Buying an under construction property at Virar (E) Gurudutt Nagar

Querist : Anonymous (Querist) 17 January 2011 This query is : Resolved
Hi,

Needed a small help from an property expert.

I have received a mail from HDFC Realty that they are powering housing loans to a particular Developer in Virar (E)Gurudutt Nagar at a little lesser per sqft rate than the market price. I did visit the site and the office the building in under construction and posession is within 1 years time. Housing loan is completely powered by HDFC Realty. What are the major details I need to pay attention to while taking an housing loan.

I also needed to know how do you check how genuine these developers are as there are a lot of frauds happening and also what are the documents we need to check before investing in an underconstuction property.

This is my first porperty investement so needed your kind help.

Thanks and Regards,
Vilintina
Mumbai

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A V Vishal (Expert) 17 January 2011
Important things to consider when going for a home loan

~ Ensure you calculate the total loan payments yourself. You need to know the exact amount you will be paying at the end of your loan term. You also need to know the penalty you will be charged if you prepay the loan. Sometimes, such penalties can be substantial.

~ Loan repayments are tricky to calculate, so make sure you know how the payments are worked out on a compound interest basis.

~ The kind of interest rate you choose is also very important. Are you going in for a fixed rate loan or a floating rate loan? If you are a first time buyer, make sure that, whatever option you choose, your EMI remains fixed even if the interest rate goes up for the first few years of your loan term. This will enable you to plan ahead and feel safe that your payments will not increase like they would with a pure floating rate home loan.

~ Before you go in for a home loan, make sure you have a good credit history. Banks and other financial institutions use credit checks. To have a good credit history, you should pay your credit card bills on time and not change your house address frequently.

~ Try and set aside a solid deposit, say 15 per cent of your property price, so you can make your monthly payments even if you are without a job for a brief period.

~ Ask your lender if they will allow you to make more than your allocated payments. If they agree, you can pay more money whenever possible, so that you pay less interest at the end of your loan tenure.

~ Before applying for a home loan, you should know for sure you have a permanent job to pay your EMIs on time. If you are holding a temporary job and you lose your contract and fail to make payments on time, it may result in the bank taking away your home.

~ Use money wisely and gradually. Don't expect sales persons from banks to educate you. Do your research thoroughly and then make a decision.

~ Finally, any form of credit does carry its risk. But, if it is managed in a methodical manner, you will be in a comfortable position in the future.

The legal status of the property is one of the first issues that you should address before confirming a property. Don't give any advance before getting confirmation about the legal status of the property.
Before buying a property, a number of checks needs to be done to confirm that it has has a clear and marketable title. The first thing is to find out the tenure, legal right of the holder of the property in government records. The tenure or possession right could be freehold, leasehold or may be held under a government grant or 'sanad'. Freehold property is always most preferable. The seller should provide all the necessary documents to the buyer.

Title deeds
The first step is to see the title deed of the property which you are going to buy. Confirm whether the property is in the name of the seller and that the full right to sell the land lies with only him and no other person. Don't be satisfied with the Xerox copy of the title deed. Insist on seeing the Original Deed. Sometimes the seller may have taken a loan by pledging the original deed. It also needs checking whether the seller has permitted any entry/access to others through this property and whether any other fact has been suppressed/left undisclosed by the owner of the land. It is better to get the original deed examined by a lawyer. Along with the title deed, the buyer can also demand to see the previous deeds of the land available with the seller.

Tax receipt and bills
Property taxes which are due to the government or municipality are a first charge on the property and, therefore, enquiries must next be made in government and municipal offices to ascertain whether all taxes have been paid up to date. The owner should also possess the latest tax paid receipts, which you may inspect. Enquiries should also be made in various departments of the municipality to ascertain whether any notices or requisitions relating to the property have been issued and are outstanding and not yet complied with.

