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.

No Objection Certificate

The common man in Punjab can now be relieved  as the practice of procuring a no objection certificate (NOC) from the local body or housing development authority for the registration of sale deeds of property has been abolished. Instead, the seller will have to give a declaration regarding the property being within municipal limits and that it is recognised by the housing authority or the local body concerned.

Although the Housing Department has raised objections regarding doing away with the NOC requirement, the Revenue Department has issued a notification, paving the way for self-declaration of property being sold rather than the tedious process of getting NOCs. The matter was discussed at the highest level in the government before the decision was announced.

Revenue Minister Bikram Majithia said that eliminating the need for NOCs was a way forward in governance reforms as people faced a lot of harassment in getting the NOCs. “Moreover, it is the job of the Housing or Local Bodies to see that if anyone gives wrong affidavit, he is liable for action. We have followed the policy of Income Tax department regarding self declaration, rather than getting NOCs from other departments,” he added.

Earlier, under the Punjab Apartment and Property Regulation Act, the seller of the property had to get NOCs stating that the plot/land was within the municipal limits. The change in land use number of the plot had to be submitted along with the copy of approved building plans by the seller with the sale deeds as per instructions issued by the Housing Department. This process has now been scrapped.

Further, other instructions issued by the Housing Department asking Registrars and sub-registrars across Punjab to not register sale deed or any other document concerning sale of land or building, situated in unauthorised colonies, unless the seller gives a self-declaration that he has applied for regularisation of the plot to the authority concerned have also been set aside.