Civil Procedure Code (CPC)

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Market rate of property

(Querist) 01 June 2020 This query is : Open 
I have decided to sell my .self acquired residential property as per the present declared 2020 Circle rate
Situation is the buyer is willing to pay as per market rate .which is much less than the Official circle rate.
I am told that circle rate is always less than the prevailing market rate.I am not willing to sell less than the circle rate
Kindly advice ?
Raj Kumar Makkad (Expert) 01 June 2020
No legal question is involved in your query. If you don't want at the market rate, it is your sweet desire and if the proposed buyer is not ready to pay you more than the market value then also you cannot force him to come to your terms. Mutual consent and sweet will prevails in the agreements/contracts.

So far the difference in the circle rate and the market rate in opposite direction is concerned, this is the truth of the day that property rates have come down to such an extent that the circle rate is more than the market rate. There is no such law which may bind the buyer to get the registration not below to the circle rate.
shyam lal (Querist) 02 June 2020
Legal question is Circle rate is govt evaluation. One has to pay stamp duty as per the circle rate & more over on in the .sale deed one has to mention the amount and mode of payment,
Query-- is this except able by the stamps & registration dept?
Dr J C Vashista (Expert) 02 June 2020
You will have to pay stamp duty and registration charges to get sale deed registered for the consideration minimum at the rate of circle rate prescribed by government, which may be higher to it but not less.
shyam lal (Querist) 02 June 2020
When govt acquirers a property ,does the compensation is on basis of market value or circle rate?
Raj Kumar Makkad (Expert) 02 June 2020
If Circle Rate is more than Market Value then in my opinion buyer has broadly 3 options to select from. Now applicability of an option vary from case to case to basis. Also, the rules vary from state to state. The following options are universal but should be exercised keeping local rules and regulations in mind. These options will be explained considering an example of Mr. Sanjay. Assuming, he is planning to buy a property with Market Value of 70 Lac. The circle rate / ready reckoner / Guidance Value / Floor Price / Govt Value of the property is 1 Cr. Now Sanjay has 2 questions in mind which i mentioned above i.e. value to be mentioned in sale deed and on what value the stamp duty and registration charges are payable.

(i) Option A: Declare Market Value equals to Circle Rate

In this case, Sanjay will declare the Market Value equals to Circle Rate in the sale deed. He will pay stamp duty equivalent to Circle Rate and register the sale deed at a value equal to 1 Cr. One minute, though it sounds great & simple but the actual payment made to the seller is 70 Lac instead of 1 Cr. The real issue in this case that Income Tax department has all the records of payment made to the seller by the buyer. The actual payment made is 70 lac but if Sanjay mention 1 Cr in the sale deed then it will be assumed that 30 lac is paid in cash or black component. As the govt is concerned about black money in real estate sector and Sanjay will find it difficult to explain. Though the intentions are good and the only objective is to comply with the law but it may land him in trouble. This option is most commonly used in states wherein Sub-Registrar don’t allow sale or purchase below circle rate. Technically, Circle Rate means that property cannot be sold or purchased below circle rate. This is the most difficult situation and instead of exercising option A, Sanjay has only one option to exercise i.e. option C.

(ii) Option B: Declare actual Market Value in Sale Deed and Pay Stamp Duty & Registration Charges at Circle Rate

Some states like Maharashtra allow registration at a lower market value than Ready Reckoner Rate or Circle Rate. The rule is that Stamp Duty and Registration Charges should be paid on higher of two values i.e. Market Value or Circle Rate. In Maharashtra, Circle Rate is known as Ready Reckoner Rate. If Mr. Sanjay does not want any hassle or delay in a transaction then he can happily mention market value i.e. 70 Lac in Sale Deed. He can pay Stamp Duty as per circle rate i.e. 1 Cr. In this scenario, he i.e. buyer will be at a financial loss. Assuming average stamp duty of 6% and Registration Charges at 1% i.e. total 7%. Sanjay will pay an additional amount of 2.1 lac i.e. 7% of 30 Lac towards stamp duty and registration charges. It’s a financial loss of 2.1 Lac and may increase if the difference between circle rate and market value is wide.

(iii) Option C: Appeal to Sub-Registrar to charge Stamp Duty and Registration Charges at Market Value

Hardly anyone exercises this option due to delays and perceived hassles. Depending on the local state stamp act, at the time of registration you have the option to keep the registration of Sale Deed pending if you don’t agree with circle rate. In short, if circle rate is more than market value then you can exercise an option that you are not willing to pay stamp duty and registration charges as decided by the Sub Registrar. In this case, Sanjay will appeal that Market value of his property is 70 lac but circle rate is 1 Cr. Therefore, he will request sub-registrar to charge stamp duty at 70 Lac instead of 1 Cr. His case will be referred to Deputy Commissioner (Valuation). If Deputy Commissioner agrees with the justification then he will grant permission to register property at a value lower than circle rate.

Another reason why buyers don’t opt for option C is because most of the properties are on Home Loan. Immediately after registration, the original sale deed is handed over to the bank or housing finance company. If the buyer will appeal for lower stamp duty then registration of sale deed will be pending till the matter is decided. In this case, bank or HFC may not agree for the delay in handing over of original sale deed. Also, the seller may not agree to wait for final disbursement till the appeal is decided by the Sub-Registrar office.

