Buying a property

Before buying any property or land in India, following legal documents or legalities should be checked.

1.Title deed / certificate of title of the land

When you are planning to buy any property, first and foremost thing is to check down the title deed of that property. The property title deed is the legal document which proves the ownership of property. The title deed presents certain rights and freedom to the person who holds it and such deeds are required where person wants to transfer his ownership.It includes description of property along with the person’s name that holds it and multiple persons can be listed as owner as well. An official seal is used to point out that the deed is recorded officially and normally it is signed by an owner(s) and a witness who may be a regional officer or a clerk.

So as a buyer you have to ask for original deed not a Xerox because sometimes the seller might have taken a loan and given in the original deed.

You should make sure through the title deed that the property is in the name of solely a seller and no one else is and he has all rights to sell it. The best practice is to get reviewed the property deed by an expert lawyer just to make sure that there are no loop holes.

As a good buyer you may also ask for a previous deed and get reviewed by a lawyer.

2. Encumbrance certificate

The encumbrance means any liabilities or charges created on any property in terms of any security of any debit by property owner which is not discharged as on date. It might be held as security against bank loan against property. Encumbrance certificate is necessary to check the title clearance of property when buying any property. This legal document is issued by registering authority. Government authorities and financial institutes like bank is requested encumbrance certificate for the period of 13 years but you can ask for up to 30 years as well to be checked. Then after if you still have any doubts, you can get possession certificate of ownership for a particular land from village office.

3. Torrence Plan

Torence plan is detailed plan of the property which is done by a licensed surveyor. All the measurements details in it are accurate in terms of length, width, borders etc. this plan is necessary for some specific areas only.

4. Pledged land

Many property owners take bank loan by pledging their property. So check they have paid the entire amount due when you are going to buy that property. If they have paid entire amount due then bank has issued them a “Release certificate”. Ask for the same as this release certificate is necessary whenever you want to take any loan in future.

5. Property Tax receipts

Property taxes are first charge on property that is paid to government or municipality. So you have to make enquiry in government and municipal offices to ensure whether all tax has been paid as on date. You can ask for latest tax receipt from owner. In this way you can check whether any notices or requisitions are issued on property or any tax due on the property. While you are checking property tax receipt, there are two columns in it. One is for owner’s name so verify it and other is for tax payer. In some cases, the tax receipt is not with owner. In such cases, you should contact village office with the survey number of land and confirm the original owner.

6. Measurement of Property 

It is prudential to measure the land before registering any property. In this way you can ensure the measurements and borders of land are perfect and accurate. You should get done it with authorized surveyor as you will avoid many problems coming in future. For the sake of your knowledge you should take surveys sketch from survey department and do ensure the accuracy.

7. Owner or Owners

In some cases, it’s possible that there will be more than one owner of property. In that case get No Objection Certificate or Release certificate from other owners.

8. NRI owner

An NRI can also sell his property in India. For this he gives Power of Attorney to third person whom he give rights for selling the property on behalf of him. The most important thing is to ensure the Power of Attorney is witnessed and is duly signed by an officer of the Indian Embassy. The Power of Attorney signed by a notary public has no legal support I such a case.

9. Deed/ Sale Agreement

After sorting out all the things whether financial or any other between buyer and seller, it’s now turn for advance payment and agreement between them. The agreement is done on 5o Rs stamp paper. It includes the final actual amount, advance payment, time limit to pay due amount and how to pay in installments, time indication when the actual sale should take place. It also includes what to do to cover loss if one of buyer or seller makes default. This ensures that the seller does not defer cost in any case after finalization and he doesn’t sell to another party meanwhile. This agreement can be done by an expert lawyer and signed by both the parties with two witnesses. After doing this agreement, if one from both parties makes any default then another one should take legal action against him.

10. Property Registration

All property sales will be held illegal unless the transaction is by means of a sale deed duly stamped and registered. After collecting and checking all the documents, you have to register land/ property at the Sub-Registrar or the SDM (Sub District Magistrates) of your area.

http://www.lawyersclubindia.com/articles/Documents-to-be-verified-before-buying-any-property-6065.asp#.U4lqMHKSzko

Due Diligence - Purchasing a property

During the process of acquisition of property, taking a legal opinion is an important constituent of the due diligence exercise. Legal opinion is the opinion given by a legal expert on the property transaction. The knowledge of individuals on the nitty gritties involved in the property acquisition is limited. Property acquisition is a complicated process. There are number of laws, rules and regulations covering property transactions. An ideal and reliable source of legal opinion is an advocate who specializes in property matters.

