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Purchasing a residential property? Be aware of these things

When buying residential property, buyers should conduct thorough due diligence on it to ensure they aren’t confronted by nasty surprises later on. 

Home is where a person gets a sense of security for oneself and one’s family. People often spend an entire lifetime’s savings and take up the additional liability of a home loan for buying a house. To ensure the house is safe and secure, prospective homebuyers should tick boxes.

⮚     Due diligence

In purchasing property, thorough due diligence should be carried out prior to the investment. In doing, so one explores and determines: (i) the seller’s right to the property, (ii) the nature of the property – freehold or leasehold (iii) whether there are any charges / mortgages or litigation pending in respect of the property and so on. The due diligence ensures that no undesirable surprises  await you.

⮚     RERA records

With the advent of the Real Estate (Regulation and Development) Act, 2016 (RERA), all new projects are required to be registered with the RERA Authority established for the state. Pursuant to RERA, builders/developers are required to disclose project-related documents including title, plans, permissions, pending litigation, rights of the developer, number of flats/units sold, stage of constructions, the proposed completion date and so on.

If a residential property is being purchased in a new project, the first thing one must do is visit the RERA registration page in respect of the project and ascertain as many details as possible about the project. In addition to this, the offices of the Sub-Registrar in many States also provide an Encumbrance Certificates, which records details of the documents registered in relation to a property. A review of these documents gives a fair idea of any title-related matters.

⮚     Precautions to be taken if property is being purchased from an individual 

If you are purchasing a property from an individual, who is claiming the right to it through his relationship with a person who has died, it is advisable to first obtain the family tree of the person to whom the property belonged, ascertain who his heirs are and whether the seller is actually entitled to sell the property. If the person died leaving a will, then you have to determine whether the document as been probated by a court having jurisdiction over it. If there is no will, his heirs would have a right to the property and no single person, in his individual capacity, will be able to sell the entire property without the other heirs agreeing to the sale.

⮚     Society and government dues

If the property is an apartment located in a society, the society’s records, including whether its dues have been paid or not, share certificates are in place and duly updated, the age of the building and its structural stability  should be ascertained. This can be ascertained by obtaining a certificate or letter from the society or as part of a No Objection Certificate (NoC) of the society. It is equally important to ascertain whether all property taxes have been paid by the seller.

⮚     Looking for a home loan?

If the buyer intends to take a home loan, it should be ascertained whether the project (in case of new development) is approved by any particular bank. Loan disbursal is smoother if the project is already approved by a bank. Also, once the loan is availed, the purchaser/borrower may consider obtaining additional life insurance at least for the amount of the loan so that in the unfortunate event of death of the breadwinner of the family who is responsible for the loan repayment, the survivors are not burdened with the loan and the family can use the claim amount for repayment of the loan and securing the house for themselves.

Buyers can themselves take care of the above aspects, but there are multiple others that may need consideration and it is always advisable to seek professional services of a real estate advocate while purchasing a house. The advocate, in addition to the aspects mentioned above, can also advise the buyer on the draft of the sale-purchase document and the requirements of any additional NoC from the authorities (depending on the location of property), stamp duty, registration, taxation and so on.

Rahul Veera, Principal Associate and Bharat Jain, Principal Associate from Economic Laws Practice also contributed to the article. 
Aditya Khadria
first published: Apr 29, 2022 04:05 pm