Checklist Before Finalising a Property Deal
This article gives a complete guide for the Checklist Before Finalising a Property Deal. Owning your own home is something people think about for years before they buy it. Many actually save up for years so they can buy a house in India. Once someone realizes they have finally found the right one, they get excited and will lose their common sense and good judgment during the entire process of purchasing a property. From hidden “floor rise” fees to the confusing process of real estate regulation (RERA) paperwork, the path from initial site visit to final registration can be very difficult and has many potential landmines.
To help protect your investment and give you peace of mind, we have provided a complete checklist of all items that need to be addressed prior to making a real estate purchase in India, so you will be able to follow this step-by-step guide and make sure that your purchase is a good one.
Below is the Checklist Before Finalising a Property Deal:
1. Verify Property Ownership
Verifying the ownership of the property is the first step in a property finalization guide; the seller must have a clean legal title to the property- i.e., an encumbrance-free title deed. Things to consider include:
- The title deed.
- Previous ownership history.
- Any encumbrances on the property.
- Disputes/legal issues.
A trustworthy title will provide you with assurance that your seller has the right to sell and that there aren’t any secret claims against the property.
2. Check Land Use and Zoning
To confirm the proper land use permissions when purchasing land is extremely important before purchasing any land.
For example:
- Residential property may only be developed on land designated as residential;
- Commercial property may only be developed on land specifically designated for commercial use.
Zoning laws are created by local authorities to regulate the allowed uses of land. If the land does not have the appropriate designation from the local authority, you may have a lawsuit with the local authority sometime in the future.
Before an Indian buyer can complete his/her due diligence on land, checking land use permissions is a critical step.
3. Confirm RERA Registration
If you are thinking about buying an under-construction property, it is important to check if the property is registered with RERA (Real Estate Regulatory Authority).
The RERA registration provides:
- Transparency in the property and how it was built.
- Tenants or Buyers will receive protective measures.
- Tenants or Buyers have legal recourse against the builder.
You can easily check the property’s approvals and construction status as well as the completion date from the RERA website.
4. Check Property Approvals
A property should receive the necessary approvals from local authorities. If it does not receive the proper permissions, it is possible for the property to be deemed illegal.
Approvals that you should check to ensure that you are getting the right approvals include:
- Building plan approval
- Commencement certificate
- Environmental approval
- Municipal approval
These documents will verify that the cost of the work has been accurately completed following the Government or official guidelines.
5. Review the Builder’s Reputation
When purchasing a home or land in India through an actual builder or developer, it’s critical to perform thorough research into the developer’s history and reputation before starting your purchase.
You should research their:
- Prior completed projects
- Timeliness of completing projects
- Quality of the finished product
- Testimonials and reviews from prior customers
Finding a builder with a good reputation (i.e. has delivered built properties on time) can greatly reduce the likelihood of delays in possession or legal issues arising from your purchase.
Although this step is frequently neglected when conducting research related to real estate transactions in India, it is an important part of any Property Purchase Checklist in India.
6. Check the Total Cost of the Property
A lot of people only consider how much they are paying for the actual property and overlook all other associated costs.
The complete cost could also include:
- Stamp Duty
- Registration Fee
- GST (if applicable, for an under-constructed property)
- Maintenance Deposit
- Parking Fees
- Society Formation Fee
These additional costs can add to the overall amount that you will have to pay. Always request a detailed list of all the costs involved prior to signing a contract.
7. Verify the Carpet Area
Oftentimes, real estate developers will use phrases such as built-up area, apartment area, or super built-up area to promote their properties. However, it’s important to be aware of the carpet area or actual square footage of your new home.
Verify that the carpet area in your agreement is consistent with what you see on the project website. This is a method to ensure accuracy in your purchase and to reduce confusion about your property.
8. Check Home Loan Eligibility
Before obtaining a home loan, check the property’s approval status with the major banks.
Most of the banks will carry out their own legal checks on the property before they will approve any loans. If your property has been successfully approved by a number of different banks it indicates that your project has all its legal documents in order.
Also check:
- Your eligibility to borrow
- Interest rates
- Affordability of the EMIs (Equated Monthly Instalments)
- The fees for processing the loan
The loan capacity is the first step to buying property in India.
9. Inspect the Property Physically
Personal Inspection of Property Prior to Closing a Deal
It is essential to conduct an in-person inspection of a property and to determine:
- Construction quality
- Water systems
- Electrical systems
- Ventilation and lighting
- Parking
- Nearby Infrastructure
Completing a physical property visit can reveal hidden defects in a property’s construction which may not be revealed through brochures or online listings.
10. Check Location and Infrastructure
The location of a property is a key factor in determining current and future property value.
Some of the factors that contribute to property value are:
- Proximity to highways and public transportation
- Distance to your job or local business centres
- Proximity to schools and hospitals
- Proximity to shopping centres and daily necessities
- Future infrastructure projects
A good location will have a better lifestyle, convenience and provide long-term investment returns.
11. Review the Sale Agreement Carefully
The sale contract should have everything outlined in relation to the sale of the property.
Before signing this contract, verify:
- When payments are due
- When will you be taking possession of the Property
- Are there any penalties for being late
- What are the Maintenance fees
- What is the refund policy
Consult with a real estate attorney if necessary for proper review of this agreement. An attorney will ensure that you are not left holding anymore than a burden in terms of the property.
12. Check the Occupancy Certificate (OC)
If you’re buying a property that is ready to move into, check with the local municipal authority for an Occupancy Certificate.
By checking the Occupancy Certificate, you can be assured of the following things:
- The building was constructed according to the approved plans.
- All safety regulations were adhered to in the construction of the building.
- The property has been granted permission for lawful use.
An absence of an OC can create problems related to getting water and electricity connections. Additionally, you could experience difficulties reselling your property should it not have an OC.
13. Verify Property Tax Records
Buying property is a long-term financial commitment; thus, the correct criteria will ensure a proper, well-planned investment with minimal risk. Following a property deal checklist will eliminate legal problems, financial disappointment and future issues after purchasing a property in India.
Here is a list of things to check before purchasing a property:
- Title and ownership
- RERA Registration and approval
- Property approvals
- Total cost
- Physical Visit to the Property
- Location and Infrastructure Study
- Sale Agreement Review/Legal Review
When you do your due diligence on a property, it safeguards your investment from financial loss in the long run.
Once a contract is signed or a property is closed, you cannot change it. It is advisable to take your time to review every detail before you sign any document. A well-informed buyer will be in a much better position to complete a safe and effective property deal.
