When they learn that there are additional stages required in the sale-purchase of a leasehold property, sellers and buyers are frequently caught off guard. It is crucial that either the seller or his or her broker informs the buyer that there will be additional transfer fees when purchasing a leasehold home or flat. To learn more, keep reading.
It is crucial to determine whether your home is leasehold or freehold before beginning the process of transferring ownership. It is essential since the type of property affects the sale process. Let’s first define freehold and leasehold properties before we begin the process.
Freehold Property
A freehold property, as implied by its name, is unencumbered by the control of any party but its owner. As a result, the owner retains full ownership and can use the property any way they see fit, including renovating, selling, or transferring it. A freehold property’s owner can sell it without seeking permission from the authorities, and the selling procedure is also rather simple. Buyers typically favor freehold properties over leasehold ones since the property title is permanent.
How to sell a freehold property?
Let’s say you want to sell your house (i.e. transfer the ownership of your property). If so, you can proceed with the straightforward process of signing a sale agreement with the purchaser before executing and registering a sale deed at the relevant office of the Sub-Registrar of Assurances. Click here to read more specifically about this procedure.
Leasehold property
As the name suggests, a government development agency typically leases the ownership of the land on which a property is developed. The land is leased to a different party for a specific amount of time, which can range from 30 years to 99 years and, in rare situations, even up to 999 years. For instance, the government agencies in Gurgaon, Ghaziabad, Bangalore, and Delhi give freehold lands whereas those in Noida, Greater Noida, and Navi Mumbai offer leased land.
The future of apartment buildings constructed on leasehold land is questionable because lease renewal fees are paid by the housing organization in question. Also, when the property draws closer to the conclusion of the lease time, buyers find it more difficult to obtain loans from banks.
How can you sell a leasehold property?
In a housing society, let’s imagine that you are the owner of a leasehold flat. You’ve identified a buyer, agreed on a price, and intend to proceed with the transaction.
Step 1: Preparation of the selling agreement and the “No Dues and No Objection Certificate” application are the first steps.
A “Sale Agreement” or “Agreement to Sell,” outlining all the terms and circumstances of the sale, will be drafted by the buyer’s attorney. The draft sale agreement will be sent to you by the attorney for your approval, after which both parties can proceed to the relevant Sub-Registrar of Assurances office and get the sale agreement registered.
You and the buyer will also need to file for a “No Dues and No Objection Certificate” from your housing organization. Make sure that you do not owe the society any maintenance or other fees that are past due. Amounts charged by housing societies as transfer fees can range from Rs 10,000 to Rs 25,000, depending on the type of housing complex (cheap, middle-class, or luxury). These fees are typically covered by the buyer. They may also want a copy of the sale agreement in addition to copies of the parties’ signatures on the application form and identity documents.
You and the buyer will also need to file for a “No Dues and No Objection Certificate” from your housing organisation. Make sure that you do not owe the society any maintenance or other fees that are past due. Amounts charged by housing societies as transfer fees can range from Rs 10,000 to Rs 25,000, depending on the type of housing complex (cheap, middle-class, or luxury). These fees are typically covered by the buyer. They may also want a copy of the sale agreement in addition to copies of the parties’ signatures on the application form and identity documents.
Step 2: Submit a “Memorandum of Transfer” application
After receiving the “No Dues and No Objection Certificate,” the interested government agency that owns the land and is the lessor must be contacted in order to request the “Memorandum of Transfer.” You, the owner of the leased property, have been given written approval by the relevant authority to transfer your ownership rights to the purchaser.
You can get the application form at that authority’s office or through its official website (if available). Both the buyer’s and the seller’s personal identification cards must be included with the application, along with a copy of the housing society’s No Dues and No Objection Certificate.
The buyer is responsible for paying the fees for obtaining the Memorandum of Transfer, which vary by area and can cost between Rs 2,000 and Rs 9,000 per sq m. The total fee is determined by multiplying the transfer fee per square metre by the size (in square metres) of the subject property. Visit the relevant Sub-Registrar of Assurances office to find out these costs. The transfer fees for plotted projects vary depending on the width of the road where the property is situated. Also, according to the master plan, plots facing green belts fetch higher transfer fees.
Step 3: Varification at the office of the relevant government agency
Following your application, you and the seller can be given a date on which you must both appear in person at the designated location of the governmental authority. The concerned officials will inquire about your desire to transfer the property to the buyer and ask you further questions of a similar nature. Within one to two weeks after that, you will receive the “Memorandum of Transfer” paperwork.
Step 4: Complete and file the sublease deed
After the buyer has paid you the full sum for your property as well as the required stamp duty, the buyer’s attorney will prepare and print the sale deed. The concerned sub-registrar in the office of the Sub-Registrar of Assurances shall inspect all documents and sign the sublease deed after you and the buyer have both signed it. The required registration fees will subsequently be paid by the purchaser.
The original registered sub-lease deed, which the buyer must maintain, will be provided by the sub-office registrar within one to two weeks. The seller must make a photocopy of each page of the sublease deed for their own records.
Remember that depending on the state and city your property is located in, this process and the types of paperwork needed may differ. For example, if you, the property owner, initially bought the property on the basis of an irrevocable Power of Attorney (POA) from the initial seller rather than a registered lease deed, this POA will be necessary during the selling process. As a result, it would be wise to get advice from a local real estate broker and a lawyer experienced in real estate transactions before moving through with the sale of a leasehold property.
Follow and Connect with us: Twitter, Facebook, Linkedin, Instagram
