Land, Property and Charity Problems in Tiruvannamalai
Land and Property Problems
Important updates -
Indian Government to act against illegal property purchases
2 - April 2005 - We have been informed by local agents that the Government of India is soon to act against illegal land sales and purchases. All peremboke land that is not being used … i.e. for its original purpose of farming by the poor, will be repossessed by the government. Those selling land or property illegally will be prosecuted and imprisoned and those who have purchased it will have it seized back by the government … we are told that compensation will not be paid by the government!
This means that foreign nationals and NRI’s who have purchased any property in India illegally - by not complying with the previous FERA (prior to 2000) and current FEMA rules - are very likely to lose their property and their money. There may be a short grace period to enable you to sell your property to Indian Nationals but it is likely to be on a case by case basis and you will not get your money back.
Those who purchased within the legal requirements will not be affected if they can prove it.
Obey the Law and be safe!
The majority of people in Tiruvannamalai are honest, hard-working individuals who will not cheat anyone. But there are a number of people who are destroying the reputation of all by their dishonesty and greed. The victims are usually those who come from outside India and who are only too willing to listen to tales of poverty and misfortune - most of it complete lies. This page is for your benefit. We cannot prevent you being cheated, only you can do that!
It is an unfortunate fact that many property offers in Tiruvannamalai have either serious problems with them or are completely fraudulent. Fraud is perpetrated on both Indians and foreigners, but especially on foreigners who are on the whole very gullible and free with their money. Property fraud is now a large business generating crores of Rupees annually for the perpetrators. Land fraud, I am told, is part of the culture, especially here in Tamil Nadu, but it has reached new heights in the past few years as more and more foreigners come to the town and throw their money around.
To prevent yourself becoming a victim please read the following:
There are two basic types of land ownership in India - Patta and Peremboke; Patta land is privately owned and can be sold and purchased freely. Peremboke land is government owned property given to poor farmers to grow crops on or to live on. Farmers can pass peremboke land to their children to continue to farm from generation to generation, but they cannot sell it. It is a crime to do so and a crime to purchase it.
There are numerous ways in which fraud is perpetrated. A lot of fraud involves Peremboke land mixed in with Patta land. There is also government land which is offered for sale by purported owners, but this is of course complete fraud.
Here is some basic advice if you are not an Indian National and want to purchase or lease land here:
1/ NRI’s (Non-resident Indians) and PIO’s (Persons of Indian Origin) can purchase immovable property in India under specific conditions set out on this page on this website. There are many other websites offering advice on this subject and the RBI site is very comprehensive.
It is illegal for Foreign Nationals of non-Indian origin, who do not have a resident’s permit, to purchase land in India without permission in writing from the RBI (Reserve Bank of India).
If you have resided in India for 182 days continuously within the tax year prior to the year of the purchase you can legally purchase land for building purposes.
Foreign Nationals of non-Indian origin cannot purchase land in joint names with an Indian National, an NRI or PIO unless the above 182 day restriction has been fulfilled and if the restriction has been fulfilled there is no reason to purchase in joint names anyway.
For the full regulations relating to Foreign Nationals see this page.
2/ NRI’s, PIO’s and Foreign Nationals residing outside of India cannot purchase agricultural land without permission in writing from the RBI - Agricultural land is defined as land with a Well on it or with a water pump installed.
If you break the law then the land can be seized back from you without compensation and you will run into difficulties if you try to sell it.
3/ Leasehold property: Leases are valid only for the duration of your current Visa to a maximum of 5 years.
4/ You can only repatriate the amount you officially declared paying for the property, so if you declare paying one Lakh for an acre but actually paid 5 Lakhs, then you can only legally take one Lakh out of the country if you sell it.
Purchase Tax - tax is due at the rate of 13% of the Government Valuation for any land when you purchase it. In general the Government Valuation is less than the market value.
