Lawful possession means having both actual control over a property and a valid legal right to keep it, usually based on a registered sale deed, lease agreement, or lawful allotment.
A recent Supreme Court ruling has underscored a crucial point for homebuyers and heirs: A registered sale deed alone doesn't guarantee ownership.
In the Mahnoor Fatima Imran vs M/S Visweswara Infrastructure Pvt Ltd case, the Supreme Court addressed a property dispute in which the buyers relied on registered sale deeds executed by a housing society to claim ownership.
The society itself based its ownership on a 1982 agreement of sale. However, the Court discovered that the land had already vested in the government since 1973 under land ceiling laws.
Further, the 1982 agreement was never registered and was later 'validated' through fraudulent means.
In other words, the society never legally owned the land, and hence was not in a position to pass on a lawful title to buyers.
Key takeaways
Through this case, the Supreme Court has clarified that property registration is merely a public record or notice of a transaction not proof of ownership.
"Legal ownership arises only when the seller has a clear and undisputed title and lawful possession," says Shankey Agrawal, partner, BMR Legal.
"If the seller's title is defective due to fraud, encumbrances, government acquisition, or other irregularities, registration alone cannot cure those flaws," added Agrawal.
Buyers should treat registration as a procedural step, not a guarantee of ownership. They must conduct thorough due diligence before purchasing a property.
Clear title
A clear title refers to property ownership that is lawful, marketable, and capable of being transferred without any dispute or legal hindrance.
It must originate from a legitimate owner whose rights can be traced through an unbroken chain of valid and properly registered documents.
"A property with a clear title must also be free from litigation, mortgages, liens, or government restrictions, ensuring that no third party has a claim or interest in it," explains Agrawal.
"Courts generally determine a clear title by verifying the validity of past transfers and ensuring the property hasn't vested in the government or any statutory authority," says Agrawal.
A title is unclear in the opposite scenario.
"It is unclear when there are breaks in ownership, unregistered or fraudulent documents, unauthorised transfers, undisclosed encumbrances, pending disputes, adverse possession, inconsistent revenue records, or violations of land or development laws," says Amit Kumar Nag, partner, Aquilaw.
Proper chain of documents
A proper chain of documents is a complete, legally continuous sequence of ownership records that trace a property's ownership from the original owner to the present seller.
"It includes duly executed and registered instruments such as sale deeds, conveyances, gift or partition deeds, or succession documents," says Nag.
Each link must be authentic, registered where required, and supported by possession and corresponding entries in revenue or municipal records.
"The chain is defective if based on unregistered or informal documents, missing deeds, discrepancies in property descriptions, unauthorised transfers, or land vested in the government," adds Nag.
In short, the chain is the property's ownership trail if even one link is weak or missing, the title is not clear or marketable.
Lawful possession
Lawful possession means having both actual control over a property and a valid legal right to keep it, usually based on a registered sale deed, lease agreement, or lawful allotment.
"If someone holds the documents but lacks real control, or their claim originates from an invalid or fraudulent source, the possession isn't lawful," says Agrawal.
Unlawful possession is occupation without legal authority, such as holding government land, occupying after ownership has ceased, possession under an unregistered sale agreement or through a fraudulent or void transaction.
"Even long physical possession cannot become lawful if it stems from a void or defective transaction.
"Lawful possession and lawful ownership must exist together one alone is not enough," says Nag.
Property mutation
Property mutation is the process of updating ownership details in municipal or revenue records (such as the property card or 7/12 extract in Maharashtra) after a sale, gift, or inheritance.
"It is done at the city survey office, municipal corporation, or through a revenue officer.
"It ensures that property tax and other municipal liabilities are recorded in the present owner's name.
"Though it doesn't confer ownership, mutation serves as evidence of possession and lawful succession," says Suresh Palav, partner, IndiaLaw LLP.
For inherited properties, mutation records the transfer from the deceased to legal heirs through documents like a probate or succession certificate.
"In cases of inheritance, mutation is critical for determining title as property often changes hands without a sale deed," says Manmeet Kaur, partner, Karanjawala & Co.
Mutation prevents future disputes or complications during resale or redevelopment.
Check for approvals and liabilities
The property should have all necessary permissions.
"Ensure that the property complies with approved building plans, and has all required no-objection certificates from the fire department, pollution control board, water and electricity authorities, and the concerned cooperative society.
"All taxes, including property tax, should be fully paid," says Kaur.
Ensure complete title
Legal experts advise buyers to conduct thorough due diligence before purchasing a property.
"Engage a qualified advocate to verify the title for at least 30 years and obtain a written title certificate.
"Ensure the sale deed is properly stamped and registered, and verify occupation or completion certificates, and society registration.
"After registration, apply for mutation and secure no-dues and encumbrance certificates," says Palav.
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Feature Presentation: Ashish Narsale/Rediff
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