My question is: Since the land is LEASEHOLD, the LESSOR has primary rights to the ownership of the land. Hence, would the primary ownership of the land by the LESSOR be counted as an encumbrance in so far as the sub-lessees (i.e., the people who bought the flats constructed by the builder) and the lessee are concerned?
I would appreciate any clarifications on this point.
This is a question about the properties purchased from a lessee which is appropriately termed as sub-lease.
In the leasehold the ownership is mostly given by the government for a tenure of 99 years.
Here the buyer is not the owner of the property or the land it is situated upon.
In case of the leasehold property you may have to the ground rent to owner or the lessor.
Some states like Delhi allow you to convert the leasehold properties to free hold properties. Every state has its own rules for such conversions.
So long the property is under leasehold the the tag of 'lessor encumbrance' will remain.