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Legal checklist for buying a house in india

For Ready-for-possession Flats

"When you are buying a flat from a developer, you have to consider two aspects. One, the title. That is, you have to ascertain whether he is actually the owner. Secondly, you need to find out if the construction is legal and authorised," says Sadhav Mishra, partner with law firm SN Gupta & Partners.

You have to see the title deed to ascertain the title of the seller. This will include the sale deed, deed of conveyance, the development agreement and the Power of Attorney (PoA), if the developer happens to be the seller.

"It is advisable to go back and check the title transfers in the last 30 years. You need to ascertain how the transaction has flown from the first seller to the last," Mishra adds.

There are chances that the builder may not always part with earlier title documents. If that case, you should ask the builder for the building agreement, power of attorney and the deed of conveyance if the builder has got the land conveyed in his name.

You also have the right to ask for the title certificate from the developer's lawyer. "Ask for the developer for the approved drawings of the project, a copy of the intimation of disapproval (IOD) and completion certificate. Ensure that the property is free from any litigation and any kind of associated debt," says Anuj Puri, chairman and country head, Jones Lang LaSalle India.

In addition to IOD, completion certificate and the approved plan, you need to ask for the occupation certificate (OC). "If the building has been in existence for quite some time, you must ask for the details of the property taxes being paid to the municipal corporation," says Mishra.

If you are buying a flat in a building where the co-operative society has already been formed, you need to ask for three key documents — the seller's share certificate, a no-objection certificate (NOC) and a letter from the society, stating that the seller is indeed the owner of the property, and there are no liens against the flat and it is free from any encumbrances.

If the Property is Under Construction

If you are buying an under-construction property, you must go through the approved sanction plan, IOD and commencement certificate issued by the municipal corporation. Again, the key is to establish whether the builder has clear ownership of the land on which the project is taking shape. "An agreement between the builder and the original owner is not sufficient. The project also needs to have an IOD. This is a set of instructions that a developer needs to comply with so that he can legally construct the project. It is valid for one year and needs to be reissued if the project has not been completed in a year's time," says Puri.

If the construction is only partly complete, you need to exercise extra caution. If you are buying a flat on say the 30th floor, while the construction has been completed only till the 15th floor, you will not get the occupation certificate as the building is still under construction.

"In that case, you must insist on seeing the commencement certificate, particularly for that floor," says Mishra. According to Puri, projects that are in the pre-launch stage, too, need additional scrutiny. "It is even more necessary to establish the trustworthiness of the builder, especially in terms of his track record for transparent dealings and compliance with legal formalities," he says.

If you're buying the property directly from a builder, Knight Frank India Research has compiled a list of must-have documents:

* Some form of documentation like the property layout plan and location plan showing the exact area of the property. Plus, a copy of the plan showing the structure that also indicates the built-up area, elevation and ground plan for amenities, parking and such.

* An occupation certificate, which is issued once the building is ready for occupation, with permanent water, sewage and electrical connections.

* A completion certificate handed out by the municipal corporation which the builder gets after he complies with the rules regarding the building's height, distance from the road and compound wall.

* A city survey number, which will help you find out the exact stamp duty payable by you. The survey number is allotted to every plot to identify its location.

A copy of the society certificate that the builder gets when he files for the registration of a new building.

Lastly, obtain the title certificate, which will ensure a clear and marketable title for the building or plot or property.

If you are buying the house or flat from a previous owner you need to ask for:

  1. A copy of the purchase agreement which can be either the purchase document between the current seller of the property and the previous owner or the builder.
    Ask to see the original document before keeping an attested copy with you. It proves that the seller has made all the mortgage payments and also tells you the antecedents of the property you are buying;
  2. A share certificate is another document that you need to procure. This is issued by the society and will ensure that the property you are about to buy is indeed owned by the person selling it;
  3. A no-objection certificate from the society or committee if it is part of a registered society; and
  4. Documented approvals from the society regarding the amenities offered to you like parking space.

Some Additional Tips

A Mumbai-based property advisor says that it is always a good idea to "decide the mode of payment before hand. If there is a non-cheque consideration, make sure to pay that only after the documents have being scanned and verified by a lawyer." Buyers should also look at other aspects like the maintenance charges levied by the society before paying up the first instalments - to avoid a nasty shock later.

Here you will find listed the main things that you need to check to make sure the property you are buying is legally transparent.

1. Check for clear title papers

It is essential that you check the legal documents of a property before you make the payment for it. The most important of which is checking if the title is clear or not and regarding this it is advisable to consult a property lawyer.

2. Check to see if it is approved by leading banks

One sure way of knowing if the property is more or less legally clear is to see if it has been approved by leading banks. Banks will only approve of properties which have legal clearances with valid documents.

3. Check if there are any mortgages on the property (in case of resale)

An individual who owns a property can avail of a loan against it. While buying a property (in case of resale), be sure to make a thorough research if the property has been mortgaged or not.

4. Check the constructed area and the sanctioned area

Before deciding on a property, ask the builder for the sanctioned plan and compare it with the actual built up area. This is because sometimes there are illegal constructions that are not in accordance with the sanctioned plans.

5. Check for encumbrance certificate

An encumbrance certificate contains the details of previous registrations which can be availed from the sub registrar’s office. It has a multifaceted advantage, it is a proof of free ownership and it also testifies that the property is free of any legal dues or mortgages,

6. Check if property tax has been paid regularly

Since paying the property tax is an annual thing, it helps to make sure that all the papers are in order. It shows a sense of responsibility on the part of the owner and also is an assurance of his having valid documents.

7. Check if property has a registered society (in case it’s not a new construction)

The presence of a registered society (in case it is a completed construction) of a property increases its chances of being legally clear. Since the process of registering a society itself involves a legal process, it makes it necessary to have all its papers in order.

It might seem a lot to do before buying a property, but since you will be investing a lot of your savings and maybe also take a loan for this purpose do take this seriously. After all a legally clear property also brings with it, peace of mind.