YOUR FIRST STEP TOWARDS BUYING A PROPERTY
Some important points to keep in mind while buying a flat are as follows:
- Locality - proximity to workplace, educational institutions, hospitals, shopping areas, entertainment centers, transportation, pollution levels.
- Quoted area of the flat i.e. Carpet, Built Up Area and super Built Up Area
- Car parking space
- Quality of construction
- Reputation of the builder or seller
- Sufficient water and electric supply, other utilities
- Cost components: price, stamp duty, registration charges, transfer fees, maintenance charges, any other payments
- Appreciation of the property for resale and rental potential
- Any other distinguishing features or advantages of the property
- Carpet area is the area enclosed within the walls, actual area to lay the carpet. This area does not include the thickness of the inner walls. It is the actual usable area within the apartment.
- Built-Up Area is the carpet area plus the thickness of outer walls and the balcony.
- Super Built-Up Area is the built up area plus proportionate area of common areas such as the lobby, lifts shaft, stairs, etc. The plinth area along with a share of all common areas proportionately divided amongst all unit owners makes up the Super Built-up area. Sometimes it may also include the common areas such, swimming pool, garden, clubhouse, etc. This term is therefore only applicable in the case of multi-dwelling units.
It is essential for you to conduct an inspection of the house you find interesting. A list of things to inspect will help you identify defects in the structure of the house, potential problems, etc. The list must have the following considerations:
- The structure of the house
- Electricity and water supply
- Condition of the paint
- Issues of water flow (in / out) in pipes
Checklist is as below:
- Identify the property you wish to purchase
- Crosscheck of current market rates of property in the vicinity and last known transactions, current market trends.
- Formulate commercial terms.
- Distinguish between negotiable and fixed terms and conditions of the contract, eg. Price, payment schedule, time of completion etc.
- Avail services for legal opinion, valuation or property related matters.
- Check for clear titles of the property. Ask for photocopies of the all deeds of title related to the property to be purchased. 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.
- Finalize commercial terms of purchase of the property. Ascertain transfer fees, stamp duty and registration charges to be paid on purchase of the property.
- Ascertain outgoings to be for the property i.e. property tax, water and electricity charges, society charges, maintenance charges.
- If you are looking for loan for property purchase, contact financial institutions and ask for a pre-approval letter.
- Permanent Account Number of Seller and Purchaser under Income Tax laws Payment of stamp duty on the formal agreement or document for transfer of the property, signing by both the Seller and Purchaser and registration.
- After payment of the entire sale price, take over legal possession of the property and check the receipt of original documents from the Vendor of the property.
- Make sure that property holder's name is changed in all related records, e.g. society, Electricity Company, municipal corporation etc.
A sale deed is one of the most valuable legal documents in a purchase or sale of a property. It is governed by the Registration Act and is an important document for both the buyer or the transferee and the seller or the transferor.
A draft Sale Deed, containing full details of the parties, advance amount paid, mode of balance amount payable, receipt of the balance amount by the seller, handing over the original documents of the property, handing over the possession of the property, handing over the authorization letter to transfer power and water meters, signing of the application for transfer of khatha, title of the seller of the property, indemnifying the purchaser in case of defect in the title, easement rights, will be prepared by the purchaser's advocate. Such draft Sale Deed should be captioned as draft Sale Deed and shall be signed by the purchaser's advocate.
As a leaseholder, you own the property, but not the land it stands on. Buying a leasehold property means you'll own it for a fixed period of time. A legal agreement (a 'lease') will be in place with the landlord (also known as the 'freeholder')
Under these plans, one pays around 25-30% of the total cost in 90 days from booking and the balance in instalments as the construction progresses. This plan is more suitable for people who want to minimize project development risks or do not have ready cash in hand.
Subvention scheme is an innovative scheme introduced by a number of developers as a part of their endeavor to make property transactions customer friendly. Under the subvention plan, a customer buys an under construction property for which he/she does not have to pay EMIs for a defined period or until he/she takes possession of the house. Usually, private and nationalized banks tie up with developers to offer loans for such subvention plans.
EDC (External Development Charges) are levied by the developer on the buyer for developing infrastructure within the complex, IDC (Infrastructure Development Charges) are levied by the government on the developer and, in turn, passed by the developer on to the buyer. This charge includes development charges for water supply, sewerage, storm water drainage, roads, street lighting, community buildings, horticulture, public health, road maintenance, and street lighting maintenance. Electricity and water connection charges are levied by the developer on the buyer for availing of electricity and water connection on behalf of the buyer.
PLC (preferential location charges) is an additional cost that a home buyer would pay for booking a housing unit which has an advantage over others in terms of location. A Preferred location within the apartment complex may mean an apartment that faces the park, Swimming Pool, Facing the Club House, Facing the Greens or is a corner plot near to the main road. The preferred location and the fee for it varies with project type, location of the city and climatic conditions, the floor number etc. It depends on the size, location and alignment and construction quality.
The buyer should validate the papers signifying the developer's ownership of the land. One can also hire a lawyer to perform the title search / due diligence to find out whether there is a legal dispute over the land. You should also check if there is any litigation over the constructed property.
The buyer should ask the developer to provide all the legal documents such as occupation certificate, structural stability certificate, municipal authority approved plans, other relevant government approvals etc.
Also, inquire whether the developer has received the approvals relating to the building plan, water supply, etc. Additionally, do a title search to know whether the property is not compromised by any pre-existing agreement and check the zoning laws and development plans to identify what type of businesses are permitted in that location and what forms of alterations to the infrastructure and city planning that might affect the property.
Location is the most important factor to be considered while buying the flat. When you choose the location, you should make the checklist of the following points and should give the weightage to these points on the basis of degree of relevancy of the points to you
- Daily market facility (How far it is from your place, what all you can buy from the market)
- Hospitals and Doctors facility
- Public transport facility (How far is the bus stop/railway station from you place)
- Health facility
- Education Facility (What type of schools and college facility is available and how far are they from the location?)
- What is garbage disposal facility in the area?
- What is the pollution level in the area and what measures are taken to ensure the area pollution free?
- Creche and Day Care center facility if the parents are working?
- How is the neighborhood? Is it a safe place to raise children?