The property buying process is most crucial when you think of owning or investing in a new property. It’s wise to be doubly sure rather than being duped into a never ending legal battle. To provide guidance on ‘Do new properties need legal checks?’ Magicbricks organised GuruTalk – a live chat session with Dhiraj Jain, partner-real estate, SNG & Partners.
If you are looking to invest in a new property that is still under-construction Jain said, “It is wise to get a thorough legal and technical due diligence done to ascertain the following:
(i) Whether the seller has clear and unencumbered title
(ii) Whether the property is under mortgage
(iii) Whether the plans and Completion Certificate obtained are pertaining to the property proposed to be purchased and is also being constructed as per the plans
Ensure there is no builder loan pending and if there is a loan, kindly insist on a bank’s NOC.
Talking about investing at the pre-launch stage Jain said, “This stage may appear attractive due to lower prices, however, it is not a recommendable investment as you do not have any rights nor any interest is created in your favour during this stage”.
Jain further informs that however it is safe to buy a re-sale property. But one should still ensure all the original title deeds – since inception till date – are available and also get a proper due diligence done to ensure there are no encumbrances.
So how can one validate the authenticity of a property claimed by the builder? “The best way to confirm the legality of the property is to get a thorough legal and technical due diligence done,” said Jain.
How does one check the credibility of a local builder? “There is no fixed rule on getting the credibility of a local builder checked. If he allows his financials to be audited, get a Chartered Accountant to go through the same and if he has a good track from the past 3-4 years, he may be considered strong financially. You can also google about him to get a better idea. Also, if it’s a company get a Company Secretary to check the company’s performance.”
When it comes to reputed developers, is legality a concern? Jain advised that any kind of investment should be done only post proper verification. For those stuck in legal hassles, “The recourse depends upon the termination clause under the agreement entered with you. If any representation has been made as a clear and marketable title by the seller, you may adopt appropriate proceedings. However, if you have bought the property knowing about the legal hassle then mutual negotiation will only help.”
In case you are buying or investing in a plot with Gram Panchayat, Jain advises, “You should ensure that the proposed plot is properly demarcated and a separate property card (revenue record) for that particular plot is available. It is advisable that a thorough legal due diligence be done prior to the purchase”.
Those who want to sell land, Jain informed, “Normally any purchaser would like to have a photocopy of the title documents. However, to ascertain the authenticity of the purchaser, you may ask for a certain amount as Earnest Money Deposit”.
Property buying is the toughest and biggest decision of our lives as it involves a huge sum of money thus ‘Don’t hesitate to spend a few bucks more rather than getting stuck later’.
Neha has a vast experience and she has written on industries such as real estate, franchise and outdoor advertising.