TONY P

Has anybody ACTUALLY seen one of these agreements, what is the wording on it? I fully understand now, thanks to Douglas, but legal wording is a very strange language, Douglas says "Option to buy" I have been trying to say "Option to convert" because that is how it has come across to me, people saying that they had paid the asking price and upon residency being completed the agreement would be CONVERTED, now this may or may not be a case of simple semantics but they seem very different to my uneducated eyes. But it is fairly irrelevant if it can't be registered as a freehold in an individuals name.
Regards
Tony

TDK

Hi again Douglas, and thanks for your quick response. When i reserved my appartment i signed an 'Agreement of Sale' which has the official stamps on and was registered at the local registration office in Mapusa. I had intentionally met the 183+ days stay requirement and as i say i had a residential permit inorder to allow me to meet the criteria as i understood them at that time.
I couldn't agree more about the Indian legal system being dysfuntional but if you are right about the point you made above, maybe that dysfunctionality might just work in my favour!! Anyway only time will tell and i guess it will involve greasing the palm of my lawyer a few more times!
Cheers & all the best - TDK

Douglas M

Hi TDK,

If you have a valid sales agrement and you have registered the freehold, then you ( not the developer) are the freeholder. How did you register the freehold if it wasnt built though, maybe it was the land you registered, maybe it was completely built and i misunderstand?

Maybe you registered the agreement of sale, not the freehold. What % stamp duty did you pay? These things need to be clearly established and understood.

If you do hold the freehold, In theory, a non Resident FN can sell the freehold after the three year lock in period, providing they were resident at the time of purchase.

You need to keep proof of residency, residential permit, certified copied of all pages of your passport, evidence of inward remittance of the purchase price etc.

In practice the register is closed to both purchases and sales by FNs as far as i know, so you cant , i presume you are also still locked in. Your file may also be under investigation and need clearance.

Looks brighter than the lease route though. Sack your lawyer if im right.

regards

douglas

TDK

Hi again Douglas and many thanks for your thoughts and suggestions. Just to clarify again though that i have only registered an 'Agreement of sale' (definately not the freehold or leasehold yet). I forget the technical Portugese name of the place i registered the Agreement of Sale, in Mapusa but it involved having the document stamped and i assume registered.

I wonder if the confusion may have arisen since you mentioned that you bought an old house (not off plan like me), so there may be a slightly different buying procedure perhaps (maybe you didn't need to register an Agreement of Sale, but only the Freehold)?

As yet i haven't paid any stamp duty, and (surprise surprise) thats another area of confusion as my developer said that if people buy leasehold then there is no stamp duty payable by purchaser, however my lawyer said i do still need to pay the stamp duty even on a Lease, so whilst i'd expect to pay it on a freehold, i'm left rather confused about the real situation, so if anyone knows the answer to this, i'd really grateful if you could please share the info on this forum (including what Stamp Duty rates are payable, and if they apply to both freehold and Leasehold, and where/at what point it needs to be paid please).

Thanks also for advising me to keep all the documents, which i have done, and i've just finished a photocopying frenzy (for back up copies)!

Also i didn't realise there is a 3 year lock in period (so does that mean you can't sell at all for 3 years after purchase)? I'm hoping that as i have only registered the Agreement of Sale & not the freehold, with any luck i won't be under investigation but even if they want to investigate me i don't know how they'd contact me as it'll be a few months before i'm back in India.

Anyway thanks again for your help and advice and All the Best - TDK

TDK

Hi Tony, and i apologise as i probably didn't make myself that clear, but what i meant was a hypothetical clause that could be added to a Lease agreement (which i intend to include in my lease when i'm next back in India). You understood me correctly that it would be an Option (for myself/and any future buyer i choose to sell to) to Convert to Freehold (at no extra cost), and as PIOs and NRIs/Indian Nationals are eligble for Freehold ownership (as well as my self if the land registry reopens to FNs), then as i understand it in my case it would be a valid clause to include in the Lease due to the fact that i had residential status when i reserve my appartment.
Regards - TDK

Douglas M

Hi TDK,

Confusion all round now, people using different terms for different things, contradiction too.

So lets touch base, point by point and firstly try and establish what u have signed and what you have registered. It will be a slow process.

You say you havnt paid stamp duty, but you say you had the document stamped .

Do you mean they stamped it with a rubber stamp at some office or other when you visited, or was the document written on a coloured piece of paper with a big stamp printed across the top and it said something like FIVE HUNDRED RUPEES INDIA NON JUDICIAL ?

If the latter, what percentage of the property purchase price do the stamps add up to and who paid for the stamp paper?

Get back to me on that one and well move to the next step.

regards

douglas

Douglas M

Hi Tony,

I have in the past signed (and still have a copy of) a 58 month lease on immovable property, that document had an option to buy clause contained in it. The option clause was valid for the period of the lease only and was not transferable, neither was the lease.

The lease document was titled deed of lease, written on coloured 500 irp stamp paper and was duly registered.

At a later date i was deemed to be a resident FN and could then exercise the option to buy under the terms of the contract and FEMA if i wished, which i subsequently did.

Upon exercise of the option, the short term lease is effectively scrapped and you enter into a new agreement called in my case a deed of sale. This is also on coloured stamp paper to the value of 2 % of the consideration ( purchase price), i subsequently registered the deed of sale/freehold.

