In today’s trend, real estate is becoming a part of each and every one of us. Sometime or other you will have to decide on buying a new house/property. Though, checking out the cost of property and modes of funds are important, it is more important for you to protect yourself from becoming the victim of fraudulence. Hence, it is essential for you to know about the documents that need to be checked during the purchase which will help you in protecting yourself against cheating.
The following writing will let you know about some of the important things to be checked when you are about to buy a new home. Its just an introduction post. In future, We will publish a series of posts with specific items to verify when buying home. So stay tuned for more or subscribe not to miss a post/article…
List of Documents to Check before Buying Your Home:
You must always remember that property documents are the most vital part of any investment in properties. In order to avoid fraudulence attempt to cheat you, it is essential to check the following documents:
- Sale Deed: This will be the core legal document that will act as proof of sale as well as the transfer of ownership from your buyer to you. This should be registered compulsorily. It is to be noted that prior to the execution of sale deed, you must execute the sale agreement while at the same time checking for the compliance of various terms and conditions as agreed upon by you and your seller. Also, well before executing the sale deed, you must check whether the property under deal is bearing a clear title.
- Mother Deed: This is the parent document which is an important legal document that would help you in tracing the antecedent ownership of the property under deal right from the start. You will need this document to further sale your property. In case, there is no mother deed available, you must make sure that you obtain the certified copies from the registering authorities. Also, it is very much important that the mother deed has recorded the references to previous ownerships in a continuing sequence. In case, something is missing, you should refer the records from registering offices. The sequence should have been updated until the current owner.This is very important if you’re buying through a home loan. (P.S: Check how to get credit score and how it affects home loan)
- Approval Plan of Your Building: Any building owner must obtain an approval plan either from the jurisdictional commissioner or any other officer who got authorized by commissioner. One will be required to submit a set of documents in order to obtain a building approval plan. Those documents include:
o Title Deed
o Property Assessment Extract
o Property PID number
o City/Panchayat survey sketch
o Up-to date tax receipt
o Earlier sanction plans
o Drawings of the property
o Demand drafts
o Foundation certificate
o Land use certificate
- Conversion Certificate: With the major amounts of land being agricultural in India, a conversion certificate is important to be obtained from the legal body. This is the certificate that will be issued by competent revenue authority in order to change the use of land from agricultural to housing purposes. A NOC (No Objection Certificate) should be obtained from the Tahsildar office and land regulatory for this conversion.
- Encumbrance Certificate: This would mean changes in the ownership on property that has been held against a home loan. This would consist of all the registered transactions that are done on the property during the time duration for which this EC is filed. In simple terms, this will provide you with evidences of mortgages, title transfers or any legally registered transaction that affects your property. The single most important document after Sale and Mother deeds.
- Power of Attorney: This is a legal procedure that is used in giving the authority to another person by the owner on behalf of him/her. The PoA holder can let-out, mortgage, sell the property on your behalf. So be careful before giving Power Of Attorney. In late 2013, the government has made registering PoA mandatory to be valid.
- Tax Receipts: These would ensure that the taxes have been paid until the date of sale. You must make sure that you ask your seller for the latest original receipts in order to check the details of owner’s name along with the tax payer’s name and date of payment. If your seller does not have the tax receipts, you are allowed to contact the municipal body by using survey number of the property in order to confirm the ownership. Other bills like water and electricity bills are also need to be checked.
- Completion Certificate: This will be issued by the municipal authorities stating that building is in compliance with rules and is built according to the approved plans. This is very important at the time of purchasing
- Occupancy Certificate: An inspection will be performed by the authorities when the builder is applying for this certificate in order to ensure that the building is meeting all the norms that are specified. In simple terms, the certificate would certify you that the project is ready for occupancy.
Though, it is important that you check for all the aforementioned documents while buying a new home, it is also essential to have a property lawyer vetting for these documents.
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Various Ways in which you can be cheated:
Most of the sellers will be using one or more of the following ways in order to cheat you while selling a new home to you. A thorough understanding of these ways would help you in getting immunity against the fraudulence. Take a look at the following ways:
- Documents Could be Fake: This is the most common in which you can be cheated by the seller. In most of the fraudulent cases, it was found that the buyer has been provided with fake documents for the property being sold. This would make the buyer to lose all the hard earned money. Also, you may have to fight legally in the court for years. I would recommend you to check whether the documents and particulars have been verified from Sub-Registrar office to avoid this kind of fraudulence.
