What is Right, Title & Interest in Property?

What is Right, Title & Interest in Property?

Right, Title and Interest?Constitute a Legal?Triplet

Right, Title and Interest constitute a legal triplet.?It signifies ownership and is generally used in drafting Property Agreement or deeds of transfer to denote ‘anything and everything’ in a property.

Summary:

1.??????‘Right’ stands for ‘legal right’ in a property

2.??????‘Title’ indicates legal recognition of ‘ownership’ of a property

3.??????‘Interest’ manifests outcome of ownership with ‘right & title’, including enjoyment in all & whatsoever manner that “Owner” desires

Hence, each of the upshots of the triplet, ‘Right, Title & Interest’, enunciates same thing when used in property dealings, though they are not synonyms in language and in jurisprudence.

Title and Ownership are closely related. One has no existence without the other. They can be said to be the 2 sides of the coin.?

Ownership is the legal right. It is also a social recognition to possess and enjoy a property, absolutely.?It denotes the relation between a person and the property. Title, Possession & Ownership upon a property constitute a legally signified triangle.

??Title with possession manifest unequivocal ownership

??One can prove his ownership and right to possess, by establishing his title.

??‘Possession is good against all but the True Owner’

??When title on a property is transferred, the ownership and the right to possess also stands transferred.

??‘Title’ encompasses capacity of individual to exercise absolute right over property and to exclude others.

??Even if a person has no physical possession over a property, he can continue title in various ways.?

??If the rightful owner did not come forward and assert his title within the period of limitation, his right may be extinguished and the person in (adverse) possession may acquire an absolute title.

What is Rights in Property?

Property rights?define the theoretical and legal ownership of resources such as property and how they can be used and can be owned by individuals, businesses, and governments. A property right gives someone the right to use a ‘thing’ – this case, land and buildings – in a particular way. The right is a legal relationship between the recognized user and all others who have to respect that use. Property rights are created in order to regulate the traffic between legal persons. Property rights are commonly identified as a right to own or possess something, such as land or abuilding, and to be able to dispose of it as one chooses. To have a?right to property?is also to have an enforceable claim to the use or benefit of something; the concept of a property right distinguishes between momentary use or possession of something and a claim to the thing which will be enforced by society or the state.

Property is the sum of a bundle or aggregate of rights.

In Guru Datta Sharma v. State of Bihar, AIR 1961 SC 1684, Property, as a legal concept, is the sum of a?bundle of rights?and in the case of tangible property would include:

??the right of possession,

??the right to enjoy,

??the right to destroy,

??the right to retain,

??The right to alienate.

In Jilubhai Nanbhai Khachar v. State of Gujarat, AIR 1995 SC 142, it is held that “Property in legal sense means an?aggregate of rights?which are guaranteed and protected by law.”

What is Title of Property?

A title is a document that shows legal ownership to a property or asset. A title can represent ownership of a real asset. A title might show ownership of property rights of an individual or business, which is the ownership of resources whether they're tangible (physical in nature) or intangible. Titles can be obtained by purchased or inherited as an estate.

What is “Title”?

·????????Title is the legal expression of ownership in a property.

·????????“Title is the legal ways of saying you own a right to something.”

·????????Owner holds title to the property (Pilla Akkayyamma v. Channappa, ILR 2015 Kar 3841; 2016-1 Kar LR 432).

·????????When title on a property is transferred, the ownership also stands transferred.

·????????‘Title’ encompasses capacity of individual to exercise absolute right over property and to exclude others.

·????????A person who has title over a property, even if, has no physical possession thereof, can continue title in various ways.?

Black’s Law Dictionary defines “title” in relation to property as under:

·????????“Title is the means whereby the owner of lands has the just possession of the property.

·????????The union of all the elements which constitute ownership.

·????????Full independent and free ownership.

·????????The right to or ownership in land: also, the evidence of such ownership. Such ownership may be held individually, jointly, in common, or in cooperate or partnership form.

