The sale-purchase of a property often involve additional steps that both buyers and sellers are surprised to learn about. The buyer must be informed of the additional transfer charges when purchasing a property from the seller or their broker.
It is important to determine whether your property is leasehold or freehold before beginning the process of transferring ownership. This is because the sale process varies depending on the type of property. To begin with, let us review the differences between leasehold and freehold properties.
Freehold Property
As implied by its name, a freehold property is not possessed by anyone other than its owner. This means that the owner is fully in control of the property and can use it for any purpose (renovation, transfer, or sale), as long as they follow local regulations. Additionally, if the owner wishes to sell, no permission from the authorities is needed, and the selling procedure is fairly simple. Since the title to a freehold property is perpetual, buyers tend to favor freehold properties over leasehold ones.
How do you sell your freehold property?
Let us say you wish to sell your property (i.e., transfer ownership). In that case, you can proceed with the straightforward process of signing a sale agreement with the buyer and then completing and registering a sale deed at the relevant Sub-Registrar of Assurances office. You can read more about this procedure by clicking here.
Leasehold property
As the name suggests, in this instance, the government agencies in Noida, Greater Noida, and Navi Mumbai offer leasehold land, while those in Gurgaon, Ghaziabad, Bangalore, and Delhi offer freehold properties. Under this arrangement, the land is leased to a third party for a term that can vary from thirty to ninety-nine years and, in certain cases, up to 999 years.
Apartment buildings constructed on leasehold land face an uncertain future because they are dependent on the rent charges collected by the relevant housing society to extend the lease. Additionally, when the property approaches the end of its lease, buyers will have a harder time obtaining bank loans.
Selling a Leasehold property
Let us say you are the owner of a leasehold apartment in a housing society, that you have found a buyer, that you have negotiated a price, and that you are planning to proceed with the sale. Step 1: Drafting of Sale Agreement and Application for “No Dues and No Objection Certificate”
The buyer’s lawyer will draft a “Sale Agreement” or “Agreement to Sell” that will include all terms and conditions of the sale; after you provide your confirmation, both parties can go to the relevant office of the Sub-registrar of Assurances and get the sale agreement registered (for more information on this, click here). The buyer, unless otherwise agreed, will pay the necessary stamp duty and registration fees.
Housing societies charge a sum of money, which can vary from Rs 10,000 to Rs 25,000, depending on the type of housing project (affordable, mid-income, or affluent); the buyer typically pays these charges. They will require copies of identification documents and signatures of both parties on the application form. You and the buyer will also have to apply to your housing society for a “No Dues and No Objection Certificate.” Make sure that you have no outstanding dues with the society regarding maintenance or any other charges.
Step 2: Application for “Memorandum of Transfer” Following receipt of the “No Dues and No Objection Certificate,” you must apply to the relevant government body—which is the lessor and owns the land—to obtain the “Memorandum of Transfer,” which is a formal document granting you, the owner of the leasehold property, the ability to transfer your ownership rights to the buyer.
A copy of the No Dues and No Objection Certificate from the relevant housing society must be attached to the application form, which can be obtained from the authority’s office or, if available, from its official website. Personal identification documents for both the buyer and the seller must also be attached.
The buyer is responsible for covering the costs associated with obtaining the Memorandum of Transfer, which vary by area and can range from Rs 2,000 to Rs 9,000 per sq m. The total cost is determined by multiplying the transfer charge per sq m by the size (in sq m) of the property in question. The relevant office of the sub-registrar of assurances can provide these rates. In plotted developments, the transfer charges are determined by the width of the road on which the property is located. Additionally, plots facing the green belts as designed by the master plan are more expensive in terms of transfer charges.
Step 3: Verification at the concerned governmental authority’s office Following the application process, you and the seller may be required to appear in person at the designated governmental authority office on a specified date. The concerned officials will ask you similar questions and confirm that you wish to transfer the property to the buyer before providing you with the “Memorandum of Transfer” document, which should arrive in one to two weeks.
Step 4: Execution and registration of sub-lease deed The buyer’s attorney will prepare and print the sale deed following the buyer’s payment of the applicable stamp duty and the entire purchase price for your property. Following your signature, the concerned sub-registrar at the Sub-registrar of Assurances office will review all paperwork, sign the sub-lease deed, and charge the buyer the relevant registration fees.
The original registered sublease deed will be sent by the sub-registrar’s office to the buyer after a period of one to two weeks, and you, the seller, should take a photocopy of each page for your records.
Remember that this process and the kinds of documents needed might differ depending on the state and city where your property is situated. For example, if you, the property owner, bought the property originally under an irrevocable Power of Attorney (POA) rather than a registered lease deed, this POA will be needed when selling the property. For more information on how to proceed with selling a leasehold property, it is best to speak with a local real estate broker and a property transaction lawyer.
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