What are the paper formality, the promoter normally do?
C.A Alok Mukherjee
(Querist) 14 July 2010
This query is : Resolved
In the course of booking of a flat often a buyer need to take the assistance of a legal expert since many formalities which the promoter insist may create confusion to the buyer even the legal expert of the buyer may not brief in detail the procedural follow ups he would be doing for the buyer.It would be a great help if somebody guide the buyer's checklist and tentative cost at best may be incurred by the buyer for the legal cost at various phase? What could be a standard repayment schedule the buyer need to pay for buying a flat to the promoter. Often promoter insist 30% on booking, 10% on brickwork, 105 on plastering etc. what could be justifiable?
Devajyoti Barman
(Expert) 14 July 2010
Checklists are different for different types of properties.
A V Vishal
(Expert) 14 July 2010
while buying a property, it is necessary that you ensure that everything is above board, that you are not investing a large sum of money if things are not clear or the legal title is not clear. Here is an attempt to prepare a checklist for cross-checking before buying a property.
- Call for original property documents. The non-availability of such documents should be taken as a red signal. It could mean that the title of the seller is not clear and there could be a lien, mortgage or other encumbrance on the property.
- Ask for photocopies of all deeds of title related to the property to be purchased. A legal opinion through a good standing advocate is advisable. The legal counsel will examine the deeds to establish the ownership of the property by seller, preferably through an advocate. Ascertain the survey number, village and registration district of the property as these details are required for registration of the sale. Previous encumbrances and loans, if any on the property must be cleared before completion of purchase of the property. The title of the Vendor to the property must be clear and marketable.
- For apartment. Check for approved layout plan and approved building plan with number of floors.
- Check the building bye-laws in that area to verify any issue with setback, side setback, height, etc.
- Confirm transfer fees, stamp duty and registration charges to be paid on purchase of the property as well as outgoings to be paid for the property i.e. property tax, water and electricity charges, society charges, maintenance charges.
- The original sale agreement should have the municipal-approved plan of the flat, carpet area with the area of the balconies shown separately, price of the property including the proportionate price of common areas and facilities shown separately and intervals at which installments may be paid.
- Check if proper stamp duty has been paid.
- If the property is in a co-operative society, examine the original share certificate. It mentions the latest owner’s name.
- Obtaining a society’s NOC may not be mandatory under the new Model Bye-laws of the Co-operative Housing Society, but it is advisable as it offers clarity about the title of the property, pending society dues, property disputes and hypothecation, if any.
- An income tax clearance certificate would ensure that the seller has discharged his income tax liabilities to avoid attachment of the property.
- If possible, consult a property lawyer, especially where the sale is through a power of attorney. A good lawyer will undertake proper investigation and issue prominent public notices to clear interest of other properties in the property concerned.
- Getting a home loan sanctioned ensures that the documents are in place as banks or institutions conduct due diligence before disbursing loans.
- Ensure payment and discharge of encumbrances that are to be cleared before purchase.
- Obtain physical delivery of the property and of the title deeds.
- Complete the transaction of sale by executing and registering the deed. An unregistered sale agreement has no validity in a court of law.
- Financing capability. The debt-service ratio helps you assess to what extent you can take financial risks. For every Rs 100 earned, your EMI should not exceed Rs 40, and that includes EMIs taken for other purposes. Maintaining this ratio is important as it helps you deal with other expenses easily.
- Accessibility. Access to the property is critically important. If access is difficult, re-sale values will be affected, and may cause day to day inconvenience.
- Locality: Proximity to transport hubs, schools, hospitals, market, central business district, entertainment centres, hotels, restaurants, pollution levels, safety records of the neighbourhood.
- Reputation of the builder or seller. Check around with local sources to find out more of the builders reputation.
- Get a good idea of the costs of various components like price, stamp duty, registration charges, transfer fees, monthly outgoings, society charges & costs of utilities. These are not immediately available, but should be factored in to the total cost.
- Facilities. Adequate water, electricity and other utilities should be an important factor.
- If you believe in beliefs such as Vaastu, get consultation done before buying the property.
- If you are buying property on loan, get an insurance so that in case of your fatality, your family can clear the outstanding loan.
These may seem like a of steps, but it is better safe than to be sorry before buying a property.
A V Vishal
(Expert) 14 July 2010
As far as the second part of your query is related, the proportion of payments required to be made is an agreement between the vendor and vendee, so how much payment is to be made at each stage depends largely on the amount of cost incurred towards raising the property to that stage.
