What is an Immovable Property: Laws and Cases?

Since the dawn of evolution, humans have classified properties based on their shape, size and use case. Generally, any property can be broken down into one of two categories- immovable and movable. As the name suggests, movable property can be relocated or shifted from one position to another with ease. Movable property examples can include anything from cash money, and vehicles, to jewellery and watches. Improvable property is any property that cannot be shifted or relocated. A Real Estate structure, like a house, is an example of immovable property. Now that we know how to define immovable property, let’s take a look at the laws, rules and regulations around the immovable property. 

What is an Immovable Property?

Property can have a vast meaning in a deeper and real sense. Although it includes valuable items like money, jewellery and houses, it generally includes items of intangible value that add as a source of income or add to the wealth of a person. With respect to Section 2(6) of The Registration Act,1908 meaning of Immovable Property is described. The act defines "Immovable Property" meaning as:

"Immovable Property includes land, building, hereditary allowances, rights to ways, lights, ferries, fisheries or any other benefit to arise out of the land, and things attached to the earth or permanently fastened to anything which in turn is attached to the earth except standing timber, growing crops nor grass".

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This definition of "Immovable Property" under the Registration Act of 1908 applies to the whole of India barring the State of Jammu and Kashmir. According to this definition, a building is classified as immovable property.

The term "Immovable Property" is mentioned in other acts as well and the definition finds more prominence from Section 269UA(d) of the Income Tax Act, 1961:

• Any land or any building or any part of a building, and it includes, where any land or any building or part of a building is to be transferred together with any machinery, plant, furniture, fittings or other things, such machinery, plant, furniture, fittings and other equipment also.

Immovable Property: Examples

Immovable asset examples include:

1. Houses, Land, Trees attached to the ground
2. Contract to cut bamboo for a specified amount of time
3. Factory Buildings
4. Machinery, receptacles intended for commercial work
5. Statues, paintings, or other decorative paintings are classified under immovable property if they are installed with the intention of permanent attachment to the property. 
6. Fertiliser utilised on farmland or a garden
7. Mines, quarries, or slag dumps
8. Any Government contracts related to public work, servitudes, or other legal rights over a property

Types of Immovable Property

According to all the definitions of immovable property, generally, the structure of the property is directly or indirectly attached to the ground. For example, a house is attached to the earth, and hence it is an immovable property. An important thing to note here is that the land on which the house is constructed is also considered to be tangible immovable property. In terms of the real estate market across the globe, an immovable property includes a home and the land surrounding it. It also includes any item or part in a house which comes with the house and it falls under the house's functioning, like drainage systems or air conditioning units. 

Rights That Come with Immovable Properties

If you own immovable property, you will also have some associated rights with the property including the following:

• Rent collection: You are eligible to collect rent in case you are renting or leasing the property out to someone. 
• Dues collection: You can collect dues if you have rented or leased out the property to someone
• Ferry rights: You have the right to use a vessel if you own a water body and can use it to transport people with water vehicles across it, for a certain payment in exchange.
• Right of way: You can lend the land for private or public movements, and even have legal offences associated with it in case of trespassing. 
• Fishery rights: You can fish from the water body within your immovable property; however, this right is exclusively for the owner only. 

The Difference Between Immovable and Movable Properties

By now, you must have understood the basic difference between movable and immovable properties – i.e. – movable properties like watches and jewellery can be moved while immovable properties like real estate cannot. We can accordingly infer some of the other differences associated with them including:

• Registration is required for immovable properties under the Registration Act of 1908 in case their value exceeds INR 100, but the same is not required for movable properties.
• There are stamp duties associated with immovable properties while movable properties can be liable for VATs or value-added taxes.
• Immovable properties are difficult to break up or inherit among heirs while movable ones can be divided easily. 
• While movable properties can be transferred easily, immovable properties cannot be transferred without a deed or will or a registration in the name of the person to whom they will be transferred. 
• You can only pledge credit or loans for movable properties, while you can borrow mortgages for immovable properties as security or collateral.

Immovable Property Law: Rules and Exceptions

India is a country that has historically undergone a major regime shift almost every century. It’s no wonder the laws around Property and its classification can get confusing. A major portion of India’s Property Laws is based on the Transfer of Property Act, 1882, which was introduced by the British regiment ruling over the country. Over time, the definition and acts have changed and evolved to make the laws clearer. Yet, no definition of the concept is exhaustive. Let’s take a look at the most significant laws associated with the details of immovable property and its wider definition. An Immovable Property is any asset that cannot be shifted or relocated. Concerning Section 3(26) of the General Clauses Act, 1897 and the Transfer of Property Act, 1882, the sale of immovable property notes the following under its bracket. 

• Land:

Any surface, above or beneath the ground. Any or all objects attached or installed to the surface with the intention of permanent settlement. It is a tangible immovable property example. 

• Land Benefits:

Hereditary allowances, right of way, equity of redemption, and right to collect rent are all basic rights for any immovable property. 

• Anything ‘Attached to Earth’

Things rooted in the earth, things embedded in the earth, things attached to what is so embedded, and chattel attached to earth or building are considered immovable. 

• Mineral below the Earth’s soil

Exceptions: 

• Growing Crops are considered movable property, despite being attached to the Earth as they don’t have any existence beyond consumption and hence, they are considered temporary. 
• Trees that didn’t bear fruit and were planted for their economic benefits are considered standing Timber. These include Babool, Shisham, Nimb, Peepal Banyan, Teak, Bamboo, etc. 
• Fruit-bearing trees are immovable properties but they can be considered movable if the owner intends to cut them down anytime soon. 

These exceptions were made over time based on the Court’s Case Laws on Immovable Property.

Immovable Property under Private International Law

In terms of disputes between international parties, conventions of Private International Law are considered. Under the Private International Law, Lex situs i.e. The law of the place where the immovable property is situated governs the rules of succession and should be adhered to. 

Gift of Immovable Property

Humans have always stayed in a close-knit community and love to exchange gifts, be it on any occasion. According to IPC, Gifts are taxable and there are laws related to the tab of tax bracket. Let’s take an in-depth look at Section 56(2)(x) of the Income-tax Act, 1961 and see how the gift deed of Immovable Property is taxed in India:

Exemptions:

1. Gift of Immovable Property from Father to Son
2. Gift of Immovable Property to Relative
3. Gift of immovable property to Brother

Owning a property is a dream come true for a majority of Indian households. However, not everyone is a tax expert and the plethora of rules and regulations around an Immovable Property can be a headache for anyone to go through. It becomes important to understand the conventions and law, and hence it’s important to plan your taxes within the frameworks and reap the most benefits. While the benefits are huge, a small mistake or misunderstanding can lead to huge mistakes, such as cases of tax evasion. With NoBroker’s Expert Legal Services, you can save big on legal procedures and ensure you don’t miss out on any information. For any legal assistance, click below and our experts will reach out to you.

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