·????????One who holds vested rights in property is said to have title whether he holds them for his own benefits or for the benefit of another.” (Quoted in: Usha Tandon alias Usha Gopalan v. Lilavati H. Hiranandani, 1991 4 Bom CR 422)

Original and Derivative Title

Jurisprudentially titles have been recognised in 2 categories. One, “the original” and another is “the derivative”. The “original title” is that which is created a de novo while the “derivative title” is that which transfer an already existing right to a new owner. Catching of fish is an original title of the right of ownership, whereas purchase of fish results in the purchase a derivative title.?(Sukh Lal v. Ashok Kumar Raghuwansi, 2013-3 ALJ 82).

Possessory Title

??If ‘no title in either party, possession alone decides’.

??Possession is a good title of right against anyone who cannot show a better.

‘Possession is good against All But the True Owner’?& Sec. 6 of the Sp. Relief Act

The principle ‘Possession is good against all but the True Owner’ is declared in Parry v. Clissold, (1907) AC 73. The Supreme Court of India while accepting this principle in?Nair Service Society Ltd. vs. K.C. Alexander,?AIR 1968 SC 1165, pointed out that the?law in India allows a plaintiff to maintain a possessory suit under Sec. 9 (preset Sec. 6) of the?Specific Relief Act. Such a suit can be filed against a title holder, if he had dispossessed the plaintiff ‘otherwise than in due course of law’. It is held in this decision that if ‘no title in either party, possession alone decides‘.

When ‘Possession Follows Title’; ‘Title Follows?Possession’?

In?Poona Ram v. Moti Ram, AIR 2019 SC 813, our Apex Court explained the principle ‘possession is a good title of right against anyone who cannot show a better’ as under:

·????????Salmond on Jurisprudence states: “These two concepts of ownership and possession, therefore, may be used to distinguish between the de facto possessor of an object and its de jure owner, between the man who actually has it and the man who ought to have it. They serve also to contract the position of one whose rights are ultimate, permanent and residual with that of one whose rights are only of a temporary nature. - - - - In English law?possession is a good title?of right against anyone who cannot show a better.?A wrongful possessor has the rights of an owner with respect to all persons except earlier possessors and except the true owner himself.?Many other legal systems, however, go much further than this, and treat possession as a provisional or temporary title even against the true owner himself. Even a wrongdoer, who is deprived of his possession, can recover it from any person whatever, simply on the ground of his possession. Even the true owner, who takes his own, may be forced in this way to?restore it to the wrongdoer, and will not be permitted to set up his own superior title to it. He must first give up possession, and then proceed in due course of law for the recovery of the thing on the ground of his ownership. The intention of the law is that every possessor shall be entitled to retain and recover his possession, until deprived of it by a judgment according to law.

·????????Legal remedies thus appointed for the protection of possession even against ownership are called possessory, while those available for the protection of ownership itself may be distinguished as proprietary. In the modern and medieval civil law the distinction is expressed by the contrasted terms petitorium (a proprietary suit) and possessorium (a possessory suit).”

·????????10. As far back as 1924, in the case of?Midnapur Zamindary Co. Ltd. v. Naresh Narayan Roy, AIR 1924 PC 144, the learned Judge observed that in India, persons are not permitted to take forcible possession; they must obtain such possession as they are entitled to through a court. Later, in the case of?Nair Service Society Ltd. v. K.C. Alexander, AIR 1968 SC 1165; this Court ruled that?when the facts disclose?no title in either party, possession alone decides. It was further held that if?Section 9?of the Specific Relief Act, 1877 (corresponding to the present Section6) is employed, the plaintiff need not prove title and the title of the defendant does not avail him. When, however, the period of six?months has passed, questions of title can be raised by the defendant, and if he does so the plaintiff must establish a better title or fail. In other words, such a right is only restricted to possession in a suit under?Section 9?of the Specific Relief Act (corresponding to the present?Section 6) but does not bar a suit on prior possession within 12 years from the date of dispossession, and title need not be proved unless the defendant can provide one.

