A Not to be Missed Checklist:
Buying a property is by no means a laidback task. It is one of the processes where it is extremely vital for the buyer to be alert right till the deal is closed and the property is acquired. You will find a number of important purchasing tips on the Internet mentioning the general tips for buying. However, to be a proud owner of a property you also need to have the legal acumen and expertise to aid you through this mind boggling process. We bring to you an essential legal checklist to be kept in mind while purchasing a property. We hope these important purchasing tips will be of some help to our users.
ü Search Report: It provides details of the original property holder, property history, charges on the property, current property status (all dues paid or still pending) and the number of times the property has changed hands before being owned by the present seller. Your advocate will fetch you all these details by conducting a survey of the title of the property, i.e. whether it is a legitimate property for sale or not. The advocate will visit the registrar’s office for carrying out the survey and making the report. A seller should have a copy of the report along with the ‘agreement for sale’ with the actual buyer.
ü Agreement: Once the property is decided and things discussed with the seller, you should make an advance payment and get a written agreement on a stamp paper duly signed by both the owner and the buyer in the presence of two witnesses.
ü Agreement Terms: The written agreement confirms the price agreed upon and also ensures that the owner cannot sell the property to anyone offering a higher price. An agreement must state: the advance paid, actual price, duration of actual sale, and legal actions to be taken in case of a default from either party.
ü Stamp Duty: For buying a property paying the full stamp duty is a must. The stamp duty depends on the location of the property. It also differs for males and females; females have to pay a comparatively lower stamp duty than males.
ü Registration: Ensure that the deed registration is done in a sub registrar office within the timeframe mentioned in the agreement. For registering a property you need: house tax/property receipts, original title deed, and previous deeds etc., two witnesses are also required at the time of registration. Seller should submit his Pan card/ Form 16 if the property is priced higher than 5 lakhs.
ü Government Sanction: Make sure that the property is in sync with the government sanctioned plan and adheres to the laws and norms of the Municipal body.
ü Payment Challan: For people who purchase a property directly from a property dealer, this is a key document. Payment challan is a proof of the payment deposited in the account of the seller.
ü Homeowner’s Insurance Policy: A legitimate homeowner insurance policy is required by the lender in case the buyer fails to make cash payments while purchasing the property. A valid insurance policy safeguards the investment of both the parties. But remember, the policy should be secured prior to the date of closure of the deal.
ü Original sale deed: If you wish to purchase a property from a private builder, make sure to get an original sale deed duly signed by the builder and the first buyer.
ü Encumbrance Certificate: Ensure that there are no legal dues pending on the property you intend to buy. A certificate mentioning that there are no legal dues or charges against the property can be obtained from the sub registrar’s office and is called an encumbrance certificate. The buyer should ask the seller for an encumbrance certificate for the past thirteen years or even thirty years to cross check the outstanding dues.
ü Tax receipt and bills: The municipality or government taxes due on the property must be checked out from the respective offices to confirm that there are no pending dues. You should also check the latest tax receipts paid by the owner. Also, ask the seller to pay all the outstanding dues (if any) for water and electricity.
ü Release certificate: Always check if the property is owned by more than one person. If there is more than one owner you should obtain a release certificate from all the people involved with the property ownership.
ü Mutation: After buying the property you should get the owner’s name updated in the government records and Municipal authorities.
ü Paperwork: Delays in closing the deal become a big botheration. For a smooth closure of the deal you must ensure to legally complete all the paperwork, including title insurance, loan papers, settlement statement etc. beforehand. You must possess all the necessary documents falling under state and local laws for a smooth property transaction. A careless mistake can incur monetary penalties and in the worst scenario might deprive you of the property.
Moreover, even if one can review the documents personally, it is always better to have a solicitor to scan through all your legal documents for checking the authenticity.
General tips on purchase of property
· Analyze the purpose, location, budget, use and resale value.
· If purchasing a flat then ensure that the site has a Clearance Certificate and government approvals from departments like Electricity Board, Water Board, etc.
· Ensure that there is sufficient water and sewage facility.
· Make arrangements for a pre-approved loan.
· Roping in a reliable real estate agent is not a bad idea with a commission fixed well in advance.