Short sale before foreclosure

Short sale is when the amount of a real estate is depreciated by negotiation or is sold by a financially crippled seller. During times of financial crisis one has to let go their property in order to pay the debt and cover the losses. In such a circumstance immediate barter becomes a requirement hence the price is reduced to gain quick buyers.

This kind of bargain can be termed beneficial for both the seller and buyer. The buyer benefits if an esteemed property is available at low price and the seller benefits because he/she can pay away the debts.

In order to negotiate, the buyer can do some research on similar properties and in neighboring areas to find out its worth. If the buyer finds that the property is over priced, he/she can show some comparisons to the seller and lower the price.

The whole procedure can take a long time to effectuate and can turn out to be risky if the seller does not keep the buyer informed. Hence the buyer should ask for proofs of the financial documents like the bank papers pertaining to the property before making a decision.

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The rules of down payment

Down payment is some amount of money provided to the seller before buying a property to guarantee your commitment towards the property. A part of the property price has to be paid from your own pocket after which one can take a home loan or personal loan.

Down payment varies depending on the investment plan or the sellers demands. Heavy down payment may reduce the interest rates while interest rates soar on minimal down payment.

The down payment you pay also affects your ability to qualify for a loan. Banks provide loans depending on your capacity to fulfill the down payment needs and a fixed monthly income. If one is unable to pay the down payment then the loan application may get rejected.

Make sure that the loan programme allows you pay a particular amount of down payment. The loan is designed in accordance with the down payment. Hence decide on a loan provider before finalizing a property and paying the down payment.

If one is unable to pay the down payment themselves then there are other ways to retrieve it. For example one can get money by surrendering some assets like a life insurance policy, shares, etc.

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Chain of title and Insurance

A property may be transferred from one hand to other and in the whole transaction the property goes through many alterations. The registrar office maintains the records of these transfers and it is known as chain of title. A document that gives the history of ownership of land along with the current owner is known as chain of title.

It is important to maintain a record of land transactions so that all the legalities can be met with. A system known as Torrens title system is used for this purpose that helps in tracking the past and present ownership.

Since the property switches hands several times it can get dilapidated or internally damaged. The damages may be foreseen by the new owner but he/she may have to face the brunt of repairing the damages. To avoid this situation the concept of title insurance was introduced. Insurance of buildings was made mandatory in 2001 but not everybody follows this rule.

Getting insurance on chain of title can be quite beneficial. An insured property increases the confidence of a new buyer and can also aggrandize the bank formalities as an insured property seems more dependable. Insurance can increase the cost attached with the property but it ensures that the owner is investing in a secured estate.

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Concept of Land Trust

A piece of land that has limited access to the public comes under the land trust. Land that needs conservation is under the ownership of the government or private party so that the resources are not hampered. Usually land used for agricultural purposes or wild-life conservation are owned in this manner. Land trust is either under a non-profit organization or one party holds its ownership for the benefits of another.

For the administration of the land monetary assistance is provided by the government with the help of grants or donations. The taxes attributed with these lands are lowered as it is not for commercial use.

A way of donating for these lands is through bargain sale. In a bargain sale the landowner sells the property to an organization at a lower rate than its actual worth. The remaining amount is considered a donation to the organization. Hence the donation may not be in tangible form but the organization saves money on its investments.

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A promissory note

A promissory note is issued in writing by the borrower stating that he/she will repay the money within a specific time and with certain amount of interest. Promissory notes are usually drafted for small amounts as it has some restrictions. In case of a real estate loan, a lien or mortgage is much preferred over promissory note.

The note includes the amount that needs to be repaid, the date of sanctioning and the last date of submission, names of the lender and borrower, reason for taking the loan, the rate of interest, terms of the loan, clauses leading to late payment, etc.

The promissory note is a part of negotiable instruments act of 1881 as the amount or time for the payment is negotiable depending on the promisor and promise. An unsecured money market instrument issued in the form of a promissory note is called Commercial paper. This was introduced in the year 1990 with a view to enabling highly rated corporate borrowers/ to diversify their sources of short-term borrowings and to provide an additional instrument to investors.

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Home Registration

The registration process in India can be exasperating as it takes immense amount of time and money. Depending on the time availability between the buyer and seller, a time is affixed with the registrar. Registration formalities take place in the sub registrar’s office.

Registration of home or land is carried out to ascertain the property rights to the owner. Once the house is registered under a particular name, that person becomes the owner of the house. It is thus important to carry out these formalities in presence of an advocate and solve all the legal issues pertaining to land registration.

The property location, legal ownership document, date of purchase of the title, property transfer and inheritance issues, if transferred the legal authority of the transferee, clearance certificate from urban land ceilings authorities, payment of all dues like property taxes, electricity and water bills and any previous alterations in the property registration are the points that require careful scanning. All the documentation and negotiation procedures cannot be met with without the presence of a lawyer.

Home Registration ensures that the right person gets hold of the property and is the sole owner of the land.

(ref.www.indiahousing.com)

Tenancy for years

Tenancy for years

Tenancy for years is allotment of tenancy for a fixed amount of time hence it is also known as fixed term tenancy. This fixed term can range from a few days to a few years though the term ‘tenancy for years’ seems like it lasts for years but the period varies.

Termination can be effectuated by mutual agreement between the landlord and the tenant or it can be terminated by the landlord due to breach of contract or it lasts until the occurrence of an event.

The mutual agreement is signed when the landlord needs to acquire the property or the tenant needs to shift. A notice is issued post which the tenant needs to vacate the place. This kind of agreement is known as ‘surrender of the lease.’ Breach of contract like failure to pay rent or using the property for illegal activities can lead to termination by the landlord.

Tenancy for years can terminate after a specified event. For example if the contract says ‘until the crop harvests’, the agreement automatically terminates after the event has occurred. It can be further extended depending on the requirement of the tenant and landlord.

The fixed term tenancy comes to the rescue of the landlord as it assures that he/she gets their monthly due on time. Even if the tenant leaves the property without mutual consent the landlord has the right to claim rent payments until the agreement expires.

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