What should I consider when I am selling a house or land?

If you are planning to sell a property, one of the most critical factors you must consider during the sale is the process of registering the transaction.

Registering the Sale

Registering the transaction or sale is beneficial for both parties since it means that the government recognizes the transfer of property from the seller to the buyer. In India, all individuals must register1 the sale of an immovable property for which the transaction costs exceed Rs.100. Since the cost of land or a house is much higher, this effectively implies that sale of such a property must be registered. Furthermore, all transactions involving gift of an immovable property, as well as lease for a period exceeding 12 months also need to be registered.

Disclosure of Information

As a seller, it is important to ensure that the transaction is carried out with absolute honesty and in full agreement with the buyer. This is necessary to ensure that there is no conflict or dispute that arises over the transaction in the future. When the buyer shows an interest in the land or house you wish to sell, you, as the seller, must:

  • Disclose to the buyer any material defect in the property of which you are aware but of which the buyer is not aware, and which the buyer cannot ordinarily discover.
  • Make available all the relevant documents to the buyer for examination, including all documents of title relating to the property.
  1.  The Registration Act, 1908.[]

Who can sell property?

Under the law, any person that is competent to enter into a contract i.e., who is 18 years old or above and is of sound mind, can sell an immovable property.1 There are specific rules for sale of property by NRIs and PIOs in India. However, for the sale of property to be legal, various aspects come into consideration, such as:

  • Whether you have the right to sell, i.e., whether you are the owner
  • Whether you have the authority to sell the property. For example, seeing if you have a power of attorney or have been authorized by the owner to sell.
  1. Section 7 of the Transfer of Property Act, 1882.[]

How can NRIs and PIOs sell property?

NRIs and PIOs can sell property in India in accordance with the Master Circular.1 An NRI can sell property in India to a person resident in India or an NRI or a PIO. A PIO can sell property in India to a person resident in India, an NRI or a PIO – with the prior approval of RBI. NRIs and PIOs are permitted to sell agricultural land /plantation property/farm houses only to a person resident in India who is a citizen of India.

  1. RBI’s Master Circular on Acquisition and Transfer of Immovable Property in India by NRIs/PIOs/Foreign Nationals of Non-Indian Origin, 2013[]