International Journal of Research Publication and Reviews, Vol 6, no 2, pp 4880-4883 February 2025

International Journal of Research Publication and Reviews

Title Search and Due Diligence in Property Transactions – A Legal

Nandini Bhatt
Genx Legal Services India LLP

ABSTRACT

A Title Search is a critical legal process in property transactions that verifies ownership, identifies encumbrances and ensures compliance with statutory and
regulatory frameworks. It plays a vital role in protecting buyers, lenders and investors from fraudulent claims, disputes, and financial risks. This paper explores the
objectives of a title search, including ownership verification, encumbrance detection, legal compliance and risk mitigation. It also examines the challenges which
are already involved for instance half land records, disputes regarding land and delays in proceedings. This study further outlines few key sources for conducting a
title search in India.

Keywords: Title Search, Property Due Diligence, Land Records, Encumbrance, Real Estate Law, Ownership Verification, Fraud, Marketable Title.

INTRODUCTION

A property transaction involves the transfer of ownership, rights and interests in a piece of real estate from one party to another. Given the high financial
stakes involved, ensuring that the property has a clear and marketable title is essential to avoid future disputes, fraud or legal complications.

A title search is a legal examination of property records to verify ownership and determine if there are any encumbrances, liens, or disputes on the
property. Due diligence, on the other hand, is a broader concept that involves verifying the legal, financial and physical status of the property before
finalizing a transaction. It involves legal, financial, technical and environmental assessments to ensure that the property is free from disputes, adheres to
statutory regulations, and meet the buyer’s expectations. Legal due diligence involves examining property documents, approvals and compliance with
land use regulations. Financial due diligence checks for outstanding loans, unpaid taxes, and other liabilities that could become a burden on the buyer.
Technical due diligence verifies the physical attributes of the property and environmental due diligence ensures that the property does not fall within
restricted zones, such as forest land, coastal regulation zones or ecologically sensitive areas, where development may be prohibited.

This article provides an in -depth analysis of the title search and due diligence process, the legal framework governing property transactions, challenges,
and the role of legal professionals and experts. Understanding these aspects is essential for anyone engaged in property transactions, whether as a buyer,
investor, lender or legal advisor.

TITLE SEARCH: MEANING & IMPORTANCE

A title search is a critical process that helps determine whether a seller has a legal right to sell a property. It also uncovers any legal encumbrances that
may affect the buyer’s rights after the transaction. The primary objective of conducting a title search include verifying ownership, identifying
encumbrances, ensuring legal compliance, and mitigating risks for buyers, investors, and financial institutions.

OBJECTIVES OF A TITLE SEARCH

• To confirm the rightful owner of the property by tracing the chain of ownership through historical title deeds, sale agreements, gift deeds, wills
or partition deeds.

• To verify whether the property is free from mortgages by checking whether the property is pledged as collateral for an unpaid loan, ensuring
there are no outstanding property taxes, water charges or utility bills and verifying court records to check if the property is subject to any
pending legal disputes, injunctions or stay orders.

• To check for government notifications, acquisition proceedings, or pending litigation.

• To confirm that there are no third- party claims, including easements, encroachments, or tenancy rights.

• To ensure compliance with local zoning and land use laws as properties in India are regulated by zoning laws, municipal rules and land use
policies.

DOCUMENTS VERIFIED DURING A TITLE SEARCH

Document Name Purpose of the Document

Title Deed Confirms the ownership and legal rights of the seller.

Sale Deed Verifies that the property is free from legal dues and financial liabilities.

Mutation Records Reflects changes in ownership in municipal or revenue records.

Property Tax Receipts Ensures all property taxes have been paid.

Land Revenue Records Confirms the ownership as per government land records.

Occupancy Certificate (OC) Required for properties in apartment complexes to prove legal occupancy.

Building Plan Approval Ensures that the property complies with local development laws.

Zoning and Land Use Certificate Confirms that the land use aligns with the buyer’s intended purpose.

Where to conduct a Title Search?

1. Revenue Department- For ownership details and land records.

2. Sub- Registrar’s Office- For encumbrance certificates, past transactions, and registration details.

3. Municipal Corporation – For property tax receipts and mutation records.

4. Court Records- To check for ongoing disputes or litigation.

5. RERA (if applicable) – To verify if a property is registered with the Real Estate Regulatory Authority (RERA).

DUE DILIGENCE IN PROPERTY TRANSACTIONS

Due diligence is a broader process that extends beyond title verification and includes legal, financial, technical, and environmental assessments. Legal
due diligence involves scrutinizing all property related documents to ensure authenticity, identifying pending litigations, verifying compliance with land
use regulations and confirming statutory approvals under RERA. This process helps in mitigating legal risks and safeguarding the buyer’s interests.

Financial due diligence is equally important, as it involves assessing any outstanding loans, mortgages, or financial liabilities attached to the property. A
clear financial history ensures that the buyer does not inherit debts or obligations from the seller. Property Tax payments are also verified to ensure that
no arrears exist.

