Home Buying Guide – Part 12: Check The Documents Before Closing The Resale Deal
Buying a resale home is a daunting task as there are several legal intricacies involved in the buying process. However, a primary benefit of opting for the ready-to-move-in resale property is that you can move in anytime you want or lease out the property for rental income. Therefore, it is always advisable to buy a ready-to-move-in home in a resale purchase. Once a home buyer has zeroed down a house in a secondary property market, he must check and verify all the documents before closing the deal.
There are a lot of important legal documents involved in the purchase of a resale property. Therefore, it is essential for a buyer to see and verify them before closing the deal. Here is a list of documents that need to be checked and verified for buying a resale home:
Sale Deed
Sale Deed is the most important document required for buying a resale unit. It is considered as a core legal document that establishes the ownership of the title of the property.
Sale Deed includes all the necessary details about the buyer as well as a seller. It includes the address of the flat with the total amount being paid by you to secure that house. It is important that a Sale Deed should be registered. Therefore, you need to register the sale deed in the Sub- Registrar’s Office of the area where the property is located.
Sanctioned Building Plan
A home buyer must check whether the property has a sanctioned building plan or not and if there are any issues related to it. A buyer must acquire a copy of the approved building plan to establish that the construction of the property is legal and is done according to set rules and regulations.
Usually, a building plan is approved by the local planning authority. The building plan includes a blueprint of the property, equipment layout, and utilities. Without a building approval plan, a building will be deemed as illegal construction.
Completion Certificate (CC)
A completion certificate (CC) is issued by the municipal authorities on the completion of the project. This document establishes the fact that the building has been constructed according to an approved plan and other laws.
Occupancy Certificate (OC)
An occupancy certificate basically confirms that the building is completed and deemed fit for habitation. It also states that the construction has been done according to a sanctioned plan and other given norms. It is issued by a local government agency after the inspection of the completed project. This ensures that the building is ready to be occupied and can be possessed by people who are purchasing the property.
Possession Certificate (PC)
A Possession Certificate is issued by the Builder to the first owner. A PC confirms the proper construction and allows people to take possession of the property. You must obtain the possession papers from the seller if you are planning to buy a ready-to-move resale unit as it is not re-issued at the time of resale.
Encumbrance Certificate
An encumbrance certificate ensures that the property does not have any pending monetary and legal dues. It confirms that the property is free from any kind of dispute over its title and there is no dues or loan against it. It is issued by the sub-registrar where the property has been registered with complete details about the legal dues pertaining to the property.
Payment Receipts
A home buyer must check all the latest tax paid receipts, in case of buying a resale property. These are previous receipts that show that the full amount has been paid to the seller at the time of getting the allotment.
Mutation Document
A home buyer must attain and check the mutation document which contains all the details about a resale property. It includes the name of the owner, property size, location, and other important information. It is issued by the municipal authority in the name of the present owner.
No Objection Certificates (NOCs)
You must check from the electricity, water board, and other respective departments if the utility bills have been paid up-to-date by the seller. You can acquire these No Objection Certificates from the respective departments to ensure whether the seller has all his dues clear. These NOCs confirm that the seller has no defaults, penalties, or outstanding payments due to the respective departments.
No-Objection Certificates From Local Authorities (NOCs)
The No Objection Certificate is one of the crucial documents to check before buying a flat from builder which is issued by the local authorities. It works as evidence in showing that the project or the building is approved by the authorities and no objections are raised related to the construction of it.
There are so many NOCs that have to be acquired by a developer from different authorities while building a housing project.
Allotment Letter
An allotment letter is one of the most important documents. It is issued by a developer or the housing authority, stating the description of the property and details of the amount paid by the buyer to the developer. Do keep in mind that an allotment letter is not the same as an agreement of sale. An allotment letter is issued on the letterhead of the authority while a sale agreement is documented on a stamp paper. Moreover, an allotment letter is issued to the first owner and other owners can ask for the copy of a original letter from the seller.
Sale Agreement
The Sale Agreement is another significant document that is signed on stamp paper between the seller and the buyer. This document includes the details of the price of the property, the maximum amount, the due date to make the complete payment by the buyer, the size of the flat, the terms and conditions, the possession date, the payment plan, the specifications, the details about the common areas and facilities, etc. This document has to be produced in original for property purchase and acquiring a home loan.