·????????11. It was also observed by this Court in Nair Service Society Ltd. (supra) that a person in possession of land in assumed character of owner and exercising peaceably the ordinary rights of ownership has a?perfectly good title against the entire world except the rightful owner.?In such a case, the defendant must show?in himself or his predecessor a?valid legal title and probably a possession prior to the plaintiff’s, and thus be able to raise a presumption prior in time.”

Present Indian Law on Adverse Possession

·????????In Parry v. Clissold, (1907) AC 73 it was pointed out that if the rightful owner did not come forward and assert his title within the period of limitation, his right?would be?extinguished and the possessory owner?would acquire?an absolute title.

·????????After the Limitation Act, 1963, the legal position in India, on Adverse Possession, has been changed as under:

·????????If the rightful owner did not come forward and assert his title within the period of limitation, his right?may be?extinguished and the (adverse) possessory owner?may acquire?an absolute title.

Because, Articles 65 of the Limitation Act, 1963 casts onus on the trespasser to prove claims of title by ‘adverse’ possession.

The 3 important modern propositions brought-in as to adverse possession (in India) are:

·????????Mere ‘animus possidendi’, not enough; there must have animus to dispossess.

·????????Trespasser must know who the true owner is.

·????????Burden to plead and prove adverse possession is upon the defendant.

Adverse possession arises from the provisions in Article 65 of Limitation Act, 1963. ‘Positive and hostile acts’?of the trespasser is the pre-requirement of Adverse Possession; because, mere possession is not sufficient under Article 65, but it requires ‘adverse’ possession.

What is Interest in Property?

?Black's legal dictionary defines an interest as: “a right to have the advantage accruing from anything; any right in the nature of the property but less than title “.Interest simply means having an ownership in property or having some kind of right to do something with or on the property. For example: having an easement on property, having a lease on the property, being a part owner, being the only owner, having a life estate etc.

Interest in property?means any estate, interest, right or power, whether at law or in equity in or over the property and include any future interest. Interest in property?means any individual, joint tenancy or tenancy in common, estate by the entireties, or community property status in any real or personal piece of property, easement, equitable servitude, license, or other form of tangible or intangible property.

An equitable interest is an “interest held by virtue of an equitable title (a title that indicates a beneficial interest in property and that gives the holder the right to acquire formal legal title) or claimed on equitable grounds, such as the interest held by a trust beneficiary.”

A?beneficial interest?is “that right which a person has in a contract made with another“. [3] The typical example is “if A makes a contract with B that A will pay C a certain sum of money, B has the legal interest in the contract, and C the beneficial interest. “[4] It is any “interest of value, worth, or?use?in?property?one does not own,” for example, “the interest that a?beneficiary?of a?trust?has in the trust“.

Black’s Law Dictionary defines?beneficial interest?as “profit, benefit or advantage resulting from a contract, or the ownership of an estate as distinct from the legal ownership or control. “[6]?A beneficial interest is also “distinguished from the rights of someone like a trustee or official who has responsibility to perform and/or title to the assets but does not share in the benefits. “

What is Ownership?

In Mysore Minerals Ltd., M. G. Road, Bangalore v. Commissioners of Income-Tax, Karnataka, Bangalore, AIR 1999?SC 3185, our Apex Court went deep to explain what is ownership? It observed, referring various definitions, as under:

“What is ownership? The terms ‘own’, ‘ownership’, ‘owned’ is generic and relative terms. They have a wide and also a narrow connotation. The meaning would depend on the context in which the terms are used.

Black’s Law Dictionary?(6th Edition) defines ‘owner’ as under:-

??“Owner. The person in whom is vested the ownership, dominion, or title of property; proprietor. He who has dominion of a thing, real or personal, corporeal or incorporeal, which he has a right to enjoy and do with as he pleases, even to spoil or destroy it, as far as the law permits, unless he be prevented by some agreement or covenant which restrains his right.