While inspecting the property tax receipt, it can be noted that there are two columns in the tax receipt. Make sure that the name entered in the owner's column is correct. The second column will be for the name of the one who paid the tax. Sometime the owner may not have the tax receipt with him, in such cases, contact the village office with the survey no. of the land and confirm the original owner of the land. If you are buying a house along with the property, then the house tax receipt should also be checked. Also ensure that the electricity and water bills are up-to-date and if there any is balance payment to be made, ensure that it is made by the seller.

Encumbrance Certificate
Before buying any house, it is important to confirm that it does not have any legal dues. It is available as a certificate called encumbrance from the sub registrar office where the deed has been registered, stating that the said land does not have any legal dues and complaints. The encumbrance certificate for the past thirteen years should be taken or for more clarification, you could demand 30 years encumbrance certificate to be checked. If you still have anymore doubts, you can take a Possession Certificate of the ownership.

Measurements
It is advisable to measure the property before registering it in your name. Ensure that the measurements of the flat and its borders are accurate. You can do this with the help of a recognized surveyor. This will avoid a lots of problems in the future. You could also take the Survey Sketch of the land from the Survey Department and compare for accuracy.

More than one owner

In some cases, the land will be owned by more than one people. So before registering, check if there is more than one owner, and if there is, get release certificate from the other people involved.

Agreement

Once all the matters, financial/otherwise are settled between the parties, it is better to give an advance and write an agreement. This ensures that the owner does not change his word regarding the cost as well as make a sale to someone else who offers more money. The agreement should be written in 50 Rs stamp paper. The agreement should state the actual cost, the advance amount, the time span within which the actual sale should take place and how to proceed in case of any default from either parties, to cover the loss. The agreement can be prepared by a lawyer and should be signed by both the parties and two witnesses. After signing the agreement if one of the parties make a default, the other party can take legal action against him.

Registration

The property can be registered in a sub registrar office, after preparing the title deed including all the relevant information. You could get the title deed written by a government licensed Document writer. Even lawyers can prepare the deed, but the document can only be computer printed or typed, not handwritten. Handwritten documents can be prepared by only those who hold the scribe license.

A draft should be prepared before actually writing the document in stamp paper. Make sure all the details mentioned are accurate. If there is incorrectness in the document after registering, a secondary document with the correct details has to be registered and depending on the incorrectness, the registration expenses will be repeated.

Make sure that the deed is registered within the time limit mentioned in the agreement. Original title deed, Previous deeds, Property/House Tax receipts, Torence Plan (optional) etc plus two witnesses are needed for registering the property. Torence plan is a detailed plan of the property prepared by a licensed Surveyor which will have accurate details of the measurements including width, length, borders etc. This plan is needed only in some specific areas. For land costing more than five lakhs, the seller should submit either his Pan card or Form Number 16 during registration.

The expenses involved during registration include Stamp Duty, registration fees, Document writers/ lawyers fees etc. The stamp duty will depend on the cost of the property and varies from Municipality to Corporation to Panchayat. Document writers fees also depend on the cost of the property and varies with individuals. There is a percentage prescribed by the government as Document writers fee and they cannot charge more than the prescribed limit.

After registration, the registered document will be received after 2-3 weeks, from the registrar office.

Querist : Anonymous (Querist) 17 January 2011
Dear Vishal,

Thank you for the valuable information that you have helped me with.

I still have a concern this Property is under construction with Chetana Developers and it is financed by HDFC Home loans, I am planning to buy a 1BHK here and they have mentioned its CIDCO approved.

Do I still need to go and check all the documents listed above and incase of CIDCO which office do I visit.

Thanks & Regards,
Vilintina

A V Vishal (Expert) 17 January 2011
Yes, in your own good and safety you are advised so, since now a days there are many projects where the developers hand in glove with the banks have cheated gullible & innocent persons, so it is advisable to check it before making any commitment.

Querist : Anonymous (Querist) 17 January 2011
If you could please tell me incase of CIDCO properties where does one inquire about the necessary documents.

A V Vishal (Expert) 17 January 2011
Unfortunately I have no knowledge of the same as I am not from Mumbai, only a local advocate can address your query on CIDCO.