house ownership documents: Buying a house? You must check and take these documents from seller – The Economic Times

Clipped from: https://economictimes.indiatimes.com/wealth/real-estate/buying-a-house-you-must-check-and-take-these-documents-from-seller/articleshow/79013266.cms

SynopsisExisting homeowners and prospective home buyers should know the important property documents they should have in their possession when they own a house. Here is a look at the main or important documents you should get from the seller while buying a house.

When you own a house, there can be many situations when you need all the documents related to it. For example, house related documents would be needed to transfer ownership of house either via resale or a will and to provide proof of compliance with various government laws etc.

Last year, residents of a South Delhi colony got a rude shock. Many in the colony received notices from the South Delhi Municipal Corporation asking them to submit completion certificates to the corporation within 15 days or risk facing punitive action. Those without the documents now have to cough up lakhs of rupees. Mind you these were residents who have been staying in these houses for decades.

This is just one example. Like this there may be many examples of homeowners across the country facing problems because they did not have the required documents for their homes. Therefore, when you buy a house you must get all the required documents of your house from the seller; you never know when you will need them.

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Both, existing homeowners and prospective home buyers should know the important property documents they should have in their possession when they own a house. Here is a look at the main or important documents you should get from the seller while buying a house.

Types of property
A house can be bought through a government agency like the Delhi Development Authority (DDA), a builder or developer, in a cooperative society or from an individual homeowner. Each type has some common and some extra documents that you should get.

Let us look at these different types of properties and the documents you need to procure for each.

  • Buying a house from government agency

Experts say that buying a house from a government agency like the DDA, Maharashtra Housing and Area Development Authority (MHADA) etc is safer, in terms of documentation, than buying a house from a developer or builder.

Avnish Sharma, Partner, Khaitan & Co says, “The purchase of a property from a government agency is extremely secure as compared to a purchase from a builder or developer as there are very limited exceptions such as the initial land acquisition itself being cancelled for non-compliance with the applicable laws which can make your house property ‘built illegally’. A government agency offers two types of schemes to a home buyer – leasehold rights and freehold rights.”

Even though it is safer to buy a house from a government agency, you should do your own checks before signing on the dotted line. For instance, before buying the house you should check for the construction quality and age of the property.

M. Arun Kumar, Partner, Induslaw says, “Before applying for allotment or before buying a house constructed by government agencies like DDA etc., it is necessary to visit the property site and check the construction quality. Another thing to keep in mind is the age of property, i.e., when the property was built. This is because a property that is more than 2-3 decades old may require higher maintenance expenses as compared to a newly built or 5-10-year-old property.”

Once the decision is finalised, the agency will issue two documents: Allotment letter and Conveyance Deed/ Sale Deed or lease deed, as applicable.

Kumar says, “Allotment letter is the document which acts as a proof of the original allotment to an applicant. Thereafter, a Conveyance Deed/Sale Deed is a contract in which the seller (government agency) transfers all rights of the property to the buyer, providing the buyer the absolute and undisputed ownership of the property. Essentially, it becomes freehold property in the hands of the owner. Although the right and peaceful enjoyment to the property is entirely with the owner, government allotted flats at times carry some restrictions on further construction or alteration of the property depending on local municipal laws.”

One must remember that in specific cases like Noida, the property is not sold but leased to the person who applies for allotment.

Sharma says, “Under the lease deed, the government agency usually allows the individual to live in the property, or at times to sell the lease rights of the property to another individual. However, the absolute ownership of the property remains with the government only.”

Sharma adds, “At the time of initial scheme announcement, the agency releases the scheme brochure which contains details of the property, terms of payment etc. One should keep the brochure safely for referring to information which may not be available in the conveyance/lease deed for future. One should ask for the completion/occupation certificate from the agency to avoid any disputes in the future.”

Documents a homebuyer@2x

ET Online(Graphic by Abdul Shafiq)

  • Buying from a builder or developer

Buying a house from a builder or a developer, no matter how reputed or even if they are listed on the exchanges, requires rigorous checks. You do not want to end up getting scammed or worse, losing your house.

Here’s what happened to the 200 families in Noida’s Gardenia Gateway. These families got notices from the bank asking them to vacate their homes. As per the lender, the developer had taken mortgage loans for the project and had not repaid the bank. These homeowners who were served with the notices had already paid the money to the builder. Thankfully the lender withdrew the notices.

To avoid being caught in this type of situation, as a buyer you should ask the builder to show the Development Agreement/ Joint Development Agreement/collaboration agreement, as the case maybe, executed by the builder/builders/individuals and loans/mortgages created by the builder.

Sharma says, “These agreements provide information regarding in what capacity the builder is working on the land to build the houses, how much is the builder’s actual right in the property and what is he/she is legally allowed to sell you. As a buyer, it is your right to demand such information from the builder or a developer.”

Kumar says, “If the builder does not on its own provide these documents/details, you can take the help of a lawyer. A lawyer can check the land revenue records with the government to ensure that the builder is the actual landowner and what kind of mortgages or encumbrances are created on the land or the building that is built on the land”.

Know your property before you buy: Real estate terms homebuyers should keep in mind

Are you prospective homebuyers? Then you should get familiar with these jargon used by builders in order to make an informed choice. ET’s Sanket Dhanorkar and Sakshi Prashar explain some commonly used real estate jargons. Watch before you embark on your real estate journey.Other than this, you need to check for other things as well from the builder. These include building plans that are sanctioned from the government authority, No Objection Certificates obtained from agencies like fire department, for putting the lift, Airport Authority of India (for high rise buildings), electricity department, sewage department etc.

