Buying a house or any kind of property and paying for it does not make you the owner of the house. Shocked? Yes, simply making a transaction does not prove that you are the owner unless you register the property in your name legally.
As per Section 17 of Indian Registration Act 1908, it is compulsory to register the documents of the sale or transfer made of any kind of immovable property or asset. The registration fee is 1% of the market value or the agreement value of the property, whichever is the higher or the maximum amount is Rs 30,000. This amount is to be paid along with the original documents of the transaction and two xerox copies of the original documents at the registrar office. This does not complete the procedure. Any kind of legal registration requires two witnesses at the time of registration. The registration procedure is to be duly completed within 4 months of acquisition of the property or else penalty charges are applicable.
Government of India has made registration of immovable property a mandatory act for the below given reasons:
It creates a proof of the transaction made
When a transaction is made regarding the sale or the transfer of the property, the amount is handed over from one party to another party. The fact is known to both the parties however, there are other people as well those are concerned with the sale or transfer of the property. The documentation is the proof for one and all that the sale or transfer has been made.
It brings transparency in the deal and the system
There are many aspects that are agreed verbally by both the parties before making the sale procedure. It is crucial that the agreement points are available in the written form also. This eliminates the chances of missing any related information later on. Moreover, it brings transparency for both the parties and builds the basis of trust for making the transaction.
Furthermore, when documentation and registration is made mandatory, it becomes a rule that is to be followed by every citizen. This creates an ethos and brings harmony in the system and the society.
It creates records for the years to come
Buying, selling or transferring immovable property involves capital transaction. Savings and lump sum capital of people involved in it is at stake. Therefore it is necessary that a record is maintained through documentation. It is also helpful when the information about the transaction made is required years later.
It eliminates the instances of frauds and forgeries
Records kept work as proof for everybody in the society. Nobody can take the transaction for granted and fabricate the facts when every detail about the sale made is written in the sale deed. Hence, every possibility of fraud or forgery is eliminated.
It adds to the security factor
When a person is selling or buying the property he is also concerned about the safety and security of the monetary transaction he is going to make. His awareness about the details of the property makes him confident of the deal. Moreover he is certain that registration process will fulfill the deal and legally sealed.