PROFFESSIONAL PRACTICE

EXPLAIN THE PROCEDURE FOR ACQUISITION OF LAND UNDER LAND ACQUISITION ACT 1894.
Land Acquisition is a process involving three authorities
 Acquiring Body- one who requires the land
 The processing Body- the authority which is empowered to acquire the lands required by the
Acquiring body.
 The land owners: who have got absolute right over the lands being acquired
Steps involved in the land Acquisition :
1.DETERMINATION OF THE EXTENT AND PARTICULARS OF THE LANDS TO BE
ACQUIRED
If the acquiring body is a government department no permission from the government is necessary.
But if the acquiring body is a company, prior permission be obtained from the government.
The acquiring body shall send the proposal along-with all the connected documents pertaining to the
lands to be acquired to the Deputy Commissioner.
The concerned land acquisition officer (L.A.O.) shall scrutinize all the documents and conduct spot
inspection to know the details such as the standing trees, buildings etc. He also shall send the same to
the surveyor and the revenue inspector to submit the proposal.
If no objections are received within the stipulated time limit, the LAO shall submit a report to the
Government in Revenue Department s
2. DETERMINATION OF COMPENSATION
Within a period of two years from this date, compensation award shall be approved by the competent
authority.
Cost of Acquisition shall be borne by the Acquiring Body and shall deposit the amount with the LAO.
If structures, valuable forest trees, (malki) horticulture trees/crops, wells (open wells or tube wells)
etc., are present on the land, the valuation report in respect of these items shall be obtained from the
appropriate authorities and they shall become part and parcel of the award.
3. PAYMENT OF COMPENSATION TO THE OWNERS
Interested persons / land owners receive the compensation after submitting the documents mentioned
in the award notice.
. If the land-lords or the interested persons are not satisfied with the quantum of compensation and not
accepted the same, may by written application along-with relevant documents to the Deputy
Commissioner or the L.A.O. require that the matter be referred for the determination of the Court.
The objections may be, to the measurement of the land, the amount of compensation, the persons
whom it is payable, or the apportionment of the compensation among the persons interested.
4.TAKING POSSESSION OF THE LANDS ACQUIRED.
5.PAYMENT OF EXCESS COMPENSATION AS PER COURT ORDER TO THE LAND
OWNERS WHO HAVE APPROACHED COURT ON APPEAL
SINKING FUND
 A sinking fund is a fund established by an economic entity by setting aside revenue over a
period of time to fund a future capital expense, or repayment of a long-term debt.
  While the service charges budget is generally used to fund the costs of the day to day
maintenance of the common areas, a portion of the budget should also be set aside to cater for
periodical or long term structural repairs.

 Before you buy, you should enquire from the estate agent or your solicitor if a sinking fund is
in place/planned for the development.

 As regards the fundamental items that management companies should consider as part of their
sinking fund calculations, it is difficult to be precise or definitive on the key elements
required.

 This is largely because factors such as the management company/surveyors views, building
age and condition, usage, location, type of materials used will vary significantly from
development to development.

Amongst some of the most common areas a sinking fund may cover are repair, refurbishment or
replacement of:

 Building structure;
 Windows and walls;
 Roof and roof finishes;
 Internal partitions;
 Floor structure;
 Internal and External Decoration;
 Plumbing and Water services;
 Heating and Ventilating;
 Lifts and Escalators;
 Mechanical and Electrical Services and infrastructure.
It is in all owners’ interests to have regard to the importance of a sinking fund. A well financed
management company with a sufficient sinking fund should ensure that the development is well
maintained and represents an attractive prospect to any potential purchaser.