Technical due diligence includes surveying the property to verify boundaries, measurements and structural integrity. It ensures that the construction
complies with building codes and regulations. Any discrepancies in the physical attributes of the property can lead to legal complications, making this
step crucial for buyers and investors.

Environmental due diligence is necessary for ensuring that the property does not violate environmental laws. Properties located in forest areas, coastal
zones or restricted regions may have specific legal restrictions that could affect ownership rights. Conducting this due diligence helps in avoiding
regulatory penalties and future disputes.

ROLE OF LEGAL PROFESSIONALS IN TITLE SEARCH AND DUE DILIGENCE

Legal professionals play a critical role in facilitating property transactions by conducting a thorough title search and due diligence. Their responsibilities
include examining property documents, identifying legal risks, verifying compliance with regulatory approvals, and drafting sale deeds, lease agreements,
and mortgage deeds. Lawyers also assist in negotiating terms between buyers and sellers, ensuring that the transaction is legally sound and transparent.
In case of disputes or unclear ownership history, legal professionals provide guidance on remedial measures and assist in resolving conflicts through
litigation or alternate dispute resolution mechanisms.
 International Journal of Research Publication and Reviews, Vol 6, no 2, pp 4880-4883 February 2025 4882

CHALLENGES IN TITLE SEARCH AND DUE DILIGENCE

Despite the importance of the title search and due diligence, several challenges persist in property transactions. One of the major hurdles is incomplete
or missing land records, as many property transactions in India are not digitalized or properly maintained. This makes it difficult to trace ownership
history and verify past transactions.

Multiple ownership claims also create complications, particularly in cases of ancestral property, where legal heirs may have conflicting interests.
Encroachments and unauthorized constructions pose another significant challenge, as properties without clear demarcation often -lead to boundary
disputes. Fraudulent transactions, such as fake title deeds and illegal sales, are common in the real estate sector and require careful verification to prevent
financial losses.

1. Encumbraces and Hidden Liabilities – A property may have legal or financial encumbrances that are not immediately apparent, such as –

• Unpaid loans or mortgage- If a property is mortgaged to a bank or financial institution and the loan is not repaid, the bank holds a charge on
the property. Many buyers unknowingly purchase such encumbered properties, leading to financial and legal complications.

• Pending property taxes and utility dues – Outstanding property taxes, water, or electricity dues may not be disclosed at the time of sale, creating
liabilities for the new owner.

2. Challenges in Mutation and Revenue Records – Mutation of land records is the process of updating ownership details in revenue records after a sale,
inheritance or partition.

• Delays in updating records- Due to bureaucratic inefficiencies, revenue records often take years to update, leading to discrepancies between
registered ownership and official records.

• Title discrepancies in revenue records vs. registry records- Sometimes the registered title documents at the sub registrar’s office do not match
the records maintained by the revenue department, leading to confusion regarding ownership.

3. Delays in Legal Due Diligence and Bureaucratic Hurdles- The legal due diligence process can be time consuming and bureaucratic, especially when
dealing with:

• Government offices that lack efficient record management.

• Multiple agencies involved in land records, revenue records, and municipal approvals.

• Slow judicial processes for resolving property disputes.

4. Regulatory and Compliance Issues- Property transactions in India are subject to various laws, and non- compliance can lead to legal consequences.
Some common compliance challenges include-

• Non registration of sale agreements- Many informal property transactions occur through Power of Attorney or unregistered sale agreements,
leading to legal disputes. The Supreme Court has ruled the PoA based sales do not confer valid ownership unless properly executed.

• Zoning and land use violations- Some properties may be designated as agricultural land but used for residential or commercial purposes
without the necessary approvals. Buyers must ensure compliance with State land use policies and zoning regulations.

• Approval delays for large scale projects- In commercial real estate and infrastructure projects, delays in obtaining approvals from regulatory
bodies such as RERA, environmental agencies and municipal corporations can stall transactions.

5. Encroachments and Unauthorized Constructions- A significant risk in property transactions is encroachments and unauthorized developments, which
can lead to legal disputes and demolition orders. Some common issues include:

• Illegal extensions and boundary disputes- Many properties have unapproved extensions or encroachments on public land, leading to potential
eviction or demolition.

• Violation of building by laws- Unauthorized construction beyond the permitted Floor Space Index (FSI) or without necessary approvals from
municipal authorities can result in penalties or demolition.

• Encroachments by third parties- In some cases, squatters may claim possession of the property, leading to lengthy legal battles for eviction.

CONCLUSION

The title search and due diligence process is fraught with legal, financial and administrative challenges. Incomplete records, multiple ownership claims,
encroachments, hidden liabilities, regulatory violations and fraudulent practices make it imperative for buyers to conduct thorough verification before
investing in a property. Seeking legal assistance, conducting physical site visits, and verifying records across multiple government departments are
essential steps in mitigating risks. With digitalization and regulatory reforms, transparency in property transactions is improving, but challenges remain.
A well- executed due diligence process not only safeguards the buyer’s investment but also ensures long term legal security in property ownership.
 International Journal of Research Publication and Reviews, Vol 6, no 2, pp 4880-4883 February 2025 4883

END NOTES:

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