Mother Deed
Mother Deed is the parent document that traces the ownership right of the property from the beginning, in case the property has changed various hands. Mother Deed also helps in the smooth selling of the property by establishing the current ownership. It helps in knowing the actual origin of the property. This document is needed when you buy a resale property.
Property Tax
All the properties attract property tax that has to be mandatorily paid by the existing property owner. Therefore, a homebuyer must check with the concerned authorities to see whether the previous owner had paid property taxes and all dues are cleared on the property. The latest tax paid receipts are proof that the property tax is paid up-to-date to the municipality.
Khata Certificate
Khata is nothing but a property account of a person. Khata is a legal document that contains all the essential details of a property regarding the name of the owner, building size, location, etc. Khata consists of Khata Certificate and Khata Extract. The Khata certificate is required at the time of transferring ownership of the property. However, a Khata Extract is nothing but obtaining the property details from the assessment registrar and is important at the time of property buying.
Land Use Certificate
A land-use certificate is mandatory, as it states the purpose for which the land is to be used such as agricultural land, residential land, commercial land etc. The purpose of the land should be clearly mentioned in the land use certificate, which specifies the type of land and the activities that could take place on that particular land.
Marketable Title Deed
One of the most important aspects of buying a resale property is to ask the seller for a clear marketable property title. It is very important to check the documents for closing the resale purchase and verify them before buying a house that ultimately helps in signifying the actual ownership of it. It provides the full right to the owner to claim absolute ownership over the property.
When you find a resale property, ensure that there are no other claimants for the same and it has a clear title of ownership and has received all government approvals. If the title of the property isn’t in the name of the seller, then legally he cannot transfer the same to the buyer unless there is consent from the real owner.
You should conduct a title search of the property for 30 years to ensure a clear marketable title. This is especially important in case you are buying a resale home.
Check for the existing loan on the property
The buyer should check if the original property documents have been mortgaged with the bank/financial institutions. It is important to ask the builder or property owner if any loan has been taken against the property you are going to buy. And if yes, has it been paid so far or else when it will be paid and then decide afterward whether to buy it or not.
Power of Attorney
This is an important document when buying a property. It is required to know if the seller has complete right over the property.
Through the Power of Attorney, a person appoints another person to act on his behalf. This document is required to prove whether the sale or purchase of a particular property is being done by an authorized person on behalf of the owner of the property.
Similarly, if the property is jointly owned by more than one person, each joint owner would be required to sign the agreement to sell and the sale deed, unless any one of them is authorized to act on behalf of the others by way of power of attorney. Also, you need to ensure that the POA is registered.
Share Certificate
This helps establish the owner’s membership in the society. One should check the share certificate issued by a society. The share needs to be transferred in your name as the purchaser. This certificate forms a part of your ownership deed.
It is essential to have the shares or the ownership documents allotted or transferred to ascertain the legal rights. Letter of transfer of shares is issued by the society. This letter shows that shares from the previous owner have been transferred to you.
Hire A Good Lawyer
Buying a resale home involves plenty of legal formalities with lots of paperwork and diligence. So, before you venture out to buy any property, it’s advisable to seek help from a legal expert or a property lawyer. These experts can handle all kinds of legal aspects involved in the process such as vetting all documents if required.
Preparing for the closing
The closing is done when ownership of the property is transferred through the buyer and seller signing the papers officially and sealing the deal. Be sure to read all documents carefully before signing them. Make sure that all documents are signed and that closing fee is properly paid.
When everything is settled, it’s the time to visit the sub-registrar of the area and produce the Sale Deed before him. Unless the property is registered in your name, it doesn’t belong to you in government records. Once you’ve reviewed and signed all closing documents the sub-registrar will verify them and will get your document registered. Thereafter, the house keys are yours and you will officially be a new homeowner. The flat becomes completely yours and it’s time to rejoice and make merry.
Also read: Home Buying Guide – Part 01: An Overview
Home Buying Guide – Part 12: Check The Documents For Closing The Resale Purchase
Ajay Verma is a founder and writer of The Housing World, a real estate and mortgage news website. He brings with him 20+ years of rich experience in the real estate and mortgage industries. He has worked in senior roles in Delhi and NCR in the above-mentioned sectors.
