Property purchase, anywhere in the world is a high involvement decision that needs a lot of caution and due diligence from the buyer’s end. Be it a residential or a commercial property, with several possible hurdles along the way such as inexperienced brokers, title defects, complicated tenancy laws, the condition of the property and financing, to name just a few makes the process all the more tedious and drawn out for a layman.
Before finalizing a deal, be sure about the property, check all relevant documents in order to avoid legal hassles, if any.
Don’t hesitate from making inquiries as this involves investment of your hard earned money. Here’s a checklist for property buyers in India to zero in on a more informed purchase decision.
1) Know your property:- Check whether the property is freehold, leasehold or a government setup.
Freehold property means that you own the land where the property is built while leasehold property is where you have the right to live in for a stipulated period of time. In most cases freehold is a better option.
2) When buying a plot:- Buying a plot of land has become a very tricky affair! Be smart- there have been instances where a seller tricks the buyer by showing wrong figures in the documents.
Be thorough and wise – get it measured by a surveyor before registering the property in your name.
3) The Title Deed:- The Title Card is an investigation into the title of the land. The deed will tell you in whose name is the property. It also states whether the property is free of debt or any other liability and has a marketable title. Check if the title deed is in the name of the seller or not. Try to get hold of the original documents, in most cases, people show copies of the originals. Besides this will help you decide the sort of usage allowed from the property i.e. is it commercial, residential, mixed etc.
Check the legal status of the land on which the property is situated. It is the primary issue that needs to be addressed before finalizing a deal. Try not to make any payment unless you have checked the legal position of the property.
4) For property under construction:- For projects under construction, check for the allotment letter along with the development agreement. The allotment letter show details regarding the agreed upon price, payment, possession date, construction schedule and builder’s liability in case the project gets delayed or other relevant issues after possession. The allotment letter is issued to the buyer upon payment of the 15% of the property value to the developer.
The development agreement is signed between the builder and the landowner and gives out details regarding the terms and conditions on which the landowner has permitted development of his property.
5) Check for an encumbrance certificate:- An encumbrance certificate ensures that the property is not mortgaged and is free from all legal and monetary liabilities. It is imperative to fetch this document before making any purchase decision. In case, the property is mortgaged or there are any pending dues, the seller is supposed to pay off all the liabilities. The encumbrance certificate can be acquired from the sub registrar’s office.
6) Pledged land:- People often take loans from banks by pledging their property. Before buying a plot, check if the owner has paid back the entire amount and has no dues. Also, check with the seller whether they have a release issued from the bank or not.
7) Tax receipt and bills:- Don’t close the deal unless you have checked all the property tax bills and receipts, being paid off by the seller. At times there are electricity bills/property tax dues etc, which are pending and are left for the new buyer to pay. Also keep a check for any notices or pending applications relating to the property in question.
Source: IIFL Property Solution
Checklist For Property Buyers In India
