If you are stuck in such a situation, here is what to do.

Purchasing a resale flat is a significant milestone, but it often comes with complex legal procedures. One such crucial step is ‘mutation of property’. This process, also known as ‘Dakhil Kharij’, is the recording of the transfer of title of a property in the records of the local municipal body. Recently, a client, Mr. Alok, approached us with a situation. He was buying a resale flat in Jaipur from the first owner, Mr. Kumar. The property was only about ten months old, and Mr. Kumar had not yet completed the mutation in his name after purchasing it from the builder, “Apex Constructions”. Mr. Alok was concerned about whether Mr. Kumar must complete the mutation before the sale and who would be liable for the associated fees and any pending dues.

This scenario is quite common, especially with newly constructed properties that are sold within a short period. Understanding the legalities of mutation is essential to ensure a clear title and avoid future disputes.

Advice in such cases

When navigating the purchase of a resale property where the mutation is pending, it is crucial to proceed with caution and clarity.

• Title Verification: Conduct a thorough due diligence of the property’s title. Ensure that the seller has a clear and marketable title, even if the mutation record is not updated. This involves examining the original sale deed between the builder and the seller.
• Sale Agreement Clause: Your Sale Agreement or Agreement to Sell should explicitly state the seller’s responsibility regarding the pending mutation. It can be drafted in two ways: either the seller agrees to complete the mutation in their name before the final Sale Deed is executed, or they agree to bear all costs associated with the ‘double mutation’ process that the buyer will undertake.
• Liability Clearance: Ensure the agreement clearly mentions that the seller will clear all dues, including property taxes, maintenance charges, and utility bills, up to the date of possession. Obtain a No-Dues Certificate from the housing society or builder.
• Possession and Registration: Do not delay the registration of your Sale Deed. Once registered, you become the legal owner. The mutation is for the purpose of updating municipal records for property tax, but the Sale Deed is the primary proof of ownership.
• Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think

Applicable Sections of Law

The process of property transfer and mutation is governed by several laws:

• The Transfer of Property Act, 1882: This Act governs the transfer of property from one person to another. The registration of a Sale Deed under this act legally transfers ownership.
• The Registration Act, 1908: This Act mandates the compulsory registration of documents related to the sale of immovable property, making the Sale Deed a public record of ownership.
• State-Specific Municipal Corporation Acts: Each state has its own municipal laws (e.g., The Rajasthan Municipalities Act, 2009) that outline the procedure for mutation of property and the collection of property tax. These laws define the process, fees, and timelines for updating property records.
• Bharatiya Nyaya Sanhita, 2023 (BNS): While property mutation is a civil matter, criminal law can become applicable in cases of fraud. For instance, if the seller intentionally provides forged documents, they could be prosecuted under Section 334 of the BNS for forgery. Similarly, acts of cheating related to the property transaction fall under Section 318 of the BNS.

If you are the complainant

As the buyer, you are in a position to set the terms before finalizing the deal. Your primary goal is to secure a clear title without future legal hassles.

• Negotiate Clearly: Discuss the pending mutation with the seller upfront. It is best to insist that the seller completes the mutation in their name before you register the property. If they are unwilling, negotiate for a reduction in price equivalent to the extra mutation fees you will have to bear.
• Document Everything: Ensure all verbal agreements are put in writing in the Sale Agreement. Specify who will bear the cost of the mutation fees for both transactions (builder to seller, and seller to you).
• Obtain an Indemnity Bond: You can ask the seller to sign an indemnity bond stating that they will be liable for any past dues or legal disputes related to the property that may arise after the sale.
• Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think

If you are the victim

If you have already purchased the flat and later discovered issues arising from the seller’s non-mutation, you have legal recourse.

• Legal Notice: The first step is to send a legal notice to the seller, demanding that they fulfill their obligation as per the sale agreement or compensate you for the financial loss incurred.
• Civil Suit: If the seller does not comply, you can file a civil suit in the appropriate court for recovery of the money you spent on the double mutation fees and other related charges.
• Consumer Complaint: If the seller is a professional builder or developer who failed to provide the necessary documents for mutation, you may also file a complaint with the Consumer Disputes Redressal Commission for deficiency in service.
• Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think

How the police behave in such cases

Property mutation disputes are primarily civil in nature. The police have a very limited role and will generally not intervene. They will not register an FIR for non-payment of mutation fees or for a seller’s failure to complete the mutation process. Their involvement is warranted only if there is an element of a cognizable criminal offense, such as cheating (Section 318 BNS), forgery of property documents (Section 334 BNS), or criminal intimidation. In such cases, you can file a police complaint, but for the contractual dispute itself, the police will advise you to approach the civil court.

FAQs people normally have

Here are answers to some common questions regarding property mutation in resale transactions:

• Is it mandatory for the seller to complete the mutation before selling the flat?
  Legally, a registered Sale Deed is sufficient to prove ownership and to sell a property. While it is highly advisable for the seller to complete the mutation, it is not a legal prerequisite for the sale itself. However, its absence complicates the process for the new buyer.
• If the seller hasn’t done the mutation, do I have to pay fees for both transactions?
  Yes. The municipal corporation’s records need to be updated chronologically. You will have to first apply for mutation from the builder to the seller, and then from the seller to your name. This often means paying the mutation fee twice. This is a key point of negotiation with the seller.
• What liabilities other than property tax should I check for?
  Besides outstanding property tax, you must check for unpaid maintenance charges to the residents’ welfare association (RWA), pending electricity and water bills, and any other society-specific charges (e.g., sinking fund, parking charges). Also, ensure there is no mortgage or loan outstanding on the property by checking for the original property documents and verifying with the sub-registrar’s office.

What evidence is required?

To apply for mutation, you will generally need the following documents:

• Copy of the registered Sale Deed in your name.
• Copy of the Sale Deed of the previous owner.
• A duly filled mutation application form.
• Receipt of up-to-date property tax payment.
• An indemnity bond and an affidavit on stamp paper.
• No-Objection Certificate (NOC) from the housing society, if applicable.

How long will the investigation take?

Mutation is an administrative process, not a criminal investigation. The timeline for the mutation process varies from one municipality to another. Typically, after submitting a complete application with all the required documents, the process can take anywhere from 15 to 45 days. Some municipal bodies have online portals that have expedited the process, while others may still follow a manual procedure that can take longer. It is important to follow up regularly with the concerned municipal office after submitting the application.

Advocate Sudhir Rao, Supreme Court of India