Checklist before buying a property
One of the most difficult, emotional and major decision we make in life when we buy a property. Hundred of questions cross our mind especially when we invest a major part of our life saving into property that today cost from many lakhs to many many crores. Be sure you do not go wrong while buying a property and that the property has a clear and marketable title and is free of any encumbrances.
The following is a checklist that you must look at before buying a property:
1) Legal right: Making sure that the seller has the legal right to the property. One must look at the Title deed of the property in original. Make sure that the property is in the name of the seller and he has all the rights to the same, and the same has not been pledged to any other person or institution in order to take a loan. Kindly note that in a recent judgment, the Supreme Court of India has ruled that property bought through the power of attorney no longer has the legal sanctity.
Check whether the property is leasehold or freehold. In case of a leasehold property, the lease can be transferred only with the permission of the lessor.
If the seller has taken any loan for buying the said property, make sure that the seller pays back all the pending loan amount. Financial institutions generally issue a release certificate which legally clears the right to sell. In order to play safe, you must obtain the release certificate before you sign on any paper to buy the land.
And if there are more than one owner of the property make sure that you get release certificate / NOC from each of them.
If you are buying a flat make sure that the project is approved and sanctioned by the local authorities. And whether you have to pay anything extra for the parking facilities, local services or any other service charge to the society.
2) Real Estate Rating: In case you are buying a flat from a builder do check on the past record, credibility, quality of the structure and all the legal certificates in original. You must also check if the project has been approved by the banks. Crisil has introduced Crisil Real Estate Star Ratings (Crest), which provides valuable information about projects in a standardized manner. The rating indicates the quality of the project and also gives an opinion on the project. One can also track the progress of the project through their website.
3) Physical inspection of the property: You must check whether construction of the property adheres to the local municipal laws. And that all the construction carries the clearance certificates from the local municipal office. Also check whether the size and measurement of the plot is as per the figures mentioned in the original documents.
4) Encumbrance certificate: It is essential that you must visit the sub registrar office where the deed has been registered, and obtain encumbrance certificate which states that the property is not mortgaged and there are no complaints and legal dues against the property. You might need it in case you want to avail a loan for the said property. You can obtain the record from the office for up to 30 years.
5) No dues: You must find out that no property taxes are due and that no legal notice have been pending on the matter of property taxes. The same can be found out from the local municipal office where the property falls. The seller of the property should also be able to produce all the tax receipts on demand. You must also check all the electricity bills and water bills to find out there are no dues and penalties and whether usage is under in the permissible limits and sanctioned load. In case of a flat, you must also check from the society register whether all the dues have been paid.
6) Agreement to sell: After you have decided on the price, the time frame, advance payment and the payment method, kindly enter into a legal agreement which besides above, should also state the penalty clause for both the parties in case any one backs down.
7) Registration: Now as per the time line drawn in the sale agreement you must get the property registered under your name. One can visit the registrar office and can find the Government approved document writer to prepare the deed. A sale deed, which is also known as conveyance deed, is also prepared. This is the main document through which the seller transfers his rights on the property to you. You need to carry original title deed and all the previous deeds, house tax receipts and two credible witnesses whom you can trust. You must also carry the original photo id proof and photographs of all the parties, including that of witnesses. In addition you may also attach torence plan which is prepared by a licensed surveyor on the measurements of the property.
8) Rules for NRI: NRI do not require any special permission from any local authority before buying any property. However, he cannot repatriate for more than 2 residential properties if they have been bought from an NRE account and if the funds have been sent of a rupee account then the limitation is that he has to hold the money in the account or in India for 10 years.