For many Non-Resident Indians (NRIs), owning or inheriting family property in India is both practical and sentimental. However, these transactions are often complicated by legal complexities, title disputes, and multiple claimants. Some of the challenges include unclear ownership rights, family disputes, and outdated inheritance laws. All these are caused by poor documentation and unclear succession rights.
To navigate these issues, NRIs must conduct thorough legal due diligence and seek expert advice. By understanding the challenges and taking the right steps, NRIs can successfully manage family property transactions in India. Here’s more on it!
Key Challenges in Family-Owned Property Transactions
Here are some of the challenges that an NRI faces while making any transaction related to their family-owned property:
Title Clarity & Legal Disputes
Verifying property ownership and resolving legal disputes is essential before proceeding with any transaction. Here are some challenges and solutions:
Ancestral Properties Without Registered Ownership Records:
Many ancestral properties lack formal registration, which can make it difficult to establish clear ownership. To address this, NRIs should conduct thorough research by gathering all available documents, such as old deeds, wills, and any other historical records that might prove ownership.
You can engage legal experts who specialise in property law to verify the authenticity of these documents and guide you through the registration process if necessary.
Disputed Ownership Claims:
Multiple family members may claim ownership, leading to legal disputes. To resolve these disputes, NRIs can use legal mediation or settlement agreements to negotiate with other claimants and reach a mutually acceptable agreement.
If disputes cannot be resolved amicably, you should consider filing a court case to establish clear ownership rights.
Properties Under Government-Acquired Land or Litigation Cases:
Properties involved in legal disputes or acquired by the government can pose significant challenges. In such cases, NRIs should seek advice from a legal expert to understand the current status of the property and potential legal avenues for resolving the issue.
It is essential to understand the government procedures for dealing with acquired land or litigation cases, as these may involve lengthy legal processes.
Multiple Claimants & Succession Conflicts
When properties are undivided among multiple heirs, legal rights can become unclear, leading to succession conflicts.
Undivided Property Among Multiple Heirs:
Properties not formally divided can lead to disputes among siblings and extended family members. To address this, NRIs can use partition deeds to legally divide the property among all rightful heirs.
This involves drafting a legal document that outlines how the property will be divided. Obtaining legal heir certificates can also help establish rightful claims on the property, which can aid in dividing the property fairly.
Read Also: Benefits of Buying Luxury Property in India for Residency Purposes
Outdated Inheritance Laws:
Laws that have not been updated can create confusion and legal delays. To navigate these challenges, NRIs should consult with a lawyer who is well-versed in current and historical inheritance laws to understand their rights and obligations. Using legal mediation can help resolve disputes without getting entangled in lengthy court battles.
Importance of Settlement Agreements:
Using settlement agreements or legal mediation can help resolve disputes amicably. This approach avoids litigation, saves time and resources, and preserves family harmony by finding mutually acceptable solutions.
Legal Steps for NRIs Buying Family Property
Following are the legal steps that an NRI must follow while buying family properties:
Title Verification & Encumbrance Checks
Ensuring the property title is clear and free of encumbrances is crucial for a smooth transaction.
- Conduct a Title Search:
Visit the local sub-registrar office to verify property ownership records. This involves checking past transactions and ensuring there are no disputes or pending cases.
- Review Encumbrance Certificates:
Obtain encumbrance certificates to check for any pending liabilities or mortgages on the property. This ensures you are not inheriting any debts.
- Cross-check with Municipal Records:
Verify property tax receipts and land registry records to ensure all documents align, and there are no discrepancies.
- Hire a Legal Expert:
Engage a lawyer to validate the authenticity of ownership documents and guide you through the verification process.
Read Also: Estate Planning Tips for NRIs with Multiple Properties in India
Partitioning Undivided Property Legally
Dividing ancestral property among multiple heirs requires careful legal steps:
- Partition Deeds:
Use partition deeds for mutual division of property among legal heirs. This involves drafting a legal document that outlines how the property will be divided.
- Succession Certificates:
Obtain succession certificates for inheritance without a registered will. This is essential for establishing legal rights when there is no clear will.
- Legal Heir Certificates:
Establish rightful claims on the property by obtaining legal heir certificates, which confirm who the legal heirs are.
- Court-Assisted Partition:
If disputes arise, file for court-assisted partition. This involves the court intervening to divide the property fairly among all claimants.
Role of Power of Attorney (PoA) for NRIs
Granting Power of Attorney (PoA) to a trusted representative is essential for NRIs.
Types of PoA
There are two main types of PoA:
- General PoA:
A General Power of Attorney (GPA) grants broad powers for managing property transactions but cannot transfer ownership. A registered sale deed is required for ownership transfer. GPA facilitates negotiations and execution, making it useful when the Principal is absent, though it has limitations in transferring property ownership legally.
- Special PoA:
A Special Power of Attorney (SPA) grants limited authority for specific tasks, such as property transactions, and becomes ineffective once completed. It’s useful for NRIs who want to delegate authority without broad control. The SPA must be executed and notarised and often requires attestation and registration in India to be legally binding.
Risks of Misuse
To prevent misuse, ensure legal safeguards are in place, such as providing clear instructions, limiting authority to specific tasks or transactions, and staying informed about all actions taken by the representative.
Granting PoA
Grant PoA to a trusted family member or legal representative to manage transactions on your behalf. This is particularly useful when you are not physically present in India to oversee the process.
Conclusion
Navigating family-owned property deals in India as an NRI buyer involves understanding the legal complexities, addressing potential disputes, and taking the right legal steps. By conducting thorough due diligence, seeking expert advice, and taking help from Power of Attorney, NRIs can ensure a smooth and successful transaction.
At Rustomjee, we understand the complexities involved in NRI property transactions and are committed to providing comprehensive support and guidance to help you navigate these challenges effectively. If you are looking for top-notch residential properties, contact us today!
FAQs
- Can NRIs buy or inherit agricultural land in India?
Generally, NRIs cannot purchase agricultural land in India without special permission from the Reserve Bank of India (RBI). Inheriting such land may also involve legal complexities and require RBI approval.
- Can NRIs sell or repatriate proceeds from property sales in India?
Yes, NRIs can sell property in India and repatriate the proceeds, subject to certain conditions and documentation. The sale must comply with FEMA regulations, and repatriation is generally allowed for up to two properties. NRIs must also obtain a Chartered Accountant’s certificate (Form 15CA & 15CB) for repatriation.
- Can an NRI be removed from a jointly owned family property without their consent?
No, an NRI co-owner cannot be removed from ownership without their explicit consent or a court ruling. Any attempt to alter property records unlawfully can be challenged legally, and NRIs should periodically check mutation records to ensure their name remains on official property documents.
