Factors to Keep in Mind While Buying Property in India
Purchasing a property is like climbing a mountain in India. Cheating in terms of money, not giving fixed land or flat, demanding more money after the agreement, etc. are not uncommon in property dealing. It is the desire of an individual to get genuine property, which should be free from any litigation. Generally speaking, property dealing is replete with glitches all over the country. Apart from the deal between the two parties, many other players take interest, and their involvement in any form makes things complicated and enhances doubts in the mind of a customer.
Miscreants enter property deals
Sometimes, local miscreants come forward and try to take advantage by encashing the situation. Use of muscle power sometimes worsens the situation, even leading to brawls and murders. Frequent change in real estate rates, property tax rules and other kinds of reshuffling really make an individual sweat before selling or purchasing a property in India. Gaining physical possession of flat or land is another tough and challenging task, which is considered the last segment in a property deal. Therefore, buyers need to beware of the antisocial elements in any property settlement.
Real estate players keep buyers in the dark
Even big-time real estate majors are not far behind in misleading customers. A few weeks back, residents of Noida’s Gardenia Gateway housing society received a notice from the Union Bank of India to vacate their houses within 15 days. It emerged that the developer of the building, Gardenia India Ltd, had taken a loan of Rs 78.45 crore from the bank in 2015, and failed to repay the same. Shockingly, the developer had mortgaged the Gardenia Gateway building for the loan, and the bank had legal rights to acquire the housing society to recover its loan. Hence, despite paying full money to the builder, the helpless residents were clueless as to what steps they should take next to avoid the roof over their head getting snatched away.
Genuine documents matter most
Therefore, it is very necessary for prospective buyers to know certain procedures and norms before finalising a property deal. Genuine documents matter the most. Documents which are free from glitches and clearly convey the title provide satisfaction in the mind of the investor. One should be careful and take legal advice from an advocate before investing money in a property.
Verify ownership of land
Verification of the true ownership of the flat or land is possible through the examination of the sale deed. It is the most trustworthy source to establish the genuineness of the documents. A sale deed is the document which acts as a proof of sale and transfer of property. Experts always advise to minutely examine the registered title document and its chain and check all the technical terms and clear essential doubts before leaping forward and signing on the dotted line. Demand to see the Will, general power of attorney (GPA) or special power of attorney (SPA) and check if they are registered with the proper authority. Additionally, the title to the property should also be verified from the records of the landowning agency, such as HUDA, Noida, MMRDA, DDA, GDA, L&DO, etc. Many law firms provide title search services. Keep one thing in mind – don’t rely upon unregistered / pre-signed documents, and steer clear of incomplete and not up-to-date titles.
Also check the status of land regarding any acquisition proceedings on part of the government for highways, industrial zone, airport, etc.
Online search is available to public to enable them to search and inspect the records maintained by the Registry of CERSAI on payment of fees prescribed under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (Central Registry) Rules, 2011. The search can be made on the basis of both asset details as well as on the basis of debtor’s details. CERSAI is a risk mitigation tool for banks / housing finance companies, and public at large to prevent multiple financing against the same property.
Builder Buyer Agreement
When purchasing a builder flat, the interested buyer should not forget to read the Builder Buyer Agreement. The same should also be run past a legal expert to catch any terms unfair to the buyer. If construction is in progress, then customers should visit the site to know the real status of the work. Also, every builder is required to keep ready and show documents pertaining to the purchase of land to the prospective buyers at their site office. Go through the same and insist on a copy, so that you can be sure that the flat stands on land actually purchased by the builder for this purpose.
In case of a builder flat, approval from the genuine authority is important for the construction of a building or a housing society. If anyone is hunting for a residential flat, then verify the license, approved layout and the site plan. Check for other clearances from the concerned civic agencies such as the MCD. Such clearances from concerned civic authorities are absolutely necessary, otherwise the building will be prone to demolition later, as has happened with some builders in the past.
In case of a built-up property, the property seller also has to furnish property tax payment receipts, with the covered area clearly mentioned. If any one of these things are missing, then construction could be illegal.
CC & OC essential for bank loans
A Completion Certificate (CC) is issued by the municipal authority after the completion of the project. Once the project is completed, then local government agencies inspect the building from all angles for people’s safety. When the authorities become fully satisfied, then an Occupancy Certificate (OC) is issued. Both these certificates are mandatory for getting bank loans or applying for water, sanitation and electricity connection.
Property buyers must also obtain the latest copy of electricity, water and utility payments from the seller beforehand, to check that the property is free from all dues.
Payment through cheques/demand drafts
Purchasers have to keep in mind to buy property through only a registered sale deed with preference of thumb/ finger impressions along with signatures. Payments should be made through only cheques/DDs or online payment (NEFT/ RTGS ETC.) in owner’s name for genuine proof of purchase.
Circle rate vs market rate
Another buyer’s dilemma, especially in big metros, is of circle rate. It is the minimum value of land/property in a particular area, which is fixed by the government. Market value generally remains equal to or above the circle rate. But in some places, market rate sometimes dips below the circle rate. So, the finance minister in 2018 budget made it clear that if the difference between the ‘actual sale price of a property’ and its circle rate is not more than 5%, then sellers and buyers have to pay no additional tax.
Non-Resident Indians (NRI) have to pass through a tough time for the sale of their property. When an NRI sells his/her property after three years from the purchase, then a TDS @20% must be deducted by the buyer and deposited with the government. If they sell the property before two years from the date of purchase, then a TDS @30% needs to be deducted.
Before investing hard earned money in a property, customers should first satisfy themselves that they have examined all legal angles and only then they should proceed. Also, they should take physical possession of the property at the earliest after making the final payment and executing the sale deed.