Legal Advice

Author: Srinivas Abhilash

What are the Legal Aspects of Farmland Ownership?

Farmland ownership refers to the legal rights and responsibilities associated with owning land used for agricultural production, especially for farmers and landowners. It can include land used for crops, and livestock, issues related to property rights, zoning, land use regulations, tax laws, etc.

Real Estate and Scams

The Indian real estate sector is growing, and so are the scams and frauds associated with it. Real estate scams run the entire gamut, from legal frauds, and fly-by-night operators to false promises and untenable buy-one-get-something-free offer. People invest in real estate, a flat/apartment, or a farm plot for various reasons ranging from long-term land security to building equity; to the land, they can pass down to their children. Joint ventures, wholesaling, property management, and many more such terms linger around and trigger a lot of anxiety in the quest to be thoughtful and make rational decisions. If not invested carefully and judiciously, the hard-earned money can get washed away in no time.

When it comes to avoiding real estate scams, knowledge is power. By being aware of the potential risks, you can protect yourself from being a victim. Arm yourself with some of the common warning signs listed below, and protect yourself from any real estate scams by staying informed.

Scams and Agricultural Land

Buying a piece of agricultural land compared to a regular plot has a lot of challenges and requires additional due diligence. The big question is, how do you avoid these challenges?

Unlike flats or apartments, the land is more vulnerable to illegal occupation, especially if left unattended. There are many parameters to be checked and verified before purchasing the land, irrespective of the developer. Exercise a little caution, and conduct due diligence and know-how to avoid real estate fraud by educating yourself about the most common mistakes and essential points to remember before investing in farmland in India.

Legal Aspects of Farmland Ownership

• • Title Verification to confirm Land Ownership

    • The term “Title” in real estate parlance refers to the rights resulting from legitimate property ownership. A free and clear title is undeniable evidence of ownership. The term free and clear refers to ownership without legal encumbrances, such as a lien or mortgage. Hence title verification is the process to check if the transferor is the legal owner of the property and has the authority to transfer ownership. Verification of farmland titles should date to a minimum of 40 years from the date of purchase. Tracing ownership should always begin with probing into the earliest document recorded. There should be no minor as the land owner. Companies such as Hosachiguru guarantee 100% secure, clear, and free land titles. Thorough checking of farmland titles tops the checklist and is a must-have before investing. If and when ignored will lead to legal complications and financial troubles. The advantage of having a free and clear title is that the property will act as collateral for loans or other financing/investment ventures. Hence it is paramount to ensure that no disputes are over the title and the land area.

      • Check Encumbrance Certificate (EC)

        • Popular encumbrances against real estate property include liens, easements, leases, mortgages, or restrictive covenants. Encumbrances impact the transferability and use of subject properties.
        • This document is instrumental in knowing the encumbrances concerning the property for a specific duration.
        • While transferring the legal titles, investors should verify if EC has the name of the same person with whom they are dealing.

      • Property Tax Receipts and Bills

        It is essential to ask the seller for previous property tax receipts and other bills related to the plot. It will help to avoid taxation issues in the future. It is also the responsibility of the buyer to seek all previous documents, invoices, and tax receipts to ensure there are no outstanding dues on the property.

      • Property Tax Receipts and Bills

        RTC is an annual document that is very crucial in title verification. It discloses the ownership, possession, tenancy, soil type, number of trees on the land, and other details. It is advisable to procure the document for the past 40 years from the date of purchase as it discloses the flow of ownership annually.

      • Land Measurement Certificate

        Before buying agricultural land, the measurements of the exact agricultural plot area need to be conducted by the surveyor to be able to mark the boundaries, and only then a land measurement certificate is to be issued. It states that the land measurements are as per the data mentioned in the title deed.

    • In the end, it all bottles down to the Title alone. The property holds no value with an improper Title. One will not have 100% rights on buy, sell, or mortgage transactions. Therefore, it is essential to carefully consider whether you possess a clear, marketable title before investing in real estate. It determines that your ownership rights are free from uncertainties, risks, and quiet claim encumbrances and defects.
    • Some other essential documents which need due diligence too to make the process of acquiring land free from any problems are as follows:
      • Index of land
      • Mutation Extract
      • Family Tree History
      • Patta Book
      • Khata Certificate
      • Survey Documents that include: Survey sketch, Akarband Extract, Hissa Tippani Book Extract, Tippani, Phodi Extract, Hudbust Register Extract, Atlas & Village Map

• • Fencing, Access Paths, and Demarcation

    • Robert Frost once said that “Good Fences make good neighbors.” Farmlands are fenced and demarcated to secure ownership rights and protect properties from intrusion. Investors should refrain from investing their time, money, and effort in farmland properties that do not have full-fledged fencing, clear access paths, and demarcations.

