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Commercial real estate is among the fastest-growing markets in India. Offices, retail stores, institutions, and industrial developments primarily fall under this umbrella. Commercial property is a property owned to generate income through business activities.
While many prefer developed structures, commercial plots have also been at the center stage due to higher appreciation and relatively lower investment costs than other asset types in commercial real estate.
However, being abreast of the nuances of buying commercial land is crucial to avoid administrative and legal hassles. From paperwork to zoning laws, there are various factors to look into. Let’s look at essential tips for buying commercial land in India.
Types of commercial property
Retail - Retail Shops, Stores, Malls
Industrial- Warehouse, Manufacturing Plants , Factories
Hospitality-Tourism Agencies, Motels, Hotels
Institutional- Schools and Colleges
Office Spaces- Corporate Offices
What’s to check before buying a commercial plot in India?
Review the Location
- Location Matters: The most critical factor in buying commercial land is its location. It should be easily accessible with good infrastructure. A prime location ensures higher demand and, in turn, leads to higher profits.
- Zoning System: Indian civic authorities use a zoning system based on Euclidean geometry to classify land for commercial purposes. They divide towns into districts with specific zones for different land uses, either permitted or prohibited.
- Integrated Zoning: As available land decreases, zoning becomes more integrated. This means that the planning of various zones becomes more coordinated to optimize land usage efficiently.
- Clearly Demarcated Commercial Zone: When buying commercial land, ensure it falls within a clearly marked commercial zone. This guarantees that the area is suitable for commercial activities and compliant with local regulations.
- Avoid Uncontrolled Development: Avoid land with uncontrolled development like unauthorized boundaries, fences, or incompatible structures within the permitted area. These issues may lead to legal and operational challenges later on.
- Types of Commercial Activities: Commercial land can be used for various purposes, including warehouses, offices, restaurants, shops, and industries. The proximity of one commercial zone to another depends on the type of activity and vehicular traffic.
Taxes and Returns
- Taxation of Rental Income: Rent received from any property, including commercial property, is taxed under the head 'income from house property' in India.
- Actual Rent or Reasonable Rent: The taxation is based on either the actual rent received from the property or the rent that can reasonably be expected from it, whichever is higher.
- Standard Deduction: A standard deduction of 30 percent is allowed on the rent received. This means you can deduct 30 percent of the rental income as an expense before calculating the taxable income.
- Deductions for Building Repairs and Renovations: You can claim deductions on the amount invested in building repairs and renovations for the commercial property.
- Interest on Loan: Under Section 24 of the Income Tax Act, you can claim the interest paid on the loan taken for the commercial property as a deduction. This includes processing fees and prepayment charges paid to the financial institution.
- Availability of Standard Deduction: The standard deduction of 30 percent is available even if the actual expenses on the property are higher or lower than that percentage. It simplifies the deduction process.
Check Documents
- Ownership Details: Review the property's registration papers to ascertain the number of owners. Knowing the ownership structure is essential to ensure a smooth and legitimate transaction.
- Seller's Right to Sell: Verify if the seller has the legal right to trade the commercial property. Confirm that they have the authority to sell the asset and that there are no disputes or legal issues surrounding the ownership.
- Existing Loans or Pledges: Check for existing loans or pledges against the land parcel. Knowing if the property has been used as collateral for any debts or financial commitments is crucial.
- Clearance of Outstanding Dues: If the land has been mortgaged in the past, ensure there are no outstanding dues related to the mortgage. The seller should clear any pending payments before the deal is finalized.
- Title Search: Conduct a thorough title search to verify the property's history and ensure no legal encumbrances, liens, or claims could affect your ownership rights.
- Encumbrance Certificate: Obtain an encumbrance certificate from the registrar's office to verify if there are any legal claims or liabilities on the property.
- Approved Land Usage: Ensure the land is categorized as a commercial plot in the official records and falls within the designated commercial zone.