The "agreement to sale" is a different animal again and i am just in the process of establishing with TDK what exactly that is , if it was stamped and who he registered it with?

Obviously, FNs can no longer effectively register deeds of sale/freeholds.


regards

douglas

Douglas M

Hi TDK,

You are running way ahead of yourself here.

As i have said before, i dont think these proposed clauses are valid because the lessee cannot offer an option to buy to someone else, only the freeholder can do that.

Please take off your wishful thinking hat and lets focus on the fundamentals, otherwise the issues become clouded by emotion. Objectivity is required in bucket fulls, in order to understand and resolve the issues of FNs in goa.

The fact that you were once resident would not authorise you to include such a clause, unless you are also the freeholder.

You could not convert to freehold as you put it under such an agreement anyway, unless you were deemed resident at the time. Previous but expired residency would not qualify you as a FN, even if the register was open. By convert i presume you mean to exercise the option to buy and subsequently enter into a sales deed with the owner for a consideration ie the act of transfer as defined under FEMA.

What we have yet to establish is, was the freehold or some other right transferred to you by the "agreement to sale" document, that you signed when you were previously resident?

Once we have stablished what this agreement to sale document is and what rights you have or have not under that document, we can then look at whether you are able to transfer or sell those rights or not and to whom, via either the existing, or a new document.

My thinking is now quite clear on this and that is the systematic bottom up route i suggest we take, otherwise we will continue to go around in circles and add to the confusion.

regards

douglas

TDK

Hi Douglas,

I will check later the exact details of my 'Agreement of Sale' (aka 'Construction Agreement'). But off the top of my head i know it is on colured paper and has several 'postage' type stamps (the value of which i will have to check. I have a vague recollection that i paid for this document to be registered at the Notary's office in Mapusa after i'd signed the Agreement of Sale with the developer, but exact details ar a little hazy now but i'll get back to you once i've checked the value of the stamps etc.

BTW, whilst i was re-reading the FAQs on the RBI site yesterday i read in Q.34: which asks if there is a lock in period for sale of residentila/cpmmercial property purchased out of inward remittance/debit to NRE/FCNR (B) account and the answer given is, ''No Lock in period is applicable for sale of such property.'' Also, according to Acron CGT is set at 20% if you sell after 3 years of purchase date and 30% if you sell prior to that.

Bye for now - TDK

Douglas M

Hi TKD,

Thanks for the acknowledgement. Even more confusion on the terminology though, do you have an agreement of sale or a construction agreement and basically what does it say, who are the parties involved etc.?

Please paste the para regarding lock, in cuz i cant find it on my faq. There certainly used to be lock in for FNs in order to prevent flipping.

I am aware of the cgt rules, lets establish if you have anything to sell first, before we go into potential profit, taxation and repatriation.

regards
douglas

Douglas M

Hi TKD,

Ref your last para comments on lock in, i have just realised that NRE acc stands for non resident external and as far as i know is only available to nris and pios.

FCNR(B) stands for foreign currency non resident banks, you are clearly not in that category either.

Your statement about no lock in is therefore not applicable to FNs.

You are continuing to jump to conclusions and then attempting to fit the evidence around the conclusion.

Its bloody confusing and you are unwittingly misinforming. Douglas then has to do his homework in order to correct the misinformation.

Stick with the fundamentals please, then we can probably come up with the true position you are in and what if anything you can do about it.

regards

douglas

TDK

Many thanks for your kind words and sorry for unwittingly causing you to get confused a little flustered!:curse:

I have an article i kept on file from the Daily Telegraph (Sat,19/11/05) by Rupert Bates 'Hippie replacement just the tonic' (may be possible to view it from www.property.telegraph.co.uk) (?)Anyway near the end he says,

'' Stamp duty is 6% & WHILE YOU CAN SELL AT ANY TIME capital gains tax is 20% if you have owned for more than 3 years and 30% if less than 3 years.''

So i don't know if the laws have changed since the article was written, or if the journalist was misinformed, but inorder to set us all straight on the 3 year Lock in which you mentioned it would be very helpful to have a specific source please.

Also in answer to your previous Q's, my Agreement of Sale (which is also some times called Agreement of Construction) has Rs20 of 'Notarial' stamps on the last page and a green Rs20 note printed on the front page, and rubber stamp marks by the government appointed Notary on each of the pages of the document (which contains previous land ownership details, constuction and internal specs, floor plan, a list of the clauses of contract, and payment schedule etc).

I don't really want to go into much more detail (and frankly i lack the time to do so) as i've come to realise that Agreements of sale etc can vary greatly from vendor to vendor and are often client specific, so i can see little point in disecting my own document here if its not applicable to others and i wouldn't want to cause anymore inadvertant confusion.

Thanks anyway for your help and good luck with your own property issues,
Regards, TDK

noni

Found a site you may be interest in.
www.legalserviceindia.com/calculator_stamp.htm I can't for the life of me remember what rate we paid it at, but I know it was reduced twice between 2001 and 2005 when we registered.

noni

Not 100% but 5% is ringing a bell. :curse:

noni

Sorry meant not 100% sure, but think we might have paid 5%