A smooth sail into your new home

A smooth sail into your new home

Here’s a list of six areas, which, if dealt with carefully, may help you escape problems that you may encounter while buying a house on resale. Seek the right information and ask the right questions

BY Urmila Rao for OUTLOOK MONEY

Buying a home is a cherished dream for most, but the path leading to it is typically fraught with challenges. This was famously imitated in the film Khosla Ka Ghosla (2006), which depicts the travails and eventual triumph of a soon-to-be-retired man duped by an unscrupulous property broker while he was buying a plot of land.

The trials and tribulations of buying a house is not restricted to buyers of plots or new apartments. They also affect those buying property on resale—from an existing owner. In recent years, as the purchases of new properties from builders skyrocketed, purchase of resale properties, too, went up. Rajneesh Gulati, 34, a Gurgaon-based garment exporter, had a reason to buy a bungalow spread over 6,500 sq. ft in 2005 from the secondary market. “The bungalow was well-located, had three independent floors and was suited for my family of eight members,” he says.

Himango Gupta, 33, a regional manager in a Gurgaon-based international firm now residing in Vaishali, Delhi NCR, had another reason. “Builders don’t meet deadlines and I wasn’t prepared to keep paying EMIs for an extended period,” he says.

Missing Links

Vishal Garg, a Delhi-based real estate lawyer, gives four small but important tips.

Establish the property’s autheticity. You can get original documents from the sub-registrar’s office, House Tax Department (check on the arrears and chain of owners), Land and Building Office. The last also has a RTI cell that can be used to check the property’s status and whether the land has been notified.

Take a loan. Even if you can buy from your own resources, opt for a loan as banks’ own due-diligence reinforces yours.

Don’t forget the frills. Be clear on issues like parking slots and the area allotted to you.

Take permission. Take the permission of other floor owners in case of reconstruction.

There could be a slew of reasons why people prefer the secondary market. Seek the right information and ask the right questions before taking the plunge. Watch out for six problem areas.

Examine the property title papers. You should ensure that the property has a clear title. If the unit has changed many hands, the biggest challenge is tracking down the ownership titles of the past owners. Banks wouldn’t give you a home loan if the ownership can’t be clearly established. Also, the property should be free from any encumbrances. “This is very relevant as the seller could have availed loans from other banks and institutions and deposited the original deeds to them as a security. Therefore, it needs to be verified that the seller is in possession of all the original documents,” says Madhumita Ganguly, senior general manager, HDFC Bank.

For Delhi-based working couple Pallavi and Rahul Narvekar, the process of buying a 3-bedroom house was rather smooth. “All the papers regarding the property were in place, but we still hired a lawyer to validate the documents,” say the Narvekars, who bought their house in 2003. “The purchase was through a distress sale and we got a pretty good deal,” they add.

In cases of leasehold property, prior permission of the lessor—the authority that leased out the land—may be needed for the transfer and mortgage of the property. There could be situations where the properties are being sold on power of attorney. Remember that not all states recognise this transaction, and if they do, the documentation will need to be legally compliant. It is also advisable to keep other documents such as indemnities and advertisements in newspapers so that you are prepared for contingencies such as loss of documents.

Look for the purchase agreement. This is your second step of ownership verification. Get hold of this agreement paper between the seller and the previous owner of the property. It helps in identifying whether the seller is entitled to sell the property.

Appraise the building sanction plan. You wouldn’t want a rude shock of municipal or other authorities knocking at your door and then penalising you for not conforming to structural norms and building plan approvals. “Ensure that the structure has complied with the sanctioned plan and the property has an acceptable, verifiable completion certificate and occupation certificate,” says Ganguly of HDFC. Both completion and occupation certificates are issued by municipal authorities. The completion certificate proves that the building complies with norms such as those related to its height and its distance from the road, and doesn’t flout other norms. The occupation certificate testifies to proper water, sewage and electrical connections.

PALLAVI 34, RAHUL NARVEKAR 33
Delhi-based working couple
For the Narvekars, the process of buying a 3-bedroom house from the secondary market was pretty smooth
“All the papers were in place, but we still hired a lawyer to validate the documents.”

Seek a no-objection certificate (NoC). If you are buying a house in a co-operative housing society, it is important to obtain an NoC from the society’s managing executive. “For resale of properties in co-operative societies, the transfer should be in accordance with the society bye-laws. The society should endorse such a sale,” says Ganguly. Also, do check out for the share certificate. It is a proof of the owner’s membership of the society and should ideally form a part of the ownership deed.

Check for pending dues. Ask the seller to give you a ‘no dues’ certificate that can be procured from the house tax department and check whether all the utility bills have been paid. You will also have to get the electricity and water meter transferred in your name. Banks will typically check the property tax and utilities receipts to establish the seller’s ownership. Further, check whether the property is registered with the local authorities and the seller has the necessary paperwork to prove it. The lending bank will also look out for this.

Estimate renovation costs. An architect can help you assess these. Also, older houses incur higher maintenance cost.

How well you do the due diligence in these six areas can be crucial to the way you buy a property and how smoothly the life in your new house begins. Remember all stories need not have a happy ending like Khosla Ka Ghosla.