Getting the legal opinion is all the more important in case you are planning to purchase an old property, that is a property from an existing owner rather than a property developer or builder. There may be many issues. The property may be held jointly, or the seller may not have proper title or authority to sell the property. The property may have already been sold by the seller or it may be encumbered, that is a charge already created on the property.

It is difficult for an individual purchaser to check out on all these areas. As such, it is better to take the services of an expert in the matter. Although a purchaser can do an initial review of the documents checked by legal expert.

Scanning through property documents is a complex process. Land records are generally in a local language. The purchaser needs to go through a number of documents to trace the ownership of the property. The legal experts are better placed to review and give their opinion on the status of the property.They can be asked to prepare a search report.

The search report traces the history of the property, that is who the original owners of the property were and how it has been transferred over time before reaching the present seller. It also traces out any charges or encumbrances created on the property and the present status, That is whether the charges have been paid and the property released or if there are some charges pending. This search on the title of the property is for a period of the past 30 years.

A seller should annex a copy of this report to the ‘agreement for sale’ with the intended purchaser of the property. It would state whether or not there is any existing mortgage, litigation, condition or claim, which is likely to affect the title of the buyer adversely.

A legal opinion covers details regarding the status of the property, such as who the legal owner of the property is, what has been the chain of holding and transfer of property, whether the property is free from encumbrances, whether the property has been already offered as a security for loan, is there any dispute on the ownership of the property, whether the seller has complied with all the requirements for getting the ownership of the property, whether the seller is competent to transfer the property etc.

In case you want to avail a housing loan, the title of the property should be clear and marketable, that is the seller should be the genuine and actual owner of the property. Also, the property should not be under any dispute or litigation.

A search report and title certificate can be obtained from an advocate who will conduct a survey of the title of the property by visiting the office of registrar. A legal opinion reduces the chances of getting into disputes at later stage. It acts as a safety device for purchasers.

In case you are getting the property purchase financed by bank, generally the bank will obtain a legal opinion before sanctioning the loan. The bank will have its own legal experts who specialize in this field. The cost is nominal and is built up in the processing and administration charges applicable for sanctioning and disbursing the loan.

How to get property with a clear and marketable title

During the process of acquisition of property, taking a legal opinion is an important constituent of the due diligence exercise. Legal opinion is the opinion given by a legal expert on the property transaction. The knowledge of individuals on the nitty gritties involved in the property acquisition is limited. Property acquisition is a complicated process. There are number of laws, rules and regulations covering property transactions. An ideal and reliable source of legal opinion is an advocate who specializes in property matters.

Getting the legal opinion is all the more important in case you are planning to purchase an old property, that is a property from an existing owner rather than a property developer or builder. There may be many issues. The property may be held jointly, or the seller may not have proper title or authority to sell the property. The property may have already been sold by the seller or it may be encumbered, that is a charge already created on the property.

It is difficult for an individual purchaser to check out on all these areas. As such, it is better to take the services of an expert in the matter. Although a purchaser can do an initial review of the documents checked by legal expert.

Scanning through property documents is a complex process. Land records are generally in a local language. The purchaser needs to go through a number of documents to trace the ownership of the property. The legal experts are better placed to review and give their opinion on the status of the property.They can be asked to prepare a search report.

The search report traces the history of the property, that is who the original owners of the property were and how it has been transferred over time before reaching the present seller. It also traces out any charges or encumbrances created on the property and the present status, That is whether the charges have been paid and the property released or if there are some charges pending. This search on the title of the property is for a period of the past 30 years.

A seller should annex a copy of this report to the ‘agreement for sale’ with the intended purchaser of the property. It would state whether or not there is any existing mortgage, litigation, condition or claim, which is likely to affect the title of the buyer adversely.

A legal opinion covers details regarding the status of the property, such as who the legal owner of the property is, what has been the chain of holding and transfer of property, whether the property is free from encumbrances, whether the property has been already offered as a security for loan, is there any dispute on the ownership of the property, whether the seller has complied with all the requirements for getting the ownership of the property, whether the seller is competent to transfer the property etc.