- Pending Litigations: Check for any ongoing legal disputes or litigations related to the property. Purchasing a plot involved in legal battles can lead to future complications.
- Land Boundary and Area: Verify that the boundaries and area mentioned in the registry papers match the actual physical boundaries of the land.
- Property Tax Records: Review the property tax records to ensure the seller has paid the appropriate taxes for the commercial plot.
Maharashtra Tenancy and Agricultural Lands (MTAL)Act 32 G: Simple Tips for Buyers
Are you considering buying land in Maharashtra? Here are some tips from Genuine Plots to ensure a smooth and informed transaction:
- Land Acquired under Section 32G of the MTAL Act:
If you're eyeing a property purchased by a tenant under Section 32 of the Maharashtra Tenancy and Agricultural Lands (MTAL) Act, be aware that the sale of such land requires prior sanction from the Collector. Ensure that necessary orders for the transfer of title to the tenant are in place.
- Access to Land Parcels:
Check if the road connecting to the land is a DP (Development Plan) Road. If it's a private road, confirm its ownership. If the seller doesn't own the road, ensure that the seller obtains a right of way simultaneously with the sale deed.
- Conducting Physical Survey of Land:
Discrepancies between the area mentioned in title deeds and revenue records are common. Conduct a physical survey of the land to accurately determine its size. This step is crucial. It can impact the amount you pay for the land.
- Discrepancy in the Description of Land Parcels:
Land parcels often undergo sub-divisions, leading to differences in survey numbers, gat numbers, or CTS (City Survey) numbers between title documents and revenue records. Map the old and new survey numbers and establish clear boundaries based on survey or CTS plans.
In a nutshell, before finalizing any land purchase, it's essential to verify the legal aspects, access to the property, and conduct a physical survey. These precautions not only ensure a transparent transaction but also help prevent potential issues down the road.
Buying land should be an exciting journey, and with Genuine Plots' guidance, you can confidently navigate the process. Genuine Plots is your trusted ally when navigating the paperwork for land purchases in Maharashtra. Their expertise streamlines the process, ensuring that legalities are meticulously handled. Their guidance ensures a smooth transaction, giving you peace of mind as you embark on your land acquisition journey.
Your Simple Guide to Section 63 Maharashtra Tenancy and Agricultural Lands (MTAL) Act
When you're diving into the world of buying or selling land in Maharashtra, it's like navigating through a rulebook – and the key chapter you need to understand is Section 63 of the Maharashtra Tenancy and Agricultural Lands (MTAL) Act. Let's delve deeper to make your land transactions a breeze.
Getting to Know Land Transfer Rules:
In the language of Section 63 of the MTAL Act, transferring agricultural land to someone who's not a farmer needs a thumbs-up from the Collector or a state government official. But there are exceptions:
City Limits and Special Zones: If the land sits within a Municipal Council or Corporation or a Special Planning or New Town Development Authority area, then– no Collector permission is needed.
Non-Agri Plans: Lands earmarked for homes, businesses, or industries in regional plans or town schemes also get a pass.
Zone Certificate Detective Work:
To see if your land is in the clear, get your hands on a zone certificate from the competetent authority. If it says you're exempt, just pay the conversion fees when ready to build.
Cracking the Code for Industrial Plans:
- Bonafide Industrial Use: Section 63(IA) is your ticket to sell land without the Collector's permission for genuine industrial use. There's a list of what counts as genuine, but it's open to interpretation.
- Watch the Clock: If you're turning land into an industrial hub, make sure it's done within five years of buying it. Need more time? You can get another five years with a small fee.
Conversion Checklist:
Are you thinking of turning your farm into something else? If your land isn't in the clear from Sections 63(1C) or 63(IA) of the MTAL Act, get the conversion done before signing any sale papers. It's crucial because who applies for the conversion matters, and tax rules are different for farm and non-farm lands.
Now that Genuine Plots has unraveled these rules, your land dealings in Maharashtra should feel less like a puzzle and more like a straightforward journey.
