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12/6/2017

How to know whether a property is legally clear

It is necessary for the buyer to know whether the property they are purchasing has a clear legal track record and has been registered or documented properly. Therefore, in order to avoid any ugly legal surprises and to ensure the undisputed nature of the property, here is a checklist you need to follow while buying a property

Buying property requires a lot of planning and careful consideration. Procuring requisite information on the builder and the property is the first stepping stone towards a trouble-free real estate transaction. Getting involved with an unlawful construction can be extremely taxing, both in terms of time and money. With the ever-growing demand for good living spaces at pocket-friendly prices in prime locations, builders are rapidly churning out new projects which claim to fulfill all of the buyers’ needs in one place. Tall claims by realtors on having all the necessary approvals from the concerned authorities can trick people into buying illegal properties. However, it is necessary for the buyer to know whether the property they are purchasing has a clear legal track record and has been registered or documented properly. Therefore, in order to avoid any ugly legal surprises and to ensure the undisputed nature of the property, here is a checklist you need to follow while buying a property.

Check the agreement papers

When a buyer approaches a builder for a property transaction, the first and foremost step should be to ask the builder for all the agreement papers. Right documentation can prove whether the property is legal and has all the requisite approvals from the regulatory authorities like RERA. In case the builder does not have the appropriate paperwork in place or if there is any doubt regarding the paperwork, the buyer can approach the office of the sub-registrar or Municipal Corporation of that area to get the relevant documents. Registered documents are available for inspection by the public. In case the papers are not registered, the project would be deemed illegal. If in any case, the authorities deny sharing the documents with you, it should be a good enough reason to suspect the legality of the property in question.

Check market prices in the area

Make sure to thoroughly check prevailing market prices in the area where you intend to buy property. If the builder is offering the property way below the prevailing market rates, then it is reason enough to be alarmed. Overly low property prices might indicate some kind of fraud or illegality. If the builders do not have the right documents or the demand for their project is too low, they are likely to sell the property below the market price. Steer clear of complications like this, because no matter how good these offers might sound, investing in such property will cost you dearly at a later stage.

Approval from leading banks

Banks and other financial institutions are very vigilant and attentive when it comes to sanctioning home loans. Before approving any project, they verify the title papers and authorization documents to certify that the plan is completely legal and the project is clear of any litigation. A property is essentially legally valid if it is approved by the leading banks. Banks usually refuse loan requests for housing projects that lack a valid title, an OC or a NOC (no-objection certificate). Therefore, a loan plea rejected due to lack of documents is a warning sign that should never be ignored. Hence, seeking financial assistance from such institutions helps you to confirm whether the property which you wish to buy is legally clear or not. Even when one might have all the funds for buying a property, it is still advisable to take a small amount of loan from a leading bank just to ensure that the property documents are in place and the project is legal.

Obtain Occupancy Certificate prior to possession

Another important document to check at the time of possession is the OC or Occupancy Certificate. A certificate of occupancy is a document issued by a local government agency or building department certifying that the home/flat you intend to occupy was constructed according to the approved design and complies with the applicable building codes and other laws, indicating it to be in a condition suitable for occupancy. A flat owner can occupy an apartment only once the OC is issued, as per law. If you don’t have an OC, basic facilities like water connection and sanitation amenities may not be provided.  Therefore, it is crucial to check the legal property documents prior to making payments for the same.

Check legal dues or mortgages

A person can avail credit against property he owns. As a buyer, you need to ensure that the property you are buying is not mortgaged. An important document to verify is the encumbrance certificate which lists the particulars of preceding registrations and tells you whether the property has any mortgages or outstanding dues such as unpaid taxes. The title document of the seller should be free from encumbrances. This document can be obtained from the relevant sub registrar’s office. If the property is part of a society, then you need to get a no-objection certificate from the society before moving in. Property tax is paid once a year; if not paid, fines and penalties may apply. In case it is a resale situation, get the no dues certificate from the bank where the property was pledged by the seller.

Check if property is part of a registered society

In case the property you are intending to purchase is a completed construction and is part of a registered society, the likelihood of it being legally clear increases. The procedure of registering a society itself entails a legal process. Therefore it makes it necessary that all papers should be in order. The registration of the society, therefore, ensures that the property you are investing in is a legally valid one.

Undertake a site visit

Builders might make tall claims regarding the project amenities and facilities available in the vicinity of the property being sold. Buyers should undertake a site visit to see the ground reality themselves before deciding to invest money in the property. When investing in an under construction project, it is equally important to visit the site regularly to get a first-hand update on the progress of the project rather than relying solely on claims made by the builder.

Take expert advice

When in doubt, get expert advice to help you go through all the documents of the property before you sign them. An expert real estate advisor can help you catch any ambiguous clauses in the agreement or verify the authenticity of documents of the builder. A real estate advisor can also help you negotiate the terms and conditions while the agreement is being drafted. 

A house is one of the most valuable purchases that you ever make. That makes it absolutely imperative for you as a buyer to act cautiously when purchasing a property. Keeping the above tips in mind will help ensure that you end up owning lawfully acquired property and your hard earned money is invested in the right place.

Also Read:- 4 Things to do Before Investing in Real Estate

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