Advocates and solicitors are often called upon to issue title certificates. This maybe a requirement under law, as in the case of the Maharashtra Ownership of Flats Act, 1963 (MOFA) and the Real Estate (Regulation and Development) Act, 2016 (RERA) or under contract, as in the case of loan transactions, mortgages, etc.
The reason for issuing title certificates is two fold; to assist one’s client and to protect members of the public and unwary flat purchasers from transacting with persons who have no title to the land they are developing or dealing with. During the course of title investigation, if the advocate finds that the title of the person concerned is doubtful, the advocate must clearly state this in the title certificate, without any hesitation. Moreover, a title certificate can be revoked by the advocate who has issued it if such advocate subsequently finds some error or was misled or defrauded. Members of the legal profession can assist their clients only lawfully and within the limits of law[1].
In the case of Ramniklal Tulsidas Kotak v. Varsha Builders (supra), the Bombay High Court dealt with the principles of law governing the issue of title certificates, particularly in agreements entered into with flat purchasers. The Court held that the title certificate must disclose at least the following.
“(1) Nature of the title of the promoter;
(2) Nature of the title of the vendor or the promoter or of the person through whom the promoter claims;
(3) Encumbrances and claims on the land;
(4) Steps required to be taken by the promoter for completing title as absolute, clear and marketable while conveying the property or causing the same to be conveyed to the organisation of flat purchasers on due date;
(5) Whether the agreement to sell the flat will bind the owner of the land?
(6) Whether the title of the promoter or his vendor or the person through whom the vendor claims is of doubtful nature in any manner? If so, the nature of doubt entertained.
(7) Whether the authorisation granted in favour of the promoter by the owner, lessee or the vendor is irrevocable so as to bind the owner with the agreements for sale of the flats? Whether an agreement to purchase the land by the promoter is revocable or irrevocable?”
The Court has then gone onto set out the step by step process to be followed prior to issuance of title certificate. It is pertinent to note that this has become the standard process followed by advocates and is the threshold for determining whether an advocate has taken minimum and reasonable care while discharging his/her duty. The same process is adopted when an advocate is undertaking due diligence on behalf of a prospective purchaser. The process is as under.
“(a) Peruse the title-deeds;
(b) Have searches taken in the office of the Sub-Registrar (and also of the Registrar of Companies in case the Vendor is a Limited Company);
(c) Issue Public Notices in at least two newspapers (one in vernacular and the other in English circulating in the area where the property is situated) inviting claims of any member of the public against or in respect of the property in question;
(d) Ask the Purchaser to require his Architect to ascertain whether the land is under set-back or reservation;
(e) Administer Requisitions on title and be satisfied about the answers;
(f) Obtain Declaration on Oath from the relevant persons regarding the factual position before issuing a Certificate of Title.”
Many clients often feel that the formalities involved are unnecessary and cumbersome. However, in my experience I have seen that each formality has a purpose and can save clients years of protracted litigation.
[1] AIR 1992 Bom 62
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