• • State Laws

    • Since agricultural lands fall under state jurisdiction, the rules may vary from state to state. Thus, one must review the latest laws before making any agricultural land-buying decision. Laws, legal procedures, restrictions on land ownership, land ceiling, and stamp duties vary from state to state.
    • Restrictions on Land Purchase – In some states in India, it is allowed to purchase agricultural land, regardless of their profession, whereas, in other states, only agriculturists are.
      • In 2020, the Karnataka government removed limitations on non-agriculturists for buying and selling agricultural plots, thereby repealing a decades-old rule. Any Indian resident, institution, corporate, or academic establishment can purchase farmland in Karnataka regardless of annual revenue from non-agricultural sources.
    • Land Ceiling
      
      • It is the maximum agricultural land that a buyer can own, and the norms vary substantially across territories.

• Physical Land Survey and Site Inspection

  • To establish clarity, precision, and transparency, physical verification of the land with the assistance of surveyors and government officials needs to get conducted. Hosachiguru has various teams of experts who examine the reports and vet the documents and lands; leaving no stone unturned. Doing this will allow having a clear say on the legal status and would help in analyzing the boundaries and nature of abutting lands as well.

Farmlands VS Flats/Apartments

Farmlands

Buying farmland is a lifestyle investment and a reliable, age-old hedge against inflation. It provides an opportunity for individuals to live on and work the land and be self-sufficient. Many urbanites buy farmland to escape the city, be closer to nature and live a healthier, more holistic lifestyle. This investment allows individuals to control their food production, grow crops, and live sustainably. Additionally, owning farmland provides a sense of community and connection to the land. It has a sense of accomplishment and fulfillment; that comes from making a parcel of land productive by growing natural, healthy food.

Flat/Apartment

An investment in a flat or an apartment can depreciate over time. Factors such as wear and tear, aging infrastructure, changes in local market conditions, and consumer preferences can all contribute to a decline in value. Additionally, if the building or neighborhood falls out of favor or becomes less desirable, the property value may decrease.

Old buildings cannot match the amenities and features of new buildings. Hence, making it less desirable to potential buyers or renters. It would have reached the saturation point for the investment value that indicates the maximum growth potential of the new building that one can realistically expect.

The cost of an old building in a posh locality will likely be lower than a new building. New buildings are expensive to construct. When we purchase a flat or an apartment, the major share of the price paid typically goes toward the cost of construction, and a very minimal amount goes toward the cost of the land.

Conclusion

Considering all the discussed points in detail, one can confidently explore agricultural land investments independently. However, informed consumers can still be susceptible to scams. Hence, it is always advisable to go with experts or seek an expert opinion that can ensure problem-free transactions.

Hosachiguru’s in-house advocates put in tremendous efforts to ensure the above legal aspects are carefully adhered to, thereby ensuring a safe investment opportunity for our co-farmers. Adding to it, the power of Talkinglands, an in-house tool that auto-populates publicly available information, ensures complete transparency towards the land you own mapped onto the part of the village/survey. Before investing, it is advisable to check if the developer or land provider is giving such tools to understand the land better.

Only SEBI-registered companies have the authority to talk about returns on investment. No other company is entitled to promise returns and hence farmland companies promising returns are not legit. If anyone offers to manage your land with short-term income from crops, be wary of this as it could be a desperate move from a developer to sell the property. People get tempted by no maintenance and end up with a bad investment. Don’t lose your principal in the quest for profits or returns. In the end, the land is the best investment on Earth. Pay in full and experience it in a wholesome way.

Author: Nihal Anand

Two notable events happened in the year 2020. The Covid-19 pandemic made people prioritize health over anything else. They started to look for options other than traditional real estate that would help them not only in the long run but also in the present times, and what better than farmland that takes you closer to nature. Simultaneously, the Karnataka government heard the calls of the urban populace, and amended the old, archaic Karnataka Land Reforms Act, by easing the restrictions that existed on the ownership of agricultural land in the state. This much-needed amendment has now opened the doors for any individual/institution to own farmland in Karnataka.

