Various kind of Property/title fraud scenarios and how to overcome them

VARIOUS KIND OF FRAUD SCENARIOS AND HOW TO OVERCOME THEM

Data on frauds in the Banking System compiled by Reserve Bank of India detected during the Financial year period 2009-2010 to 2012-2013 mentions a cumulative loss of a sum of Rs.29,910 Crores based on the Information furnished by various Banks. Out of this amount, a total of Rs.24,828 Crores pertains to 29653 Cases of frauds detected in India’s Nationalised Banks during the period 2009 to 2013.

State run Banks had been soft targets for frauds. Unfortunately the Officer in a Nationalised Bank handling title deed documents are not given specialized training on how to Identify Original Documents and to compare the same with a Certified Copy of Document and also for distinguishing the Original Documents from Fake Documents resulting in easy commitment of frauds by unscrupulous elements intending to cheat the Bank. A vast majority of them are also ignorant about the various existing online mechanisms available in many States to cross check the authenticity of the genuineness of loan borrower and his/her title to the Property. 

Some of the fraud scenarios and how to overcome them are suggested hereunder:

Scenario I – One Original and many fake duplicate documents

In this scenario, there would be one Original Document which would have been registered. While applying Encumbrance Certificate from Sub Registrar Office, the name of the owner and the sale deed document details would be reflected (Since the Original would have been registered). However many fake duplicate copies of the Said Original document would have been created so as to easily avail loan from many Banks over the same Property. This kind of fraud practice had been predominantly followed by many Criminal and unscrupulous elements who had availed loans from many Banks over the same property. In many such cases, they would have made use of Sec 41 of Stamp Act which permits payment of stamp duties by Demand Draft (ie in case if the Stamp duty is say Rs.100000, in the Original Document, stamp papers would have been purchased only for Rs.5000/- and DD for remaining Rs.95000/- would have been taken). The Criminal unscrupulous elements fabricated many duplicate sale deeds by just buying lower stamp duty papers and forging the Section 41 seal in the reverse side of the forged documents.  

How to overcome fraud Scenario I

The Certified Copy of the last title deed document should be obtained and kept on record. This should tally with the Original title deed document in all respects. Such kind of frauds can be detected only when Certified Copy of Documents are obtained from the records of the Sub Registrar Office and the same should be compared with the Original document and both should tally in all respects. The genuineness of any document can be ascertained only when Certified Copy of document obtained from Sub Registrar Office is compared with the Original Document (Detailed Procedure for comparing Certified Copy of Sale Deed Document obtained from Sub Registrar Office with Original Sale Deed had been mentioned in Page number          of this book) Likewise the Original Receipts issued by Sub Registrar Offices for payment of stamp duty under Section 41 should be obtained and kept along with the Original title deed documents.

Scenario II – Fabrication of revenue records

In this scenario, there would be no parent title deed documents to support the ownership of an Individual except a land revenue record. The revenue record in possession would be a fabricated one. These kind of frauds usually take place over Government lands, temple lands etc.

How to overcome fraud Scenario II

The revenue record should be cross verified online and in case if no online facility is available, the same should be cross verified with the revenue department authorities to ascertain the genuineness of the land revenue record submitted.

Scenario III – Fabrication of death and legal heirship records

In this scenario, the `real owner’ would be alive. However fake death certificates and legal heirship records would be created by fraudsters stating that the real owner has passed away and that X is the legal heir. Based on this fake legal heirship certificate, the Property would be sold by X to unintentional buyers who will be duped. Usually in these kind of frauds, the Original Parent Documents will not be available. Instead a Newspaper Advertisement in a lesser known Newspaper with limited circulation would be made available for losing of the Original Document

How to overcome fraud Scenario III

One has to be very careful in dealing with such kind of a scenario. Wherever possible the Death Certificate should be cross verified online (Chennai Corporation has facility for online cross checking Birth and Death Certificates for the last 84 years ie from 01.01.1930). In case if the Death Certificate could not be verified online, it should be verified from the records of the concerned issuing authority office. Also in this case, the Legal Heirship Certificate issued by the concerned authority (in many states, Tehsil offices) should be cross verified to ascertain its genuineness. Also one has to ensure that the below mentioned procedure is followed for losing of the Original Sale Deed Document (or) Original Sale Deed Parent Document of same extent of land (not larger extent)

      a)    Lodging Police Complaint

b)      Obtaining Non Traceable Certificate issued by Police

c)      Publication of Newspaper Advertisement in 2 reputed Newspapers with decent readership base (One in English and One in local vernacular language)

d)     Undertaking Letter or Affidavit from the Present Owners stating that the Originals have been lost (incl reasons) and that it has not been misused and that as and when the original is traced, the same would be immediately handed over to the intending Purchaser

Scenario IV – Impersonation of `real owner’

In this scenario, the fraudster would impersonate the actual owner by executing a fraudulent  general power of attorney (based on it, the Power Agent would subsequently execute a sale deed in favour of unsuspecting buyers) or by executing a fraudulent settlement deed impersonating the actual owner. In these kinds of frauds, the fraudster will usually fabricate the title deed document of the real owner (ie prepare a fake document) or claim that Originals are lost.

How to overcome fraud Scenario IV

These kinds of frauds can be detected only when Certified Copy of relevant title deed document are obtained from the records of the Sub Registrar Office and compared with the Originals document in all respects. Always there will be certain clues left behind by any criminals while creating a fabricated document like mismatch of signature styles, seals etc. Moreover in case if the seller claims that the Originals are lost, then the procedures listed above for losing of Original documents should be followed. Also the intending buyers should insist on the production of PAN CARD and Voter ID Card of the owner and the same should be cross verified online (Steps for online verification of PAN Card and Voter ID Card is mentioned under the heading “Procedure for Online Verification of certain KYC requirements” in Page number           of this book). Also in case if Power of Attorney had been granted, it is also suggested that the owner (Principal) may be personally approached in the address mentioned in the Power of Attorney document to ascertain the genuineness of the Power of Attorney.    

