Search Report and Certificate of Title or as it is called at some places, No Encumbrance Certificate, is a credibility manuscript relating to the real estate transactions, issued by the Attorney-at-law or an Advocate or Solicitor having expertise in real estate jurisprudence.
It becomes the professional obligation on the part of a law firm, when it comes to the job of real estate documentation, to assess and investigate the title or nature of the ownership viz; it’s origin, it’s transformation i.e. change in nature of user, it’s present status, compliances of various statutory and regulatory laws affecting the estate itself by the seller, by his/her predecessors-in-title and other related persons etc; with a view to ensure the safe passage for the proper and legal transfer of the property from the seller/transferor to the purchaser/transferee.
Prior to the conclusion of the property transactions, either in the form of Sale/ Purchase Deed or Development Agreement & Development Power Of Attorney or Transfer of Development Rights or any other legal indenture but during the subsistence of the Agreement for Sale, the law firm is supposed to perform its professional duty laboriously in the interest of its client/s. The present nature of the estate may have come a long way after passing through the various stages. Professional ethics enjoin upon the law firm to verify whether all the compliances are made by the concerned person/s right from the initial title holder to the final owner i.e. the seller.
1) Inspection of Land Records:
Primary area of title investigation is the land records maintained by the Government through Land Departments. The land records is Record of Rights that contains inter alia the name/s of the holder/owner of the land, user/tenure, mutation references, land measurement, entries highlighting easement rights, encumbrances, statutory restrictions on transfers, if any.
2) Registers under the Registration Act 1909
The Registration Act provides for compulsory registration of the documents connected with the immovable property. The Authority acting under the Registration Act is cast with a statutory duty to maintain a register recording briefly the transactions pertaining to the immovable property. Thus a lawyer conducts inspection of such register to search whether the seller of the immovable property under sale process/investigation, has entered into any past transaction that may have extinguished or encumbered or limited the marketable right of the seller to transfer the same to the present client.
3) Acquisition, Requisition, Reservation:
Large scale of enactments provides for property acquisition, requisition, reservation which renders such property non-transferable. A lawyer has to be vigilant about whether the property under investigation is a subject matter of the provisions of Central/Union enactments like Land Acquisition Act 1894, Urban Land (Ceiling) Act 1976, Income Tax Act 1961, Banking Companies (Acquisition and Transfer of Undertakings) Act 1980 under the Union of India to name the few and Maharashtra Regional and Town Planning Act 1966, Maharashtra Industrial Development Corporation Act 1976, Maharashtra Land Revenue Code 1966 and other state legislations in the State of Maharashtra.
4) Act of party:
In certain cases the act of the party or the owner restricts the transfer of the property to the bona fide purchaser. The Transfer of Property Act 1872 restricts the transfer of the property which is the subject of any court proceedings, likewise, the property of the owner who has availed any loan or any financial security on the estate in the form of mortgage, charge, encumbrance and running into bank debts is liable to acquisition under the Securitisation And Reconstruction Of Financial Assets And Enforcement Of Security Interest Act, 2002 and the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 and other relevant enactments as also under the Criminal Procedure Code 1973 the property of the owner who is either the accused or the surety for the accused in the criminal proceedings is liable to be forfeited or attached on the happening of the events laid down. The Code of Civil Procedure 1908 also provides for the attachment or forfeiture, by an order of the Court, of the property of the seller who may be one of the litigants in the civil suit/application/proceedings.
5) Title papers Review
For getting the trace of origin of the ownership and its variant features, a competent lawyer is duty bound to review, evaluate and read the Title papers i.e. all old property documents to verify the transferability and to identify whether any restrictive covenant is fastened to the ownership.
6) Central-State-Municipal Taxation
It is of utmost significance for the law firm to verify that due to the seller’s laxity or wilful conduct the property is entangled in proceedings/orders relating to the taxation under Central-State-Municipal enactments which impedes the transfer of the property.
7) Public Notice
Issuance of Public Notice in the newspaper having large circulation is a part of title search and thus is a statutory obligation. Public Notice is issued by the law firm to inform the public at large about the impending transaction with a intention to invite objections or say from the member of the public who may have acquired legal rights in the property by operation of law or by an voluntary or deliberate act of the seller. Upon the expiry of a period set for filing of objections, a law firm accordingly issues its certificate pursuant to the Public Notice detailing the response thereto.
8) Statutory Compliances
Several legislations enjoin upon the seller/purchaser to make mandatory compliances as laid down in the statute for the lawful conveyance of the property. A law firm has to address this issue very meticulously in the high interest of its client/s to secure the estate in the property.
During the process of investigation of title the lawyer cautiously review all the old records, documents, papers, etc; and thus draws up a questionnaires to be put up to the seller either in writing as well as orally during the interrogation session and records all the answers responded by the seller and thus as a further precaution requires the seller to execute necessary Indemnification Bonds and Undertakings and Affidavits in support of the answers and replies offered by the seller.
THE areas of investigation of title enumerated above are not exhaustive and there may be other avenues also, to be explored by a competent and experienced lawyer, depending upon the variant nature and status of the property that may be influenced or affected or governed by several of the plethora of statutes or governmental regulations or resolutions.
Upon completion of search and investigation of title, Attorney-at-law or an Advocate or Solicitor draws up a Search Report detailing the past and present record of the property and at the end opines about the marketability and transferability of the property in form of Certificate of Title or No Encumbrance Certificate which assists the individual Purchaser, Corporate Entities, Banking and Financial Organisations, Land Developer, Educational Institutions, Trusts and many others to decide either to carry on or to pull out from the deal.