The reasons for not changing the government records is that the parties to the transaction might not have initiated the mutation process hence it remains on the vendor's name itself despite registered transaction.
However whether a registered sale deed was executed subsequent to the registered sale agreement?
1. Can legal heir of ‘X’ do a freehold conversion of the land for their 50% share?
The legal heir of X cannot apply for conversion of freehold from leasehold to their share without identifying the same by a proper partiion and NOC by other buyer.
2. What are the ownership rights of legal heir of ‘X’ in the building?
The legal heirs of X are entitled to the fifty percent share in the property that belonged to X
3. How does legal heirs of ‘X’ gets physical possession of the property? What is the procedure?
First there has to be a registration of sale deed in favor Y and legal heirs of X, after converting it into freehold fro leasehold and then the legal heirs of x and y can partition the property amicably, register the partition deed unto their names and enjoy the possession of property.