Important legal tips when buying an immovable property – House, Plot (Land)

Important aspects to be considered, including searches to be made and documents perused before BUYING an immovable property in India:-

  1. Ascertain creditworthiness, past performance and reputation of the developer.
  2. Ascertain ownership of the land, ideally the land is freehold and developer is it’s owner. If it is leasehold the term of unexpired lease is long. If it belongs to other owner(s) who have executed POA in favor of the builder, the POA is without any onerous clause and is registered.
  3. Ensure that the land is not charged, if charged earlier it is released and NOC has been obtained. It is not under any notice of requisition or acquisition.
  4. Ensure that the project plan is duly sanctioned by the appropriate authority and all the required clearances are obtained. The construction has been /being made strictly as per terms of sanctioned plan.
  5. Meticulously go through the broacher and advertising material to educate yourself about the facilities and amenities such as common space, car parking, power back-up, lift, swimming pool, park, club etc offered by the builder.
  6. Before booking or making any payment get all the aforesaid aspects perused, verified and certified by competent professionals such as lawyers, architects and property valuers.
  7. Immediately after paying the booking amount get sale agreement prepared by a lawyer, containing all the terms of purchase, facilities and amenities offered, time frame for completion and handing over possession with occupancy certificate, mode and slabs of payment etc, and executed by the parties involved. Sale agreement is the most important and primary document to right and must be prepared carefully. Hidden cost for all the amenities, club membership, parking, maintenance etc must be clearly mentioned therein.
  8. Insist upon the builder and get final sale deed registered within the stipulated time frame. Post registration the property must be mutated in the name of the buyer immediately.

Important searches to be made:-

1. Clear and transferable title of the seller:- 

First and foremost requirement is to ascertain that the seller of the property is having clear and transferable ownership rights in the property. A person cannot transfer a better title than he himself enjoys. This has to be verified by perusal of the “Mother Deed” and chain of title ending with the present seller.

2. Search for title and records of right:-  

Based on informations contained in the mother deed, records need to be searched with various govt. bodies / offices such as Public Index in the Municipal office, Local

registration office, Land reform office, Land Revenue office  etc to confirm that the present seller is the real owner and is entitled to transfer the ownership rights in the property.

3. Search for encumbrance, charge:-

It must be ensured that the proposed property is not, encumbered and / or charged as security against any loan availed by the seller.  Encumbrance / charge is created over immovable property in favour of somebody, agency, authority against any dues, obligation or commitment. Generally such charges are created for availing loans by creating mortgage of the property either as principal security or as a collateral security. Right, title and interest in an encumbered / charged property cannot be transferred unless the charge is released.

4. Search for litigation:-

It must be ensured that the desired property is not subject to any litigation. This again can be and must be verified by search of the records with office of the Registrar/sub-registrar and court having jurisdiction over the area.

5.  Searches for Requisition, Acquisition:-

Searches have to be made with Land acquisition office, Improvement trust, Land Reforms and Land Revenue office, etc to ascertain that the concerned property is not under any notice of requisition / acquisition. Transfer of any property under such notice is null and void and prone to subsequent litigation.

6.  Searches for statutory approvals:-

It must be ensured that all the necessary approvals have been obtained from the relevant authorities for the project containing the property. Some of the most important approvals required are site plan sanctioned by appropriate authority; Government agencies such as land development authority, planning authority; environmental clearance authority, Income tax clearance etc. Physical verification of the original documents and certificates must be done to ensure that the requirement of statutory approvals have been properly met and are valid. Close scrutiny of the reasons leading to the inordinate delay, abandonment, protracted legal battles, pertaining to the projects under construction reveal that in most of the cases the root cause of the projects being delayed, stalled, litigated is violation of the sanctioned site plan, non-approval by relevant authority or obtaining approval by misrepresentation / suppression of facts.

7.  Extra precaution in certain immovable properties

Extra precaution is required to be taken in dealing with transactions relating to the properties of trust, minor, widow, lunatic and also when any of the parties is owned by Mohammedan or governed by the Mitakshara school of Hindu Law. There are lot of restrictions on transfer of such properties and compliance with formalities is required for legally valid transfer of properties owned by the aforesaid entities. Even a minor error can render the entire transaction void / voidable giving rise to undesired litigations.

Care required to be taken while:-

1.  Dealing with property involving “Power of Attorney”

The property in question might have been developed / being developed by real estate developers, under POA, on plots of land belonging to different land owners (which is the

case in most of the instances at present) OR the property might have been / being sold by the seller in fiduciary capacity under POA in cases of auction sale. In all these cases the POA, ownership right of the Principal, the charge documents etc must be carefully perused and ascertained that all the legal requirements in such cases have been duly complied with.

2.  Preparation of the sale agreement

Pending registration of the final sale deed, to allow time for completion of the project (if under construction) or arrangement of funds by the buyer (loan etc) the seller and buyer enter into a “Sale Agreement”. It’s a document in writing  prepared on Non-judicial stamp paper, containing all the relevant details of the property (proper identification and measurement), the parties (seller / buyer) involved in transaction, terms and conditions such as consideration, schedule of property along with attached easements and inherent rights to common amenities, completion schedule, quality of construction material, penalty for delay in payment and termination of agreement charges etc. After execution of the Sale agreement by the parties, it becomes a legal binding for both to perform as per terms and conditions laid out in the agreement. Violation of terms and conditions of the Sale agreement amounts to breach of contract and becomes liable to be dealt with under Specific Performance Act.

