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Inherited Property – Check out 5 Imp Points before Purchase

Inherited Property
Inherited Property

In India, most of the property related disputes are on the inherited property. The reason being, the property is one of the most valuable assets that a person can inherit. With the rapid urbanization, there was an insane appreciation of property during the last decade barring the last couple of years. The lack of awareness and taboo to discuss inheritance during the lifetime are main reasons for dispute on inherited property. Though experts suggest that inheritance through WILL is the best way to avoid dispute. There can be N no of loopholes as the authenticity of the WILL can be challenged. In one of recent interaction, one of my client told that one of the pages of the registered WILL was replaced by his brother. You must be wondering, how it is possible. I don’t want to comment on the public forum. Another most common reason to dispute the WILL is to challenge the physical or mental fitness of the testator.

In a normal routine, the sellers hide the fact about the inherited property. In one of the case, my client came to know on the day of registration that property is inherited property. As i mentioned in my post, Beware of Heavily Discounted Property that such properties are sold at a discount. I feel sorry for the sellers in such scenario. One of the reasons for this discount is that one or another loophole is left during inheritance process. All these loopholes can be avoided. I always suggest that if the testator of the WILL is not keeping well or above the age of 60 years. In such cases, it is always advisable to obtain physical and mental fitness certificate from CMO of Civil Hospital & register the WILL. It eliminates 99% probability to raise a question mark on the authenticity of the WILL in future.

Coming back to buyer’s perspective, you need not worry too much if the proper process is followed. It is important for the buyer to clarify from a seller in case of doubt. Once you are aware that it is inherited property then you have to ensure or enforce 5 important points to close the deal. Let’s check out

Inherited Property – Check out 5 Imp Points before Purchase

1. Details of Inheritance: As a buyer, the first step is to understand the inheritance process i.e. how the seller inherited property. I love to quote an example. In the recent case of the client from Maharashtra, the seller gets his name updated in the records of the co-operative society. He shared NOC from his siblings for inherited property. It is not the right process. At the macro level, the seller can get the title of inherited property transferred either through succession certificate or probate. I will not get into nitty gritty of the same. It is advisable to take all details from the seller. You can consult a lawyer whether the proper process is being followed or not.

Once the buyer is assured that correct process is being followed, he can capture all these details in his sale deed with the seller.  

2. Indemnity: To further safeguard his financial interests, a buyer can include an indemnity clause in the sale deed specific to the inherited property. The crux of this clause will be that in the case of any future dispute on inherited property, the seller indemnifies the buyer. The terms and conditions of this clause can be mutually decided between buyer and the seller. In the case of any doubt or high perceived risk, you can also execute a separate indemnity bond in the court.

3. Confirming Witness: A buyer can insist on including all the legal heirs of the deceased as confirming witness. In short, all legal heirs should be signatory as a confirming witness in the sale deed. It is important to make the sale deed 100% fool proof. In future, none of the legal heirs can stake any claim on the property. Though it will be an operational nightmare for a seller but you can clarify this point before closing the deal. If the seller is hesitant and is not able to share any logical reason then there is every reason to doubt.

4. Token Money: If there is a dispute on the inherited property then seller demand high % of the token money. On the other hand, the buyer should pay bare minimum token money. Reason being, if the buyer is not satisfied with the title of the inherited property then his money should not get stuck. If the seller demands high % of token money then it is first red flag for the buyer. Secondly, in the case of dispute seller will be in a hurry to sell the property. Therefore, you should be extra cautious to pay token money for the inherited property.

5. Court Case: All said and done, sometimes the dispute is from unknown quarters. For example, in one of the scenarios the deceased person had availed a loan from his one of friends. After he died, there was NO dispute among legal heirs but they refused to clear the loan of deceased. The friend of deceased filed a court case to recover his dues from the sale proceed of property. On the other hand, the legal heirs had a tacit understanding to dispose of the inherited property hurriedly. Though it unlikely scenario but there is a possibility. In such cases, a buyer can hire a lawyer to check whether there is pending litigation against the inherited property.

Words of Wisdom: For any property transaction, it is imp to understand the history of property transfer. Typically inherited property is close to the heart of a seller. It is sold to fulfill family settlement reached between all the legal heirs. In case you are buying from multiple sellers i.e. 2 or more sellers based on succession certificate/probate. It is not necessary that all the sellers will have an equal stake in the property. You should only pay in the proportion of ownership as per succession certificate or probate. Last but not the least, the buyer should be beware of counterfeit documents like succession certificate. You can check the authenticity of the documents and retain the original ones if possible. Though this post, i covered five important points but as i always mention, each case is different. If you are buying an inherited property then it is must to hire an experienced property lawyer who guides you. The probability of fraud is high in such cases. I hope no buyer would like to get trapped in a legal tangle.

Copyright © Nitin Bhatia. All Rights Reserved.

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