Fraudulent Transactions in Real Estate

Aditya Pratap is a lawyer practicing in the Bombay High Court. He can be reached at aditya@adityapratap.com

Introduction 

The real estate boom in recent decades has everyone making a beeline towards investing in real estate. But despite the advent of RERA, real estate dealings in India can be prone to manipulation, and one still hears of cases of frauds, misrepresentation, and forgery.

The crime of real estate fraud occurs when one party to a real estate transaction falsely represents relevant information to the other party. The other party then acts on the false information, to their financial detriment.

What are the essential documents to check in order to avoid property fraud?

  • Sale Deed: Sale Deed is the core legal document that acts as proof of sale as well as the transfer of ownership to the buyer. It should be compulsorily registered. Prior to the execution of sale deed, one must execute the sale agreement and at the same time check for the compliance of various terms and conditions as agreed upon by both the parties. Also, well before executing the sale deed it is important to check whether the property under deal is bearing a clear title.
  • Mother Deed: Mother deed or title deed is the parent document which is an important legal document that helps one in tracing the antecedent ownership of the property under deal right from the start. This document is needed to further sale one’s property. It is very much important that the mother deed has recorded the references to previous ownerships in a continuing sequence. In case, something is missing, one should refer the records from registering offices. The sequence should have been updated until the current owner. This is important specially if one is buying through a home loan. 
  • Approval Plan of Your Building: It is mandatory for each building to have an approval plan either from the jurisdictional commissioner or any other officer who is approved by the commissioner.      
  • Conversion Certificate: Since large parts of land in India are being used for agriculture, it is very important to obtain a conversion certificate from the legal body. This certificate is issued by the revenue authority, stating the change in land use, from agriculture to housing. For this conversation, a NOC (No Objection Certificate) has to be obtained from the Tahasildar office.
  • Encumbrance Certificate: Encumbrance Certificate is a very important document just like the sale deed and the title deed. This document provides evidence of mortgage, title transfers or any legally registered transaction against the property.
  • Power of Attorney: Power of attorney is nothing but giving authority to another person to sell or mortgage the property on behalf of the seller. The registration of the power of attorney has been made mandatory.   
  • Tax Receipts: One must go through the tax receipts to make sure taxes have been paid until the date of sale of the property. In case the seller does not possess tax receipts, one can get in touch with the municipal body by using the survey number and confirm the ownership. 
  • Completion Certificate: It is very important to check the completion certificate before purchasing the property. The municipal authorities issue the completion certificate, stating that the building is in compliance with rules and is built according to the approved plans.
  • Occupancy Certificate: The Occupancy Certificate shows that the building is ready for occupancy. When a builder applies for this certificate, the authorities perform an inspection to ensure that the building meets all specified norms.

Types of real estate fraud and how to avoid them

The Supreme Court in the Landmark case of Ibrahim and ors v. State of Bihar and anr. stated that a person is said to have made a ‘false document’ if:

  • He made or executed a document claiming to be someone else,
  • If he altered or tampered a document, or
  • He obtained a document by practising deception or from a person not in control of his senses.

Following are the types of property frauds and ways to avoid them:  

  • Fabricated title deeds: In such cases, there would be one original document that would have been registered. While applying for the encumbrance certificate from the sub-registrar’s office, the name of the owner and the sale deed document details would be reflected (since the original document would have been mortgaged with a money lender).A fake document quoting similar details as mentioned in the original sale deed could be prepared.
  • How to avoid it: The authenticity of any document can be detected only when a certified copy of the document is compared with the original document to ensure both tally.
  • False revenue records: In this scenario, there would be no parent title deed documents to support the ownership of an individual except a land revenue record. Such frauds usually take place in government, temple land deals.
  • How to avoid it: The revenue record should be cross-verified online and if no online facility is available, it should be verified with the revenue department authorities.
  • Fabricated death and legal heirship records: Properties are sold based on fake legal heirship certificates. Usually in such frauds, the original parent documents will not be available. Instead, an advertisement stating the loss of the original document will be published in a lesser-known newspaper.
  • How to avoid it: One has to be very careful in dealing with properties when original title deed documents are not available. The death certificate should be cross-verified online or with the records of the issuing authority.
  • Impersonation of the ‘real owner’: In this case, a fake power of attorney is executed, based on which the power agent executes a sale deed in favour of unsuspecting buyers. The title deed of the real owner is usually fabricated and the seller claims that the originals are lost.
  • How to avoid it: Intending buyers should insist on obtaining copies of the seller’s pan card and voter ID and get them verified. Similarly, the power of attorney must be verified with the owner.

Conclusion

Real estate fraud can occur in many contexts, including the closing (sale or purchase) on a piece of real property, and the mortgage application or approval process. Real estate fraud may be punishable by time in jail and/or monetary fines. Thus, it is Important for one to be alert while making any real estate transactions.

Real estate fraud can occur in many contexts, including the closing (sale or purchase) on a piece of real property, and the mortgage application or approval process. Real estate fraud may be punishable by time in jail and/or monetary fines. Thus, it is Important for one to be alert while making any real estate transactions.

About the Author – Aditya Pratap

Aditya Pratap is a lawyer practising in Mumbai. He argues cases in the Bombay High Court, Sessions and Magistrate Courts, along with appearances before RERA, NCLT and the Family Court. For further information one may visit his website adityapratap.in or view his YouTube Channel to see his interviews. Questions can be emailed to him at aditya@adityapratap.com.

Cases argued by Aditya Pratap can be viewed here.

Spread the word