Scenario V – Builder – Bank Borrower Nexus Fraud

These kind of scenario are very rampant in most cities in India. In this kind of fraud, the builder would have got approval for construction of say 10 Apartments. But he would have deliberately executed the Sale Deed for 20 Apartments by showing the same Apartment as `A’ in one sale deed document and `1’ in another sale deed document. Many of the Bank loan Borrowers would have been his benamies.

How to overcome fraud Scenario V

To overcome this kind of a fraud, the Encumbrance Certificate for the entire extent of land should be obtained. This will throw light whether the undivided share of land being conveyed exceeds the total area of the land. The land area sold under various Sale Deeds should be totaled and the same should be tallied with the total land area. Also the sanctioned Approved Building Plan should be obtained and the total number of Kitchens reflected in the drawings should be ascertained (For each Apartment, only one kitchen is allowed) to know the total permissible Apartments which can be constructed. This should be tallied with the total numbers of Apartments already sold and Apartments which are yet to be sold.

Scenario VI – Ignorance of Bankers and Borrowers (ie Buyers) on certain basic rules leading to easy exploitation by many Builders (Observed by the author of the Book in his home state of Tamil Nadu)

The normal permitted FSI (Floor Space Index) in Tamil Nadu for buildings is 1.5. This means that for every 2400 Sq.ft of land area, up to 3600 Sq.ft of plinth area of building can be constructed (Car parking area is separate) . The Approved Building Plan drawings (with seal) will clearly reflect the extent of permitted FSI for that Property.

However I had observed that many Bankers and Borrowers are ignorant about this issue. If a Builder is constructing say 1000 sq.ft of plinth area of an Apartment with an FSI of say 1.4, then the proportionate Undivided Share of land (UDS) to be conveyed shall be 1000/1.4 which is equal to 714 Sq.ft of UDS. However since the buyers are not fully aware of this rule, many builders tend to flout the extent of Undivided Share of land which should be conveyed by deliberately reducing the quantum of extent of UDS conveyed to ridiculously low extent to as low as 300 Sq.ft or 400 Sq.ft for a 1000 Sq.ft Apartment. Normally when low UDS are offered, the builder would have deliberately constructed an Unauthorised Apartment in the Said premises. Hence to give UDS for the unauthorized Apartment, the other buyers are taken for a ride by deliberate reduction in their UDS extent. Another reason which I have found out is that some builders would have retained one or two Apartments in the constructed premises for their own use and would have deliberately retained a very higher extent of UDS over and above the permitted extent of UDS for the retained Apartment. This is deliberately done to ensure that they get a higher price for sale of such Apartments in future.

Shyam Sunder

Advocate, Chennai

09841136901

(Shyam Sunder - Author of Book titled `Property registration, land records and Building Approval Procedures followed in Various States in India- First of its kind Book being Published in India)

Books available in:

Flip Kart (Online)

Land Mark (in all major cities in India)

Chennai – Sitaraman & Co (044-28111516, 28117069), Higginbothams and Odessey

                  Sri Vidya Devi Publishers (044-24936193/9841136901)

Coimbatore – Odessey (Brooksfield Mall)

Bangalore – MPP House (080 – 41136866, 22260706)

Hyderabad – Asia Law House (040 – 24742324)

Mumbai – Students Book Centre (Snow White Publishers – 022 – 22050510/22080668)

The Hindu – Habitat (Property Supplement) – 14^th Dec, 2013 - Book Review

http://www.thehindu.com/features/homes-and-gardens/q-and-a/a-guide-to-realty/article5455252.ece

Economic Times – 4^th Dec, 2013

Only a few states follow good property registration procedures: G Shyam Sunder
G Shyam Sunder, a Chennai-based advocate, points out to the benefits of standardising procedures.

click here to read the full article >>

This article can also be accessed if you copy and paste the entire address below into your web browser.
http://economictimes.indiatimes.com/markets/real-estate/news/only-a-few-states-follow-good-property-registration-procedures-g-shyam-sunder/articleshow/26851644.cms?intenttarget=no&mailtofriend=yes

Times of India – 1^st Dec, 2013

http://articles.timesofindia.indiatimes.com/2013-12-01/chennai/44618823_1_ec-states-and-union-territories-departments

The New Indian Express – 21^st Nov, 2013

http://newindianexpress.com/cities/chennai/A-one-point-reference-for-property-and-land-records/2013/11/21/article1901988.ece

Business Line – 23^rd Nov, 2013

http://www.thehindubusinessline.com/industry-and-economy/real-estate/watch-out-when-you-buy-property/article5379637.ece

Nanayam Vikadan – 15^th Dec, 2013 (leading Tamil Financial Weekly)

http://www.vikatan.com/new/article.php?module=magazine&aid=90315

http://nanayam.vikatan.com/index.php?aid=4337

Dinamalar – 19^th Nov, 2013, 19^th Dec, 2013 and 12^th Jan, 2014 http://www.dinamalar.com//district_detail.asp?id=852526&dtnew=11/19/2013

http://www.dinamalar.com/splpart_detail.asp?id=93&dtnew=12/19/2013

http://epaper.dinamalar.com/PUBLICATIONS/DM/DINAMALAR/2014/01/12/ArticleHtmls/12012014408018.shtml?Mode=1  (Book Review)