Purchasing residential and commercial property in India is a complicated procedure. However, detailed planning before actually making the investment can help alleviate a significant amount of stress that may come to haunt you later on. Here is a look at a few things to keep in mind while buying immovable property in India.
- Before the Purchase
Before you move to actually purchase the property, go through all the documents that are related to the property and make sure you are well versed with the facts and the encumbrances of the property. Go through the title deeds of the property in order to ascertain the true owners of the property. If the document is not available, head to the local sub-registrar’s office and get the document, it’s available for a small fee.
It is always advisable to have your lawyer go over the property papers to ensure that the title is clear and that you are not being defrauded at any moment of time.
Make sure that you avail the ‘No-Encumbrance Certificate’ for the past thirty years. Properties in Bangalore, Hyderabad and other major cities are often mortgaged. The certificate helps prove that there are no liabilities such as mortgages overdue on the property and also provides another proof of rightful ownership.
Get cleared under the Urban Land (Ceiling and Regulation) Act. If the property is being sold through a broker or a similar third party, make sure that he has been given adequate powers by the rightful owners of the property. You can ask him to furnish an affidavit submitted by the true owners to prove such powers. If you’re not sure that you are paying the right price, you can get the property valued by a registered valuer.
- Terms and Conditions
Sign an agreement detailing the price and the agreed terms of payment. There should be a clause which states that final payment will be made once possession is handed over and the property is registered. The sale deed should have all the information relevant to the property. This includes the history of the property, the identification and survey numbers of the property, terms of payments, amount already paid, methods of payments and confirmation of the instruments used to make such payments.
Another key point of interest should be the agreement made between the builder and the buyer. There shouldn’t be any power given to the builder post the full payment of the agreed price. Ensure that your rights are not threatened by indiscretions made under the Apartment Ownership Act.
Stamp duty should be remitted, the value of such stamp duty is different for different states. The stamp duty is based upon the land value of the apartment while in some cases, the stamp duty is based upon the value of the entire project.
On completion of the project, the title should be transferred through registration at the local sub registrar’s office.
Remember that the sale deed is only a preliminary contract. The final and legal deed is to be written on stamp papers of relevant value. The Income Tax Act, 1961 makes it mandatory for all properties and sale deeds above a prescribed value to be signed off on by an Income Tax Officer. Following the tax officer’s approval, the registrar will move forward with registering the property.
If you are purchasing an apartment, then the apartment itself is not registered. An allocated amount of space on the land which is in accordance with the value of the apartment is registered. In the final agreement, make sure that the plans, blueprints and details of the work done in the flat are mentioned. These may be important in case there are legal disputes in the future.
There should be clear clauses detailing the date of completion and the compensation due in case of delay in delivery of property or in delay of payments to be made.
The Indian Market now has many young buyers who are looking to purchase properties in Bangalore and other booming cities. As India’s burgeoning youth flexes its spending muscles, the caveats and complications involved in the Indian system should be understood in order to avoid potholes.
Bio: Ricky McMillan is a former real estate
consultant turned free lance writer. Ricky uses his experience to provide advice to new entrants into the property markets of India. His words of caution for those optimistic buyers of properties in Bangalore, Hyderabad, Pune and Delhi provide them with a peace of mind and a stress-free future. Contact him for any details related to the real estate market in India.