COMMON PROPERTY FRAUDS AND HOW TO IDENTIFY AND AVOID THEM

by | Aug 9, 2020

Reading Time: 4 minutes

People spend their life savings while purchasing a home, they are the single biggest purchases in most people’s lives and any error in this regard could have severe and long-term monetary repercussions for the buyer. Thus buyers need to take utmost care while investing in property and stay safe from property frauds. Here we look at some signs that could indicate that everything may not be right with the property, or the seller, or the intent behind the transaction.

Hint 1 – The property is very cheap

The Mumbai Police’s crime branch recently busted a racket that promised Maharashtra Housing and Area Development Authority (MHADA) flats, at rates lower than the market price. The racket was busted following a complaint from a buyer who was cheated of Rs 12 lakhs, with a promise of a MHADA flat in the suburbs.

Even a desperate seller will not let go of his immovable asset at a throwaway price. Real estate is not a commodity that loses its chances of getting its true worth over time. Hence, deals at unbelievably low rates must be examined cautiously.

Hint 2 – The seller is in a hurry

A person who intends to dupe a home buyer would want to close the deal in a hurry. Hence, such behavior should serve as a warning and the buyer should stay away from such deals. Nevertheless, it may also be true that the seller might be forced to sell his property in a hurry, because of a personal emergency. However, for a buyer, the scope for errors is huge, if the deal is concluded in a hurry.

Hint 3 – Property is located in unregulated areas

Buyers may, sometimes, be willing to consider the risk of buying a property in an unregulated area, because of low rates. This is a bad idea, as you will continue to live under the fear of losing the property title throughout your stay.

Hint 4 – Seller hesitant to show property documents

The property’s documents serve to prove the owner’s rights over a real estate asset. A seller who is not genuine would be evasive and unwilling to produce these documents. In August 2019, Lasudia police arrested a property broker of Scheme 78 (Indore) area for duping an individual of Rs.20 lacs.

However, the actual verification of the property documents is an arduous task and it involves investigation at many levels and stages, we suggest you take time and verify before finalizing the deal.

  1. Step 1 – Check all the original deeds of the title of the owner including chain of title( chain of the title means how the present owner came to be the owner) inspect each document carefully to ascertain that all documents are original and not colored photocopies of the original. Look for the signature and seal of registering authority.
  2. Step 2 – Next step is to Visit the concerned office of concerned Sub Registrar, to inspect his registers which are classified according to the area in which the property is located.
  3. Step 3 – You can also visit the tax department of the respective Nagar Nigam (Municipal Authority) and request the tax collection clerk to issue you a receipt for the property in question, he will issue it to you (under obligation), which would show in whose name the property stand in the Municipality records.

Alternatively, you can take the help of property lawyers to get this job done for you.

Hint 5 – The seller is abroad

Another common way to dupe home buyers is to use the power of attorney (PoA) to sell the property. In this scenario, the so-called representative of the non-resident Indian (NRI) seller would inform you that his client cannot be present during the property transaction, because s/he is unable to travel. There have been numerous fraud cases in the past where properties have been sold to naive buyers, using fake PoA documents.

Hint 6 – Excuses on-site visits

A seller who wants to dupe you, may not allow you to visit the property at your convenience and only allow the same at their comfort. To ensure you are dealing with genuine sellers, make several visits to the property and get in touch with the neighbors.

Hint 7 – Bank Rejects loan request

An advantage of applying for a home loan is that the bank carries out the due diligence about the technical and legal aspects of the property. Any issue found will result in the home loan request being refused. This could serve as a clear indication that you should not proceed with the deal.

Hint 8 – Demand for huge token money

A person who is out to deceive the buyer is likely to consider the possibility that the buyer may see through his scheme and it may fall apart mid-way. Such sellers will focus on getting as much token money from the buyer, as possible.

 


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