Table of Content

Investing in agricultural land is increasingly popular among risk-averse buyers, particularly after the COVID-19 crisis, with a focus on agricultural land near city outskirts. This preference arises from concerns about delays in under-construction properties and high costs of ready homes. However, it is essential to be well-informed about the rules governing the sale and purchase of agricultural land before making any decisions.

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Return on Investment (ROI) on Agriculture Land Investment

Return on Investment (ROI) for agricultural land can be influenced by various factors and may not follow a standardized or fixed rate. The ROI on agricultural land is typically determined by considering the following aspects:

1. Crop Yields and Prices: The primary source of income from agricultural land comes from the cultivation of crops. The ROI depends on the types of crops grown, their yields, and prevailing market prices.
2. Land Value Appreciation: The value of agricultural land may appreciate over time, contributing to the overall ROI. Factors such as location, infrastructure development, and demand for agricultural land in the area can influence appreciation.
3. Investment in Infrastructure: Investments in irrigation systems, soil improvement, and other infrastructure can enhance the productivity of the land, potentially leading to higher returns.
4. Government Policies: Government policies, subsidies, and support for agriculture can impact the ROI. Changes in policies related to water usage, subsidies, or land-use regulations can affect returns.
5. Risks and Challenges: Agricultural land investments come with risks such as weather conditions, pests, and diseases affecting crops. Understanding and mitigating these risks are crucial for calculating potential returns.
6. Operational Costs: Expenses related to farming operations, including seeds, fertilizers, labor, and maintenance, affect the overall ROI.
7. Land Use Purpose: Some lands may have restrictions on use, and the ROI can be influenced by adherence to these regulations.

It’s important to note that ROI in agriculture can vary widely and is influenced by both external factors (market conditions, government policies) and internal factors (management practices, investments). Investors in agricultural land should conduct thorough research, consider local conditions, and consult with agricultural experts to make informed decisions regarding potential returns. Additionally, local real estate professionals and agricultural extension services can provide valuable insights into the specific conditions of the region.

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Advantages of investing in agricultural land

Investing in agricultural land can provide sustained returns, particularly if the land is located in an area earmarked for upcoming government infrastructure projects. Additionally, in the event of government acquisition, compensation for rural land tends to be higher than that for urban land.

Several state governments are contemplating land pooling policies, especially in areas witnessing urban expansion. By becoming a landowner through the land pooling policy, you secure guaranteed regular returns from the land pool.

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Disadvantages of buying agricultural land

Acquiring agricultural land comes with certain disadvantages that individuals should carefully consider before making such an investment. These drawbacks include:

1. Market Volatility: The agricultural sector can be subject to market fluctuations, impacting crop prices and, consequently, the profitability of the investment.
2. Weather Dependency: Agricultural productivity is highly dependent on weather conditions. Adverse weather events, such as droughts or floods, can significantly affect crop yields and overall returns.
3. Operational Expenses: Farming involves various operational costs, including expenses for seeds, fertilizers, equipment, and labor. These costs can cut into the overall profitability of the investment.
4. Expertise Requirements: Successful farming demands expertise in agronomy and agricultural management. Lack of experience or knowledge in these areas can lead to poor decision-making and reduced returns.
5. Land-Use Limitations: Agricultural land may be subject to specific land-use restrictions, restricting certain activities or developments.
6. Long-Term Investment: Agricultural investments often require a long-term commitment. It may take several years before substantial returns are realized, and liquidity can be a challenge.
7. Government Policy Impact: Changes in government policies related to agriculture, land use, or subsidies can significantly affect the profitability of agricultural investments.
8. Environmental Impact: Agricultural practices can have environmental consequences, including soil degradation and water pollution, potentially leading to increased scrutiny or legal challenges.
9. Land Tenure Issues: In some areas, unclear land titles, disputes, or tenure uncertainties may pose legal challenges and affect the investment.
10. Limited Diversification: Investing solely in agricultural land may lack the diversification that can help mitigate risk in an investment portfolio.

Potential investors in agricultural land should conduct thorough research, seek professional advice, and carefully evaluate these disadvantages to make informed decisions that align with their financial goals and risk tolerance.

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Important points to check before buying Agricultural Land in Maharashtra

Agricultural lands are typically designated for farming or cultivation purposes. In Maharashtra, these lands are exclusively available for purchase by existing farmers, who can be from any part of India. To pre-emptively address potential issues in land transactions, thorough scrutiny of all pertinent documents is crucial. The following is a checklist of the most commonly required documents to be reviewed before acquiring land in Maharashtra.

7/12 Extract

The 7/12 Extract provides comprehensive information, including survey number, hissa number, gat number, land size, owners’ full names, cultivated crops, and any existing loans on the land. This document can be acquired from the Local Talathi office or conveniently downloaded from the website https://mahabhulekh.maharashtra.gov.in/. To download it, you’ll need to have the District name, Taluka, Village name, and Gat/Sr number or Owner’s Name ready.