??The term is, however, a nomen generalissimum, and its meaning is to be gathered from the connection in which it is used, and from the subject-matter to which it is applied. The primary meaning of the word as applied to land is one who owns the fee and who has the right to dispose of the property, but the terms also included one having a possessory right to land or the person occupying or cultivating it.

??The term “owner” is used to indicate a person in whom one or more interests are vested for his own benefit……..”

??In the same Dictionary, the term ‘ownership’ has been defined to mean, inter alia, as –

??“Collection of rights to use and enjoy property, including right to transmit it to others……… The right of one or more persons to possess or use a thing to the exclusion of others. The right by which a thing belongs to someone in particular, to the exclusion of all other persons. The exclusive right of possession, enjoyment or disposal; involving as an essential attribute the right to control, handle, and dispose.”

??Dias on Jurisprudence?(4th Edn., at p. 400) states :

??“The position, therefore, seems to be that the idea of ownership of land is essentially one of the `better right’ to be in possession and to obtain it, whereas with chattels the concept is a more absolute one. Actual possession implies a right to retain it until the contrary is proved, and to that extent a possessor is presumed to be owner.”

??Stroud’s Judicial Dictionary?gives several definitions and illustrations of ownership. One such definition is that the ‘owner’ or ‘proprietor’ of a property is the person in whom (with his or her assent) it is for the time being beneficially vested, and who has the occupation, or control, or usufruct, of it; e.g., a lessee is, during the term, the owner of the property demised.

??Yet another definition that has been given by Stroud is:

??” “owner” applies to every person in possession or receipt either of the whole, or of any part, of the rents or profits of any land or tenement; or in the occupation of such land or tenement, other than as a tenant from year to year or for any less term or as a tenant at will.”

Salmond explained “ownership” as that ‘denotes the relation between a person and an object forming the subject-matter of his ownership. It consists in a complex of rights, all of which are rights in rem, being good against all the world and not merely against specific persons. Though in certain situations some of these rights may be absent, the normal case of ownership can be expected to exhibit the following incidents’.

?“Ownership, in its most comprehensive signification, denotes the relation between a person and any right that is vested in him.?That which a man owns in this sense is in all cases a right.”?(J. Deepak vs The Secretary to the Government (2021)

Incidence of Ownership

In Jilubhai Nanbhai Khachar v. State of Gujarat, 1995 AIR SC 142, it is held as under:

“42. Property in legal sense means an aggregate of rights which are guaranteed and protected by law. It extends to every species of valuable right and interest, more particularly, ownership and exclusive right to a thing, the right to dispose of the thing in every legal way, to possess it, to use it, and to exclude everyone else from interfering with it. The dominion or indefinite right of use or disposition which one may lawfully exercise over particular things or subjects is called property. The exclusive right of possessing, enjoying, and disposing of a thing is property in legal parameters. Therefore, the word ‘property’ connotes everything which is subject of ownership, corporeal or incorporeal, tangible or intangible, visible or invisible, real or personal; everything that has an exchangeable value or which goes to make up wealth or estate or status.” (Quoted in: Laljibhai Kadvabhai Savaliya v. State of Gujarat, AIR 2016 SC 4715)

It is observed, as to the theoretical concept of ‘ownership’, in Mohd. Noor v. Mohd. Ibrahim, AIR 1995 SC 398, as under:

“The theoretical concept of ‘ownership’, therefore, appears to be that a person can be considered to be owner if he has absolute dominion over it in all respects and is capable of transferring such ownership. Heritability and transferability are no doubt some of the many and may be most important ingredients of ownership. But they by themselves cannot be considered as sufficient for clothing a person with absolute ownership. Their absence may establish lack of ownership but their presence by itself is not sufficient to establish it.”

In Butterworth’s Words and Phrases Legally Defined, 2nd Edn. Vol. 4, page 61, ‘ownership’ has been defined as under:

“Ownership consists of innumerable rights over property, for example, the rights of exclusive enjoyment, of destruction, alteration, and alienation, and of maintaining and recovering possession of the property from all other persons. Such rights are conceived not as separately existing, but as merged in one general right of ownership. (Quoted in Mohd. Noor v. Mohd. Ibrahim, AIR 1995 SC 398.)

