What is Benami Property Act and its Impact on Real Estate?

The real estate business revolves around the concept of production, selling, and buying of land. As Louis Glickman, a philanthropist and New York-based real estate investor, says, “The best investment on Earth is Earth.” This is a universal principle that is abided by real-estate sellers as well as buyers. Talking about ‘Benami property’ in the real-estate business context, we observe that it is a term that is extensively used every now and then. Have you thought about what it could possibly mean? And what impact does it make on real estate? This article attempts to find an answer to both questions. The term ‘Benami’ conveys the meaning of purchase of land by veiling the identity of the buyer of the property. The real owner purchases it in the name of a benamdar. A Benami transaction is a system by which a property is held by a person for which the payment is made, or consideration is provided by another person. So, what all comes under Benami properties to give it this meaning? Come, let us explore! Property bought by you for any of your family members for which the amount is paid with a traceable, known source of income will come under Benami properties. A property bought in fiduciary capacity between a trustee and a beneficiary can also come under this. Not just individual properties, properties that are jointly bought can also fit into this category. The condition is that the amount for that land purchase should be paid with a known source of income. There are certain pointers to which attention has to be given before tagging a property as a Benami property. Some of these include: The evaluation of the motive behind the purchase The money source for the property purchase The conduct of both the buyer and seller during and after the transaction The relationship between the benamdar and owner. The nature of the use of the property after the purchase However, there are certain exemptions to these conditions as listed with reference to the Benami Transactions (Prohibition) Act. This particular came into effect in the year 1988. It was later amended in the year 2016. The immunity is achieved by certain property buyers when the land purchase is made in the name of certain specific relatives of the family under specific conditions. For instance, the property can be held in the name of a son without attracting the provisions of ‘prohibition of benami property transaction act of 1988’. This can be done the consideration is made out of a known source of that particular individual. But the same cannot be done in the name of a brother’s son. This will attract Benami Act. The act was still found to have certain deficiencies. In order to address the same, the Benami Transactions (Prohibition) Bill of 2011 was formulated. Over the years, amendments were made to the act, and there have been many noted changes. The amended Benami act accounts for certain conditions like – holding the property in the name of a parent, which is funded by the child, can attract the Benami law now. From the 1988 Benami act to the 2016 amendment made on it, many vital modifications have been observed. This is thought to cast an impact on both old and new property buyers. The amendment has made stricter provisions like – those found guilty of the offense committed under the Benami act will be imprisoned for seven years and will be charged with a fine of about 25 percent of the property’s market value. They can also lose the property. But these amendments and changes made to the act also come up with certain limitations. Say, for example – Consider a scenario of you buying a property from your friend. If this friend was a benamdar of another person who has initially paid for the property, and even if you have no clue regarding the purchase of the land, you could fall into trouble. The government can attach the property you bought even if you have paid the consideration out of known sources. Now that we have gone through the Benami Act meaning and the essence of Benami transactions, let us get into the crux of the mpact of impacts on real estate.
source url := https://www.homes247.in/blogs/benami-property-act-331

Leave a Reply