STANDARD RENT
 The Rent control act was brought into force to protect the old tenants, who had been living in
houses since years from possible evacuation by the landlord or overcharging of rent, mainly
because of the shortage of houses during that era. The rent control act regulates the renting of
the properties and protects the interest of both, tenants as well as the landlord.
 This is applicable mainly in India. The Rent Control Act, in India, prohibits the owner to
charge excess rent than as prescribed under the law irrespective of prevailing market rent. The
standard rent is the rent, which would be permissible under the law to be charged to a tenant.
The rent Act applies to premises let for residence, education, business, trades, storage, etc.
Rent more than certain rent, even though the free market may support, is not allowed under
the Act.
 The standard rent has been defined in rent control act as the rent act is a state act, all states
have definitions which may differ marginally in meaning from one state to another.
 The rent as decided by the landlord and tenant at the beginning of the tenancy either by
negotiations or by bargaining is known as contractual rent. Standard rent is the rent, which
would be permissible under the law to be charged to a tenant. Due to this socialist law, it is
observed that there is a wide gap between contractual rent / fair market rent and standard rent.
 As per the act, the rent at which the premises have been let out for the first time after 1st
September 1940, is called the standard rent. For buildings constructed and let out after 1st
September 1940, the contractual rent is the standard rent.
 These provisions were incorporated in the act, to defend the poor tenants and saving them
from exploitation by the landlord as there was a huge gap in supply and demand of housing.
Under the provision of the rent control act, whatever may be the market conditions, whatever
may be the supply and demand situation, whatever the affording tenants can pay to a landlord,
the standard rent cannot be more than a certain amount, i.e. standard rent.
GILT EDGED SECURITY
WHAT IS FIRE INSURANCE? EXPLAIN 5 CLAUSES OF FIRE INSURANCE.
 Fire insurance is property insurance that covers damage and losses caused by fire. The
purchase of fire insurance in addition to homeowner’s or property insurance helps
to cover the cost of replacement, repair, or reconstruction of property, above the limit set by
the property insurance policy. Fire insurance policies typically contain general exclusions,
such as war, nuclear risks, and similar perils.
 Homeowners should document the property and its contents to simplify the assessment of
items damaged or lost during a fire. A fire insurance policy includes additional coverage
against smoke or water damage due to a fire and is usually effective for one year. Fire
insurance policies that are about to expire are usually renewable by the homeowner, under the
same terms as the original policy.
5 clause of fire insurance are-
 REMOVAL OF DEBRIS CLAUSE
(upto 1% of the claim amount) “It is hereby declared and agreed that the expenses incurred upto 1%
of the claim amount is included in the sum insured on:
a) Removal of debris from the premises of the Insured;
b) dismantling or demolishing;
c) shoring up or propping.”
 FLOATER CLAUSE
“In consideration of Floater Extra charged over and above the policy rate the S.I. in aggregate under
the policy is available for any one, more, or all locations as specified in respect of movable property.
At all times during the currency of this policy the insured shall have a good internal audit and
accounting procedure under which the total amount at risk and the locations can be established at any
particular time if required. The changes in the address of locations specifically declared at inception
should be communicated”
 DECLARATION CLAUSE
1) In consideration of the premium by this policy being provisional in that it is subject to adjustment
on expiry of each period of insurance. “The Insured agrees to declare to the Company in writing the
value of his stocks (other than retail) less any amount insured by Policies other than declaration
policies, in each separate building or non-communicating compartment or in the open on the
following basis namely
1] average of the values at risk on each day of the month or
2] the highest value at risk during the month and to make such declaration(s) latest by the last day of
the succeeding month. Such declaration(s) shall be signed by the Insured or by a responsible person
authorised to sign on his behalf.
If other policies on declaration basis cover the stocks hereby insured, the declarations shall be made
so as to apportion to each policy a share of the value of the stocks insured under such declaration
policies, PRO RATA to the respective amounts named in the policies. In the event of a declaration not
being made latest by the last day of the succeeding month , then the insured shall be deemed to have
declared the Sum Insured hereby as the value at risk.
On the expiry of each period of insurance the premium shall be calculated on the average Sum Insured
namely, the total of the values declared or deemed to have been declared divided by the number of
declarations deemed to have been made.
If the resultant premium is less than the provisional premium, the difference shall be repaid to the
Insured but such repayment shall not exceed 50% of the provisional premium.
 VOLUNTARY DEDUCTIBLE CLAUSE
“It is hereby declared and agreed that the insured having opted a voluntary deductible (as mentioned
in the policy Schedule) out of net amount of each and every admissible claim under the fire
policy(ies) covering the said premises, the company has allowed a discount (as mentioned in the
policy Schedule) on the final premium payable for the policies and Add-on Covers. It is further agreed
that the above voluntary deductible opted shall replace the compulsory excess stipulated under
"General Exclusions" attached to the policy(ies) and/or for add-on covers.”
 FLOATER DECLARATION CLAUSE
“In consideration of Floater Extra charged over and above the policy rate the S.I. in aggregate under
the policy is available for any one, more, or all locations as specified in respect of movable property.
At all times during the currency of this policy the insured shall have a good internal audit and
accounting procedure under which the total amount at risk and the locations can be established at any
particular time if required. The changes in the address of locations specifically declared at inception
should be communicated”
EXPLAIN THE DIFFERENCE BETWEEN SINKING FUND AND DEPRECIATION
Sinking fund
 It is the fund which is built up for the sole purpose of replacement or reconstruction of a
property when it loses its utility either at the end of its useful life or becoming obsolete.
 The fund is regularly deposited in a bank or with an insurance agency so that on the expiry of
period of utility of the building, sufficient amount is available for its replacement.
 As regards the fundamental items that management companies should consider as part of their
sinking fund calculations, it is difficult to be precise or definitive on the key elements
required.

