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Different types of property title – Freehold , Leasehold. Common hold, Power of Attorney and document related to each title.
Meaning of the word “Title to property”
In property law, title in its broadest sense refers to all rights or bundle of rights that can be secured and enjoyed under the law. Title to property ordinarily signifies that the holder has full and absolute ownership. However, the term does not necessarily imply absolute ownership as it can also mean mere right to possession thereof, which is also called possessory title.
Tenure is the right and the manner in which the land is held and possessed. It is the legal relation in which the holder of any land stands to Government or any other overlord with respect to the land he holds. The tenure of the land may be freehold or leasehold or land may be held under a Government Grantor Sanad.
Freehold property can be defined as any estate which is "free from hold" of any entity besides the owner. Hence, the owner of such an estate enjoys free ownership for perpetuity and can use the land for any purposes however in accordance with the local regulations. Freehold property is inheritable and there are no restrictions on the right of the property owner to further transfer the property. In a free hold property, there is no encumbrance to the absolute title of the property. Free hold property can be inherited by a legal guardian. A freehold property can be transferred by registration of sale deed.
Lease hold Property on the other hand is a property in which the Lessee (tenant) have the right to occupy the property for the period specified in the lease. A person who gives the property on lease is called the “Lessor” and the person who takes the property on lease is called “Lessee” and the document under which such arrangement is made is known as “Lease Deed”. Under this document, the Lessor allows the Lessee quite enjoyment of the property for the specified period provided the Lessee observes the terms of the Lease specified in the lease deed. A free hold interest is permanent whereas the leasehold is for the period specified.
Common hold is a system of ownership which involves indefinite freehold tenure of part of a multi-occupancy building (typically a flat) with shard ownership of and responsibility for common areas and services.
Power of Attorney : Power of Attorney can be of two types. General or Special.
General Power of Attorney authorizes your agent to act on your behalf in a variety of different situations whereas special power of attorney authorizes your agent to act on your behalf in a specific situation only. Any person entering into a transaction with the Power of Attorneys holder will get valid title as long as he has taken care to ensure that all the terms contained in the Power of Attorney have been fully complied with.
In case a immoveable property is to be registered through a power of attorney holder, such power of attorney must be executed and authenticated in accordance with provisions of section 33 of the Registration Act.
It may be mentioned that a Power of Attorney holder cannot transfer better title than the person giving such power of attorney has.
A power of attorney is not an instrument of transfer in regard to any right, title or interest in an immovable property. The power of attorney is creation of an agency whereby the grantor authorizes the grantee to do the acts specified therein, on behalf of grantor, which when executed will be binding on the grantor as if done by him (see Section 1A and Section 2 of the Powers of Attorney Act, 1882). It is revocable or terminable at any time unless it is made irrevocable in a manner known to law. Even an irrevocable attorney does not have the effect of transferring title to the grantee.
Execution of a power of attorney in terms of the provisions of the Contract Act as also the Powers-of-Attorney Act is valid. Except in cases where power of attorney is coupled with interest, it is revocable. The Hon’ble Supreme Court in the case of Suraj Lamps have observed that immovable property can be legally and lawfully transferred/conveyed only by a registered deed of conveyance. Transactions of the nature of 'GPA sales' or 'SA/GPA/WILL transfers' do not convey title and do not amount to transfer, nor can they be recognized or valid mode of transfer of immoveable property. The courts will not treat such transactions as completed or concluded transfers or as conveyances as they neither convey title nor create any interest in an immovable property. They cannot be recognized as deeds of title, except to the limited extent of Section 53A of the Transfer of Property Act. Such transactions cannot be relied upon or made the basis for mutations in Municipal or Revenue Records. What is stated above will apply not only to deeds of conveyance in regard to freehold property but also to transfer of leasehold property. A lease can be validly transferred only under a registered Assignment of Lease. It is time that an end is put to the pernicious practice of SA/GPA/WILL transactions known as GPA sales.
It may be seen that the Hon’ble Supreme Court has reiterated that rights which are created pursuant to Section 53A of the Transfer of Property Act, 1882 dealing with the doctrine of part performance , an irrevocable right of a person holding a power of attorney given for consideration coupled with interest as per Section 202 of the Contract Act, 1872 can exist though a person strictly may not have complete ownership rights unless there is a duly registered sale deed.
There is also one other aspect which needs to be clarified before proceeding ahead and which is whether a power of attorney given for consideration would stand extinguished on the death of the executant of the power of attorney. The answer to this is contained in illustration given to Section 202 of the Contract Act, 1872, and the said provision with its illustration reads as under:-
"Section 202. Termination of agency, where agent has an interest in subject matter.- Where the agent has himself an interest in the property which forms the subject-matter of the agency, the agency cannot, in the absence of an express contract, be terminated to the prejudice of such interest.
- A gives authority to B to sell A’s land, and to pay himself, out of the proceeds, the debts due to him from A. A cannot revoke this authority, nor can it be terminated by his insanity or death.
- A consigns 1,000 bales of cotton to B, who has made advances to him on such cotton, and desires B to sell the cotton, and to repay himself out of the price the amount of his own advances. A cannot revoke this authority, nor is it terminated by his insanity or death." The object of giving validity to a power of attorney given for consideration even after death of the executants is to ensure that entitlement under such power of attorney remains because the same is not a regular or a routine power of attorney but the same had elements of a commercial transaction which cannot be allowed to be frustrated on account of death of the executants of the power of attorney.
Documents related to Free hold property :
- Sale Deed or Deed of Conveyance
- Approved Site Plan
- Extract from Revenue Records
- Receipts for payment of Sale consideration
- Non encumbrance Certificate
Documents related to Lease hold Property
- Lease Deed or Rent Deed
- Permission to mortgage
- Receipts for payment of premium, if any.
- Non-encumbrance Certificate
- Photocopy of the sale deed or Deed of conveyance evidencing ownership of the Lessor.
- Site plan