• Free of encumbrances

Say a piece of land is demised in favour of a builder on LEASEHOLD BASIS. The LESSOR is a government agency.
While offering the flats built by the builder, the builder makes a statement " THE LAND IS IN OUR POSSESSION AND IS FREE OF ALL ENCUMBRANCES"

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.
Asked 4 months ago in Property Law from Kolkata, West Bengal
Religion: Hindu
Hello,
1) Strictly speaking the fact that the primary ownership of the Land lies with the government is an encumbrance as far as the lessee and the sub- lessees are concerned.However practically as these leases are for 99 years or more and so can not easily create any encumbrances.

2) When the builder declares that there are no encumbrances it would mean that during the subsistence of the lease there can not be any concerns for the sub-lessees who have purchased the flats.

S J Mathew
Advocate, Mumbai
1954 Answers
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Hello,
1) It will be governed by the WB Cooperative Societies Act, if a Cooperative Society is formed by making all the flat owners members of it.

2) The fact that the flats are built on leasehold land does not alter the way a conglomeration of residential flats will be regulated.
S J Mathew
Advocate, Mumbai
1954 Answers
65 Consultations
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Under section 3(a) West Bengal Apartment Ownership Act, 1972, , an apartment means a property that has direct exit to a road or to a common area leading to such road and the apartment along with common areas and facilities forms an independent residential unit and it also includes a flat.

2) Under West Bengal Apartment Ownership Act, 1972, Section 2, the Act applies to every building which is used, or is to be used, mainly for residential purposes.

3) all owners shall submit to the Competent Authority under the Act, a declaration in the given Form A in duplicate in non-judicial stamp paper of Rs. 10/- which needs to be duly signed and notarized. Enclosed within the Form A must be authenticated copies of the Building Plan, Site Plan and all relevant Title deeds.

4) the sale deed executed by builder with flat owners would contain a clause as to whether cooperative society would be formed of all apartment owners or registration would be done under WB apartment act
Ajay Sethi
Advocate, Mumbai
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association cannot discriminate on grounds of religion the classes of people who will be allowed to buy apartment in the complex 

2) any seller can move court to challenge the provisions in the bye laws restricting classes of people who can be members of the complex
Ajay Sethi
Advocate, Mumbai
23367 Answers
1224 Consultations
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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. 
T Kalaiselvan
Advocate, Vellore
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In West Bengal, if an apartment complex with over 400 flats is built on leasehold land, would the flat owners be governed by the WB Cooperative Societies Act or WB Apartment owners Act?

The registration of association of the flat/apartment owners association shall depend on the decision by the office bearers of the office association.
In my opinion there is no hard and fast rules that the association has to be registered under the cooperative societies act only or under the flat owners act. 
T Kalaiselvan
Advocate, Vellore
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127 Consultations
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Under the WB Apartment Owners Act, can the Owners Association introduce restrictions in the bye-laws about the classes of people who will or will not be allowed to own the sub-lease deed of the apartments though resale/ transfer (the apartments are built on leasehold land of 99 years allotted by the WB Govt)?

This clause also will depend on the bye laws meant for it.  You can go through the bye laws for this purpose and can frame or set up the law/rule in this regard 
T Kalaiselvan
Advocate, Vellore
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127 Consultations
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1. No. The primary ownership of the lessor will not be considered as encumbrance,

2. Any other person claiming to be leasee by the same lessor or filed suit demanding ownership of the said land will be considered to be causes of encumbrances.
Krishna Kishore Ganguly
Advocate, Kolkata
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No. Any such provision will violate the Articles of equality provided by our Constitution.
Krishna Kishore Ganguly
Advocate, Kolkata
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