Here is a key summary of the Act through the years:

The Sections	The PastThe Karnataka Land Reforms Act (1961)	The PresentThe Karnataka Land Reforms Act (2020)	The Future
Section 63	Ceiling on holding of agricultural land limited to 10 units* per individual	Ceiling increased to 20 units per individual (it means that the land ceiling for a dry land has increased from 54 acres to 108 acres)	Any green enthusiast of any professional background from anywhere in the country, under any income bracket, with a passion for agriculture can buy farmland in Karnataka to fulfil their dream of owning farmland.
Section 79A	No family (HUF) having a non-agricultural income of over 25 lakhs per annum could own agricultural land.	Sections 79A has been repealed. Now, anyone can own land as there is no income slab.
Section 79B	No person from a non-farming family of Karnataka could ever own agricultural land	Section 79B has been repealed; anyone from a non-farming family from anywhere in India can also own agricultural land in Karnataka.
Section 80	Agricultural land cannot be transferred to a non-agriculturist	The Section has been amended to propose restrictions on land transfer, as opposed to a complete bar.

* One unit is equal to 5.4 acres

Implications of the Act:

• The amendments to these archaic laws have opened up the agricultural business, a sector that is witnessing an influx of investments. In fact, the people owning these lands will themselves benefit from these reforms because it opens up their land to different avenues and opportunities.
• Karnataka’s already thriving service sector will receive an even bigger boost. Infrastructure, tourism, transport, and hospitality will all demand an increase in investment and manpower, and this Act facilitates the impetus.
• More than anything, it’s the common Karnataka citizen whom this Act will impact the most. People will no longer have to travel to another state to purchase land. Many agriculture enthusiasts who dream of owning land despite not having an agricultural background can now fulfil their dream.

Author: Nihal Anand | Ruchi Renavikar | Pavithra BC

Does the concept of investing in nature excite you? Have you ever been interested in owning a farm land? Is buying farmland a good investment in a city like Bangalore?

Land as a commodity has many uses and features, however owning a plot of land brings with it a serious amount of paperwork and background checks. Legal formalities can be intimidating for some but once successfully completed, owning a managed farmland can be extremely rewarding and fulfilling.

Here’s a list of the common pitfalls first-time land owners could be vulnerable to, and how we can help you bypass these mistakes.

Mistake 1: Ignoring the importance of clear & un-disputed land titles

Checking the title of a farmland is the fundamental compliance that must be done prior to purchase. Not confirming the land’s clear and marketable titles would lead to legal complications. It is important to ensure that there are no disputes over the title and area, as these would only add to the delay in acquiring the land. Farmland title verification should date back to a minimum of 40 years from the date of purchase. Title verification also includes the careful perusal of mother deed documents. All such verification procedures including existing claims, disputes and the classification of the land, are efficiently carried out by the legal team at Hosachiguru.

Mistake 2: Assuming one state law holds good in another state

Agriculture in India is a state subject, which means that different states have different laws. Not being aware of the agricultural laws of the state could lead to a different set of legal entanglements. Depending on the State in which the farm-land is located, Hosachiguru follows State laws in force and gathers all the documents required while conducting Land due diligence. On gathering all the necessary documentation, Hosachiguru establishes a clear land title. Documents and historical land use records are verified by government agents and lawyers to establish authenticity. Further to this, the land area and boundary is also verified with government survey records and physical verification.

Following is a list of the basic documentation required when doing land due diligence:

• Title Documents
• Encumbrance certificate
• RTC – Record of Rights or Pahani
• Mutation Extract
• Family Tree History
• Patta Book
• Survey Documents which include: Survey sketch, Akarband Extract, Hissa Tippani Book Extract, Tippani, Phodi Extract, Hudbust Register Extract, Atlas & Village Map.
• Conveyance Deeds
• Khata Certificate
• Grant Certificates

For more details on documentation please get in touch with us at info@hosachiguru.com

Mistake 3: Failure to conduct a proper physical land survey and site inspection

Land is much more than its history. Not physically verifying the land could lead to a false assessment about the suitability of the land for agriculture. If you are looking for agricultural land for sale in rural Bangalore, just verifying the documents wouldn’t suffice; actual physical verification of the land and its boundaries is also necessary. Hosachiguru conducts a physical verification of the land with the assistance of the surveyor and government officials, to provide utmost clarity regarding the legal status of the land. This helps in analyzing the boundaries and the nature of the abutting lands as well.

Mistake 4: Not knowing the seller 

One of the major purposes of extensive document verification is to trace the origin of the property. Tracing ownership should always begin with scrutiny of the earliest document recorded. For instance, if agricultural plots are up for sale in North Bangalore, knowing about the history of the land-owners would tell you about the history of the land-use itself. It is necessary to do this because you do not want to purchase the seemingly fertile land only to find out that it is located in an environmentally sensitive zone, or is under dispute. The historic use of the land is taken into account before it is acquired by Hosachiguru.

