NRIs, Beware of Your Properties In India

Are you an NRI who owns property in India? If so, don’t assume your property is completely safe simply because you have the sale deed in your name and the Encumbrance Certificate (EC) appears on the online portal.

A recent case from Gannavaram in Andhra Pradesh has once again brought the issue into focus. Vedantham Shanta, a Brahmin NRI woman from Gannavaram, has reportedly alleged that land inherited from her father was encroached upon with the alleged support of the police. She has also reportedly alleged that the Gannavaram police were involved in the matter.

This is not the first time allegations of this nature involving NRI-owned properties have surfaced. There have already been media reports of alleged attempts to take over NRI-owned lands in places such as Tirupati and Guntur, including allegations involving political leaders. The latest allegations from Gannavaram have once again raised questions about how vulnerable properties owned by NRIs can become when the owners live thousands of miles away and have limited ability to monitor what is happening on the ground.

There are people who deliberately target properties owned by NRIs, especially when they know the owner rarely visits India. In some cases, they identify who owns vacant land in an area and then look for properties belonging to NRIs who live abroad and have limited local presence.

Once they identify such a property, they may attempt to establish illegal possession by creating fake documents, obtaining an electricity connection, putting up a temporary structure or hut, or taking other steps to create the appearance that they have been occupying the property for some time.

The real trouble begins when the owner discovers what has happened and approaches the local authorities or courts.

“I know an NRI who owned about two acres of land. The local MLA, police and officials at the registrar’s office allegedly colluded to take control of the property, and they succeeded”, a person who deals with real estate started.

He continued, “When the victim eventually approached the court, the case went through the legal process for nearly seven years. Eventually, the victim found himself in a position where the only practical way out was to withdraw the case and accept around one-tenth of the property’s market value”.

“The victim had initially hoped that a change in political power would help, and waited for the MLA to lose his position. But when it comes to land disputes, people from both the ruling party and the opposition can have their own interests, so the change did not work in his favour”, he added.

“By then, he had realised how difficult it was to fight the system and eventually withdrew the case and gave up the land,” he concluded.

One might assume that these problems are limited to vacant plots, while houses and flats are relatively safe. That assumption can also prove costly.

Residential properties can face a different kind of problem, illegal or difficult-to-remove occupants, including tenants who stop paying rent and subsequently initiate legal proceedings against the owner.

Consider the case of an NRI living in San Jose who owned a three-bedroom flat in a gated community in Hyderabad.

The owner rented the apartment to a family. Initially, the tenants paid the rent for four months. They then informed the owner that they had lost their jobs and requested additional time, saying they would clear the pending rent within two months.

The owner waited for another two to three months and eventually asked them to pay the outstanding rent. When the tenants did not respond, the owner sent them a message asking them to vacate the flat.

According to the account, the tenants then approached the court, alleging that the owner was harassing them to vacate the property despite their having informed him that they would settle the outstanding rent.

The dispute subsequently entered the legal system. The owner was unable to regain possession of the apartment and reportedly did not receive rent during the dispute.

Eventually, the owner tried to sell the property to another buyer. However, when prospective buyers visited the apartment and learned that it was involved in litigation with the occupants, they backed out.

After fighting the matter for around three years, the owner ultimately had to sell the property to the same tenant at reportedly around one-fourth of its market value.

Such cases are not necessarily restricted to one particular state or region. Property disputes involving NRIs can arise in different parts of India, particularly when the owner lives abroad and has no strong family or social network locally.

A legal expert who has dealt with such disputes said NRIs should also be cautious about relying entirely on apartment or gated-community associations.

“Many NRIs believe that renting out their property through the secretary or president of a gated-community association is relatively safe because the association conducts background checks.

“But, to my shock, I had to handle two cases where the presidents of apartment complexes allegedly colluded with tenants to create problems for property owners. The objective was to create a situation in which the owner would eventually agree to sell the property at a fraction of its market value, after which it could be sold to another buyer at the prevailing market price.

“NRIs have increasingly become targets for such unscrupulous practices,” the expert said.

The legal expert also cautioned NRIs against buying flats or plots in India purely for future investment or rental income unless they have reliable people on the ground who can actively look after the property.

“Buying a flat or plot in India as a long-term investment is not always a wise decision unless the NRI has strong and trustworthy family members or a reliable support network in India.

“If an NRI plans to buy a flat or house now and come back to India and settle after 20 years, I would advise them to think carefully before making such an investment. They could consider investing in the US or other markets and allowing their investments to grow. If they genuinely want to return to India after 20 years, they can consider buying a property at that time.

“Buying a property in India that the owner intends to occupy immediately after taking possession is a different matter. The risks can be zero when the property is continuously occupied by the owner rather than being left vacant or rented out for years.

“Otherwise, NRIs should be prepared for unexpected complications and disputes,” the expert added.

The bigger lesson is that having a registered sale deed, a clean EC and documents showing ownership does not automatically protect an absentee property owner from every practical problem.

In land cases, illegal possession can create complicated disputes. In residential properties, tenant-related litigation can make it difficult for an owner to regain possession or sell the property.

“Ultimately, if influential local interests, authorities and other parties collude, it can become extremely difficult for an absentee owner to protect the property through the system alone.

“However, the nature of the risk can differ. Large vacant parcels of land may attract those attempting to establish illegal possession, while flats and apartments can face problems involving occupants and tenant disputes,” the expert concluded.

For NRIs, therefore, owning property in India should not simply be about buying it and keeping the documents safely abroad.

The real question is: who is watching the property when you are thousands of miles away?