Property Due Diligence Before Purchase

A few steps have to be observed before a sale of property is concluded: registration of the sale deed, examination of the property, and affidavits from the seller that the property is unencumbered and that the seller will indemnify the buyer if a claim is later brought.

Most of the onus is on the seller to see that the property is free of obligations on the seller’s side and that title passes cleanly. The buyer is exposed to whatever the seller chooses to reveal about encumbrances.

Section 41 of the Transfer of Property Act ordinarily protects a buyer who, in good faith, takes a transfer from an ostensible owner and had no way of verifying the truth of that ownership. The transfer is not voidable merely on that basis.

That protection has a caveat. The buyer must have done everything in their power to verify the truth. If information relevant to the transaction can be reached within reasonable limits, the buyer is expected to obtain and consider it. Information the seller withholds, but which the buyer could have verified, is not by itself a ground to treat the contract as voidable.