Mistake 5: A Short-term outlook and failure in Goal setting 

For many, investing in agricultural land is just about experiencing farm life and connecting with nature. However, it is important to remember that it is still an investment you are making into the future; An investment in sustainable farming, an investment to grow your assets and finally an investment in the community and the planet.

Goal setting is often taken very lightly by agricultural enthusiasts. Not setting goals can lead you down a path of uncertainty and disappointment when you don’t get the returns you expected. Setting goals when investing in farmland is highly dependent on the type of ROI you wish for. If you are specifically motivated by long-term ROI then investing in Agroforestry, will bear you a sweet fruit in the years to come. ROI from harvesting timber can vary between tree species, but on an average takes 15-18 years. Trees create a living ecosystem that is supportive and highly biodiverse. The benefits of growing crops and trees in combination are multiple in terms of improving your soil and water quality.  Hosachiguru has created an opportunity to own managed farmlands focused on the agroforestry model that also protects indigenous biodiversity.

The real estate boom in most tier 1 cities across India is gradually tapering down and the extraordinary growth one saw over the last 20 years ago is more or less leveled. There is an over-supply of apartments and rentals are not as attractive but for a few localities. Residential plots are available in plenty and people are not hurrying to book and purchase them as they did a few years ago. There are too many satellite towns – Tumkur, Chikballapur, Doddaballapur, Ramanagar etc. RERA has swung in bringing the much-needed regulation governing both buyers and developers. Genuine investors now need to look for newer opportunities to protect and grow their investments. Farmland can be a realistic option and here are the reasons why.

To begin with, let’s consider an apartment and its rental potential today. Hypothetically speaking, one would have to invest approximately Rs.70 to Rs. 80 lakh in an apartment only to expect a rental income of around Rs. 25,000. And the property only depreciates over time as the value of the building depreciates, which eventually nullifies the land appreciation.

Coming to plots, communities have to migrate and settle down in layouts in order to enhance their value. Often, the first disadvantage is connectivity. Mr. Siddalinga, a friend of mine had bought a 1600 sq.ft. land for Rs.28 lakh in the outskirts of Whitefield in 2012. However, the layout hasn’t witnessed any major rise in price since then considering its poor connectivity to main roads and proximity to social infrastructures. The land has appreciated by just 20% which Mr. Sidda never expected when buying the land. Hence value appreciation enough to meet investor expectations is circumspect. The worst part about plotted developments is that many owners just buy the plots and there is no maintenance of common areas. The roads and drainages need an upgrade as extensive damage has been caused to them and other infrastructures due to construction of houses. Hence, after a few years, people looking to buy plots do not find the development of the layout great and look for newer layouts with better amenities. Though the development expense is not as high as development of an apartment, it can still range from 20-50% of the cost of the plot.

Now, coming to farmlands and what they offer.

• Farmlands are free from taxes
• There is scope to grow crops and try to monetize the investment, even factoring for the vagaries associated with a yield
• The income so generated is tax-free as it is agri-income
• You have a getaway home for you and your family to relax and do things unhurried
• Last, but not the least, you will always benefit from the appreciation of the asset explained below

While there is retardation in growth/ boom story of megacities, several smaller towns are experiencing brisk growth. This does increase the value of land in those areas. An investment in a farmland in and around any of these towns/ districts offers a much higher potential in terms of ROI in the long run. However, this is possible when the land is well managed and can be done by the new purchaser without having the hassles of managing the land that would be liable.

Your first step would be to identify a good, established partner to ensure the clear land titles, the legality of the project and the company’s ability to manage the farmland and deliver returns. Something we can assure you of at Hosachiguru.

Hosachiguru is managed by a highly-experienced and professional team of specialists, scientists, project managers, and supply chain experts dedicated to deliver expected outcomes in agri projects. We address and clear all legal requirements ensuring you of a safe investment to offer you what can potentially be the best possible return option in both the short and long term.

As for our expertise in agri-management, we have experience in growing a variety of timber crops such as Melia Dubia, a promising tree highly suitable for generating higher income in semi-arid regions, teak and sandalwood, a highly profitable proposition in the long run.

So, if you wish to explore a newer, greener opportunity in doing something disruptive, eco friendly and profitable over time, farmland is a great choice, one you could consider for success.