Buying a second-hand house can be a smart move—you get a ready-to-move-in living space in the neighbourhood of your choice. But what if, after possession, you find out that the extension on the terrace is illegal or the papers are fraudulent or that it will cost you pots of money to repair the faulty electrical wiring? The only way to safeguard yourself is to be cautious. Here are some suggestions:
1. Look beyond the new paint
LOOK BELOW THE SURFACE
Outside the house
• Check for dampness on the walls. Fresh cement or paint could be hiding flaws
• Tap suspect wood, especially the frames of doors and windows. If it feels spongy or dead, explore further
• Inspect the water supply system of the house
• Check if the drains are functioning properly
• In case of an independent house, go to the roof to check for signs of rust or cracked tiles
Inside the house
• Check for leaks, water stains or suspicious new paint on the ceiling
• Scrutinise the walls; any bulge or crack could be the result of moisture
• Check cupboards for moulds
• Open the tap to check if the plumbing is working properly
• Ask for the age and layout of concealed wiring and plumbing from the owner or the housing society
A glitzy exterior may conceal severe damage to the structure of the house. Anyone who is selling his home will ensure that the paint isn’t peeling or the faucets are not rusted, but there could be more critical problems. Engage an architect to inspect the house and he will be able to spot areas that spell trouble. Chances are that the house might require extensive renovation. But mouldy kitchen cabinets do not mean you should strike out the house from your list. Assess the damage and consult an expert to estimate the cost of repair. You can then renegotiate the purchase price with the owner and ask for a better deal. But if there is a serious flaw that will require a lot of money and effort on your part, move on to other options.
2. Peep into the property’s past
It is not enough to ensure that the person who is selling the property is actually the owner. You must trace the ownership for a minimum of 20 years and a maximum of three generations, depending on the age of the house. Consult a lawyer who will prepare a “search report” on the property. If there was a fraud involved in the transfer of the property, say 10 years ago, all subsequent ownerships, including yours, could be nullified.
Make sure that the owner of the house is in possession of the original “conveyance deed”, which declares that the property is freehold and can be bought or sold. The seller is also legally bound to clear all outstanding dues such as property tax and ground rent. Also, the price of the house must be commensurate with the value of the property as fixed by the government. The price can be slightly more, but not less than this value.
Rajiv Gupta, a Supreme Court lawyer, advises prospective buyers to check the district court records for any litigation that the property might have been involved in. “If it is an apartment, the society records will have the necessary details. All you require is a no-objection certificate in your favour. But be careful while buying an independent house as the owner can make multiple sale deeds,” he says.
If the property has been inherited, conduct a thorough legal scrutiny. The best way to pre-empt a future dispute is to advertise your intended purchase in a local newspaper, inviting any claimants to the property.
3. Prepare to spend more
Banks are willing to lend you money to buy a house even if it is a pre-owned one. They have the property valued and pay up to 85% of the valuation or the price that has been agreed upon, whichever is lesser. But they can refuse to give a home loan for a very old property. For instance, the State Bank of India does not offer home loans for houses older than 25 years.
The only hiccup you can face is if the owner wants to under-report the sale price. If you agree, you could cough up the extra amount not disclosed to the bank. But the costs don’t end here. After you have bought the house, you would probably want to refurbish it according to your taste. The renovation could include new woodwork, re-tiling or lamp fixtures, adding up to the cost. Don’t forget to pad up your cost estimates by at least 10%, because after you move in you might want more changes than planned earlier.
4. Check for fees, prospects
Before you sign on the dotted line, find out about the maintenance fees or parking fees that you might have to pay to the society in your area. Brand new or secondhand, a house will probably be your biggest investment. So it is wise to approach property dealers to check how much the property will be worth, say, 10 years later. If it is an independent house, you can be reasonably sure that the land will appreciate in value over the years. Unfortunately, this is not true of apartments.
Find out if there are possibilities of value addition to the property, which may increase its worth in the future. In an independent house, any scope of extension is a bonus. For an apartment, check with the appropriate authority whether you can let it out to generate income.