Immovable property is any property or asset that is not movable or cannot be physically transferred. The property could be built on ground or attached to it, with its positioning being fixed. Buildings, roads, constructions (statues) and natural structures are immovable properties. The land on which an immovable property is built or positioned is also an immovable property.
Every object or component attached to land (immovable property) or serving a defined purpose when in the attached state is also an immovable property. These include heavy machinery, trees, river, etc. If the thing does not lose value and offers the same benefits when separated from land, it’s a movable property. For example, if a cow can produce milk irrespective of its surroundings and location, it is a movable asset. However, a fish that ceases to live if taken out of water (pond) is an immovable property. An animal house, fish pond, or similar breeding places that the land owner positioned with the objective to have them appended to the land permanently are also immovable properties.
Defining Immovable Property
In the Indian legal framework, immovable property’s definition lies in section 3(26) of the General Clauses Act, 1897. The definition lays tremendous emphasis on the nature of attachment related to immovable properties. As per which, an object attached to land would be considered immovable if it cannot be detached without demolition.
In case detaching the object from land would not cause any drop in value of the object, then the object is not immovable. For instance, a building if demolished doesn’t hold any value. But if a tree can be safely uprooted and grounded elsewhere, it’s a movable property. If a tree has been preserved and raised for the fruits and vegetables it provides, it’s an immovable property. But if it’s been grown only for its timber (wood), it’s a movable property.
Immovable Property Sale and Rights
The sale of an immovable property gets carried out as per the Transfer of Property Act, according to which there has to be a seller and buyer and a price paid in part or full in exchange of transfer of ownership. The buyer should be alive and in sound health. At times, the property could also be transferred freely to another party. The buyer procures all the privileges and legal rights attached to the property, such as rent collection. The property owner can legally improve, renovate or alter the property provided the project stays within the confines of local governing ordinances.
Before selling the property, the seller should clear all the public charges, rent and tax pending on the property. In case there are any legal ramifications to the property, the seller must inform them all to the buyer before completing the sale. The buyer’s advocate must investigate property title after a sale agreement has been drafted. In case the property in question is huge, the buyer must publicly state (usually through a newspaper) his interest in buying the property.
Taxation, Registration and Laws
The rules governing an immovable property differ with the region where the property is located. In India, an immovable property when transferred must be registered as per the Indian Registration Act, 1908, provided the value of the property is more than ₹100. Registration in the transferee’s (purchaser) name is important for the buyer to become the new legal owner of the property. Section 55 of Transfer Property Act governs the duties and rights of the seller and buyer.
Sales tax does not apply to immovable property transfer. However, stamp duty must be remitted as per the Indian Stamp Act, 1899. There would also be a registration fee documented under the Indian Registration Act, 1908. The stamp duty and registration fee validate the property’s sale. Registration records the property’s new ownership.