1/ Be extremely cautious about purchasing any land or property shown to you by anyone approaching you to sell you land. Not all are dishonest, but a few are dedicated to cheating foreigners … these are usually very persuasive and charming, hence their success. Some of them will even be known to you. They know that you have limited time in India and that you will have to leave when your Visa expires. This gives them several advantages, hurried agreements under pressure being the primary one - you will be told that prices are rocketing and that the land you want will go quickly if you don’t buy it now - this is complete rubbish. There is a lot of land here for sale and it has been on sale for years, every year the price goes up but no-one is buying because it is too expensive. Don’t be pushed into hurried agreements. I have personally seen hundreds of acres of good land in the past year (2007) priced between Rs.70,000 and 2.5 lakhs per acre - one Lakh is 100,000 rupees - most of it within 10 kilometers of the town centre and with direct road access.
If you are not fully conversant with Indian Law and cannot read Tamil then you are open to fraud. They specifically target vulnerable women.
Many people have purchased land in the name of a third party or have formed a Trust and have later found to their dismay that the Trust agreement they signed is completely useless and that the third party is the sole owner of the land. They even hand over the money and sign a document stating that the money is a donation to the third party to avoid tax. This is really stupid, but people do it in the belief that the third party is honest.
2/ Do not purchase any land that is landlocked - property that you have to cross someone else’s land to get to. This is a frequent problem; the owner of the land that you have to cross will allow you to build your house then will block the access and charge you anywhere up to three times the total value of your property for access rights, or you will be forced out of frustration to sell your land to him for a lot less than you purchased it.
There is a lot of land for sale here right next to a public road, but a small strip of the land between the road and the property is excluded from the sale. This is where very serious problems always arise. You will be assured that you will have free access across this land, but the truth is the opposite. Do not purchase land like this under any circumstances.
3/ Do not give a a deposit unless you really have to: The law here states that deposits do not have to be refunded if the purchaser does not complete the deal within the specified period. Once you give the deposit you are duty bound to complete the transaction or lose the money. Conversely the land owner has also to abide by any agreement you make. However, it is sometimes the case that obstacles are placed in the way of the buyer, so that the deal cannot be completed in time and the deposit is lost. Deposit fraud is widespread, with some apparent sellers taking deposits from many people for the same plot of land which they often don’t own in the first place. After getting lots of money they simply disappear. Insist upon photographing everyone, the landowner, his male relations, the agent, etc.
If you have to give a deposit then make sure that an agreement is drawn up binding the seller to the deal just the same as you are. This is because many sellers take your deposit then tell you later that they want more than the agreed price because someone else has offered more … nine out of ten times this is a complete lie designed to blackmail you to pay more.
4/ Another frequent problem relates to the size of the land you are purchasing. Do not take anything you are shown on paper as fact. Ensure that the Government surveyor and private surveyors measures the land and give you properly stamped documents to prove that what you are being sold is precisely what you are paying for. Often landowners will sell parts of their land to several people and charge each of them for the whole original size of the land. An acre is 43,560 square feet - an area approximately 208 feet by 208 feet.
Our advice is as follows - do not trust anyone on their word, double check everything using independent people - even double-check what we tell you. This can be expensive but costs far less than losing all of your money. There are many honest people here in the property business but their reputation is being spoiled by the cheats.
5/ Foreigners will be charged anything up to ten times the price that a local will be charged for the same piece of land or property. So the moral here is do not show your face to an interested party until the deal is done by someone you can fully trust. Whatever the case, foreigners always pay a premium for everything, but in the majority of cases it is only five or ten percent extra.
It has become commonplace for landowners to refuse to sell their property to Indian Nationals because they believe that foreigners will pay up to ten times the real value - some people have actually done that and lived to regret it. The fact is that locals will not pay more than Rs. one lakh per acre for farmland. Westerners and North Indians are being charged up to 25 times that price per acre in some places.
6/ The ‘Power of Attorney’ fraud is a frequent one here … the apparent seller has only paid a small deposit on the land he is selling and obtains the ‘power of attorney’, which gives him the right to transfer ownership without the original owner being present. What happens here is that he takes a deposit equal to the real price of the land and then pays the true owner the small purchase price and pockets the huge balance - neither the original owner nor the purchaser are aware of the fraud because they never meet.
