Legal tips for buying agricultural land in India

[ecis2016.org] Buying an agricultural land, as opposed to a regular plot, requires additional due diligence. We examine the things to watch out for and the procedure to use the land for non-agricultural purposes

To many, flats and apartments may not seem like the perfect choice, to call their own home. This lot would rather build their own homes, right from scratch, as per their own linking. This is where plot and land purchases come into picture. Investing in land makes more sense, also because there is hardly any depreciation involved. Unlike flats and apartments that undergo devaluation with the passage of the time, the value of land only appreciates with time. Nevertheless, unlike apartments, land purchases have a higher risk associated with them.

You are reading: Legal tips for buying agricultural land in India

We keep hearing of various instances, where fraudsters illegally occupy land belonging to someone else and sell it to naïve buyers. Unlike flats or apartments, land is more vulnerable to illegal occupation, especially if it is left unattended.

Hence, it is important to confirm that the land has a clear and marketable title, to avoid falling into legal hassles. While buying agricultural land in India, one has to confirm that there are no disputes or legal hassles and the process of registering has to be hassle-free. Procedures for buying agricultural land vary from state to state.

In some states like Telangana, anyone can buy agricultural land, regardless of whether or not they are farmers. However in other states, like Karnataka, only registered farmers or those from farming families can buy agricultural land. Therefore, one should be aware of the rules in the state, prior to buying agricultural land. Given below are some of the points that one should consider, for buying agricultural land in India.

[ecis2016.org] How tax is imposed on your agricultural income?

Title deed of the land plot

The title of the property confirms the seller’s name and also verifies whether the seller has an absolute right to sell the property. The original present deed and previous deeds, should be examined by a lawyer, to verify that the seller has not allowed access to others through this land. If there is more than one person owning the land, it is important to have the release certificate from the other participants involved, before registering the documents.

Also read all about pros and cons of investment in land

Agreement for sale

Read also : What are the different types of ration cards in India?

After the verification of all the documents, a written agreement on the cost, advance payment and the time within which the actual sale will take place, is made. The agreement must be drawn by a lawyer and should be signed by both the parties and two witnesses.

It begs mention here that the agreement to sale document is the precursor to the sale deed. Based on the terms and conditions established in this document, the future deal is likely to proceed. Consequently, it becomes extremely crucial to set the terms carefully and go through each clause diligently to fully understand its implications, before the signing of the agreement to sell.

Stamp duty on the land

Stamp duties are government taxes and vary from state to state. A stamp duty paid shall be considered a legal document and can be admitted in court, as evidence.

[ecis2016.org] The pros and cons of buying agricultural land

Registration of the land

Registration is the process by which a copy of a document is recorded and the title of the immovable property is transferred in the name of the buyer, at the registrar’s office. As per the Indian Registration Act 1908, the deed should be registered at the sub-registrar’s office, within four months of the date of the execution of the document. Details such as original title deed, previous deeds, house tax receipts and two witnesses for registration of the property, should be provided in the document.

Conveyance deed or sale deed of the land

A sale deed is a document that transfers the title of the property, from the seller to the buyer. This document will help you to determine ownership of the property, where the property is located and the details such as site measurement, boundary details, etc.

Tax receipt and bills

The buyer should check the latest property tax bills and can ask for the same at municipal offices. The buyer must also ensure that notices or requests relating to the property are not outstanding. Water, electricity are other bills, should be up to date.

Encumbrance certificate

An encumbrance certificate may be obtained from the sub-registrar’s office, for the last 13 or 30 years, to ensure that the land has no legal duties or complaints.

Measuring the land

Read also : The pros and cons of prepaying a home loan

A recognised surveyor can ensure that the measurements of the plot and its boundaries are accurate and as indicated in the title certificate.

Changing the title of the land in the village office

The entire legal procedure for the purchase of the property is completed, only if the name of the new owner is added to the village office record. An application can be made to the village office, together with a copy of the registered deed.

Purchasing land from NRI land owners

A person staying abroad can sell his or her land in India, by authorising a third party to sell the land on his or her behalf. In such cases, the power of attorney should be witnessed and duly signed by an officer in his province’s Indian embassy.

Converting agricultural land for non-agricultural use

• Any development, which has to be undertaken in agricultural land, should take place only after converting the land into non-agricultural use.
• An application form has to be submitted to the concerned authorities, clarifying the reason behind conversion.
• The necessary documents like sale deed, tax paid receipt and mutation letter, have to be submitted with the application form, along with details like the dimensions and extent.
• Depending on the property and locality, a fee should be paid for the land to be converted to non-agricultural purposes.
• The authorised person, like the deputy commissioner or the collector, will permit conversion of the land if the necessary conditions have been met and no litigation is pending.
• The land is declared non-agricultural land, after it receives the official conversion certificate.

Above all, when buying a property, buyers should check the previous land records and always buy it from a trusted and renowned developer.

Word of caution

Land parcels are more prone to getting encroached upon. To make sure this does not happen to your prized asset, building a boundary wall would be a necessity. In case this is not immediately possible, at least some sort of fencing should be created, to mark the entire area.  In case you are not able to visit the site often, you will have to hire a trustworthy person, as a caretaker of the land.

At this juncture, it is also important to mention that leading financial institutions lend money to buy plots, mostly in urban areas and upon the condition that the borrower will construct a residential unit on the same within a specific timeline. Those planning to buy land in rural areas will find it hard to get financial support from leading banks in India. They would either have to approach a non-banking finance company (NBFC) or a cooperative bank, for the purpose of obtaining a loan.

It is also advisable that a boundary wall be immediately constructed around the plot, demarcating the area, with a sign board that states it belongs to such and such persons/s. Considering that encroachments are quite common in case of land and plot, no procrastination should be shown in marking the territory. In case the owner lives in another city, he must make arrangements for periodic inspection of the property. A caretaker can be hired for this purpose, till the time construction starts on the site.

(The writer is managing director, Century Real Estate)

FAQs

Source: https://ecis2016.org/.
Copyright belongs to: ecis2016.org

Source: https://ecis2016.org
Category: Must Knows