• Stamp duty and registration

Allotment letter was issued to party A in 1991 by the builder. Party A sold the allotment rights to Party B 
in 1992 and it was confirmed by the builder. 

Party B sold the allotment rights to Party C in 1993 which was again confirmed by the builder. 

All the above transactions were not registered and no stamp duty was paid.

In 1996, on completion of the building, the builder made agreement with Party C and Party C made a short payment of stamp duty for this sale agreement. However, this agreement was not registered.

Now in 2018, Party C has paid the differential stamp duty along with 400% penalty and got letter of adjudication. 

Party C is now wanting to sell the property to a prospective buyer and the buyer wants confirmation that the earlier transfer of allotment letter would attract stamp duty, if yes, then to what extent would be the penalty? Also, all the above transactions have not been registered till date.

Kindly suggest if a prospective buyer can buy the above property by paying stamp duty and registration charges applicable towards this transaction and the past unregistered agreements would not impact the buyers ownership once he concludes the deal by paying stamp duty and registration for his transaction and if the seller is willing to give an indemnity towards any past dues. Will the indemnity suffice and legally will the prospective buyer covered for full rights on the said property without any past liabilities?
Asked 4 years ago in Property Law
Religion: Hindu

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11 Answers

In case the adjudication is done and the differential duty is paid in that case the transaction is clear and further transfer of allotment without registration donor attract stamp duty as there was only agreement the property was directly registered or given to party C by the builder.

See since the transactions are not registered that is only a set back otherwise since it is good allotment and there is deed and 30 years of possession and check municipal taxes are paid then it is good to purchase same with the registered deed and paying stamp duty there is no problem just take all the original allotment letter and agreement from the seller along with the adjudication letter. The pas unregistered agreement wont effect the ownership and indemnity will save the buyer from any third party claim that is least possibility to arrive if all the documents are in place. There wont be any past liability.

Shubham Jhajharia
Advocate, Ahmedabad
25516 Answers
179 Consultations

5.0 on 5.0

Hello,

If the entire stamp duty alongwith the penalty has been paid by C then there will not be any past liability for the same.

Since previous transactions were done before the completion and before the first registration.

The prospective buyer will have full right over the property after C sells the same with proper stamp duty.

Regards

Anilesh Tewari
Advocate, New Delhi
17940 Answers
377 Consultations

5.0 on 5.0

C does not have clear and marketable title to property

2) agreement between builder and C ought to be stamped and registered

3) although stamp duty has been paid but sale deed is not registered

4) un registered sale deed is in admissible in evidence

5) don’t purchase the property

Ajay Sethi
Advocate, Mumbai
87947 Answers
6207 Consultations

5.0 on 5.0

Indemnity clause indemnities you in case any claims are made

2) allotment letter does not attract stamp duty

3) however since sale deed is not registered don’t purchase the property

4) builder can execute deed of confirmation in favour of C and it should be registered

Ajay Sethi
Advocate, Mumbai
87947 Answers
6207 Consultations

5.0 on 5.0

1. are the transfers from A to B and B to C mentioned in the agreement between builder and C?

2. if the prior transfers are not mentioned then no need to declare

3. if they are mentioned in agreement between builder and C, then each transfer from A to B and B to C will attract stamp duty at the applicable rate then prevailing plus penalty of twice the amount of deficit stamp duty

4. as the agreement between builder and C is not registered, C has a defective title in the property. Also the transaction is not in public domain. To cure that the builder can execute a confirmation deed with C, provided B Is traceable. This deed can be registered alongwith the agreement between builder and C. Stamp duty for transaction between builder and C is already paid by you with penalty I guess, or you have the adjudication order for the same from the collector, according to which the duty plus penalty can be paid

5. if builder is not traceable then a public notice will have to be issued to inform the public about agreement between builder and C and that C is now selling the property to a prospective buyer. You will need to invite objections from public

6. the allotment transfers do attract stamp duty as there was a transfer of property by each one of them

Yusuf Rampurawala
Advocate, Mumbai
6882 Answers
79 Consultations

5.0 on 5.0

Dear Client,

If in the sale deed, all the above transfer will mention than liable to pay stamp duty on all transactions except C.

Better show two transfers - from builder to C and C to You.

No implication, this is usual course to evade unwanted stamp duty. Make sure allotment letter should not include/issued to A and B but shown directly from builder to direct C.

Transfer of ownership on allotment letter also bears stamp duty and mandatory be registered.

Also, only adjudication has been done by Party C and no registration is done, what will be the impact of this non registration on the prospective buyer? --- NOT GETTING.

Yogendra Singh Rajawat
Advocate, Jaipur
21481 Answers
31 Consultations

4.4 on 5.0

See since there was no transfer, in earlier agreements as it was only agreement to sale with the builder duty was not payable since then also it is required to disclose all transaction to make the title of the property perfect.

See since in all old properties there are registration problems since the title are not disturbed and there are least chances of cases when there is a indemnity but the price of property is less then the property with the perfect title.So it is better get the complete title verification report from a property lawyer and then proceed accordingly. The allotment letter there is no stamp duty in cooperative society./ housing society before 2000.

Shubham Jhajharia
Advocate, Ahmedabad
25516 Answers
179 Consultations

5.0 on 5.0

1. There is no Stamp Duty or Registration Fees that is applicable on "allotment letters", since they are not classified as Agreements or Deeds.

2. Here in the case, it has to be construed that "C" is the direct purchaser from the Builder, due to the Sale Agreement, between "C" and Builder.

3. IT would be safe enough to buy property from "C", and take a proper indemnity bond from him to indemnify you against any losses or eventualities.

Keep Smiling .... Hemant Agarwal

VISIT:

Hemant Agarwal
Advocate, Mumbai
5612 Answers
25 Consultations

5.0 on 5.0

It is not necessary that the allotment letter has to be by a registered document during that period which is mentioned by you.

The allotment letter is an important document meant for the buyer. Generally, while you will be pursuing a bank loan to buy a certain property, the builder/housing society issues the allotment letter to the buyer which includes details pertaining to the description of the property being sold/bought by the two parties.

The allotment letter includes all the details regarding the flat, the payment options and any extra charges that you may have to pay in case of maintenance or additional facilities. It also includes the construction schedule, house plans, delivery date and builder’s liability in case of late completion or problems after possession. Generally, it is issued to you upon payment of the 15 per cent of the property value to the developer.

However this need not be a registered document, hence you need not be worried on that count.

T Kalaiselvan
Advocate, Vellore
78104 Answers
1543 Consultations

5.0 on 5.0

What will be the impact if Party C hasn't declared the past allotment letters at the time of adjudication?

If the previous allotment letters are handed over at the time of executing the registered sale deed, that will take care of all other issues.

Also, only adjudication has been done by Party C and no registration is done, what will be the impact of this non registration on the prospective buyer?

The seller should have a registered document to establish his clear and marketable title to the property proposed to sell.

Also, just for clarification, allotment letter doesn't attract stamp duty?

No.

T Kalaiselvan
Advocate, Vellore
78104 Answers
1543 Consultations

5.0 on 5.0

1) Now the property is more than 20 years old and went from more than 3 hands, so here letter of allotment doe matter.

2) Plus the completion certificate given by the corporation and why the property has been not registered yet, so get cleared from registrar that how much penalty exactly you has to pay from the time of transferring the property from builders hand or from the Party C. Because registrar can give you exact figure including all charges that how much you have to pay as of now the get registered property on New Buyers name and he may not have any issues in the future.

Ganesh Kadam
Advocate, Pune
12338 Answers
191 Consultations

4.9 on 5.0

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