In case you want to avail a housing loan, the title of the property should be clear and marketable, that is the seller should be the genuine and actual owner of the property. Also, the property should not be under any dispute or litigation.

A search report and title certificate can be obtained from an advocate who will conduct a survey of the title of the property by visiting the office of registrar. A legal opinion reduces the chances of getting into disputes at later stage. It acts as a safety device for purchasers.

In case you are getting the property purchase financed by bank, generally the bank will obtain a legal opinion before sanctioning the loan. The bank will have its own legal experts who specialize in this field. The cost is nominal and is built up in the processing and administration charges applicable for sanctioning and disbursing the loan.

Source:,http://www.indianrealestateforum.com/buying/t-how-to-get-property-with-a-clear-and-marketable-title-752.html

The Real Estate (Regulation and Development) Bill-2013- A Giant Step in Real Estate Sector

The real estate sector in India has been largely disorganised and for a long time a need has been felt to regulate and organise the sector. The last few years have seen tremendous growth in the sector and prices of properties have gone up accordingly. There has been a spurt in foreign investment as well. To address the emerging need, Government has been trying for several years to introduce a Real Estate Bill. Hence, A Bill providing for setting up a regulator for the real estate sector and having provisions like a jail term of up to three years for developers who make offences like putting up misleading advertisements about projects repeatedly was presented in the Rajya Sabha in the current session of the Parliament.

 

The Real Estate (Regulation and Development) Bill, approved by the cabinet, seeks to provide a uniform regulatory environment to the sector. It also intends to make it mandatory for developers to launch projects only after acquiring all statutory clearances from relevant authorities.

The Bill makes it mandatory for builders to clarify the carpet area of the flat. This would be made uniform for the entire country. This rule would make the concept of super area - which is often used to mislead owners - virtually non-existent. The Bill has provisions under which all relevant clearances for real estate projects would have to be submitted to the regulator and also displayed on a website before starting the construction, sources said. The proposed legislation has tough provisions to deter builders from putting out misleading advertisements related to the projects carrying photographs of the actual site. Failure to do so for the first time would attract penalty which may be up to 10 per cent of the project cost and a repeat offence could land the developer in jail.

 

The Ministry of Housing and Urban Poverty Alleviation is working on bringing all projects under a single-window clearance. While the Airports Authority of India and municipal bodies have come on board, there are some objections from the Environment Ministry which are being looked into.

 

As per government sources, nearly 22 states had given their approval to the Bill while five states wanted certain amendments. These changes have been incorporated in the Bill presented in the Rajya Sabha. Chhattisgarh is the sole state to still oppose the Bill.

 

While the Regulator in the states will be appointed by the state governments, in Delhi the Urban Development Ministry will appoint the regulator. DDA is likely to be made the regulator in Delhi, sources said. The Regulator will also be the appellate authority in cases of dispute. This will save the owners the hassle of running around to different authorities for redressal.

 

The latest draft of the Real Estate (Regulation and Development) Bill, 2013 (the Bill) was approved by the Union Cabinet on June 4, 2013. (Real Estate Bills have been formulated by Maharashtra and Haryana State Governments. When enacted, the Central Act would prevail over any State legislation and any provisions repugnant to the Central Act would be void.) The Bill proposes to establish a regulatory oversight mechanism to enforce disclosure, fair practice and accountability norms in housing transactions and to provide dedicated adjudication machinery for speedy dispute resolution in the real estate housing sector.

 

Salient features of the Bill and the problems it seeks to resolve are as follows:

 

Residential projects – The Bill aims to promote transparency in the real estate sector and to establish mandatory governance standards pertaining to all private residential projects of more than 4,000 square meters. There is no prescribed limit on the number of dwelling units. The Bill only seeks to cover large residential projects; commercial projects are not covered.

 

Regulators – A two-tier dispute resolution mechanism is proposed comprising a Real Estate Regulatory Authority (the Authority) and adjudicating officers at state-level and a central Real Estate Appellate Tribunal to adjudicate upon matters relating to residential projects covered under the Act. Currently real estate transactions are largely governed by the agreements between the parties, which are considered generic contracts relating to immoveable properties with remedies including specific relief (if applicable) and damages for breach available under civil and criminal law. Pursuant to enactment of the proposed legislation, civil courts shall not have jurisdiction in respect of any matter covered under the Act.