Further, do ensure that the building project is RERA compliant. Although the law requires the builder to display the RERA registration number for ease of reference to all buyers, an individual can check if the building project is RERA compliant by visiting the respective state’s RERA website and entering the RERA registration number or name of builder or name of the project.

Further, a lawyer’s help can be taken for the verification of the title of the unit/house that is proposed to be purchased, details of land use – conversion details, land use permissions, zoning permissions and for encumbrance certificates.

“It is recommended that a title check is conducted for the particular unit that is being purchased in an apartment. Certified copies of relevant documents that are required for title check can be obtained from land revenue authorities and government authorities on paying a nominal fees and thorough check of all these documents does go a long way in satisfying oneself of any potential disputes or liabilities that may come up in future,” says Kumar.

An Encumbrance Certificate or as is most commonly called EC is a certificate of assurance that the property in question is free from any legal or monetary liability such as a mortgage, charge or an uncleared loan.

Once the evaluation of the property is done and you have decided to buy the property, the builder should give you the following documents:

a) Conveyance Deed/Sale Deed
b) Any possession letter of the unit/house issued by the builder
c) Completion Certificate and Occupancy Certificate issued by the competent authority

Sharma says, “In cases where the builder has collaborated with an individual property owner under collaboration agreement and the property is still under construction, the buyer must be mindful that the right of the builder to sell the apartment would normally be contingent on the execution of the development work. So, it is advisable to check with the owner about if there are any disputes.”

  • Buying a house from another individual

Before buying a house, you can request the seller to share a copy of the following documents:

a) Copy of conveyance deed/sale deed by which the existing owner (i.e., the seller) obtained the right to the property to ensure that he/she has the right to sell the said property;
b) Copies of all property tax payment receipts to ensure there is no property tax payment pending for the property. In case property tax dues are pending, then once you have bought the house, you will be liable to clear such dues;
c) Ensure that all the electricity, water, gas bills and any other utility bills for the property are also paid till date.

Kumar says, “These documents will help the buyer verify that the seller is actually the owner of the property and there is no other third party who has or can claim ownership over the said property. One should also verify the seller by asking him for his PAN/Aadhaar to ensure that seller mentioned on the sale deed is same person to whom you will be giving money to avoid scams. Also, ask the seller if any modifications, alterations, etc. have carried out in the house by existing owner. As explained earlier, at times, there are restrictions on making modifications/alterations in the house and the buyer must ensure there is no such non-compliance on the property.”

Is it a good time to buy property? Here is expert’s take

ET Online’s Shambhavi Mehrotra speaks to Raj Khosla, Founder & MD, MyMoneyMantra.com, who explains how homebuyers can gain in terms of pricing, interest rates etc. while buying property and sheds light on the pitfalls one must look out for when it comes to real estate in this period of uncertainty. Watch now.Once the above-mentioned checks are made, the seller should give you the following documents or you should ask for the same:

In case of house was allotted by government agency
a) Sale Deed/Conveyance Deed or lease deed, as the case maybe
b) Original Allotment Letter
c) Receipts of paid property tax
d) Receipts of electricity, water, gas and any other utility bills

In case house was built by builder/developer
Apart from the documents mentioned above, following documents must be collected from the seller,
a) Possession Certificate (if any),
b) Completion Certificate and Occupancy Certificate from the relevant competent authority.

Kumar says, “Some states and municipal corporation also issue a property card. A buyer must ensure that the same is collected from the seller. Similarly, if the seller has taken a home loan to buy the house, then the buyer should enquire about the same from the seller and ensure that any documents related to closure of loan accounts have been taken from the seller.”

Sharma says, “As a buyer, you must ask the seller to provide you all the old sale/lease deeds from the first allotment by government agency or builder. This is done to ensure that old documents provide you the correct owner chain from the first buyer till the last, i.e., you.”

  • Buying a house in co-operative society or RWA society

The process of buying a house in a cooperative society or Residents Welfare Association (RWA) is similar to buying a house from an individual homeowner. However, additional documents must be collected from the seller if the house is in a co-operative society or is part of a registered RWA.

These additional documents include:
a) No Dues Certificate from the association/society stating that all dues for maintenance, etc. have been paid and settled and no such dues are outstanding;
b) Details of existing owner’s registration number/membership number in the RWA/Co-operative Society;
c) Further, a No Objection Certificate (NOC) from the RWA/ Cooperative Society, if required, as per their bylaws for enabling the sale and
d) Copy of the Bylaws of the RWA/Society – This needs to be reviewed to ascertain the restrictions in the use of the house, whether alterations/remodelling can be carried out or not, use of common areas, details of maintenance charges that are payable etc.

A buyer must understand the by-laws and society rules to ensure that there are no lifestyle challenges in buying a house in a co-operative society. There are examples of co-operative society’s having strict rules on not having pets, or not allowing pets to walk within the apartment complex, and then there are examples on restricting members from cooking non-vegetarian foods, conducting hawans (puja), having more than 1 vehicle and if there are more vehicles then the same to be parked outside the apartment complex.

Conclusion
Along with the above-mentioned documents, to further provide you protection from any future financial loss, it is better to add an indemnity bond in the sale agreement (except in case of government allotment), says Kumar.

An indemnity bond is an agreement in which the seller promises to compensate the buyer in case of any financial loss caused to him in case of any third party claim or dispute related to the title of the house which arises due to any fault of the seller.

A house is probably the most expensive asset one will own in one’s lifetime. Which is why one should make sure that enough due diligence is done before taking the keys to the property and all the necessary documents are in one’s possession. You do not want to end up like the 200 homeowners in Noida, the residents of the South Delhi colony or the scores more who landed in trouble because they did not have the required property documents.

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