When buying property in India, whether it's for residential or commercial purposes, the process can be complicated. With numerous legal formalities and potential pitfalls, it’s crucial to be well-informed to avoid costly mistakes. This blog will outline the key things to consider before you finalize your property purchase. Key Things to Consider Before Buying Property in Mumbai
1. Title and Ownership Verification
Before purchasing any property, verify that the seller has a clear and marketable title to the property. This means that the seller must have the legal right to transfer ownership. To ensure there are no legal disputes, you should:
- Obtain a title report from a lawyer or a title search agency.
- Ensure the seller’s ownership is unencumbered by legal disputes, liens, or claims.
- Trace the chain of ownership for at least the past 30 years.
In the case of Suraj Lamp Industries v. State of Haryana (2011), the Supreme Court clarified the importance of title verification and ruled that no property sale is valid without a properly executed sale deed.*
2. Encumbrance Certificate
An encumbrance certificate is critical to prove that the property is free from any monetary or legal liabilities. This document will show whether the property has any outstanding loans, mortgages, or unpaid taxes.
3. Check for RERA Registration
The Real Estate (Regulation and Development) Act, 2016 (RERA) mandates that all developers must register their projects with the RERA authority. This is applicable to both ongoing and new projects. Check whether the property is RERA-registered to ensure:
- Compliance with building norms and regulations.
- Transparency of the project and legal safety for the buyer.
- Timely completion and delivery of the property.
Pro Tip: Always cross-check the developer’s promises and the project details on the official RERA website before making any payments.
4. Legal Diligence: Verify Building Plan Approvals
The property's construction must be in accordance with the local municipal authority's building plans. Ensure that the builder has the necessary approvals for:
- Zoning regulations.
- Environmental clearances.
- Construction layout approvals.
Any unauthorized constructions can be subject to demolition, leading to significant financial and legal losses for the buyer.
5. Check for Property Tax Payments
Ensure the current owner has cleared all property taxes. Pending taxes or dues can become the buyer's responsibility after the transaction. Ask for receipts of previous tax payments and consult the local tax authorities if needed.
6. Due Diligence on Mortgaged Property
If the property is mortgaged, you will need a release certificate from the bank or lending institution, ensuring that the loan has been cleared before purchase. This protects you from future legal entanglements regarding the property.
7. Sale Deed: The Final Document
The sale deed is the most important legal document in a property transaction. It transfers ownership from the seller to the buyer and must be:
- Executed after ensuring all other legal formalities are completed.
- Signed by both parties in the presence of witnesses.
- Registered at the local Sub-Registrar’s office under the Indian Registration Act.
In Shanti Budhiya Vesta Patel v. Nirmala Jayprakash Tiwari (2010), the court emphasized the importance of registering sale deeds, stating that an unregistered sale deed cannot transfer property ownership legally.*
8. NOC from Authorities
If the property is part of a cooperative housing society or if it's a flat or apartment in a complex, ensure that the seller has obtained a No Objection Certificate (NOC) from the society or relevant authority.
9. Stamp Duty and Registration Fees
Don’t forget the additional costs of stamp duty and registration fees, which are mandatory for property registration in India. These charges differ across states but typically range from 5-8% of the property’s value. Failure to pay these fees could render the transaction legally incomplete.
Conclusion
Property purchases are long-term investments and require thorough legal diligence. It’s always advisable to consult with a property lawyer to ensure that your investment is protected from legal complications. Avoid shortcuts and make sure you have all the proper documents in place before committing to the purchase.
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