 

Advisory council – A Central Advisory Council is proposed to advise the Central Government on implementation of the Act, with a mandate to make recommendations on major questions of policy, to protect consumer interests and to foster growth and development of the real estate sector. The proposed Council will possibly take over the role of The National Real Estate Development Council, which was set up in 1998 by the Housing Ministry as an autonomous self-regulatory body to assure transparency and ethics in the real estate business, and seeks to formulate real estate policies through advisory and consultative processes with both Industry and Government.

 

Mandatory registration – The Bill proposes registration of developers, their projects and their real estate agents with the Authority to accredit and monitor projects.

 

Project launch after approvals – The Bill contemplates launch of new projects only after all approvals are in place. Accordingly, development, conversion or commencement of construction of immoveable property would be permissible only after obtaining requisite approvals and registration with the Authority.

 

Mandatory disclosures – Developers would be required to upload information and documents on the Authority’s website relating to land title, encumbrances over land, number and carpet area of units, layout plan, proposed facilities, proposed completion date, etc. These provisions have been introduced to ensure that customers are able to procure complete information and there is no ambiguity with respect to the status of approvals and stage of construction of the project. This will also substantially reduce disputes between the parties that largely arise due to lack of transparency. Presently consumers are unable to procure complete information or hold developers to account in the absence of effective regulation.

 

Agreements – Developers would also be required to provide to the Authority proposed advertisements relating to the project, formats of the agreements to be executed with buyers and lists of bookings in the project on the basis of the agreements with proposed buyers. This will further protect the interest of the buyer and avoid hardship due to one-sided agreements.

 

Carpet area – The Bill provides for developers to clearly specify the carpet area for each unit. As per current practices, developers usually mention “super built-up area” of a unit, which can be very misleading, as the super built-up area may be 25-40 per cent more than the carpet area.

 

No pre-launch bookings – The practice adopted by developers to commence sale of units in pre-launch booking before obtaining mandatory approvals for the project and at times even before acquisition of the land is to be curbed. Issuance of advertisements or booking of units in a project would be permissible only pursuant to registration of the project.

 

Use of funds – The Bill proposes acceptance of an advance/deposit for the proposed sale of a unit in a project by developers only pursuant to execution of a written agreement with the buyers. Further, 70 per cent or a lower percentage (as prescribed by the Authority) of the funds received are to be deposited in a separate bank account to be used only for the relevant project. This provision was introduced to the Bill to ensure that funds collected for a particular project are not diverted for other purposes.

Adherence to approved plans – Developers under the proposed Bill must adhere to approved plans and project specifications and are liable to rectify, at their own cost, any major structural defect or deficiency in the unit or services incidental thereto for one year from the date of handing over possession. If developers fail to rectify such defects within a reasonable time, they shall be liable to pay appropriate damages or compensation to the buyers as may be determined by the Authority.

 

Transparency – Developers would be required to make available information and documents to proposed buyers to ensure transparency in development of the proposed project such as approvals, site plans, structural designs, specifications, construction schedule, etc.

 

Delayed possession – The Bill provides that if the developer is unable to complete construction to give possession of the flat to the buyer, the developer would be liable to refund the deposit received along with interest at the rate prescribed by the Authority. Correspondingly, the buyer must make payments in a timely manner and would be liable to pay prescribed interest in case of delayed payment. These provisions in the Bill have been introduced to ensure timely delivery of possession/completion of the project. The Bill also strives to strike a balance by ensuring that the buyer makes timely payment to the developer.

 

Revocation of registration – In case of wilful default of the provisions of the proposed Act, or unfair practice by a developer, including false representation of the quality of services or status of approvals, the Authority may revoke registration of the developer.

 

Punishment – The provisions for punishment in case of contravention and/or non-compliance with the provisions of the proposed Act currently include imprisonment for a term of up to three years, or a penalty of up to 10 per cent of the estimated cost of the real estate project, or both.