 This is largely because factors such as the management company/surveyors views, building
age and condition, usage, location, type of materials used will vary significantly from
development to development.

 The calculation of Sinking Fund depends upon the life of a building as well as upon
the rate of interest and it is generally calculated on 9/10 of the cost of construction as
the owner will get 10% as scrape value of the building when the life of the building is
over.

Depreciation
  It is defined as the gradual decrease in the value of a property because of constant wear, tear
and decay etc.
 The rate of depreciation depends upon the longivity of utility period neglect of maintenance
etc of a property.
 Instead of realizing the entire cost of the asset in year one, depreciating the asset allows
companies to spread out that cost and generate revenue from it.
 Therefore, depreciation is considered a non-cash charge since it doesn't represent an actual
cash outflow.
 Method of Depreciation Calculation A. Straight Line Method a fixed amount of original cost
is lost every year and is deducted from the original cost as long as the useful service life and
salvage value remain unchanged. Thus at the end of the utility period only the salvage value
remains.

EXPLAIN THE TERM YEARS PURCHASE AND FACTORS AFFECTING THE SAME
 Year’s purchase is defined as the capital sum required to be invested in order to receive a net
receive a net annual income as an annuity of rupee one at a fixed rate of interest.
 The multiplier of the net annual income to determine the capital value is known as the Year’s
Purchase (YP) and it is useful to obtain the capitalized value of the property.
 Repair: - It includes various types of repair such as annual repair, special repairs, immediate
repair, etc. - Amount to be sent on repairs is 10 – 15 % of gross income. 
 Taxes - Include municipal tax, wealth tax, income tax, property tax etc. - Paid by owner of the
property annually and are calculated on annual rental value of the property after deducting the
annual repairs 15 to 20% of gross income.
 Sinking Fund
 Management and collection charges - 5to 10% of gross income may be taken for this purpose
- For small building it may not necessary to considered it
 Loss of Rent - As it may not be possible to keep whole of the premises fully let at all times, in
such cases a suitable amount should be deducted from the gross rent
 Miscellaneous - These include: electrical charges for lighting, running lift, etc and are borne
by the owner - 2 to 5% of gross rent is taken for these charges

