Thakut Property Counsaltancy

Basic Info Realestate - India

Definition of Immovable Property

The Term “Immovable Property”

Thus, the term is defined in the Act by excluding certain things. “Buildings” constitute immovable property and machinery, if embedded in the building for the beneficial use thereof, must be deemed to be a part of the building and the land on which the building is situated.

This definition of immovable property is also not exhaustive;

The definition of the term “Immovable Property”, which extends to the whole of India, except the state of Jammu and Kashmir, is comprehensive. The above definition implies that building is included in the definition of immovable property.

The following have been held as immovable property. A right to collect rent, life interest in the income of the immovable property, right of way, a ferry, fishery, a lease of land.

Freehold property

Freehold is a special right which grants full use of property for an indeterminate time. The term is used to describe ownership of property i.e. both the buildings and the land on which it stands. An absolute right to property is known as a freehold interest in the property – that is to say no one has a better right to the property in question. In other words, the property which is owned, outright, outright ownership of the building and land on which it stands for a free tenure in which the owner has the maximum rights permissible. If someone owns property which is freehold means no one else has any right over the property.

Leasehold property

Leasehold is a right to hold or use property for a fixed period of time for adequate consideration, without transfer of ownership. A lease agreement or contract provides a right of exclusive possession, but not the ownership of a property, for an agreed period of time for an agreed consideration. The ultimate ownership of the property remains with the person granting such right in the property. Leasehold is treated as fixed asset. At the end of the lease period, the property reverts to the owner or landlord. Lease is a right to the use the property by virtue of an agreement, for a specified term, for which a consideration is paid.

Building

The building is defined as any fixed construction that is temporarily or permanently erected on the surface of the earth or water. A structure enclosed by exterior walls on all sides, built, erected and framed of a combination of materials, whether portable or fixed, having a roof, to form a structure for the shelter of persons, animals or property.

Any structure used or intended for supporting or sheltering any use or occupancy. Building includes barn, store, hotel, factory, or warehouse that shelters some from of human activity but do not include any type of mobile home, recreational vehicle, boat or tent. A building is an independent free standing structure, comprising one or more rooms and other spaces covered by a roof and usually enclosed within external walls or dividing walls which extend from the foundation to the roof. Toilets, bathrooms, kitchens and garages in detached structures are not counted as separate buildings.

Flat

The Term Flat is defined as “a separate and self contained set of premises used or intended to be used for residence, or office, showroom, or shop or godown for carrying on any industry or business and includes a garage, the premises forming part of a building and includes an apartment.”

Apartment

The term APARTMENT is defined as “Apartment as a part of any property, intended for any type of independent use, including one or more rooms or enclosed spaces located on one or more floors or any; part or parts thereof, in a multi-storied building to be used for residence, profession or any occupation or such other types of independent use and with a direct exit to a public street, road or highway or to a common area leading to such street, road or highway.”

Easement right

A legal instrument enabling the giving, selling, or taking of certain land or water rights without transfer of title, such as for the passage of utility lines. An affirmative easement gives the owner of the easement the right to use the land for a stated purpose. A negative easement is an agreement with a private property owner to limit the development of his land in specific ways.

A right to access to a portion of a property for which the owner gives up his rights of development. A right of way giving persons other than the owner access to or over a property. A right of passage over a neighbor’s land or waterway. Although right of ways are the most common easements, there are many others such as rights to tunnel under another’s land, to use a washroom, to emit smoke or fumes, to pass over with transmission towers, to access a dock and to access a well. A right or privilege that a person may have on another’s land, as the right of a way or ingress or egress. The right to make limited use of another person’s land. It is usually granted in writing by the owner and becomes an interest in the land and an encumbrance on the title. For example, as the owner, you may wish to grant an easement for the installation of a utility line through your property.

License

The Term LICENSE is defined as “Where one person grants to another, or to a definite number if other persons, a right to do, or continue to do, in or upon the immovable property of the grantor, something which would, in the absence of such right, he unlawful, and such right does not amount to an easement or an interest in the property, the right is called a licence.”

The grant of a license may be express or implied from the conduct of the grantor, and an agreement which purports to create an easement, but is ineffectual for that purpose, may operate to create a licence.

Lease

A lease of immovable property is a transfer of a right to enjoy such property, made for a certain time express or implied, or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, service or any other thing of value, to be rendered periodically or on specified occasions to the transfer by the transferee, who accepts the transfer on such terms.

Floor Space Index

FSI or Floor Space Index is the ratio of the size of land on which is building is being built to the size of the built-up area of the building.

Development Rights

Development rights entitle property owners to develop land in accordance with State development regulations in Maharashtra the applicable law is “Development Control Regulation. “Rather than the right to develop the land, the buyer acquires the responsibility to enforce the negative covenants or restrictions stipulated in the development rights agreement. Development rights may be sold to individuals or a public agency through a transfer of development rights program. In this case, the buyer does acquire a positive right to develop land, but the right is transferred to a site that can accommodate growth.

Transferable Development Rights

When a person is unable to use available Floor Space Index (FSI), of his property for various reasons he is permitted to use the remaining FSI on another property. Sometimes the land has potential for development but FSI is already utilized. In such case the person can acquire FSI by way of transfer of development rights and utilize it on his property. Where a plot of land is reserved for any purpose, the owner will be eligible for development rights in the form of FSI to the extent and on the condition set out in the Act. Development rights are available only in cases where a development of a reservation has not been implemented i.e. transferable development rights will be available only for prospective development of reservation.