 

Few practical problems in implementation of the Bill include the setting up of regulatory authorities at national and state levels, which is likely to be a long-term process. Developers may structure their projects so that each phase is less than 4,000 square metres to escape the reach of the proposed Bill; as each phase developed separately would be considered as a stand-alone project. Furthermore, the provision in the Bill for opening a separate bank account for funds collected for a project may not serve its purpose as State Governments may allow developers to maintain even less than 70 per cent of the funds collected for the project, thereby allowing for utilisation of funds for some other purpose.

 

Even otherwise the Bill has only been approved by the Union Cabinet, and has to be approved by the Parliamentary Standing Committee, passed by both houses of the Indian parliament, and then submitted for approval of the president pursuant to which it can be enacted as legislation. There are likely to be many more discussions and changes to the Bill following the recommendations of the Standing Committee and debate in the parliament.

 

The impact of the proposed regulatory Bill can be only assessed over time as to whether it is able to effectively address the issues facing the housing sector including standardization of sale agreements, efficacy in resolution of complaints and encouragement of private equity through effective regulations. This would also depend on the extent to which the major players are able to find loopholes, the Government’s resolve to plug them and its commitment to regulate growth of the real estate housing sector.

 

Anurag Tiwari, Advocate

Guidelines before purchasing house from Builder/ Developer

Important points to consider while entering into an agreement with the Developer.

1. ACTUAL PRICE OF THE HOUSE

The agreement you enter into with the builder details the various costs that you will need to bear for buying the house. This would include the cost for utilities like electricity and water, parking space, various taxes and in some cases even the registration charges.

However, the builder may then levy some extra charges for any of these.

Measures to take

• Check the agreement very carefully for all the charges applicable.
• If possible, get the agreement checked by a lawyer for any missing or hidden charges and get the anomalies (if any) rectified by the builder.
• If the extra charges are for alterations made to the original plan, ask the builder for the sanction letter provided by government authorities for such alterations.

2. ACTUAL SIZE OF THE HOUSE

The agreement would clearly mention the size of the house you are purchasing. However, there is a clause which states '. . . the plans, designs, and specifications are tentative and the developer reserves the right to make variations and modifications. . .'

Therefore, you may agree for a certain size, but the builder can give a different size.

Measures to take

• Before freezing on your choice of a builder, do some research about the builder's past projects.
• If possible, talk with other buyers who already have got possession about problems faced by them
• Try and include a clause in the agreement stating the minimum and maximum size beyond which the builder cannot increase or decrease.

3. CARPET AREA

The area of an apartment or building, not inclusive of the area of the walls is known as carpet area. This is the area in which literally a 'carpet' can be laid.

When the area of the walls including the balcony is calculated along with the carpet area, it is known as built-up area. The built-up area along with the area under common spaces like lobby, lifts, stairs, garden and swimming pool is called super built-up area.

The carpet area can be 15-30 per cent less than the super built-up area. However, you will not come to know the exact size until the flat's construction has been completed.

Measures to take

• Purchase the property based on the carpet area of the flat.
• Ensure that this area is mentioned in the agreement.
• Try to get a clause included which will ensure that the contract can be terminated if the builder provides a house with the carpet area less than what is mentioned in the contract.

4. DATE OF POSSESSION

The agreement normally mentions a tentative date of possession. However, there have been instances where builders have delayed possession by more than a year.

Measure to take

• Check the progress of the construction personally.
• If the progress is slow and would not meet the date of possession in a timely manner, build pressure on the builder.
• Forming a society with other buyers sometimes helps a lot in getting things to speed up at the builders end.

5. COMPLETION CERTIFICATE

On handing over the house to you, the builder needs to also give a Completion certificate. a completion certificate is issued by municipal authorities which establishes that the building complies with the approved plan.

You would need this certificate for registration of your house and other government formalities.

Measures to take

• If the agreement does not mention the certificate, ensure that the agreement has a clause which states that the builder will provide the certificate while handling over the house to you.
• If the builder delays a lot, forming a society with other buyers sometimes helps a lot.

Other than these five points there more points such as the quality of the construction, management of the society, etc. 

For this you can try to add clauses to the agreement or form a society to get the builder to meet your demands. Since there is no industry regulator you can turn to for the redressal of issues, it is important that you are aware of what you want and what you are getting.