What is the role of ‘lis pendens’ in property transactions?

Lis pendens in common parlance means “a pending legal action”. The doctrine of lis pendens finds its place in Section 52 of TOPA which provides that if there is any transfer of any immovable property pending litigation, the same shall not affect the rights of the parties in respect to the immovable property. The outcome of the litigation, passed by a court of competent jurisdiction, in the matter during the pendency of which the transfer had taken place would be binding upon such a purchaser, who has purchased the property during the pending litigation.

 Section 52 of TOPA does not declare a transfer by a party during the pending litigation to the suit as void or illegal, but only makes the purchaser, who has purchased the subject property bound by the decision in the pending litigation. The principle underlying Section 52 of TOPA is that if during the pendency of any suit in a court, in which any right of an immovable property is directly and specifically in question, such property cannot be transferred by any party to the suit to affect the rights of any other party to the suit under any decree that may be made in such suit. If ultimately the title of the pendente lite transferor is upheld regarding the transferred property, the transferee’s title will not be affected.  On the other hand, if the title of the pendente lite transferor is not recognized or accepted by the court, then the transferee shall acquire no rights at all.

What legal checks and due diligence should be carried out before entering into a real estate transaction in India?

 —Name withheld on request

Due diligence in a property transaction means that the purchaser is not buying the property on “as is where is” basis but on a clear and marketable title from the seller. There is no caveat emptor doctrine running against the purchaser, but a duty cast upon the owner of the property to give a clean, clear and marketable title to the property which is free from all and every encumbrances.

  The purchaser can verify the title of the owner from the concerned sub-registrar where the property is situated to check whether the title flow is aligned with the title documents provided for inspection by the seller. Some States in India also provides for encumbrance certificate so that one can understand that any financial institution or any authority has a charge on the property. Verification from the land authorities or local authorities or society records are also few diligence steps to confirm the title of the owner to the property. One may also issue public notice in the newspapers to check any claim from third parties including the financial institutions. Generally, purchasers also inspect and survey the property so as to rule out any the structural defects in the property.

Aradhana Bhansali is partner, Rajani Associates.

(If you have a personal finance query, write to us at mintmoney@livemint.com to get it answered by experts.)

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Published: 04 Apr 2024, 08:51 PM IST