WHAT IS SOLATIUM
 It is an amount or consideration that is given over and above the compensation for land.
Solatium basically compensates for a person’s emotional suffering from loss of asset, death
due to disaster or natural calamity.
 In terms of real estate, the loss of asset happens when the government acquires a private
property or land to develop an infrastructure or residential project. In most countries,
ownership of land is also seen as a matter of family history and pride. It is considered that the
market price given to the land owner when his land is acquired may not be appropriate. Thus,
an additional amount is given as solatium to compensate the emotional loss of the asset.
 Solatium is a percentage of the market value of the property. This rate is fixed by the
government.
 Globally, solatium is usually higher for residential dwellings and land in use.
 Absence of any standards in assigning solatium leads to confusion. In several parts of the
world, the rate of solatium is considered low and inappropriate. In fact, solatium given in
India is one of the highest in the world.
 If you are a land owner and your land is being acquired by a government agency, a solatium is
due to you. Check the market value of your land and the exact regulation on solatium in your
state before settling for a deal.
MARKET VALUE
 Market value is defined as "the estimated amount for which a property should exchange on
the date of valuation between a willing buyer and a willing seller in an arm’s-
length transaction after proper marketing wherein the parties had each acted knowledgeably,
prudently, and without compulsion".[1]
 Market value is a concept distinct from market price, which is "the price at which one can
transact", while market value is "the true underlying value" according to theoretical standards.
The concept is most commonly invoked in inefficient markets or disequilibrium situations
where prevailing market prices are not reflective of true underlying market value. For market
price to equal market value, the market must be informationally efficient and rational
expectations must prevail.
 Market value is also distinct from fair value in that fair value depends on the parties involved,
while market value does not. For example, IVS currently notes fair value "requires the
assessment of the price that is fair between two specific parties taking into account the
respective advantages or disadvantages that each will gain from the transaction. Although
market value may meet these criteria, this is not necessarily always the case.
EXPLAIN THE TERM LEASE, LESSOR & LESSE. ALSO COMPARE THE LIABILITIES
OF LESSEE & LESSOR
Lease- A lease is a contract outlining the terms under which one party agrees to rent property owned
by another party. It guarantees the lessee, also known as the tenant, use of an asset and guarantees
the lessor, the property owner or landlord, regular payments for a specified period in exchange. Both
the lessee and the lessor face consequences if they fail to uphold the terms of the contract
Lessee- A lessee is a person who rents land or property from a lessor. The lessee is also known as the
"tenant" and must uphold specific obligations as defined in the lease agreement and by law. The lease
is a legally binding document and if the lessee violates its terms he or she could be evicted.
Lessor- A lessor, in its simplest expression, is someone who grants a lease. As such, a lessor is the
owner of an asset that is leased under an agreement to a lessee. The lessee makes a one-time or
periodic payments to the lessor in return for the use of the asset.
Liabilities of Lessee
Duty to disclose material facts- The lessee is bound to inform the lessor of any material fact which the
lessee is aware of and the lessor is not. In case the lessee does not disclose such fact and the lessor
suffers any loss then the lessee is bound to compensate the lessor.

1. Duty to pay rent- The lessee is bound to pay the rent or the premium to the lessor or his
agent in the proper time and proper place as decided by the lease deed. In case the lessee
fails to pay his/her rent then, in that case, the lessor can eject the lessee on the ground of
non-payment of rent or file a suit for arrears of rent.
2. Duty to maintain the property- The lessee is bound to maintain the property in a good
condition as it was when he was given the possession of the property. The lessor or his agent
are allowed to inspect the property at the reasonable ground. Only the changes caused by
irresistible forces can act as an exception for this liability.
 3. Duty to give notice- If the lessee becomes aware that any person has tried or is trying to
damage the rights of the lessor or the title of the lessor is endangered then, in that case, the
lessee must give notice to the lessor.
4. Duty to use the property in a reasonable manner- The lessee must use the property in a
manner as if it was his/her own property.
5. Duty not to erect any permanent structure- A lessee cannot erect any permanent structures
except in the case of agriculture without the consent of the lessor.
6. Duty to restore possession- After the determination of the lease, the lessee must restore the
possession of the property to the lessor. If the lessee does not vacate the premises even after
the expiry of the notice, the lessee is then bound to pay the damages.

Liabilities of Lessor

1. Duty of disclosure- The lessor is bound to disclose any form of a material defect in the
property. There are two kinds of defects:

 Latent defect- Latent defect cannot be discovered rationally or through inspection by the
lessor.
 Apparent defect- Apparent defect can be easily discovered through some inspection.

So basically, a lessor shall disclose any apparent defect to the lessee and it is vital to disclose such
defects as they interfere with the enjoyment of the property by the lessee.

2. To give possession- The lessor must give possession of the property to the lessee on lessee’s
request. However, this liability only arises when there is a request on behalf of the lessee.
3. Covenant for quiet enjoyment- The lessee has all the rights to enjoy the property. It is the
duty of the lessor to not cause any form of interruptions during the tenancy period. The
Madhya Pradesh HC stated that actions such as physical interference or direct interference
in the premises lead to a breach of enjoyment and interruptions.