6/12 Extracts

The 6/12 Extract, also known as Fer Far, Mutation Extract, Hakka Patra, or D Patrak, contains multiple mutation entries documenting various types of rights transferred or created for legal heirs or land purchasers. This document provides details on how the land has been transferred and any additional rights or conditions that have been introduced or modified in the process. It serves as a comprehensive record of the evolution of land ownership and associated rights.

3. 8-A Extract

The 8-A Extract, presented in book form, delineates information such as land revenue tax payments, types of crops, and the names of landowners. Typically, it is examined in conjunction with the 6/12 and 7/12 extracts to gain a comprehensive understanding of the land’s status, ownership history, and agricultural specifics. Reading these extracts together provides a more comprehensive overview of the land, aiding in a thorough assessment of its details and attributes.

Land Revenue Tax Receipts

Land Revenue Tax Receipts are issued by the Tahsildar or the officer at the Tehsil or Village office and serve as documentation for the payment of taxes on the revenue generated from the land. This receipt provides evidence of compliance with tax obligations related to the land and is an essential record for landowners to maintain.

Village Map & Block Plan (Gaon Nakasha)

The Village Map & Block Plan, also known as Gaon Nakasha, is essential for pinpointing the precise location of a piece of land within the village. This map serves as a reference to verify and reconcile the actual location of the land with the information provided in the documents. It ensures alignment between the physical geography of the land and its representation in official records.

Access Roads

Confirmation regarding access roads must be obtained from the Revenue office. Additionally, the presence of an approach road should be documented in Register-26 of the Panchayat office. This ensures that there is an official record of the accessibility of the land, providing clarity on the routes and roads leading to the property as recognized by the local authorities.

Soil Testing

Soil testing is crucial, especially when acquiring land for agricultural purposes, as it provides essential information on the soil’s composition and fertility. This analysis offers clarity on the types of crops suitable for cultivation. Soil testing can be conducted through both Government and private institutions, allowing prospective landowners to make informed decisions about the agricultural potential of the land they intend to purchase.

Reservations or Acquisitions

It is imperative to scrutinize whether any portion of the land has been subject to reservations or acquisitions by entities such as P.W.D, Panchayat, Irrigation, State Government, or any other authorities. This examination ensures a thorough understanding of any existing claims or encumbrances on the land, providing clarity on potential restrictions or prior allocations affecting the property.

Agricultural Land Ceiling

It is essential to verify the categories of the land under Agricultural Land Ceiling regulations. If necessary, a No-Objection Certificate must be obtained from the Collector. For non-agriculturists, seeking guidance from local advocates is advisable. Additionally, the size of the land should comply with the Land Ceiling Act of Maharashtra, ensuring adherence to the specified limits set by the regulatory framework.

Original Title Deed

The Original Title Deed should undergo thorough examination by a legal advisor to ascertain the absence of any litigations and ensure the clarity of the land title. This careful scrutiny is essential to confirm that the property is free from legal disputes and that the title is unencumbered, providing confidence in the legitimacy of the land transaction.

Public Notice

A Public Notice concerning the purchase of the land should be published in a minimum of two local newspapers. This step is crucial for checking the title of the land, and it is advisable to seek guidance from a legal advisor during this process. Publishing such notices helps ensure transparency and provides an opportunity for interested parties or claimants to come forward with any objections or concerns related to the land’s title.

Encumbrances

Prior to the sale deed, it is essential to investigate and clear any encumbrances on the land. This includes verifying and resolving issues such as bank loans, private party mortgages, government dues, or any other charges associated with the property. Clearing these encumbrances in advance ensures a smooth and unencumbered transfer of the property during the sale transaction.

Litigations

Before finalizing the sale deed for the land, a thorough examination of any ongoing litigations related to the property is crucial. This careful study helps in understanding and addressing any legal disputes or issues that may impact the property’s title or ownership. Resolving or addressing these litigations before completing the sale ensures a clear and undisputed transfer of ownership.

Demarcation, Boundaries and Survey

Demarcation, boundaries, and surveying of the land are typically conducted by authorized officials such as DILR (Director of Land Records) and Circle Inspectors. These officials are responsible for accurately marking and delineating the boundaries of the land, ensuring clarity regarding its extent and geographical limits. Engaging with these authorized surveyors helps in obtaining reliable information about the property’s dimensions and boundaries, which is crucial for various legal and transactional purposes.

Disputes relating to boundaries

Disputes related to boundaries should be resolved well in advance before initiating the sale deed process. Addressing and settling boundary disputes beforehand is essential to ensure a smooth and undisputed transfer of ownership during the sale transaction. Clearing up any uncertainties or disagreements regarding property boundaries helps prevent potential conflicts and legal complications in the future.

Claims from outsiders

Prior to completing the sale deed, it is crucial to address and settle any claims from outsiders, including boja, isaar, power of attorney, or any other legal or financial claims on the property. Resolving these claims in advance ensures that the sale process is free from encumbrances and potential legal complications, providing a clear and unambiguous transfer of ownership. This step is essential to protect the interests of both the buyer and the seller in the property transaction.

