Due Diligence
Freehold is a way to transfer the ownership of the property from Government Authority to private person. There are certain properties which are allotted by the government authority to individuals on leasehold basis. Such properties need to be converted to freehold by the concerned authority in order to render free transferable title on the allottee/ purchaser. It enhances the value of the property and renders the perfect, clear and marketable title upon the allottee/ purchaser.
FAQ’s
Who all can apply for Freehold Conversion?
- Any person who is the original Allottee and whose name appears in the records of DDA or L&DO can apply for leasehold to freehold conversion. If there is more than one lessee, all of them will have to sign the application for Freehold conversion
- Any person who is a holder of power of attorney can also apply for the Freehold conversion by specifying in the application, the name of the person in whose favour conversion is sought to be done. If there are a series of power of attorneys, then certified copies of the entire chain of power of attorneys has to be submitted along with the application.
- If the power of attorney holder has died, his legal heir can apply for the conversion process
What are the General guidelines with regard to Leasehold to Freehold Conversion of properties?
- This scheme of Leasehold to Freehold Conversion covers the following properties:
- All built up residential plots except the plots having area up to 50 sq. m. where the lease/sub-lease has been granted on behalf of the President of India/Delhi Development Authority.
- All fixed term residential built-up properties where premium has not been charged.
- LIG, MIG, HIG and SFS flats allotted by the Delhi Development Authority including the flats in Asian Games Village complex. Flats constructed by Co-operative Group Housing Societies on land leased by the Delhi Development Authority.
- These charges may be paid in lump-sum or in equated annual instalments spread over a period not exceeding five years. When the payment is made in instalments, interest calculated @ 12% per annum shall be payable. The conversion from leasehold to freehold shall be allowed only after all the instalments have been duly paid. No extension of time for payment of any instalments shall be granted under any circumstances. The liability to pay ground rent shall continue to accrue till the last instalment is paid. Original sub-lessees/allottees would be entitled to remissions in the freehold conversion charges as specified in Annexure-“A”.
- Conversion would be allowed only when the residential building on the plot has been constructed and completion certificate/’D’ form for the building has been obtained. In the case of land allotted to Co-operative housing societies, conversion for individual flats would be permitted after completion certificate/’D’ form has been obtained by the society and possession of flats given to the members.
- The application for leasehold to freehold conversion shall not be entertained unless accompanied by prescribed documents.
- The arrears of ground rent alongwith interest @ 10% per annum wherever applicable would have to be paid by the applicant before conversion from leasehold to freehold can be permitted. In cases where revision of ground rent has become due, the revised amount of rent will be notified to the lessee for depositing the amount before the execution of the conveyance deed.
- The conversion shall be applicable only for properties which are on land for which the land use prescribed in the lease deed/sub-lease deed/allotment letter is residential.
- In cases of mortgaged properties, conversion would be allowed only on submission of ‘No Objection Certificates(s)’ from all the mortgagee. If the property has been mortgaged more than once a ‘No Objection Certificates’ from all the mortgagees are required to be submitted. In case of flats allotted by a Co-op Group Housing Society, it would be essential to produce ‘No Objection Certificates’ from the institution with which the property has been mortgaged by the society.
- In cases where lease deeds/conveyance deeds have not been signed, conversion from leasehold to freehold will be allowed provided that the non-execution of the lease deed has been on account of administrative reasons and not because of certain defaults on the part of the allottees. However in such cases the stamp duty would be payable on the amount of conversion charges and the surcharge wherever applicable as well as the price/premium of the property.
- In case of any legal dispute relating to title of the property, freehold conversion shall not be allowed until the legal dispute is settled.
- In case of re-entered properties conversion would be allowed only when re-entry notice has been withdrawn and the lease/sublease/allotment restored.
- In case of any dispute between the original lessee/sub-lessee/allottee and Power of Attorney holder, application for grant of freehold rights would be entertained only after the dispute is settled.
- In cases where applications for mutation or substitution are pending with the lessor, conversion from leasehold to freehold would be allowed only after the necessary mutation/substitution has been carried out.
- The conversion shall also be allowed in the cases where lessee/sub-lessee/allottee has parted with the possession of the property, provided that :
- Application for conversion is made by a person holding power of attorney from lessee/sub-lessee/allottee to alienate (sell/transfer) the property.
- Proof is given of possession of the property in favour of the person in whose name conversion is being sought.
- Where there are successive power of attorneys, conversion will be allowed after verifying the factum of possession provided that the linkage of original lessee/sub-lessee allottee with the last power of attorney is established and attested copies of power of attorneys are submitted.
- In such cases, a surcharge of 33-1/3% on the conversion fee would be payable over and above the normal conversion charges applicable for a regular lessee (no unearned increase will be recoverable).
- In case of the DDA residential flats on hire-purchase basis, conversion shall be allowed only after all the installments have been paid with interest, if any.
- The scheme of leasehold to freehold conversion is optional.
- The land rates for different areas have been given in Annexure’B’. The localities for which land rates have not been given in-Annexure ‘B’ and rates of the adjoining/comparable locality would be applicable.
- However, in the case of Co-operative house building societies, the land rates of the localities specified in Annexure’B’ would be applicable.
- In respect of DDA flats, the conversion charges mentioned in Annexure ‘A’ part (B) would be applicable. For the purpose of ascertaining the zone of a particular DDA housing estate, first the locality in which that particular estate is situated may be determined, then the zone of the locality can be determined by making a reference to Annexure ‘C’.
- For flats constructed by Group Housing societies on land allotted by DDA, the conversion rates would be as given in part (C) of Annexure ‘A’. For Co-operative group housing flats upto 125 sq. mtrs. plinth area, the conversion charges are based on zone wise flat rates. The zone of Group Housing Society flats can be determined in the manner as mentioned for DDA flats above.
- For CGHS flats of plinth area above 125 sq. mtrs. conversion charges as prescribed for plinth area of 125 sq. mtrs. shall be increased in proportion to the increase in plinth area of the flat.
- The requisite freehold conversion charges, and surcharge as applicable alongwith processing fee of Rs. 200/- are required to be deposited at the time of submission of application form.
- Mode of remittance shall be preferably by cheque (subject to realization), pay order, bank draft payable at Delhi. For amounts less than Rs. 20,000/-, cash will also be accepted. The amount of remittance has to be rounded of to the nearest rupee. The payment is to be made through the prescribed challan form which is a part of application and is in quadruplicate. After depositing the application form and the leasehold to freehold conversion charges, applicants must ensure to obtain an acknowledgement from the bank together with a copy of the challan to serve as proof of payment for their future reference.
- The freehold conversion charges, and surcharge wherever applicable can be deposited either in lumpsum or in not more than five equated annual installments. Annexure “E” gives the formula for working out the amount payable by way of first and subsequent installments. The exact amount of the equated annual installments can be worked out accordingly depending upon the payment plan chosen by the applicant).
- The original lease deed should be produced at the time of execution of the conveyance deed. The same will be cancelled and returned along with the conveyance deed.
- If the original lease deed was lost, the lessee/applicant must issue notice in a prominent newspaper having circulation in the area where the property is situated and also execute an affidavit before the Ist Class Magistrate indicating there in how the original lease deed was lost. A copy of the public notice published in the news-paper and the original affidavit must be submitted at least 10 days before the date of execution of the conveyance deed.
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