings and informal transactions in rural areas, the amendments may result in dispossessing those with small landholdings.
Vinod Sampat, an advocate and property expert based in Mumbai, has a word of caution. He said the amendments looked good on paper, but the reality could be different. “The amended Act would work only if there is transparency.” Without a sustained and closer scrutiny of the registration office and practices, it is not possible to implement desired changes, he said.
(With inputs from Atiq Khan in Lucknow, Sharath S. Srivatsa in Bangalore, Shiv Sahay Singh in Kolkata and Sukhada Tatke in Mumbai)