Transfer

The term ‘transfer’ is understood in the general sense as conveying or passing or making over the from one person (the owner) to another.
The term “transfer of property” means an act by which a living person conveys property in present or in future to one or more other living persons, or to himself and one or more other living persons. In this section, the term, “living person” includes a company or association or body of individuals, whether incorporated or not. The word, “property”, is used in this Act in its widest and most generic legal sense. Therefore, an actionable claim, as also the right to reconveyance land, may be termed as “property”. However, the power of appointment is not a property.

Sale

Sale maybe defined as the transfer of ownership in exchange for a price paid or promised or part paid and part promised. The transfer by way of sale of tangible immovable property of the value of rupee one hundred and above can be made by a registered instrument. The transfer by way of sale of tangible immovable property of the value of less than one hundred rupees may be made either by a registered instrument or by delivery of the property.

Sale Deed or Conveyance Deed

A deed of sale or conveyance is executed between the interested parties of the sale, in favor of the buyer or any other person as he directs. The sale deed consists of the following clauses.
  • Place and date of the execution of the deed
  • Name and description of the parties
  • Description of the property
  • Recitals
  • Consideration
  • Operative part- the seller conveys or transfers the property in favour of the purchaser
  • Exceptions and Reservations
  • Conditions, if any
  • Vovenants and
  • Receipt clause

Lease

A lease of immovable property is a transfer of a right to enjoy such property, made for a certain time express or implied, or in perpetuity, in consideration or a price paid or promised, or of money, a share of crops, service or any other thing of value, to be rendered periodically or on specified occasions to the transferor by the transferee, who accepts the transfer on such terms.

The transferor is called lessor, the transferee is called the lessee, the price is called the premium, and the money, share, service or other thing to be so rendered is called the rent.

Lease Agreement / Lease Deed

The Person transferring a right to enjoy such property for a certain time for a consideration in form of fees or lease rent. The transferor is called the lessor, the transferee is called the lessee and the price is called the premium and the money, share, service or other things to be rendered is called rent.

  • The essential elements of a lease are a) parties b) property c) demise d) terms and conditions and e) consideration.
  • It is drafted as an ordinary agreement but the property to be leased, period of lease, the date of commencement of the lease, rent and other terms and conditions agreed upon are mentioned.
  • Whether an agreement is a lease, is construed form the intention of the parties.

Leave And License

The practice of Leave and Licence is widely prevalent and popular in real estate markets in Maharashtra and Gujarat. Leave and Licence, in its simplest sense, is just a license to make use of premises. Consequently, the landlords are at a lower risk as far as the recovery of possession is concerned. Secondly, the laws that govern Leave and Licence practices are more lenient than those that are applicable to lease.

Mortgage

A mortgage is the transfer of an interest in specific immovable property for the purpose of securing the payment of money advanced or to be advanced by way of loan, an existing or future debt, or the performance of an engagement which may give rise to a pecuniary liability.

The transferor is called a mortgager, the transferee a mortgager; the principal money and interest of which payment is secured for the time being are called the mortgage-money, and the instrument (if any) by which the transfer is effected is called a mortgage-deed.
Development of an immovable property as regards the extent and nature of use, in which the property is situated. Such an act prescribes the outline of the land classified into different zones viz. ‘residential, ‘commercial, ‘industrial’ and ‘no development zone’ and prescribes the guidelines for development of the particular land in future.

Methods of development

The owner of the immovable property may adopt one of the following methods for exploiting the immovable property.

To Sell

The owner may enter into an agreement for sale of the immovable property at the agreed consideration and upon agreed terms and conditions including right to develop the same and on completion of the development finally to execute sale deed or deed of conveyance in favour of the purchaser or his/her/their nominee/s.

To Sell FSI

As per the recent trend of the market, the owner does not like to sell his right, title and interest in the land / immovable property, but, likes to sell the right of utilization of FSI permitted by the concerned local authority at a mutually agreed rate and on development of the same ultimately to transfer the owners right in favor of the purchasers of the flats or units as the case may be.

Development Agreement

Development Agreement is an agreement for sale or lease of the immovable property but not a simple agreement. Development means construction of buildings as per municipal sanctioned plans and approved schemes, selling flats therein on ownership basis and ultimately transferring the land with the building to a body like a co-operative housing society or limited company formed by the purchasers of the flats in such buildings. For this purpose a developer or builder has to secure some vacant land or built-up land and so he enters into a deal with the owner thereof. This is done in different ways, one of which is by entering into an agreement only for carrying out the development as an agent for the owner or promoter of a co-operative society. The developer is allowed to enter upon the property as a licensee or under a power of attorney given to the developer in lieu of a substantial part of the consideration paid by him to the owner of the property.

Development agreements should be in writing though registration is not mandatory. A development agreement is generally accompanied by a power of attorney executed by the owner in favour of the developer. The power of attorney is required inspite of the provisions and powers given by the development agreement because it is required to be produced before several authorities for getting several things done.

Gift Deed

Gift is the transfer of certain existing movable or immovable property made voluntarily and without consideration by one person, called the ‘donor’ to another, called ‘donee’ and accepted by or on behalf of donee. Such acceptance must be made during the lifetime of the donor and while he is still capable of giving. If the donee dies before acceptance the gift is void.