News & Views on Indian Real Estate

Wednesday, March 19, 2008

Goa government bans sale of land to foreigners

Those foreign nationals who are eyeing the booming property market in Goa should better do a reality check. Against the backdrop of cases of foreign land mafia and drug cartels buying real estate in Goa, the state government on, March 14th 2008, banned foreigners from purchasing properties.

The government would make a serious attempt to incorporate the changes in Section 22 of the The Registration Act, 1908 during the budget session beginning March 24. Post-amendment, sub-registrars will be vested with the authority to scrutinize the credentials of the buyer and also the source of his/her money. All documents submitted by a foreigner will also be vetted by the Goa police and the home department. If found questionable, the sub-registrar concerned will have the powers to revoke such a sale deed. Earlier, there were no proper powers (given) to the registration authorities in Goa to checks whether the Reserve Bank of India had cleared a deal. Four other states, including West Bengal and Jharkhand, have already amended the Act.

With the state government unearthing 400-odd cases of sale of agricultural property to foreigners, the sale of land to the foreigners had become a contentious issue in Goa. The Goa government had constituted a committee a few months back, which studied all the proposals threadbare and referred 298 cases to the Union Enforcement Directorate for further action.

A sub-registrar can also deny the sale of commercial land to foreigners, if their ‘business plan’ is not found to be satisfactory. With this, the government hopes to curb drug trafficking mainly patronised by many foreigners here, who operate out of their ‘holiday homes’ and ‘shacks’ along the beaches across the state.

At present, sale of property to foreign nationals is permitted under the Foreign exchange Act (Fema) after a foreign national has spent more than 182 days in India in the preceding financial year. Land can be purchased for commercial purposes like setting up an industry or running a hotel. “Even if the foreigners enter into the partnership with an Indian and wants to buy property, RBI clearance is mandatory”.