Appropriate Precautions You Should Take Before Buying a Property

There is an old English proverb - precaution is better than cure which would be the most appropriate when it is about buying an immovable property. Although there are several laws in place that protect a purchaser of property, however, self-help is the best help and one must do due diligence before buying a property.

Although the below mentioned list of precautions to be taken are not exhaustive, some of the important aspects one must look at are listed below, though they may vary case to case.

TITLE : Clear title to a property is one of the most important factors to be considered before purchase. There are various means to investigate the title such as:

  1. By studying the documents of title to ensure that the owner has proper ownership to the property. The documents of title should be studied very carefully as any shortfall may lead to a defective title.
  2. Taking inspection of the original title deeds.
  3. Taking search of the land records and the records of the Sub-Registrar.
  4. Taking search of the records of the society where the property is in a society.
  5. Issuing public notice in newspapers calling for claims in respect of the property.

PLANS : Sanctioned plans and commencement certificate by the concerned authority should be inspected, especially for under-construction buildings. If the building is not built in accordance with the sanctioned plans, the completion certificate will not be granted. For buildings that are complete, occupation certificate/completion certificate should be verified.

POWER OF ATTORNEY : Many a times, the property is sold through a person holding the power of attorney (POA) on behalf of the owner. This POA should be closely scrutinized to ensure that it is property executed. As per the state government stamp act, heavy stamp duty is attracted on a POA in case the POA for sale of immovable porperty is executed to a person not closely related to the executant. Thus, in most cases, a POA is executed to a close relative as defined under the Act.

TENURE OF LAND : This aspect should also be considered. For example, if the land is leasehold and the residue tenure of lease is short and if there is no provision for renewal on old rent, additional ground rent may be payable by the purchaser on renewal of the lease. It is also possible that there may be no renewal clause at all.

NOC AND DUES : Although no-objection of a society is not required for sale as per the new model bylaws, it is preferable to obtain the no-objection certificate as well as a no dues letter from the society if the premises are in a society. In case, the building is not conveyed to the society by the builder, then a no-objection of the builder should be obtained. It should be verified that the seller has paid all his dues such as property tax, service-tax, VAT and other outgoings to the society or the builder, as the case may be.

INCOME TAX : One may investigate whether there are any proceedings against the seller under Section 281 of the income-tax Act, 1961. Further, if the seller is a non-resident Indian, TDS may be deducted from the consideration paid unless certificate for non-deduction or lower deduction is obtained from the concerned income-tax officer.

PERMITTED USER AND RESTRICTIONS : This aspect should be verified as well. For example, one should see whether the property is residential or commercial as per the Development Control Regulations. Other factors such as heritage rules, set back for road widening, may apply to certain buildings, which should also be considered.

DOCUMENTATION : Proper documentation should be put in place for purchase of the property. The sale document should be property stamped and registered and the original title deed should be taken bye the purchaser from the seller.

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