Guide on legal checks before property purchase

Recently, in an Allahabad High Court ruling, the real estate giant Supertech was asked to demolish its 40-storey tower in Noida.  However the company will move the Supreme Court against the order claiming that all necessary approvals from appropriate authorities were in place. The tower was constructed against the mandatory building rules. While the permitted FAR should be 3.5, the builder followed only 2.75 FAR rendering the construction illegal.

In the current real estate scenario, most home buyers face litigations over their newly purchased apartments. It is therefore crucial to check if the property is legally clear before booking it. Even if it is a branded project by a reputed developer, inspection of the legal documents and construction approvals through legal consultants is becoming essential.

Besides property related litigations, such construction issues add to the load of home buyers who have purchased the property on loan since they end up paying EMIs and rentals till the construction is free from litigation. Most residential project cases running in courts stretch for years and even if the judgement is in favor of the home buyers, the builders will appeal again leading to a never-ending wait for the possession.

We present here, a quick guide to a litigation free real estate transaction. Examine these factors before purchasing a property:

Verification of Title Deed & Khata

Ensure that the Title Deed from the seller is clear from any encumbrance. The records related to the title deed of the property can be searched at the sub registrar’s office. The report will contain the owner of the property and the related changes in the title. Khata is a legal document that supports the title which will have an entry of the present owner and it can be verified with the local municipal records. Check whether the Khata is changed in the present owner’s name as it is necessary to obtain home loan, electricity approvals etc.

Project plan examination

In case of under construction projects, inspect whether the building plan is sanctioned & approved by appropriate authorities. This can be done by comparing the sanctioned plan with the actual built up area of the project to avoid buying property in an illegal construction. The layout approval can be verified with the concerned authorities. Examine the land survey report made at the time of buying the property to validate that there are no legal disputes over titles, boundaries etc.

Checking legal dues

To check whether the property has any legal dues, one can scrutinize the encumbrance certificate which is an evidence that the property is free from all legal dues and mortgages. If the property already has a registered society, then a no objection certificate (NOC) is also necessary to authenticate the legal status of the project.

Examine bank approvals

A simpler way to check whether the property is legally clear is to look at bank approvals. Banks approve only those properties which are legally clear and possess valid documents. Banks usually check the title clearance and all other important paper-work related to the project so one can rest assured that the property is fit to be purchased.

With legal issues concerning real estate developments increasing by the day, it is advisable to not only check the documents and the builder profile along with his previous construction track record but also take professional help if possible to perform thorough checks on legal clearances before booking a home.