Why You Should Register Property Documents?

 Though its not mandatory to register every property document, doing so proves its authenticity & helps avoid legal battles.

Paperwork can be tedious, especially when you are dealing with legal matters. However, sweating the small stuff is important if you want to avoid trouble in the future.

A single slip, be it a typographical error or / delay in registering a property document, and you could find yourself mired in a long legal conflict.

Even improper or / incomplete attestation could lead to a major court battle. Take the recent case that was resolved in the Supreme Court.

The father of appellant Mr. Narinder Singh Rao had written on a piece of paper that his wife would inherit the property on his death.

This paper was signed by a single witness &  was not registered. After the fathers death, his widow executed a will, bequeathing the entire property to one of her 9 children.

The aggrieved siblings challenged the mothers will in court, stating that she had not inherited the entire property because the fathers will was invalid.

Indian Registration Act..!.

The Supreme court accepted the argument, stating that for a will to be valid, it had to be attested by 2 witnesses. Besides, the document could not be held as a valid transfer of property as it was not registered as required by the Indian Registration Act.

So, the Supreme Court ruled in favour of the respondents, saying that the rule of succession would apply in dividing the property as the fathers will was invalid.

This case reiterates 2 rules that have been clearly enumerated in our legislations. The first relates to proper attestation in the case of a will and the other is the registration of documents.

Attesting a will..!

A will is said to be attested when it is signed by 2 independent witnesses.Though the witnesses need not sign in each others presence, they must see you sign your will or /  at least acknowledge that you were mentally fit to execute the will.

Besides, the witnesses should not benefit from the will,that is,you should not bequeath your assets to the witness or his / her spouse.If you do,the will shall be valid, but the witness will not be able to inherit the property.

Instead, it will pass on to the residuary legatee, that is,the person who would inherit the remainder of your property that hasnt been allocated to anyone. 

Of course,the residuary legatee must not act as witness either. Though a relative who is not inheriting your wealth can attest the will, it is best to appoint an independent, third person as a witness, says Mr. Sandeep Nerlekar, CEO and MD, Warmond Trustees & Executors.

 

Mandatory Registration..!

The more important part of the recent judgement relates to registration of documents.

Time &  again,various courts across the country have held transfers of property to be invalid merely because the document purporting such a transfer was not registered.

Section 17 of the Indian Registration Act clearly states that the instruments purporting to transfer or assign any interest in immovable property should be registered. So,documents such as sales or gift deeds, which relate to immovable property, must be mandatorily registered, failing which the transfer would be invalid and not recognised by law.

In fact, in a 2011 case, the Supreme Court had held that transfer of immovable property through a general power of attorney would also be invalid.

The judgement clearly established the rule that a transfer would be valid only through a registered deed of conveyance. Till date, a will was not required to be registered even if it included the transfer of immovable property.

However, experts opine that it is better to register your document as it ensures a more transparent deal.

The registered records prove the sale or transfer even if you lose the document or / it is destroyed.

Even a document stating that a PoA has been revoked must be registered, so that it is not misused after the revocation. Besides, the accessibility to records makes it easy to find out about the person who has the title and right to the property, and whether there is an existing liability or /  ongoing litigation, before you decide to buy it.

Cost of Registering Document..!

Since the documents are in the public domain, it helps prevent forgeries and fraud in transactions, especially the evasion of income tax, wealth tax or / stamp duty.

Besides, the cost of registering a document is not very high. Though it differs from state to state,on an average,it would cost Rs. 1,000 to Rs. 2,000 to register a document, excluding the stamp duty charges, if applicable.

Optional registration..!

Not all documents need to be registered as per the Indian Registration Act. There is a clear distinction between mandatory &  optional registration.

According to Section 18 of the Act, the documents that relate to the transfer of movable property, as well as wills, are not required to be registered. Besides, a letter of authority or / power of attorney with respect to movable property need not be registered.

However, experts say that it is better to register such documents. This is because doing so lends the document more sanctity, says Mr. Ravi Goenka, Advocate, Goenka Law Associates.

In the case of a will, which is valid even if it is drawn on a simple piece of paper &  not registered, the act of registration would set aside doubts regarding the authenticity of the document.

When a document is registered, there is proof that it was actually drawn, which makes things easier for you in case of disputes that may arise later, adds Mr. Goenka.

Src: ET Wealth, SAKINA BABWANI

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