Pilla Akkayyamma v. Channappa, ILR 2015 Kar 3841; 2016-1 Kar LR 432, it is observed as under:

“Ownership imports three fundamental rights, namely, right to possession, right to enjoy and right to dispose. The owner of the property is not only entitled to possess but also has the right to exclude all others from the possession or enjoyment of it. If the owner is wrongly deprived possession, he has a right to recover possession from any person, who may possess it. But an absolute owner may deprive himself of such right by an assignment, e.g., grant of lease, and may thereby become a limited owner. The right to possession may be limited or restricted in various ways, either by a voluntary act or involuntarily. An owner who has, however, suffered a limitation in respect of his right to possession can hardly be regarded as an absolute owner.”

?

From the above, it is clear that the following rights are the incidence of ownership:

??Possession,

??absolute enjoyment,

??exclude others, or exclusive enjoyment,

??disposition or alienation,

??abandon or destruction,

??alteration,

??maintain or retain possession,

??recover possession.

Kinds of Ownership

??Corporeal and Incorporeal Ownership

??Corporeal ownership is the ownership in tangible material objects (land, building, machinery etc.). Ownership in the incorporeal or intellectual properties which cannot be perceived by senses is called Incorporeal Ownership (such as easement, copyright, trademark etc.).

??Trust and Beneficial Ownership; Legal and Equitable Ownership

??Under English law, there is ‘duel ownership’ on trust property. First is the ‘legal ownership’ – vested with trustee; and the second, the ‘equitable or beneficial ownership’ – vested with the beneficiary.

??Vested and Contingent Ownership

??Perfected and absolute titles, unbounded by conditions, give rise to vested ownership. When it is subject to conditions and capable of becoming perfect on the fulfillment of conditions is contingent ownership.?

??Sole Ownership and Co-ownership

??Sole ownership is the ownership of a single person. Co-ownership is the joint-ownership of more than one person.

??Joint Ownership and Co-ownership

??‘Tenants in common’ and ‘joint tenants’ differentiates Co-ownership and Joint Ownership

??Absolute and Limited Ownership

??Absolute title on property, unbounded by conditions creates absolute ownership. When it is circumscribed by imposition of rights of others or limited in its enjoyment (by restrictions in possession, disposal etc. or burdening by benefits as to trust) it is limited ownership.

Interpretation of Documents: On Issue on Ownership

In Bhikan Sk. Noor Mohd. vs Mehamoodabee Sk. Afzal, AIR 2017 SC 1243, our Apex Court observed that when the issues involved ‘ownership based on interpretation of documents (exhibits), the questions did constitute substantial questions of law’. It was further held as under:

??“18. When the Court is called upon to interpret the documents and examine its effect, it involves?questions of law, it is, therefore, obligatory upon the High Court to decide such questions on merits. In this case, the High Court could do so after framing substantial questions of law as required under Section 100 of the Code. It was, however, not done.

??19. The High Court thus, in our view, committed jurisdictional error when it dismissed the second appeal in limine. We cannot countenance the approach of the High Court.”

Title Deed of Property

Definition: A title deed is a crucial document in real estate that proves a person's ownership of an immovable asset, such as land or property, in India. It ensures that the seller is the legitimate owner and has the right to sell the property.

A title deed is essential for confirming property ownership and ensuring a legitimate and smooth property transaction. It provides legal security for both buyers and sellers in the real estate market.

Function: A title deed outlines how the property is inherited, owned, transferred, or allotted by an authority. It includes information on the land area or property rights owned by an individual. Title deeds are registered with Sub-Registrar Offices in India.

Purpose:

a)????? Ownership Verification: Helps buyers verify the seller's ownership and right to sell.

b)????? Detailed Information: Provides necessary details about the property, facilitating a smooth sale transaction.

