Checklist while buying property in India

Investment in realty is one of the most crucial and important decisions that a person has to take during his lifetime. Considering that it is one of the most expensive investments that a person engages in, with a sizable amount of his savings, it is important that it involves due diligence. Otherwise, one could end up being duped by fraudulent developers, thereby being in a financial soup. Hence, it is essential that an investor is extremely scrupulous while making a realty investment decision.

Here is a checklist of legal and property documents that need to be verified before investing in residential or plotted land in India.

1. Title Deed/Certificate of land title:

A title deed is a legal document that proves that a person is the owner of a property. It presents certain rights and securities to the person who holds it. It is required when a person wishes to transfer the ownership of the property. A title deed includes the description of the property as well as the name/names of the person/persons who hold it. An official seal confirms that the property is officially recorded. It should signed by the owner as well as a witness who may be a regional officer or a clerk. It is important to ensure that the original title deed is received which should be in the name of a seller. It would be safer to get the property deed reviewed by a legal expert to ensure that there are no loopholes.

2. Encumbrance Certificate:

Encumbrance refers to any liabilities created on a property as a result of it being placed as a security for any debit made by the property owner which has not been cleared to date. Security may be in terms of a bank loan that has been extended against the property. An encumbrance certificate is a legal document which is issued by the registering authority. It is required while buying a property so as to check the title clearance of the property. Generally banks and government authorities ask for encumbrance certificate for upto 13 years. However, a property buyer can ask for encumbrance certificate for upto 30 years from the registering authority.

3. Torence Plan:

Torence plan is a detailed plan of the property which is prepared by a licensed surveyor. It gives the details of all the measurements of the property in terms of length, breadth, borders etc. This document is required only for certain specified areas.

4. Pledged Land:

Generally property owners pledge land while taking a bank loan. In case the property was pledged by the owner, it is imperative that the buyer ensures that all the dues have been cleared and there are no liabilities attached to the property. If all the liabilities have been cleared, the bank would issue a ‘Release certificate’. Hence, the new buyer would need to get this Release certificate from the owner, if the property needs to be pledged later.

5. Property tax receipts:

Property taxes are the charges that the owner has to pay on the property to the government or municipality on a yearly basis. To ensure that all property taxes have been paid to date, the buyer can get the latest property tax receipt from the owner. To cross-verify this, the property buyer can inquire with the government or municipal office. This will also enable him to ensure that there are no notice or requisitions issued on the property as well as that all dues have been cleared. It is also essential that the property owner’s name is confirmed through the village office using the survey number of the land.

6. Measurement of property:

Before buying property, it is essential to ensure that the measurements and borders of the property are accurate. This can be done through an authorised surveyor. To ensure the accuracy of the different measurements, a survey sketch of the property can be obtained from the survey department.

7. NOC from other owners:

In case there is more than one owner to the property being bought, the buyer has to get a No Objection Certificate (NOC) or Release certificate from the other owners.

8. NRI owner:

An NRI owner who owns property in India can sell his property through a third person. This person is entrusted a Power of Attorney which bestows him the right to sell the property on behalf of the owner. However, in such a scenario, it is important to ensure that the Power of Attorney is witnessed and duly signed by an officer of the Indian Embassy.

9. Deed/Sale Agreement:

After all the financial and other aspects related to the sale of the property are sorted out between the buyer and seller an agreement is made. IT specifies details related to the sale like the advance payment, the final actual amount, the installments if any, the time limit to clear the sale amount as well as when the actual sale will take place . This is done on a Rs.50 stamp paper. It also specifies how costs will be covered in case the buyer or seller defaults. It also ensures that the seller does not defer costs after the finalisation of the sale deed as well as does not sell the property to anyone else. This agreement is made through an expert lawyer, with both the buyer and seller as well as two witnesses signing in it. After this agreement is made, if any of the parties defaults, then legal action can be taken against them.

10. Property registration:

All property sales will be deemed illegal unless they are duly stamped and registered by the authority concerned. After all the documents are verified and collected, the property has to be registered at the Sub-Registrar’s or the Sub-district Magistrate’s office in that area.