Property investments are capital intensive, and any mistakes made during the process can spell trouble for the buyer. This makes it imperative for a buyer to exercise due caution while examining the property documents. With proper legal and technical advice, scrutiny of documents and verification of relevant information about the property, the buyer can ensure that the investment brings peace of mind and a sense of security.
So, here in this article, we look into what Top Real Estate Consultants of Indore advice specifically to check while purchasing a property, so read on!
Sanctioned Building/Colony Development Plan from Urban Local Body (ULB):
A Sanctioned Building/Colony Development Plan is accompanied by a Building/Development Permit from the ULB. A ULB can be the Local Municipality, Gram Panchayat, Town and Country Planning, etc. Demand a copy of such Building/Development Plans and take them to the project site and check
- The project boundaries. Use the roads in/around the project to interpret the plans.
- Whether the construction is executed more or less as per these plans or whether there are any deviations. Minimum deviations may be compounded by paying charges but major deviations can lead to rejection of Occupancy certificate and worse case, can even lead to demolition orders by the local body.
Verification of title and ownership of the seller:
A person can only convey a title that he has. As a first step, the buyer should undertake due diligence to ascertain the existence of the title with the seller, the nature of the title and its marketability and the ability of the seller to convey clear and marketable title, free from encumbrance. Documents, for 30 years, if not more (and where documents are not available, for a minimum period of 12 years), must be examined.
A project which is being developed on a parcel of land may either belong to the Builder/Developer/Colonizer or it might belong to any individual or a group of individuals or company(companies) commonly referred to as the Land Owner(s) with whom the Builder/Developer/Colonizer has entered into a Development Agreement. Consider asking for the following documents to verify the title:
- If the land is a purchased property of the Builder/Developer/Colonizer, then request for a copy of the Sale deed and the mutation copy in its name. Also, enquire about the copy of updated property tax receipts.
- Check the type of land i.e., whether it is freehold or leasehold. If the land is leasehold then check the period of the lease. In case of a leasehold property, a buyer must verify the no. of years that is remaining in the lease and whether the same can either be extended or converted into freehold. In many areas and sectors in Indore, leasehold property cannot be sub-leased or even if it can be sub-leased it is after obtaining the necessary NOC from the competent authority. So, one must be very careful.
- Using the above-mentioned documents, verify and compare the Khesra (Survey Plot no. ), Khata no., Mauza, Tehsil and the total area of the plot on which the project is being developed. The total area of the plot(s) mentioned in the sale deed(s) or the development agreement(s) and the mutation copies should be more than or equal to the area mentioned in the sanctioned plan. If it is contradictory, seek clarification. Don’t proceed with the deal if the explanation is unsatisfactory.
- Or, if the Builder/Developer/Colonizer has entered into a Development agreement with any Landowner, then ask for a copy(or copies) of such Development Agreement and also the mutation copy (copies), updated tax receipts in the name of such Landowners (All the landowners).
- Note 1: All the above-mentioned documents should be signed and stamped from competent authorities. Even photocopies should have stamps.Note 2: A defective title can often lead to litigation and the eventual termination of works on the project. So, do enquire about any ongoing litigation cases and the current status of such cases.
Details of encumbrances:
Encumbrance is simply a reference to any liabilities in the form of a mortgage or a loan against the property that has not been cleared. Read about it in detail here.
- An encumbrance in the form of a loan might be created by the Builder to complete the project. So, seek details about any such encumbrances made on the property and make sure that you are not purchasing any inventory which is mortgaged by the builder(such inventories can only be sold by the builder if they have cleared the encumbrances).
Conversion and land-use permissions:
With increasing urbanization and rapid infrastructure development, the conversion of property for Non-Agricultural (NA) use assumes crucial significance. Several state laws restrict the purchase of agricultural property by non-agriculturists and subsequent execution of development works on agricultural land without conversion of the land. Here, the buyer must examine the Indore Master Plan and satisfy that the property is developed following the zoning plan – such as residential, commercial, industrial, etc. Where actual use is different from the notified zoning, obtaining orders from the Town Planning Authority permitting a change of land use is mandatory. If you are unable to interpret the Master Plan by yourself then seek the help of your Architect/Engineer or you can contact us.
No objection certificates (NOCs):
Check whether relevant no-objection certificates viz. Fire clearance, Airport clearance, Environmental clearance are in place. Be mindful of the validity of such approvals.
Note: NOCs are not mandatory in all cases. For example, environmental clearance is required in Building and Construction projects if the total built-up area of the project is more than equal to 20000sqm. and less than 1,50,000 sqm. For Townships and Area Development (i.e., plotting development projects), it is required if the total land area is more than 50 Hectares (1 hectare= 100sqm) and or the total Built Up area of the project is more than 1,50,000 sqm.
For Fire NOC, refer to this and this.
For Airport NOC, refer to this.
Seek the help of your Architect/Engineer or you can contact us if you face any difficulty in understanding the NOCs.
RERA Registration certificate:
Demand a copy of the RERA registration certificate for the project. RERA registration is mandatory for projects which are being either developed on a plot area of more than 500 Sqm. (i.e., 5380 sqft.) or if the project is having more than 8 units (flat, shop, plots). Using the certificate, pull up the details of the project from the State RERA website. For Real Estate projects in Madhya Pradesh, use this link to check the details of the project. Look for any contradictory information by the Builder and get it clarified. Note: Under the rules of the RERA Act it is mandatory that the builder mentions the carpet area of the flats, and also that the builder cannot charge the customer more than 10% of the total unit cost at the time of booking.
A copy of the Agreement for Sale:
Ask for a copy of the draft agreement for sale. Check whether it is in the format prescribed by RERA, or if they have made modifications (Prescribed RERA format for the MP RERA can be found here. The Agreement for sale which the builder has submitted to RERA can be found on the project registration page i.e., here). Enquire if there are any changes. Check the Schedules thoroughly given at the end of the Agreement. Be mindful of the amenities promised and also the payment schedule in the agreement since this document will serve as proof in case of any disputes in the future.
Choosing the right property (purchasing a flat or constructing your own home) can be stressful and hard. A wrong decision or indecision can create a huge financial impact. But we are here to help you. Drop your contact details today to consult with us about any decisions about Flats or Home construction. We are a team of Civil Engineers, Architects, and Financial Advisors. Our first consultation is completely free of charge!
Author- Sarbojit Dutta
Civil Constructions, Home Interiors & Renovations!
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