Family disputes

Resolving family disputes is a crucial step that should be undertaken well in advance of the sale deed. Any conflicts related to joint ownership, succession entries, or other family-related matters need to be addressed and settled beforehand. Clearing up these disputes ensures a smooth and undisputed transfer of property during the sale transaction, preventing potential legal complications and safeguarding the interests of both the buyer and the seller.

Cultivators Land

Cultivators’ land, listed under the Kul-holding u/s 32-G, is prohibited from being sold by the Collector or the Revenue Tribunal. Therefore, it is advised to strictly avoid purchasing any land designated as cultivators’ land. This precautionary measure helps to adhere to legal restrictions and ensures compliance with regulations governing the sale of such specific types of land.

Inami Land

Inami lands often come with various conditions and restrictions. It is advisable to exercise caution and avoid involvement with these types of lands. The complexities and conditions associated with Inami lands can make transactions more challenging and may lead to legal complications. Before considering any dealings with Inami lands, it is recommended to seek legal advice and thoroughly understand the specific conditions and implications tied to such properties.

Aadivasi Land

It is crucial to note that lands belonging to Adivasis (indigenous communities) should not be purchased under any circumstances. Such lands often have specific legal protections and restrictions to safeguard the rights of Adivasi communities. Purchasing Adivasi land without proper authorization can lead to legal complications and may infringe upon the rights of these communities. It is essential to respect and adhere to legal provisions regarding Adivasi land to ensure ethical and lawful transactions.

New owner should be farmer

The acquisition of agricultural land is restricted to agriculturists only. However, a non-agriculturist has the option to purchase agricultural land by obtaining prior consent from the District Collector.

Agreement to sell

An Agreement to Sell should be formulated and executed by your legal advisor, encompassing all the terms and conditions related to the transaction.

Deed of conveyance

The Deed of Conveyance is the final legal document that needs to be executed, and the applicable stamp duty should be paid accordingly.

Registration of the deed

The deed of conveyance must be properly registered with the registrar of the sub-registrar office, ensuring that all relevant stamp duties are duly paid to confer legal validity and effect.

New owner name on 7/12 extracts

The names of the new owners should be reflected in the 7/12 extracts within six months of the registration process.

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Process of buying an agricultural land

Acquiring agricultural land in Maharashtra involves a comprehensive process that requires careful consideration and adherence to legal procedures. Here is a general outline of the steps:

1. Conduct Research:
   • Identify the purpose of the land purchase and research suitable locations.
   • Verify zoning regulations, land-use policies, and environmental factors.
2. Engage Legal Counsel:
   • Hire a qualified legal advisor to provide guidance on the legal aspects of the transaction.
   • Ensure the advisor reviews all relevant documents and provides necessary clearances.
3. Verify Ownership and Title:
   • Confirm ownership and title through documents like the 7/12 extract and sale deed.
   • Ensure the seller has a clear and marketable title.
4. Check Land Records:
   • Examine land records, including the 6/12 extract, to understand the land’s history and identify any encumbrances.
5. Check for Liabilities:
   • Confirm the absence of litigations, disputes, or encumbrances on the land.
   • Verify if there are any outstanding dues or mortgages.
6. Obtain NOCs:
   • Secure necessary No Objection Certificates (NOCs) from local authorities, including the Collector.
   • Ensure compliance with land ceiling regulations and other legal requirements.
7. Draft and Execute Agreement to Sell:
   • Engage legal professionals to draft an Agreement to Sell outlining terms and conditions.
   • Execute the agreement between the buyer and seller.
8. Execute Deed of Conveyance:
   • Once conditions are met, execute the Deed of Conveyance.
   • Pay applicable stamp duty and registration charges.
9. Register the Deed:
   • Register the Deed of Conveyance with the local sub-registrar office.
   • Ensure payment of all necessary stamp duties for legal validity.
10. Update Land Records:
    • Within six months of registration, ensure the names of new owners are reflected in the 7/12 extract.
11. Take Possession:
    • Assume possession of the land after completing all legal formalities.
12. Comply with Post-Purchase Formalities:
    • Fulfil any additional post-purchase requirements, such as notifying local authorities of ownership changes.

Property Registration Process in Details and List of all Property Registration Offices from Pune District

Engaging legal professionals, conducting thorough due diligence, and complying with all legal requirements are essential for a seamless and legally compliant acquisition of agricultural land in Maharashtra.

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Can NRI Indian citizens buy agricultural land in India?

Non-Resident Indians (NRIs) are permitted to acquire commercial and residential properties in India, subject to specific regulations and taxes applicable to property purchases by NRIs. However, NRIs are not authorized to purchase agricultural land, farmhouses, farms, or orchards in India.

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Agricultural land use for real estate development

Prospective investors contemplating the acquisition of agricultural land in the rural outskirts of the city might discover this opportunity to be highly profitable. Currently, several state governments are initiating the conversion of farmlands for housing development and industrial utilization.

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