When acquiring land, understanding the nuances of possession is crucial. Here, Genuine Plots will break down the types of possession every buyer should know in simple terms.
- Authorized Possession:
Obtained through ownership, grant, license, or lease.
Legitimate and sanctioned by relevant authorities.
- Unauthorized Possession:
Gained through encroachment or trespass.
Not sanctioned by authorities, potentially illegal.
- Wrongful Possession:
Conversion Without Approval:
Changing land use mandates permission under section 42 of the MLR Code 1966.
Possession becomes wrongful if the possessor alters land use without proper authorization.
Expired Lease or Tenancy:
Wrongful possession occurs if someone holds land after the lease or tenancy period expires.
This includes situations post-termination or breach of specified conditions.
State Government Lands:
If an individual occupies land vested in the State Government without authorization, it's deemed wrongful possession.
The Collector holds the right to evict such occupants, especially in areas reserved for government use, like grazing lands.
- Adverse Possession:
Title Acquisition Through Time:
Ownership title can be acquired by extended possession, even if gained through unconventional means.
Once adverse possession is proven, the original owner forfeits rights to the property.
More Than Physical Possession:
Mere physical possession isn't sufficient for acquiring title.
Regular registration in the possessor's name via Village Form VII-B during crop inspections is a requisite.
Legal Safeguards and Limitations:
Adverse possession is protected by a statute of limitations.
If the possessor maintains control for over twelve years, the true owner loses the right to challenge adverse possession.
Changing Land Dynamics:
Migration of landowners to developed areas left their lands exposed.
Local residents, cultivating abandoned lands with peaceful and continuous possession, gained legal ground through the "village form."
Legal vs. Illegal Possession:
Legal possession, backed by proper documentation, is safeguarded by law.
In contrast, illegal possession faces discouragement by legal provisions, outlined in the MLR Code, 1966, Section 59.
Collector's Authority:
Under Section 59, the Collector holds the power to summarily evict any person wrongfully occupying land due to legal constraints or conditions annexed to the tenure.
Key Points for Buyers:
Legal Protection: Legal possession is safeguarded by law, offering security to rightful owners.
Illegal Risks: Unauthorized possession is discouraged by law and may lead to eviction.
Wrongful Actions: Changing land use without permission or violating lease terms can lead to wrongful possession.
Adverse Possession: After 12 years of continuous possession, the possessor may acquire title rights.
Implications for Land Buyers:
As a prospective buyer, understanding the possession status is vital. Legitimate ownership ensures legal protection, while unauthorized or wrongful possession may lead to legal complications. Adverse possession, if unaddressed, can impact the rightful owner's claims over time.
Protective Measures:
Buyers should conduct due diligence:
Verify ownership and possession details.
Check for any unauthorized or wrongful possession issues.
Be cautious about land with a history of adverse possession.
Wrap Up
Legal possession is your shield, while unauthorized or wrongful possession poses risks. It's crucial to navigate the complexities of land possession to make informed decisions. Always consult legal experts or the Genuine Plots’ expertise and ensure proper documentation to safeguard your investment. Remember, knowledge is your strongest ally in the realm of real estate.
The sale deed emerges as a pivotal legal instrument, substantiating the transfer of property ownership from the seller to the buyer. For a seamless and legally secure property transfer, a profound comprehension of its fundamental components becomes indispensable.
Property Description:
This section provides a detailed description of the property being transferred. It covers aspects like plot size (in square meters), carpet area (for apartments), land registration number, construction details (including the construction date), exact location, and surrounding features. A schedule, along with a graphical representation, may also be attached to further elaborate on these details.
Details of the Parties:
The sale deed begins by detailing information about the involved parties—the seller and the buyer. This includes their names, addresses, contact details, occupations, ages, and the date of the sale deed's execution. If one party delegates the power to execute the deal through a Power of Attorney (PoA), those details are also included.
