Posted on 09 Dec 2020
Real estate is a huge capital intensive investment. Putting money in it without any due-diligence may land you down in big trouble. Although looking for the property itself is a strenuous task, still, you cannot ignore the legal aspect related to it. As soon as you decide the property for yourself, before finalizing the deal you enter in the world of legality.
On the one hand, some people have a little bit of knowledge about the legal points but on the other, some get easily misguided by the ill-informed realtors, causing loss and other legal risks. That's why potential buyers and investors must know about the basics of the legal aspect related to real estate.
With legal verification of relevant information about the property, the buyer can ascertain that the investment brings peace of mind and a sense of security. Real estate investment involves the transaction of millions, so don't turn a blind eye.
The legal aspect is always tricky, but here we tried to break it in a simple way to make you understand. Go through this legal checklist for buying a property that you are supposed to know.
Document verification - The foremost thing a potential buyer should do is to check the authenticity of the legal papers/documents of the property. The buyer must first confirm the existence and validity of the property title and make sure that it is free from any kind of mortgage and is duly-stamped. Verify the nature of title whether it is leasehold, freehold, or development right. Even though, if you opt for a home loan, the bank itself will do the due diligence, but that doesn't mean you would remain oblivious.
Seller's identity verification - It may seem trivial, but before you finalize the deal you should one verify the identity of the seller. For this, you can scrutinize valid legal documents like a PAN Card, Aadhar Card, etc and if the property is the shared property, then verify the identity of all the owners. If the seller is an organization, go through its legal documents that justify its registration and TAN number etc. Make sure they are eligible to transfer the property and all the documents are duly authorised.
Go through land-use permission -Confirm the type and purpose of land for it can be residential, commercial, industrial, non-agricultural, mixed-use, etc. Several national and state laws prohibit the use of land for another purpose than what it's actual purpose is, while some restrict the purchase of agricultural property by non-agriculturists. Therefore, before purchasing the property, check the documents related to the land on which it is built. Examine the Master Plan and satisfy that the property is developed by the zoning plan. Besides, if the land is converted legally, then look for the conversion papers too.
Check for construction approvals - Look for building plan/layout plan if you are purchasing ready to move-in house. It should be sanctioned by the local municipal authorities, along with permissions issued by the government, statutory and regulatory authorities, to provide the basic utilities such as water, electricity, clearance, sewage, fire safety approval, etc. To lead a comfortable life basic utilities is must, so confirm that the property has all the required arrangement for it.
Occupancy certificate - Without it, a seller cannot transfer the property ownership title to the potential buyer. Therefore before purchasing, the property makes sure that the seller has obtained this certificate from the competent authority. The use of the property without this certificate is not correct and the buyer can land up into trouble and have to bear the heavy penalty while the risk of demolishing the property also lingers.
Tax payment status - With the municipal authorities make sure that the seller has cleared all the property tax and there is no default. It is crucial to do and do ask for the receipts of all utility bills from the seller. If the seller hasn't paid the property tax, the heavy penalty reduces the value. Also, you should be aware that if the tax is at default and the property is transferred on your name then you will be liable to clear it.
Mortgage or other claims/ encumbrance - Now surely, you don't want someone to claim the property out of nowhere once you purchased it, right!! So be sure that the land or the property isn't any under dispute as it enhances the chances of encumbrance. You can easily check through the government website where the property registration information is available or can issue a public notice in the newspaper, before finalizing the deal.
Compliance under Real Estate Regulatory Authority (RERA)- Last but not least, check whether the property you are purchasing is registered under your state's RERA or not. The official website of RERA provides details about any cases or complaints filed against the developer, defaulted payments by the developer, etc. To operate legally, it is mandatory by law to register the project with the state RERA.
Investment in property demands a huge amount, therefore, potential buyers must be aware of the primary details regarding the legalities of the real estate market. If you don't have enough knowledge, go and contact the real estate lawyer to have accurate details. Don't depend completely solely on the realtor since it's you who has to put the money, not the realtor. If you have even the slightest doubt regarding the legality of the property, leave it, a buyer should avoid getting into such deals, irrespective of how flourishing it might seem.
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