7/ Beware of the ‘don’t tell anyone else’ caution from those trying to sell you land, etc. The reason they don’t want you to tell anyone else is because they are afraid you’ll find out the truth. Do precisely the opposite - tell other people and ask about the price and validity of the property. You might get a surprise - actually you will get a surprise.
Do’s - First and foremost: Obey the Law!
Take your time over the purchase, ensuring that everything is clear and legal before spending any money. There are some people who say they were or are associated with ashrams here, who perpetrate the biggest frauds. Be cautious, ask at least three people for advice about the person you are dealing with before parting with any money. The fraudsters are well known, and honest people will tell you who not to deal with. Successful cheats do not carry baseball bats and guns, they do not have scars and a bad attitude, they are charming and very persuasive, some still wear the clothing of priests and sanyasins!
Do not take anything at face value. Fake land documents are rare but can be obtained … good enough to fool anyone. However, by employing a careful lawyer who will perform the correct searches and processes, these fraudulent documents will be exposed and hopefully the fraudster will be arrested. However, under intense pressure from the seller, people give large deposits just on the face value of such documents, even paying the whole amount over before anything is checked. They of course lose everything because the fraudster vanishes with the loot and the agent denies all responsibility.
These are just a few of the more prevalent frauds. Be careful!
If you want to employ a good and honest lawyer in Tiruvannamalai, who speaks perfect English and will not permit you to break the law, then go to - Sri Ravichandran, the Sri Ramanasramam lawyer.
The procedures to be followed when purchasing property
The correct procedures for obtaining genuine property documentation during the purchase process are the most important of all. To ensure that you are purchasing legal land and are not being cheated you MUST follow the correct procedures set out below.
Any agent or lawyer who will illegally register land in your name is not a good person to deal with. It is almost certain that you are going to be cheated and 100% certain that you will lose the land and your money in the long run.
To see what legal documentation looks like download this zip file (1.8mb).
1/ You must ask the seller to show you the original ownership documents (on yellow bond paper), the survey documents detailing the property and to give you a copy so that you can check the validity - your lawyer should do this for you. If they are not on bond paper then you are not dealing with legal property or are about to be cheated. Insist on seeing the documents yourself and take them to get copied there and then.
The documents should contain all of the information relating to the location and size of the land/property; the name of the current owner and who he/she purchased it from; the market valuation at the time of purchase and plot/property number, whether it is patta land, etc.
These have to be checked word for word against the copy held in the registration office to ensure that they match.
2/ Your lawyer should also obtain copies of the parent documents from the registration office - these are the papers relating to who owned it prior to the current owner. The name of the owner on the parent documents and the name of the seller (to the present owner) on the current documents should be identical. If the property has passed through a number of hands within a few years then ask your lawyer to check the last 15 years of ownership papers.
3/ Get an encumberance certificate for the property - going back at least 30 years. This tells you about any outstanding loans on the property or other debts. If you purchase property without checking this then you inherit any debts. Your lawyer should do this for you and hand the certificate to you - check everything against the documentation for the land to ensure that the encumberance certificate is for the property you are interested in - the numbers should match.
4/ Once these items are checked out you can be reasonably confident that everything is OK.
5/ The next step is to get the property measured by the local survey office and to obtain stamped documents with the survey result on it, which should be identical to the one shown to you by the seller … unless you are purchasing a small plot out of many - and in this latter case you might come across a lot of other problems, inlcuding the non-transfer of ‘patta’ (the real ownership) to you.
6/ If everything works out then you are in the final stage - your lawyer should prepare ownership papers for you on the same yellow bond paper with the coloured rupee notes printed on it and the transfer can go ahead. Ensure that it is registered in your name and that the transfer of the ‘patta’ is to you - if the property is registered in your name but not the ‘patta’, you are going to have problems in the future.
Payment is always in cash at the Registrar Office where the seller will be asked if he has received payment in full and you will be asked if you have received the documents.