Sale Consideration:
The sale consideration is a critical component representing the mutually agreed-upon price at which the property is sold. This amount is mentioned in both figures and numbers within the sale deed to avoid any confusion between the buyer and the seller.
Transfer of Title:
This clause, often referred to as "Words of Conveyance," signifies the transfer of ownership from the seller to the buyer. It outlines the seller's intention to transfer the property's ownership to the buyer. The transfer of title makes the buyer the absolute owner of the property, either immediately or after a specific period.
Indemnity Clause:
The indemnity clause ensures that the property being sold is free from encumbrances. The seller declares that there are no liabilities attached to the property, such as loans, arrears, charges, taxes, water charges, electricity charges, and house tax. The seller certifies that all encumbrances are cleared and that the property is free from litigation.
Understanding these key components is crucial for both buyers and sellers in ensuring a transparent and legally sound property transaction. Additionally, it is essential to register the sale deed at the office of the Sub-Registrar of Assurances, as mandated by the Registration Act, 1908. This registration serves as conclusive proof of ownership.. A well-drafted sale deed with clear and comprehensive components is the cornerstone of a successful property transfer, offering security and transparency to all parties involved.
Set forth on your path to land ownership with assurance, backed by Genuine Plots. Our unwavering team is dedicated to delivering effortless paperwork support, guaranteeing a stress-free process in your land acquisition. Connect with us today, and let our committed experts lead you through, ensuring that your journey to land ownership is not only smooth but also filled with confidence.
Difference Between Agreement for Sale vs. Sale Deed Essential Insights for Plot Property Buyers
In the realm of real estate transactions in Maharashtra, a sequence of legal documents comes into play, each with its distinct role in facilitating the property transfer process. Among these crucial documents, the Agreement for Sale and the Sale Deed stand out, serving as pivotal instruments in guaranteeing a transparent and legally secure property transfer.
Understanding Agreement for Sale:
The Agreement for Sale, commonly referred to as the "Agreement to Sell" in the context of Maharashtra, serves as an initial understanding between the buyer and seller, outlining terms and conditions prior to the ultimate sale.This document outlines the terms and conditions, including property details, sale price, payment schedule, and possession date. It establishes the intention to sell/buy and serves as an essential understanding between the parties.
Key Points:
- Regulated by the provisions in Section 54 of the Transfer of Property Act.
- Registration is optional but recommended.
- Contains vital specifics such as property description, sale price, and payment schedule.
- Legal status: Establishes an intention to sell/buy.
Understanding Sale Deed:
The Sale Deed, also known as a Conveyance Deed, is the final legal document completing the transfer of ownership. Governed by the Registration Act, it contains comprehensive transaction details, including property specifics, final sale price, and terms and conditions. Once duly signed and registered, it legally transfers ownership from the seller to the buyer.
Key Points:
- Subject to the regulations stipulated in both Section 54 of the Transfer of Property Act and the Registration Act.
- Compulsory registration in Maharashtra.
- Contains all crucial details of the transaction.
- Legal status: Conclusively transfers ownership.
Key Differences:
- Nature of Document: Agreement for Sale is preliminary; Sale Deed is the final transfer document.
- Legal Status: Agreement for Sale establishes intention; Sale Deed completes the sale.
- Registration Requirement: Agreement for Sale registration is optional; Sale Deed registration is compulsory.
Conclusion:
While the Agreement for Sale initiates the property transaction, the Sale Deed concludes it by legally transferring ownership. Both documents hold distinct legal significance, and understanding their implications is crucial for a smooth property transfer process. Seek expert guidance from Genuine Plots for transparent transactions and guidance throughout the paperwork involved in buying plots.
With Genuine Plots' expertise, embark on a journey of transparent transactions and seamless property dealings when buying plots. Our commitment is to provide assistance and clarity, ensuring a secure and legally sound experience for every property transaction. Trust Genuine Plots for your peace of mind in real estate.
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