Home Buying Guide – Part 11: Check The Documents For The Primary Purchase
Once a buyer finalizes the property in a primary purchase market, there are some legal intricacies that need to be dealt with to complete the purchasing process. Often a project faces delays in getting legal approvals from a number of authorities which lead to serious consequences for the buyer.
You should find out if a builder has obtained all the approvals before commencing work at the site and the finished building conforms to the approved plan. Even, noncompliance may result in scrapping of the project.
Therefore, before investing in a property, the buyer must check all the approvals and clearances to ensure that the builder has completed all the regulatory and legislative obligations.
Check The Legal Documents Of The Property
There are a number of important legal documents which are essential to complete the sale. If the flat is to be purchased from a private developer, check if the builder has obtained all the necessary documents of approvals and clearances. Some of these legal documents are Sale Agreement, Title Deed, Sanction Plans, Environmental Clearance, Structural Safety Certificates, Urban Land Ceiling Certificates, and Commencement Certificates etc. Make sure there are no unwanted encumbrances in the the primary purchase of the property.
Check The Title Papers
You should check the purchase agreement between the developer and the authority or the agency from which the land has been bought. If you are thinking to do the primary purchase from a builder, you must check the ownership of the land on which the project is to be developed. This will determine whether the title of the property is clear or not and if the property is free of encumbrances. Besides, this will confirm you whether the land is freehold or leasehold, and whether the seller is entitled to develop and sell the property or not.
However, the risk of clear titles and documentation gets reduced significantly if a developer purchases the property from the urban development authorities. You can ask them to show the allotment letter of the land if it has been acquired from a government agency.
But, if the land has been acquired from farmers, check the title paper of the land ownership and also find out, if the land is approved for residential purposes.
Check The Approved Sanction Plans
The next step should be to find out whether the developer has secured all the required approvals for that project by the concerned local authorities or not. A building should be approved by the concerned local body, which is responsible to look for civic as well as infrastructural assets. It could be a municipality or an urban development body.
For this, check the sanction plan of the project and confirm that the development is approved and entirely legal. So, ask the builder for the approved plan of the building along with the number of floors, and the floor on which the apartment intended to be purchased. Make sure the building bye-laws are applicable in the specific area and there are no violations on the part of the seller.
No Objection Certificates
A No Objection Certificate (NOC) from the local civic authority is required if the building is to be built on its land. Besides, don’t forget to obtain NOCs from the water, electricity, lift and land ceiling authorities.
If the residential project is in an ecologically sensitive area, environmental clearance from the concerned authorities is essential. Without this, the construction would be considered illegal.
The local body should provide a certificate for commencement of construction. This would be issued after the promoter has obtained all the necessary clearances and approvals.
Check that the land is not designated as agricultural land, else the construction will be illegal. Developers should get it converted into the residential land from the concerned authorities if the land was originally agricultural or earmarked for other purposes.
Besides, if you are planning to buy a house in a completed project, then check the occupation certificate, fire safety equipment, and mechanism, water and electricity connections and property tax receipts etc.
If you are buying a ready-to-move-in property then ask for the completion certificate issued by the municipal authorities. It confirms whether a building complies with the rules and whether it is built according to the approved plan. Besides, this confirms that all necessary amenities like power, water, drainage, etc. are ready and it adheres to municipal requirements.
You should also check the Occupation Certificate which the developer obtains by the local body when the building is complete and fit for living. The Occupation Certificate from a government authority is very important as it confirms the handover of the property to the buyers.
It certifies that water, sewage, and electrical connections are in place. It also signifies that it has not only got all the approvals in place but also it has adhered to all the specifications given in the “agreement to sell” and correspond with the plans of the construction norms and building bylaws.
The carpet area is the actual usable area which includes the area within the walls. Since the implementation of the RERA last year, the developer can charge for the carpet area only. Therefore, you should know your actual carpet area, the area which is now used to work out the cost of the apartment.
Gross Price Of The Flat
Sometimes, it is possible that the developer may not be fully transparent at the time of booking with regards to the gross pricing of the property. The gross price of the property is typically a sum of the base price, external development charges (EDC), infrastructure development charges (IDC), preferential location charges (PLC), electricity and water connection charges, GST and any other applicable taxes, etc.
In fact, EDCs are levied by the developer on the buyer for developing infrastructure within the complex. However, IDCs are levied by the government on the developer and, in turn, the developer passes it on to the buyer. IDC includes development charges for water supply, sewerage, storm water drainage, roads, street lighting, community buildings, horticulture, public health, road maintenance, and street lighting maintenance etc.
Amenities such as car parking, club membership if applicable, and maintenance charges are levied at the time of occupancy.
Bank Verifies The Documents
If you are planning to buy a flat through a housing loan, the bank normally appoints its own lawyer to check the title deeds. So, if you take a home loan from a bank, it too is involved in the whole process.
Otherwise, you can hire a property lawyer who can handle all kinds of legal aspects involved in the purchasing process. But as a smart buyer, you can also pore through the documents yourself.
It’s important that you do a due diligence of the property before buying it as there is a huge financial transaction involving a significant portion of your earnings and wealth. So, verify all the relevant documents before buying the property, considering the legal implications that improper documentation can create for you. Therefore, ensuring proper documentation for legal safeguards makes your home ownership a lifelong delight to cherish.
Also read: Home Buying Guide – Part 05: Resale Old Home
Home Buying Guide – Part 11: Check The Documents For The Primary 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.