Tips while Buying Property

Tips while Buying Property

A buyer should exercise utmost caution while buying property in India, be it for residential or commercial interests. Below is a real estate purchase checklist that includes tips for property buyers, discussed under specific categories:

Buying with preliminary research:

It is advisable to identify the property in terms of:

1. Nature of property:

Whether residential/commercial/industrial
Whether plot of land/flat/floor/commercial space
Whether the plot of land on which the building is constructed or is about to be constructed is freehold or leasehold.

2. Type of Seller:

Whether individual/partnership/HUF/joint stock company/Association of persons. Reputation of the builder or seller.

3. Potential resale value or the potential rental income of the property.

4. Proximity afforded:

Whether close to central business district, entertainment centres hotels, restaurants, transport hubs, hospitals, market, schools, etc.

5. Quality of construction:

Whether structural stability of the building, electrical systems, plumbing systems, drainage, sanitary fittings, roof, walls, ceilings, floors, paint work, foundation, doors and windows is sound or not.

Determining the title and interest of the Seller:

1. Thoroughly check and satisfy yourself with the marketability of the property title in terms of whether the owner is the original owner and whether the title deed is original. Obtain legal opinion through an Advocate of repute, who can examine the deeds to establish the ownership of the property by the Seller.

2. Similarly, if you are buying a resale flat, ask for the Purchase Agreement, which is the Agreement between the current seller and the previous owner and get it scrutinized by an Advocate. He/she will identify whether the seller is truly entitled to sell the property, whether any mortgage exists on the property and if it has been paid off and whether there is any lien on the property.

3. Retain a copy of this document and also check the original.

Avoid engaging in negotiations over a disputed property.

Documentation:

1. Ask for all the legal documents in original. Check whether a 'No Encumbrance Certificate' has been obtained to ensure that no mortgage exists/has been existing on the property. Get a 'No Objection Certificate' from the Builder/ Society.

2. Check for authentic approvals from government agencies like the land development, planning authority and Income Tax Department. Ask for original documents and certificates.

3. Get a full and true disclosure of all outgoings such as municipal and other local taxes, taxes on income, water charges, electrical charges etc.


4. Take a declaration from the seller on what add-on, if any, he is giving along with the property.

5. Make sure to include every conceivable clause in the Sales Agreement. A Sale Agreement is the only written evidence of the deal so it should include everything from payment terms to exact description of the title.

6. Understand the finer details of the sale contract properly to arm yourself with knowledge that shall be beneficial during and after the transaction is complete.

7. Learn about the advantages of Caveat and put one on the title.

8. Take care that all the duties that are to be paid on the property like Stamp duty, Registration fees and taxes is included in the Sale Deed/Agreement to Sell.

9. Ask for any other information and documents as may be prescribed under the law.

Post Registration Activities:

Subsequent to the registration of the Sale Deed, you should:

1. Verify that all the taxes, statutory payments in respect of the property including power, water charges are paid till date.

2. Collect deposit receipts given by power and water supply agencies from the Seller. Without delay, apply to the power/water supply authorities to transfer the meters and deposits in your name.

3. Ensure that the 'Khata' in the records of the Local Bodies, Gram Panchayats or the City Corporation is transferred in your name. The original authorization letter of the Seller and a copy of the new 'khata' have to be enclosed with the application of transfer.

(A Khata is a document that includes complete details of the land or property in question for the payment of tax.)

4. Get a good idea of the costs of various components like monthly outgoings, costs of utilities. Do research on the mode of payment and the tenure for which you will be liable to pay taxes.

5. It is useful to obtain periodical Encumbrance Certificates at least once a year, and make it a routine exercise.

You can use the services of a real estate expert to complement your efforts in an effective manner, saving time and energy and money.

Source:
http://www.indianrealtylaws.com/buying-property-in-india/tips-while-buying-property.aspx