In India, real estate is controlled and influenced by a mix of federal (central) and state-specific regulations. This is because, according to Article 246 of the Indian Constitution, ‘Land’ is a subject matter under the State List or List-II of the Seventh Schedule to the Constitution of India, which enlists subjects on which only States can legislate, whereas ‘Transfer of Property other than agricultural land, registration of deeds and documents and ‘Contracts other than for agricultural lands’ are enlisted under the Concurrent List or List-III of the Seventh Schedule.
Furthermore, because India is a multi-sectarian country, laws governing various issues such as devolution, inheritance, and so on are frequently founded on customary principles and practices relevant to numerous sects, in addition to codified laws. Various judicial declarations on real estate law have been made by India’s higher courts over the years, which serve as judicial precedents and influence the interpretation of applicable statutes.
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Important Laws About Real Estate Investments in India in 2022
Some of the most important pieces of real estate legislation in India are as follows:
- The Transfer of Property Legislation, 1882: It is a basic act that specifies broad principles of moveable and immovable property, such as sale, exchange, mortgage, lease, and the gift of property, as well as part performance and lis pendens. The requirements of this Act must be implemented by each state.
- The Indian Easement Act of 1882: Administers the law of elementary rights to immovable property.
- The Registration Act of 1908 and the Indian Stamp Act of 1899: Control rules about the payment of stamp duty as well as the requirements for the registration of different deeds, papers, and instruments relating to the transfer of an interest in immovable property.
- Contract Act, 1872: This Act controls contract laws in India, including the power to enter into a contract, its execution, and implementation, as well as its violation and remedies accessible to the parties.
- The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation, and Resettlement Act of 2013: Establishes the right to fair compensation and transparency in land acquisition, rehabilitation, and resettlement. This Act oversees the purchase of private properties by the government for specific public objectives or a firm, as well as the compensation and rehabilitative measures that the government must take.
- Land Revenue Rules: Various Indian states have developed their land revenue codes, which control legislation relating to agricultural land-holding, land revenue, tenancy kinds, and other related issues. The aforementioned codes include the division and classification of immovable property in a state, limits on its transfer, the powers and responsibilities of revenue officials, rules, regulations, and penalties for violating such codes.
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- The Real Estate (Regulation and Development) Act of 2016 (RERA): This Act oversees the development, marketing, and sale of real estate developments to safeguard the interests of consumers in the real estate industry. The Act established an adjudicating framework for expeditious dispute resolution in the form of the Real Estate Regulatory Authority and the Appellate Tribunal, as well as mandating the registration of projects and significant actors in the real estate sector. Corresponding RERA rules and regulations have been enacted by the states to guarantee proper implementation of the Central Act at the local level.
- Foreign Exchange Management Act, 1999 (FEMA) and Foreign Direct Investment Policy (FDI Policy): The FEMA and its accompanying rules oversee the purchase/sale of immovable property in India by foreign entities and people not resident in India. The unified FDI Policy oversees the permissibility of foreign investment in India’s real estate industry, as well as compliance standards and the exit of such investors. Foreign investment in India is governed by the Government of India’s relevant ministries, the Department of Industrial Policy and Promotion (DIPP), and the Reserve Bank of India (RBI).
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In addition to the foregoing, the real estate sector in India is governed by a variety of State/local/municipal laws, policies, and customs, including nuances about urban development, slum rehabilitation/improvement, rent control, apartment ownership, building codes/bye-laws, property tax, Special Economic Zones (SEZs), Benami transactions, environmental protection, land pooling policies, land ceiling, land use and zoning norms, and Real Estate Investment Trust regulation.
The Indian legal system incorporates characteristics of both civil and common law. While most laws in India are written, elements of common law, such as fairness and natural justice, are useful in interpreting legislation, court decisions, and conventions, especially in real estate, since these have grown to have both persuasive and authoritative value.
While international laws have no direct bearing or applicability in the context of real estate in India, several concepts or principles recognized under international law have historically been adopted in some form or another in Indian real estate legislation, such as tribal or Adivasi community’s land rights, farmers’/agriculturalists’ rights to fair and equitable compensation in the case of government acquisition of lands, and so on.
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