Points To Remember Before And After Buying A Property

Points To Remember Before And After Buying A Property

As is obvious from the title, our attempt here is to make our readers aware of the things they should look into before buying a property, and equally important, what they should remember after they buy the property. Let us jump straight to the first part of the subject, “Points To Remember Before Buying A Property”.

Whether you are buying a property for investment purpose or for own stay,  it needs to go through certain evaluations and checks to mitigate any possible risk before one takes the final call.

We hope the points discussed in this article, would benefit you in making your next purchase.

1. Purpose of Buying: Even before you start your search for a suitable property, you need to have absolute clarity as to the purpose of your purchase. Your criteria for evaluation and comparison changes based on your purpose, be it for own use, or for renting or for investment. Based on the purpose of the purchase, one should factor in the location, market rate, possible appreciation in value, status of construction, built up area, carpet area and the undivided share, while doing a deep dive of that property.
2. Due Diligence: It is ideal to engage an expert who can do a detailed check of the property documents. Please keep in mind that the points mentioned below form a part of the legal evaluation one is expected to do [this part we have discussed in a related article “What are some questions you should ask a builder / seller?''] before you purchase any property.
   • Check whether the seller from whom you intend to buy has legal ownership and possession over the property being sold.
   • Check whether all approvals and certifications required from the development authority for construction of the building and also for the occupation of the property are in place.
   • Check whether all the legal clearances such as water and sewage board, electricity board, fire and emergency services, pollution board, environment etc. are taken before commencement of work.[Recently in Forward Foundation and others versus State of Karnataka and others, the National Green Tribunal has delivered the land mark judgement wherein proper permissions were not taken before commencement of the project. The Tribunal vide its order has put a halt to the construction and also levied fine from the builder. It has also set strict guidelines for the SEIAA (State Environmental Impact Assessment Agency) to impose a new buffer zone of 75 meters from lakebeds or wetlands and to amend legal clearance accordingly.  The reference to this judgement is only to make you aware of possible consequences if proper statutory NOC/clearance as mandated by law are not taken.]Currently in Bangalore, there is a demolition drive by the government for demolition of illegal constructions on Rajakaluve (storm water drains) and encroachments on lake beds. Some of these could possibly have been avoided, had a proper diligence been done by the buyers before purchase of the property.
   • Identify the type of land on which the property is constructed. For instance if originally the nature of the land is agriculture, then ensure a proper conversion order to use it for non-agricultural purpose has been obtained.
   • Check the zoning of the land as denoted under the comprehensive development plan. If the land is marked for commercial use, change of land use by paying statutory charges to the development authority is required to use it for residential purpose. If applicable, ensure the “change of land use order” is in place.
   • Check whether all the dues, charges, improvement charges, loans, taxes, maintenances, encumbrances are cleared regularly.
   • If you are buying a villa, check whether the Layout which is formed is approved by the development authority.
   • Check the report of the official surveyor for details of the extent, all types of waste land, details of any storm water drains etc.
   • Check the revenue records of the Property on the Official Website.
   • Give public notice (most advisable while purchasing an independent house or land) regarding the intent of your purchase in newspapers, so that you will come to know if there are other claimants for the property.
   • Check the authenticity of the title documents from the development authority, concerned local authorities and sub-registrar offices.
   • Inspect the original documents available with the seller.
   • Check if betterment charges are to be paid to the local municipal authorities. If you are buying your property on resale from an existing owner or if it is a direct sale from the builder make sure the previous owner or the builder as the case maybe, has paid off the charges. Else you would be required to pay such charges when you apply for the khatha/mutation transfer post your purchase.
   • Collect up-to date property tax paid receipts from the previous owner. It will be required, when you submit taxes post your purchase.
3. Road Map for the Purchase: 
   • Negotiate and fix the sale price; define and detail all expenses and charges included in the sale price.
   • Negotiate and agree on your payment plan with the seller, any flexible plan can reduce your financial burden.
   • In case you are availing loans, compare loan offerings from multiple banks and other agencies to check for loan rates, lesser EMI’s and better payment options.
   • Fix the timeline for signing the legal agreements; execution and registration of sale deeds; and also the date of actual delivery of possession.
4. Legal Documentation [this topic we have discussed in detail in “11 must have clauses in the Agreement To Sell and Construction Agreement“]:
   • Document all the terms and conditions finalized with the seller to avoid ambiguity on the obligations and liabilities of either party.
   • Always collect the receipts of all payments made to the seller.
   • In the agreement always record the date of delivery of possession and penalties to be imposed on breach of the obligations, so that failure of commitment on the part of the seller does not curtail your right to compensation.There have been cases, wherein due to long delay in delivery of possession, the Parties have suffered immensely and approached Consumer Courts for redressal.[Here are some land mark judgments which were delivered by several Forums/State Commission.
     • District Forum of Chandigarh decided a case Inderpaul Singh & others vs. TDI Infrastructure Ltd., directed the Builder to refund the amount of Rs.7,25,000/- along with interest @10 % p.a. (since the date of deposit till the payment is made), also to pay Rs.50,000/- as compensation to the complainant.
     • Ghaziabad District Forum delivered a verdict sentencing a Ghaziabad Development Authority secretary to six months imprisonment for not giving possession of a house to its allottee for 14 years and also imposed a fine of Rs.5000 on GDA Secretary and directed the Ghaziabad SSP to arrest him.]

If you document all terms and conditions, it will secure and protect your rights on the properties and shall leave less room for the seller to deviate from the agreed terms. Further, if the Seller breaches the terms, it shall ensure you remain legally indemnified.

Let us now look at the second part of our subject, “Points To Remember After Buying A Property”

Buying a property is like crossing a half hurdle, the ownership comes along with a bundle of responsibilities. There are certain compliances related to the property which an owner is required to comply as per the statutory provisions of law.  Let us look at what those compliances are.

1. Whenever a property is bought, it is required to pay adequate stamp duty and registration fees on the conveyance deed which has to be duly registered with the jurisdictional Sub-Registrar upon payment of the consideration. Always keep the conveyance deed and other property documents in safe custody.
2. Once property is registered in your name, you need to get the property khatha/mutation transferred in your name in the revenue records of the concerned municipal authorities.
3. Never fail paying your property tax in time. If the property owner fails to pay the stipulated property tax every financial year, then the government is authorized to impose penalty of two percent (2%) every month on the value of property assessed till such payments are made.
4. To add further to the list, the timely payment of electricity bill, water charges and the maintenance fee to the association are also some of the mandatory requirements.

In short, with the enjoyment of ownership there also comes certain liabilities towards the property which you are required to comply to enjoy a peaceful ownership.

We hope this article would come handy to prospective buyers of property.