New Delhi, May 4: The Delhi government's revenue department has declared all property sales through transfer of general power of attorney null and void with restrospective effect from October, 2011, through thousands of property transactions in Delhi under a cloud, The Times of India reported today.
The order, dated April 27, directs all 13 sub-registrar offices, DDA and NDMC to follow the Supreme Court's order last October that no sale deed will be registered if it is through a GPA transfer.
This means transactions carried out since October on GPA transfers will have to be registered afresh with complete documents.
On average, around 20 per cent of registries are done through GPA transfers, a common way of selling leasehold properties and those that don't have a clear title.
In Delhi's northwest district, for instance, of 5,300 documents registered across three sub-registrar offices in March, 1,157 were GPA transfer registries.
Bankers said the proportion of GPA transfers were even higher in sales involving bank loans.
Top revenue department officials said that as this was a Supreme Court order, it should have been implemented at the sub-registrar offices since October.
They admitted, however, that registrars have only stopped registering such sale deeds after the April 27 directive from the revenue secretary and divisional commissioner Vijay Dev.
Property dealers say, the order will reduce the number of saleable properties in the capital and lead to a hike in the value of properties on freehold land.
Citing the October 11, 2011, judgment of the Supreme Court, the revenue department circular says, "It is reiterated that immovable property can be legally and lawfully transferred only by a registered deed of conveyance (sale deed)... 'GPA sales' of 'SA (sale agreement)/ GPA/will transfer' do not convey title and do not amount to transfer, nor can they be recognized as valid mode of transfer of immovable property. The court will not treat such transactions as completed..."
"To ensure that the Supreme Court order is followed, I have issued a circular informing all officials involved in registration of documents to not register any sale deeds on a GPA transfer," Vijay Dev said.
He said it was required as GPA transfer transactions left no evidence of how many hands a property might have changed hands.
There are also loopholes in GPA transfer cases as property papers may not be complete or a property may not have the requisite completion certificates.
In such cases, Dev said, there were greater chances of a buyer landing in litigation.
The implementation of the court order would mean cleaner transactions with clear title deeds and also higher revenue to the state as each sale of the same property will have to be duly registered on payment of stamp duty, he said.
The retrospective order has thrown thousands of property sales after October on GPA into uncertainty.
Owners who bought property on GPA because it lacked perfect documentation are now in trouble because legally the property remains in the seller's name.
Both parties will now have to initiate the process of transfer of property through clear sale deed.
The TOI report says due to archaic regulations, many properties in the do not have clear titles.
For example, co-operative societies that do not have a completion certificate because the builder did not follow rules during construction. A flat owner in such a society, who may be in possession of the property for decades, will not be able to sell it.
Most of apartments in cooperative housing societies and DDA condominiums are sold though GPA.
Now, if the societies have completition certificate and the original buyer has cleared all the dues, these property can be converted into freehold. Only after that its owner can sell it through registered sale deed.
Anshuman Magazine, MD of global consultancy firm CBRE 9South Asia), said that banning transactions through GPA would bring in transparency .
"But before issuing the order, the government should have conducted a special drive to give completion certificates to properties," he said.
Also facing uncertainty are houses in unauthorized colonies because very few properties here have a clear title . These house owners too would have encounter problems in selling the property.
The order also provides an opportunity for middlemen to take advantage of the crisis as the demand for converting properties to freehold is likely to surge.
In practice, such conversions are usually carried out through touts.
