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Notary vs Registration: The significant difference

Saturday, February 24, 2018

The most popular alternative to registration, which many resort to, is notary. However, it is important to understand the legality of notary and notarised agreement. Advocate Tanmay Ketkar explains why it’s always better to go for registration

The agreement is the most important thing in any transaction of property, more particularly immoveable property and legality of such agreement is phenomenal for any kind of transaction. Thinking about the agreement, we need to think about various relevant Acts and enactments, among them, the most important are Contract Act, Registration Act, Transfer of Property Act, etc.

The contract Act has prescribed certain conditions for an agreement to be a valid agreement. The conditions include soundness of mind, free consent, legal consideration etc. The next important act that is registration act. Section 17 of the registration act clearly mentions the agreements, for which the registration is mandatory. Accordingly, in nutshell, every agreement of property, beyond amount of Rs 100/- is to be registered. Section 49 of the act speaks about the effects of non-registration of agreements, which are to be mandatorily registered. If an agreement required to be registered, is not registered, the agreement does not create right, title or interest in the property, moreover such an agreement cannot be tendered and will not be accepted as evidence in court of law.

Registration mandatory
The provisions of the registration act make it clear that almost all property agreements are to be registered. However, due to lack of knowledge and awareness, many people avoid registering the agreement. The most popular alternative to registration is notary. Now, let us understand the legality of notary and notarised agreement. The Notaries Act 1952, is the governing Act for the notaries. Section 8 of the notaries Act speaks about the functions of the notaries. One of the functions of the notary is to authenticate execution of any instrument.

Execution and Admission are two most important legal terms for agreements. By execution, we mean actually signing the agreement, and when the signature and the contents of the agreement are admitted before the registrar, the agreement is registered. Now, if the function of notary is analysed, on backdrop of this execution and admission and the provisions of registration act, it is clear that notary, at most can authenticate the execution of agreement, that’s all. However, an agreement executed will not be a valid and legal agreement unless and until its duly registered. Further, it must be understood that every agreement to be a valid and legal must be registered, however every agreement registered cannot be assumed to be valid and legal. An inherent flaw in a registered agreement will not make it legal, just because it is registered.

Registration benefits
Another advantage of registration is that the registration department preserves forever, the record of every registered agreement, now with digital technology, the records are updated in real time and available online. No such record is preserved, updated and available for notarised agreement.
As far as notarising of agreements is concerned, it is most prevalent in leave and license agreement. Reason being leave and license agreements are for shorter terms and the parties involved are reluctant to pay the stamp duty, registration fees and are reluctant to register the agreement. Therefore, most of licensors and licensees resort to notarising the leave and license agreement.

Generally, the leave and license agreements are for period in multiples of 11 months for e.g. 11 months, 22 months, 33 months. It’s again a misunderstanding that a leave and license agreement can be done only in multiples of 11 months. There is no legal provision mandating the period or term for leave and license agreement. Leave and license agreement can be done for any term whatsoever, mutually agreed by the parties.

Legally Speaking
If there is absolutely no dispute between the licensor and licensee, non-registration or notarising of agreement would not harm. However, If the licensee is refusing to vacate the premise, or licensee has damaged the premise, or licensee has sub-let the premise or the licensor is refusing to refund the deposit or any other dispute, and the dispute reaches judiciary. The fate of such dispute would largely depend upon the agreement and its legality. If the agreement is registered, it can be tendered as an evidence, consequently the probability of an aggrieved person getting relief would be much more that in cases of unregistered or notarised agreement which will not be considered as an evidence.

To conclude, it must be understood that notarising the agreement neither make it legal nor adds any valued to it. Whenever we are entering an agreement we must ensure to register it. About the leave and license agreement, now the registration of leave and license agreement is possible online as well. All licensors and licensees must take benefit of the facility and shall insist on registration of the agreement.

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