- Double Mortgage Chances: Before selling the property to you, there are chances for the seller to have mortgaged the property with two different banks. The seller would have availed loans on the property and might have escaped after selling the mortgaged property. If you are buying this kind of homes, the banks will approach you saying that your property was mortgaged in their banks. You will be the one who is going to lose all the hard earned money by getting trapped into these kinds of fraudulence. Also, you may be required to fight a legal battle in the court. Again, if you want to avoid these kinds of cheating, all the particulars of ownership should get verified from Sub-Registrar office.
- Chances for General Power of Attorney: There are chances that you are buying your home from the person who was given with the general power of attorney by the real owner. You may find it later that the same house was sold by different persons who were given with general power of attorney to different buyers. Also, in some cases you may see the real owner would have approved more than one person as general power of attorneys. You must be really thoughtful about this kind of fraudulence before making any real estate purchase.
- Government Lands may be shown to you: These are the other cases of most common fraudulence. Your seller may show you the fake layout. The entire plot might not belong to the seller himself. You may become one of the victims of fraudulence if the seller has created an unauthorized layout in Government land, sell the plot to you and run way. You must be watchful and make sure whether the plot or house shown to you by the owner or real estate agent is really owned by him/her. You would have to make some local enquiries in order to avoid these kinds of cheating.
- More than One Registration: You should be aware of these kinds of cheating also. You would approach a seller or real estate broker with an intention to buy a property. After paying some considerable amount, the registration might be done in your name. Later, when you are intending to sell the home due to any personal issues, you might come to know that there are some other people who are claiming the ownership. This would happen when the owner is selling the same house to different persons without the knowledge of each other. If you are the first buyer in this case, you must fight legally in order to prove your ownership.
- Encroachments are also Possible: There are chances that the seller has encroached into his/her neighbor’s property by creating/violating a lay out. He/she may register this encroached layout in your name after getting a considerable amount of money from you. When you are about to move to your new home only you will know that you are not the owner of the purchased house and you have no rights over it. This would make it impossible for you to claim your money back if your seller has escaped from the scene.
- Dubious Agreements May be Given: There are chances that you are given with the dubious agreements. For instance, you are intending to buy a flat that is measuring a particular size, say 1200 square feet and after paying a considerable amount, you get your flat registered in your name. However, when you measure your flat at a later point of time, you may see that the original size of the flat is lesser than the one that is mentioned in the agreement, say for example only 900 square feet. You must be really very cautious about these kinds of cheating done by your seller.
Thus, it is really very important to verify each and every criterion with the sub-registrar in order to make a right choice. Also, nowadays it is becoming very essential to make some local enquiry about the home and the owner in order to be at the safer side. By doing these, you are more likely to avoid the fraudulence that is being tried over you by the seller or real estate agent.
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Wrap Up: List of Things you need to check
I believe that you have got a better idea about the ways you can be cheated. The following check point list will give you a chance to make yourself prepared against any kind of fraud. Take a look at them!
- You must ask for original property documents. When they are not available, then take it as a red signal and stop the business right away. There are chances that title of seller is unclear or there could be a lien or mortgage over the property.
- You must ask for the Xerox copies of every link document of title deed those that are related to the house under sale. Also, a legal opinion from an advocate is advisable.
- You must check for previous encumbrances or loans if any. The title of the vendor also must be clear.
- You should check for approved layout and building plans with the number of floors available.
- You are required to check the building bye-laws in the area of purchase.
- You could check the transfer fees along with the charges for stamp duty and registration that are to be paid. You should also check for property and water taxes along with electricity, society and maintenance charges.
- You have to make sure that the original sale agreement is having the plan of the house that is municipal approved. The following details are important:
o Carpet area in which balconies should be shown separately
o Price of the whole property
o Other facilities
o Intervals at which you will pay your installments (Only if it is there)
- You must make sure whether proper stamp duty has been paid.
- If you are intending to buy your home in a co-operative society, you must verify the original share certificate. This would have the latest owner’s name mentioned.
- You must check whether your builder has mortgaged the land under purchase in any bank.
- You must also watch out for the income tax clearance certificate to ensure that the owner has discharged all the income tax liabilities.
- You must obtain the physical delivery of your house along with the title deeds.
- You would have to complete the transaction of the purchase by registering the deed. You must always remember that the unregistered agreement would not have any validity in law.
- You could perform the local enquiries in order to know about the seller’s reputation.
- You should ask for the NOC’s of all the concerned departments from your builder or seller.
With all the above mentioned information, you will be able to suspect a fraud by looking out for some simple things like missing originals, varying signatures, notarized documents, missing seller, sale deed signed in blue inks and so on. Thus, you won’t be a victim of fraudulence provided you are checking these during your purchase.
The above documents to check to avoid fraud when buying property will help you preserve your money. Buying a home is a serious decision. Some prudence on your part, will make sure the decision is wise and gives peace in long run. Give us a Like on Facebook on the side bar, if you like this article.