3.  Preparation of Draft Conveyance Deed.

At the appropriate time of registration as stipulated in the Sale Agreement and by mutual consent of the parties, a draft of the final conveyance deed is prepared for approval of all the parties involved in the transaction. It must be ensured that the identification of the property, seller and buyer and all other terms of transaction are the same as mentioned in the Sale agreement. Any variation in any of the terms and conditions must be by mutual consent of the parties. It must be ensured that there is no error of any nature including typing error. This draft is prepared on plain paper. It must be checked and approved by lawyers of both parties.

4. Preparation of Final Conveyance Deed, execution and Registration.

Non-judicial stamp paper, of appropriate value commensurate to the value of the property at the rate of stamp duty prevailing at the place where the property is situated, has to be purchased and the final conveyance / sale deed is prepared. Stamp duty being state matter the rate differs from state to state. It is executed by the concerned parties and is also witnessed by at least 2 witnesses, and then the document is presented to the Registrar’s/ sub-registrar’s office having jurisdiction over the area, for registration. After completion of the process of registration, a paper token called IGR (Index General Register) is supplied by the Registry office, and on production of the same the original Conveyance Deed, duly registered, is delivered to the bearer of the token, when the deed is ready for delivery.

Perusal of other relevant perusal documents: 

Title Deed, Land records & Development agreement:- It is the most important document. It gives a clear picture regarding ownership right, title and interest pertaining to the land on which the property is situated or is being constructed. If the land is owned by person(s) other than the builder/developer then there must be an agreement between them called “Development agreement”. Details in the title deed must be searched with the office of registrar, and terms of the development agreement must be perused.

Land Use/ Conversion Certificate:- Due to expansion of cities / towns agricultural land in the fringe areas are being converted to residential land, by appropriate authorities. In case of such land the intending buyer must verify with Urban Development / Planning Authority to ensure that such conversion is proper and legal, because it is illegal to have residential properties on a commercial or industrial zone.

Master Plan of the Area:- Respective “Town Planning Departments” have the master plan for development of a newly developing area, containing all the details of infrastructural development such as roads, highway, metro etc envisaged in the area. An intending buyer in such areas must verify the claims of the builder with master plan of the area so that he does not get cheated on exaggerated claims of the builder.

Clearances Certificate for Construction:- This certificate is issued by the “Town Planning Department” after inspection of the basic foundation for a high rise. It is known as “Certificate of commencement” and it must be obtained to commence any construction

Sanctioned / Approved Building Plan:- The building plan duly approved by the concerned civic body must be inspected. It must be ensured that all the conditions and stipulations mentioned therein are being followed without any violation of any nature whatsoever.
No Objection Certificates (NOCs): The intending buyer must also ascertain that all the applicable NOCs from various ministry/department/body such as land ceiling, environmental clearance, clearance from fire deptt,  power & water supply etc have been duly obtained and are valid.

No Objection Certificates (NOCs):- The intending buyer must also ascertain that all the applicable NOCs from various ministry/department/body such as land ceiling, environmental clearance, clearance from fire deptt,  power & water supply etc have been duly obtained and are valid.

DOCUMENTS REQUIRED FOR PURCHASE OF PROPERTY

  1.  WHEN PROPERTY IS PURCHASED FROM INDIVIDUAL OWNER:-
    1. Mother Deed  OR Seller’s Title deed
    2. Tax receipts for taxes paid to Civic / Government bodies.
    3. Records of Rights (ROR) in the books of Civic bodies.
    4. Encumbrance / Non-encumbrance certificate.
    5. Charge document (if any) of charge over the property.
    6. Gift Deed / Probated Will if Right, Title and Interest acquired by the Seller / owner by Gift / Will.
    7. Family partition Deed if Right, Title and Interest acquired by the Seller / owner by partition of the family property.
    8. Consent letter / Release letter by the joint owner / co-owner (if any).
  2. IF PROPERTY IS DEVELOPED BY DEVELOPER / BUILDER
    1. Agreement between the Owner of the land and Developer
    2. Power of Attorney given by the land owner to the Developer.
    3. Agreement in between the land owner, developer and tenant (if any, residing in the property under development)
    4. Mother deed of the land owner to ascertain his / her right, title and interest over the property under development.
    5. Plan of the proposed construction duly approved / sanctioned by the civic authority, with emphasis on number of floors.
    6. NOC obtained from Water, Electricity supply authority.
    7. Clearance / NOC obtained from Urban Land Ceiling authority (wherever applicable).
    8. Environmental clearance certificate (Where applicable).
    9. Clearance from Land Development authority, Income Tax authority, Planning authority etc. (Wherever required)
    10. NOC obtained from the relevant housing society.
    11. Completion certificate / Occupation certificate.

indianpropertylawyersThis article is contributed by IndianPropertyLawyers.com, simplifying property legal services. Kindly do post your comments and queries below.

 

Comments

  1. Great legal tips above by Ask Vakil ji… if readers have any queries about this topic do feel free to comment. We will try our best to address them.

  2. Ms. Vaishali Shah says:

    Nice Article

Speak Your Mind

*