Types of Title Deeds

a)????? Sale Deed: Created during the sale of property. Transfers ownership rights from the seller to the buyer. Must be registered with the Sub-Registrar Office.

b)????? Gift Deed: Transfers ownership out of love and affection without monetary exchange.

c)?????? Mortgage Deed: Transfers interest in the property to secure a loan from a bank or financial institution.

Importance of Title Deeds

a)????? Proof of Ownership: Confirms an individual's ownership of a property.

b)????? Encumbrance Details: Indicates any liens, encumbrances, or claims on the property.

c)?????? Buyer Protection: Ensures the seller has the right to sell and there are no third-party claims.

Title Deed Verification

Before purchasing a property, the buyer must:

I.??????????? Check all title deeds, including sale deeds, encumbrance certificates, and tax receipts.

II.??????????? Ensure a clear chain of ownership documents.

III.??????????? Verify there are no court judgments against the seller's right to sell.

Difference between Property Title and Deed

Title:

I.??????????? Conceptual ownership of a property.

II.??????????? Can be held by individuals, organizations, or trusts.

Deed:

I.??????????? Physical document transferring ownership.

II.??????????? Must be signed and registered to be valid.

Physical Aspect

I.??????????? Title: Not a physical document but a concept of ownership.

II.??????????? Deed: A physical document that evidences the transfer of ownership.

Title Deed Property Search

During a property purchase, a title search is conducted to:

I.??????????? Verify public records affecting ownership.

II.??????????? Check all related documents, including sale deeds and mortgages.

III.??????????? Determine if the seller has a clear title and the right to transfer ownership.

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Adverse Possession versus Right to Property

Adverse Possession: Adverse possession is a legal doctrine that allows a person to claim ownership of land under certain conditions. If an individual occupies land without the legal owner's permission and meets specific requirements, they can eventually gain legal title to that land.

Key Elements of Adverse Possession:

I.??????????? Continuous Possession: The possession must be uninterrupted for a statutory period, often 12 years in India.

II.??????????? Hostile Claim: The possession must be without the owner's consent and against the owner's interests.

III.??????????? Open and Notorious: The possession must be obvious to anyone, including the legal owner.

IV.??????????? Exclusive Possession: The possessor must have exclusive control over the property.

Right to Property: The right to property refers to the legal ownership and control of property. In India, it was a fundamental right until the 44th Amendment of the Constitution in 1978. It is now a constitutional legal right under Article 300A, which ensures that no person can be deprived of their property except by the authority of law.

Key Aspects of Right to Property:

I.??????????? Legal Ownership: The owner has legal documents proving ownership.

II.??????????? Transferability: The owner can sell, transfer, or bequeath the property.

III.??????????? Protection: The owner's rights are protected by law against unlawful possession or encroachment.

Comparison:

Basis of Claim:

?? Adverse Possession: Based on long-term, uninterrupted, and hostile use of the property without the owner's consent.

?? Right to Property: Based on legal documentation and recognized ownership rights.

Legal Process:

?? Adverse Possession: Requires meeting statutory conditions and possibly court validation to convert possession into legal ownership.

?? Right to Property: Involves ownership through purchase, inheritance, or transfer, supported by legal documents.

Conflict:

?? Adverse Possession: Can conflict with the right to property, as it involves claiming ownership against the interests of the legal owner.

?? Right to Property: Can be challenged by adverse possession claims if the owner fails to protect their property rights actively.

Protection:

?? Adverse Possession: Protects possessors who have used the land for an extended period under specific conditions.

?? Right to Property: Protects legal owners from unlawful deprivation of their property.

Conclusion: Adverse possession and the right to property represent two sides of property law. While the right to property ensures legal ownership and protection, adverse possession provides a means for individuals to claim ownership through long-term, continuous, and hostile use. Balancing these principles is essential to ensure fairness and legal clarity in property disputes.

CA Harshad Shah, Mumbai [email protected]