Documents To Be Checked Before Buying A Property

Published on 16 Feb 2018 by Tushar

The great Indian dream is buying your own property! Whether you are a family looking for the perfect abode or a seasoned investor looking to divert your funds into real estate.

Buying a property may perhaps be the largest investment in any one’s life. Therefore, one needs to be extra cautious in buying a property lest one’s precious savings go down the drain. After zeroing in on the desired property, one still has to go through a formidable maze of tedious legalities and paperwork to ensure proper registration of property in his name.

Situation 1- Buying a flat from a Builder or Promoter

  1. Approved Building Plan- It is absolutely crucial before any other step to check the approved plan of the building.

  2. Freehold or Leasehold- The second document which needs to be checked is whether the land is a freehold land and free from encumbrances.

    1. Leasehold land cannot be transferred freely whereas Freehold properties are those where the title paramount has conveyed the property in favour of the purchaser by execution of conveyance/sale deed with no restrictions on the right of the holder to further transfer the property.
    2. Every time, the property is transferred, stamp duty is payable on the registration of the sale deed.
  3. Building By-laws- Every municipality can potentially have different by-laws or definitely have small changes from one area to another. It is pertinent to read the bye-laws as applicable in the area where you want to buy the property as well as to ensure that the builder is constructing without any violation of such bye-laws etc. The best property lawyers in India can be consulted to check that all laws are adhered to for construction of property.
  4. Urban Land Ceiling, if applicable
    1. The Central Government had enacted UrbanLand (Ceiling and Regulation) Act, (ULCRA) with the objective of preventing the holding of urban land by a select few. The excess land made available after applying ceilings was to be utilised for the housing sector. 
    2. This check is relevant to the following states where ULCRA is still in existence post its repeal via State Legislations-  Andhra Pradesh, Assam, Bihar and West Bengal are continuing with the provisions of ULCRA
  5. NOC from different authorities- It needs to be checked with the builder whether NOC from water, electricity and lift authorities has been obtained.
  6. Builder-Buyer agreement /construction agreement with the builder- It is absolutely crucial to check whether
    1. the size of flat (carpet area & super area),
    2. floor plan,
    3. car parking space,
    4. details of various amenities,
    5. date of completion and
    6. delivering possession of the flat and other standard specifications have been incorporated in the said agreement.
    7. The payment schedule must also be clearly mentioned and the buyer should not agree to informally deviate from this fixed payments schedule.
    8. Payment should be in accordance with the construction being completed stage wise and not time bound. This is critical in keeping the control and a certain leverage over the Promoters.
  7. Do not sign without a clearly stated penalty clause in the final agreement- The final agreement to sell the property must have a clearly worded penalty clause which provides a detailed remedy to the buyer in cases of default by the builder. The default can be regarding the delay in possession of flat by the builder or non-compliance of the stipulated terms of the agreement. It is suggested to hire a property advocate in India to get the final agreement drafted or vetted for a clear understanding.

Situation 2- Buying a flat in a Registered Housing Cooperative Society

  1. Most crucially first check the Letter of Registration of Society issued by the Registrar of Cooperative Societies.
  2. Copy of the bye-laws of the Society.
  3. Share Certificate issued by the Society in favour of the seller.
  4. It is also important to understand the previous chain of conveyance/sale deeds and also Sub-Registrar’s receipts in this respect to ensure whether it is a good title or merely a marketable title in the hands of the seller.
  5. Obtain the No Objection Certificate from the Society for transfer and sale of flat.
  6. The latest payment receipts with respect to electricity, water, maintenance charges and property tax.
  7. Transfer forms as prescribed by the Society for transfer of ownership must be filled and submitted.
  8. Execution of Deed of Assignment after paying the stamp duty in the Office of Sub-Registrar of Assurances.
  9. The name of the buyer should immediately be recorded in the records of the Society.

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