Concluding Remarks: From a buyers perspective, option C is the best option but may not be feasible due to operational difficulties. As a buyer, if you exercise option A or option B then it may create tax related issue or financial loss. In case, circle rate is less than market value then you should always discuss the matter in advance with the seller. With a slowdown in real estate sector, the scenario of Circle Rate more than Market Value is here to stay for long time.

Raj Kumar Makkad (Expert) 02 June 2020
When a Government acquires any private property for pulic purchase then LAC assess the compensation amount keeping in view other factors including the market as well as circle rate.
Rajendra K Goyal (Expert) 02 June 2020
Buyer can not be forced to buy at circle rate.

If circle rate is higher represent to concerned authority for revision.
shyam lal (Querist) 02 June 2020
The D.G.Stamps & registration of not entertain revision ,they say their /valuation is done after sorting all objection of the publik.
Raj Kumar Makkad (Expert) 02 June 2020
You may mention the actual rate of sale consideration in the body of the sale-deed and can mention therein that due to the rate of circle, you are forced to bear the enhancement of the rate and registration charges if you can't wait for the outcome of third option as told above.
shyam lal (Querist) 02 June 2020
The D.G.stamps & registration cares a damn about your options mentioned by your good self?
P. Venu (Expert) 02 June 2020
To my knowledge, the circle rate or fair value or ready reckoner value etc. are only directory, not mandatory (in the same status as the 'advisories' issued in enforcement of lock-down). Bu is the Bible for the officialdom. Law does not envisage charging stamp duty at a higher rate than the market value. However, it is unlikely that there could be any remedy except in approaching the Constitutional Court.
Raj Kumar Makkad (Expert) 02 June 2020
If DG is of the same opinion as you told then you have no other option but to approach a constitutional court to get the desired relief.
shyam lal (Querist) 03 June 2020
One last question ,who is the publik authority to evaluate what should be the market rate .when the circle rate is not excepted as the value of property
P. Venu (Expert) 03 June 2020
Every State has its own system.
shyam lal (Querist) 03 June 2020
Please mention the system of any state you are aware of,as the info provided would give me a lead in valuation of market rate in question.
Raj Kumar Makkad (Expert) 03 June 2020
A buyer cannot be forced to purchase the property at the circle rate, this is the judgment given by Division Bench of Delhi High Court recently.

Read more at:
shyam lal (Querist) 03 June 2020
All said stead of going to courts one should rely on the property dealer.its pathetic the D.G.& his establishment should be dismantled why waist publik money.the courts depend on their opinion do not apply brains .
Raj Kumar Makkad (Expert) 03 June 2020
Mr. Shyam Lal! We are here for the Rule of Law and we do not represent property dealers. If you deem them fit to solve your problem and if according to you, Courts do not apply their brains, the same is nothing but a contempt of court and also defamation to law and lawyers.
shyam lal (Querist) 03 June 2020
With due respect as per rule of law who is the authority to decide market rate?
don't tell me go to court .so far I have not got this answer
I.know what is contempt & very well know lawyers too .

humble request if you also do not know the answer to my query ask some and get back to me inspite giving threats
.there is no shame in admitting you have no clue what was asked.
Raj Kumar Makkad (Expert) 03 June 2020
We have no talent and entire talent has been filed by God in you, as per your assertion. Who had then called you here to seek advice as you already know lawyers, judges and courts? If property dealers are the courts then better to avail all your replies from them.
shyam lal (Querist) 04 June 2020
Thanks for the kind words,thoughts & compliments.
Further I which to add already our country we have two jokers .who at the drop of the hat put people behind bars in pretext of sedition & NSA with the help of learned lawyers whom you seem to be in good books.And now you adding contempt to their armour.Please do not treat the Quarist as a migrant labour.Corona is is still around so be careful while passing comments.
Lastly who is the authority in deciding market value?you said it who has talent.
Raj Kumar Makkad (Expert) 04 June 2020
Corona has also taken the lives of those persona also who deem themselves over and above Law of God or of Land. Everyone is required to be safe including the author. Threatening of Corona virus is nothing but an inhuman desire of the author.It seems he is an agent of Buhan Lab of China indulged in spreading such virus which he wants to distribute here also. You need no sympathy from any expert.
shyam lal (Querist) 04 June 2020
Remember one thing no law of the land .courts
lawyers experts frankly speaking people who believe in degrading others have very short life ,any doubt ask your Gods.
Raj Kumar Makkad (Expert) 04 June 2020
If your parameters are pure and impartial then the same are equally applicable for you also.
shyam lal (Querist) 05 June 2020
Thanks for your patience,I was waiting for the court order.the court refuses Bail to a pregnant women with medical complications.pity the law .you jolly well know why. lesson is! don't tell your problems to any one 80% don't care and the other 20% are glad you had them. My head hangs in shame.have a nice time.
M.Sheik Mohammed Ali (Expert) 11 July 2020
Well advise of the advocates
Isaac Gabriel (Expert) 19 August 2020
If the guideline/market value is exhrbitantly.high, you can buy it according to the amount agrdd upon and get the dovument after evaluation by the apprpriate authritirs.

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