It is not every day that you decide to buy real estate, right? There are millions of people who will never be able to achieve the dream that you have seen, and realised. Buying a property involves large financial commitment over a long tenure. Hence necessary caution has to be taken while entering into such transactions. Although the Indian real estate industry now has customer-friendly rules and regulations, it is important for a buyer to be watchful, given the involvement of multiple parties and an overload of paper-work involved in buying a property. The following key aspects should be considered to avoid fraudulent activities:
Ascertain true ownership
Often, there are intermediaries involved in negotiations and discussions related to a property. It is vital for a buyer to ascertain true owner of the property so as to evade any cheating/fraudulent practice on behalf of the owner and/or intermediaries. In case the seller possesses a power of attorney on behalf of the owner, buyer should confirm the trueness of the same and then proceed with the transaction. It is extremely important that the agreement is executed between the buyer and true owner of the property only, failing which legal complications might arise in the future.
Verify bank/institution approval
There is a simple and easy way to check if the property is 'clean' as banks /financial institutions will approve only legally cleared properties that possess the requisite paperwork. This can prevent buyers from investing in a fraudulent property and be cheated by the developer/seller.
Validate title deed
Verifying the property's title deed is imperative if you want to ascertain whether the property is in the developer's/seller's name and also cross-check whether the right to sell lies with him. Also, it is better to check the original deed rather than relying on photocopies provided by the developer/seller and getting it furtherexamined by a reputed legal consultant. It is advisable to avoid buying a property if the title of the land is not clear as it might lead to legal hassles in the future.
Check completion certificate
Completion certificate is issued by municipal authorities and confirms that a building is built according to approved plans and is ready for habitation. Else, local authorities may consider the building or its part/s illegally constructed and resort to demolishing it in full or part.
Confirm approved layout
Buyers must procure a copy of the approved building layout from the developer/seller of the property. Confirming that the building plan/layout and construction is approved by the authorities will mitigate risks such as delay in execution or cancellation of project plans. This quick check will ensure that the plan is legitimate and the buyer is not cheated after the initial downpayment.
Confirm area details Developers use terms like super built-up area, builtup area and carpet area to establish and communicate property prices. A buyer should confirm the carpet area of the property under consideration by measuring the actual area and not merely relying on details mentioned in the brochures. Additionally, in order to prevent further disputes, it is important to ensure that the same area details are mentioned in the agreement as well.
Check for legal dues
Before buying a property, check if the property does not have any legal dues. The encumbrance certificate should be procured to check whether the property is mired in any legal disputes and complaints. If the property is in a society (in case of a resale), a noobjection certificate (NOC) from the society should be demanded. Checking this will safeguard the buyer's interest and he/she will not be levied any additional charges on account of any unpaid dues.
Obtain detailed cost break-up
At times developers/sellers might quote a lump sum price for the property. It is recommended that a detailed cost breakup be obtained, clearly indicating the nature (breakup) of cost and the tenure of payment that is included in the lump sum price. In addition, it is essential that this cost breakup is included in the agreement so that it becomes legal binding.
It is prudent to enter into a written agreement with thedeveloper/seller. The agreement must ensure that the payment terms and charges for amenities, facilities, parking, delays, etc. are duly written in the agreement to avoid any complications in the future. In case the agreement is violated, necessary legal actions can be resorted to. However, as the proverb says, 'prevention is better than cure,' it is better to invest significant time and effort on property assessment and agreement drafting rather than taking the cumbersome route of fighting legal battles at a later date.
Do not delay registration
Unless the property is registered with the Government/local authorities in the buyer's name, it may create legal complications. It is prudent to register the property at the earliest so that it is legally in the buyer's name and the seller does not execute multiple transactions for the same property.
CLP is advisable
Many developers give huge discounts on significant upfront payments. Although this lures many buyers, it is advisable to opt for a construction-linked plan (CLP) as they are less risky, given that the payment is made as construction progresses. Following construction-linked payments ensures that the buyer does not have to unnecessarily service the mortgage, even if the project is delayed by the developer.
(Shveta Jain is Executive Director, Residential Services at Cushman and Wakefield)