Help for NRIs: inherited property transfer- Good Article

Inheritance

Dealing in Indian real estate matters, especially if you have lived outside the country for a long time can be a nightmare. 

Dr Sastri, a US citizen, inherited a residential apartment in Chennai from his uncle (father's brother) in 1999. But the process to transfer the title to his name was anything but smooth. "My uncle was very good at documentation and legal paperwork. He left a Will spelling out clearly the distribution of his assets. So the title in itself was not disputed. However, unfortunately, one piece of paper that we didn't find in his records was the 'khata' or 'patta' record of property in municipal records, and that single missing document was enough to make us run pillar to post," he says. 

"The process of transferring title in India can be quite cumbersome especially if the paperwork is not in order as it will involve several court matters," explains P Sunder, Managing Director of yourmaninindia.com, a TTK Services company that provides legal services for Non Resident Indians (NRIs.) "A lot of times there is no Will making the title itself disputable. When there is a Will, the related property documents may not be in place. Indian sensitivity prevents the heirs from asking for estate documents before the death of parents or other bequethers. As a result, the heirs end up running around quite a bit to complete the inheritance process," Sunder adds. 

In Dr Sastri's case it took close to 5 years for the entire transfer process to be completed. "The 'khata,' it turns out, is a very important document in the title transfer process. Since I did not have the 'khata' I had to first get a duplicate copy. There were several challenges. Firstly, I had lived outside the country for many years and did not know the systems and processes. Secondly, I did not have much time to devote to this. Every year I could take just a couple of weeks of vacation to travel to India. And finally, it took me some time to accept the bureaucracy and I had to learn to not hang on to high morals. Kickbacks are a regular feature and I realized that the sooner I could accept it, the faster my work would get done," he says. 

For those of you in a similar situation, here are some answers to frequently asked questions on this issue: 

What are the documents needed to transfer title of inherited property? 
A registered will 

As per legal requirement, a Will is not required to be registered. It can just be written on a plain piece of paper. However, registration makes it a valid document that can be presented in the court. "We recommend that the Will is registered. One can always keep revising a registered Will," Sunder explains. 

A succession certificate 
In the absence of a Will, the heirs would need to obtain a Succession certificate from the court. "The heirs will have to submit various documents such as death certificate of the deceased, the birth certificate of the heirs, copy of the ration card, bank statement of the heirs etc. These documents are needed to prove that the heirs are indeed the rightful successors," Sunder says. 

Original purchase deed of property and registration documents In case of old properties, the original purchase deed may not be available. In such cases, you would need to procure certified copies of the title deed from the jurisdictional registrar's office. 

Encumbrance certificate 
The Encumbrance Certificate records and reflects all the transactions occurred in respect of an immovable property be it a sale, lease, mortgage, gift, partition, release, etc. 

Khata 
Khata is a record that shows the entry of the property owners details in the records of the Corporation/Municipality. It contains details such as name of property owner, type of property, property taxes paid/ payable etc. It is basically an evidence of who owns and possesses the property concerned. 

How is Khata different from the property registration? The registration document shows the purchase or sale of the property from one owner to another with various rights thereon, whereas the Khata shows the annual property taxes paid. Ideally, when registration of a property changes, automatically the Khata should also be changed in the municipal records. Unfortunately, that automatic process does not happen and Khata must be transferred separately. 

What is the process for effecting transfer of title? 

"Transfer of title can be done through mutation of revenue records/ transfer of Khata," Sunder explains.
Mutation of revenue records means updating the details of new owner of the property in the books of the respective development authority, that is, either the municipal corporation or the village panchayat. 

In order to do this, you must submit all the documents mentioned above to the authority. 

"While the transfer must be effected locally, that is, within India and within the same jurisdiction where the immovable property is situated, it can be executed by an NRI using a Power of Attorney (PoA)," says Sunder adding, "For the succession certificate too, the NRI can have someone represent him/her through the PoA." The person you choose can be a friend, relative or even a professional. Dr Sastri, for instance, gave the PoA to yourmaninindia.com for the transfer of his property. 

Having said that, different municipal bodies follow different processes. It might be best to speak to a local lawyer about your specific case. 

How should an NRI make the PoA? 

Sunder explains the procedure, "The NRI can issue a PoA in favor of a local representative, authorizing such person to do certain specified and incidental acts/deeds and things. Such PoA should be duly notarized by an attorney in the country of the NRI's residence followed by attestation at the nearest Indian consulate in that country. This must be handled by the NRI in his country of residence. Next, the PoA needs to be registered in India (via adjudication process) by paying requisite fees/stamp duty to the Department of Stamps and Registration. This can be handled by the PoA holder." 

"It is safe to give a PoA provided you clearly specify its purpose and keep a track of it. If you apprehend misuse at any point of time then take immediate action to revoke the PoA followed by a newspaper publication of such revocation thereby deliberately notifying the general public. General PoAs (that is PoAs with open ended/blanket/broad powers) should be avoided at all times. Through the PoA, the acts of the holder are akin to acts as if they have been carried out by you. So you cannot claim misuse if you have given a very open ended PoA. Also, we have seen that normally misuse of PoAs happens within families and relatives. Blind trust without checkpoints and the sensitivity of personal relationships makes this a difficult space to tread. Most property related legal problems for NRIs stem from here," he adds. 

What are the most important things to do as a precautionary measure to avoid future legal issues or complications with respect to inherited property? 

Ensure that a Will is made and duly registered. One can always draft a fresh Will anytime and have it registered again. The last registered Will is the one that will be used. Ensure property matters are discussed and clarified between siblings so that there are no complicated legal wrangles later on. 

Ensure that documentation required for each property to establish ownership is mandatorily done. "In some cases the property continues in peaceful enjoyment without mutation (transfer of records to the next successors) for generations. That kind of a situation is a time bomb waiting to explode should relationships go bad. And the more the number of successors, the more the complications," Sunder says. 

"For NRIs, the biggest challenge is about tackling the unknown. It is important to understand and accept the systems and processes in India. Having lived abroad for several years, one gets used to a certain way of doing things. There is no right way or wrong way anywhere. It is just about getting accustomed to the local way. There is no point in trying to fight the local bureaucracy. I would only suggest that you consult a local lawyer who understands the system or avail the services of professional organizations. It is well worth it," Dr Sastri concludes.