Legacy Planning

Navigating Property Title Deeds: What Every Investor Should Know

20 Jan 20248 Min Read

Real estate is a cornerstone of a diversified portfolio, often endorsed by seasoned wealth managers as a key component of a robust growth strategy. The Indian real estate industry is projected to reach $1.3 trillion by 2034, with the global market estimated to grow at 5.2% until 2030.

While investment experts typically manage the financial side, many investors remain unaware of the legal intricacies involved in property ownership. The Title Deed is a crucial document in the legal management and validation of property ownership.

What is a Title Deed of a Property?

A title deed is a legal document that serves as proof of property ownership. It often details the property’s ownership history, allowing you to trace the chain of previous owners. Essentially, it clarifies the title of a property, which is crucial for avoiding legal disputes.

Therefore, when planning to invest in real estate, it's essential for investors and their management teams to review the title deed thoroughly. To simplify this process, here’s an insight into the key aspects of a property’s title deed:

Evidence of Ownership
The title deed consists of the name of the legal owner of a particular property. The owner can use it as proof in any legal dispute.

Description of Property
The deed contains a detailed description of the property. This includes the exact location, boundaries, survey numbers, dimensions, and other identifiers. This clause helps identify a particular property.

Encumbrances
An encumbrance refers to any sort of burden on a particular property. This provides clarity to potential buyers. As a buyer, you must look out for any existing mortgages, loans, or legal disputes associated with potential investments.

Chain of Ownership
A title deed includes the details of previous owners in addition to the current owner. It has a detailed description of the chain of previous owners, which helps establish a clear title free from legal disputes.

Transfer of Ownership
During a sale, a transfer of title deed also takes place. This transaction is then registered with the local sub-registrar’s office to make it legally valid.

The case of Delhi Development Authority vs. Skipper Construction Company (P) Ltd. (1996), presented before the Supreme Court of India, is a landmark judgement emphasizing the need for a clear title over property. In this case, the construction company was accused of illegally constructing and selling properties without clear title deeds and necessary permissions from the DDA. The SC ordered the demolition of all illegal structures and penalized the construction company for not having obtained a clear title.

Importance of the Title Deed

Title deeds are particularly important for all real estate transactions since they:

Provide legal protection to property owners against unauthorized claims
Make it easier to procure credit from banks against the said collateral
Ease the entire process of property transfer for profit booking/liquidity

Types of Property Title Deeds in India
Based on the nature of the real estate transaction, you must prepare a different type of title deed.

Type of Title Deed	Description
Sale Deed	It contains the terms of the actual transfer of a property from a buyer to a seller.
Gift Deed	Comes into play when a person gifts a property to another without any consideration.
Lease Deed	It outlines the terms and conditions between a tenant and a property owner.
Mortgage Deed	Executed when someone uses a property as collateral against a loan.
Partition Deed	Divides joint family property among its co-owners.
Release Deed	Used to release the rights of a property co-owner in favor of another co-owner.
Exchange Deed	Executed when two parties are exchanging properties.
Rectification Deed	Used to correct any errors or misinformation in an already registered title deed. It gives a levy for human errors to avoid property disputes.

How to register a Title Deed in India?
It is mandatory to register the title deed for any property transaction under the Indian Registration Act, 1908. Here’s a step-by-step rundown for you:

Prepare the draft of your title deed with all necessary details. Then, calculate and pay the stamp duty as applicable. Obtain an e-stamp certificate as proof.
Collect all required documents, such as ID proof, encumbrance certificate, and property card. Both parties must then visit the sub-registrar's office on a weekday during working hours.
The sub-registrar verifies all your documents. Once verification is complete, both parties need to sign the title deed in the sub-registrar’s presence. The sub-registrar will affix the official seal to make the title deed legally valid. You will receive a receipt and later collect the registered title deed.
Once registration is complete, the property must be mutated in the new owner’s name. Mutation involves submitting an application to change the local records of a municipality or revenue office.

Difference Between Title Deed and Sale Deed
The terms sale deed and title deed are often used interchangeably. However, the key difference between the two lies in the fact that a sale deed is a specific type of title deed, whereas a title deed is a general legal document that can be used for any type of real estate transaction.

For example, a sale deed is only executed when there is an actual sale of property against consideration. However, a title deed can be executed even in the event of gifting, etc.

Conclusion

Navigating the complexities of property title deeds is essential for every real estate investor, particularly those managing substantial portfolios. Understanding the nuances of title deeds can significantly impact the security and profitability of your investments. Title deeds not only serve as legal proof of ownership but also detail critical aspects such as property descriptions, encumbrances, and the chain of ownership, all of which are pivotal in safeguarding against legal disputes.

While the financial aspects of real estate investments are often handled by experts, the legal aspects, especially title deeds, are equally critical. A well-informed approach to title deeds enhances your investment strategy, providing robust protection and peace of mind for all parties involved.