The first and most important thing to keep in mind before buying a property is to verify the property documents.
7 Documents you “must check” before buying a property.
So you found your dream property, and now deciding whether it is a right investment or not. One of the criteria for your analysis should be the status of the property’s documents, and whether or not they comply with the local authority’s requirements.
To help you with this analysis, we’ve identified 7 documents that we think you should ask for and examine, regardless of the city you are in.
1. Title Deed:
Title Deeds are documents that typically outline the chain of ownership of a property. Title Deeds are those documents based on which the present owner can claim absolute ownership over a property; the genesis of title and other relevant information pertaining to the land can be derived from it. It is essential that you always check the title deeds and confirm whether the seller has the right, title, and interest over the property and the absolute capacity to sell.
Why is this important? If the title of the land is not in the seller’s name, then legally, the ownership of the property does not belong to the seller, and you should steer clear of this, as it may lead to future disputes and/or litigation by other claimants over the property.
2. Sanctioned Building Plan:
At the start of any construction, one has to get an approval from the local planning authorities. The approval called a “Sanction” is usually given based on the builder submitting the necessary documents as stipulated by the local planning authorities. This is called a “Sanctioned Building Plan”. Apart from checking the ownership over the property, it is utmost crucial to check the legalized construction of the building. The foremost requirement for any building to be constructed is that it must have an approved building plan from the concerned authority. Further, it is recommended to get it verified from the office of the issuing authority to ensure that the Building Plan provided is indeed a genuine document.
Why is this important? If there is no Sanctioned Building Plan for the property that you are about to buy, the risk could be that the property is an illegal construction, and hence, not approved by the local planning authorities.
3. Occupancy Certificate:
As mentioned above, after getting a Sanctioned Building Plan, construction starts. When it is ready to be occupied, the local planning authorities are again involved and they issue a certificate commonly called “Occupancy Certificate” (OC) or in some states referred as the “Completion Certificate”. This implies that the construction was carried out in compliance with the building plans and the norms, and is ready to be occupied
Why is this important? In absence of an OC, the construction of the building is not considered as a legally authorized construction, and in some cases, can be construed as not fit to be occupied. Without this document, one would find it difficult to obtain loans from the financial institutions and to procure other government-issued documents such as Khatha / Mutation etc.
It is the collection of revenue by the government from the owner of the land and/or the building, based on the extent and the built-up area.
Why is this important? If it found that tax has not been paid for a particular property and you just became the owner of such a property, then the government is authorized to impose penalty of 2% every month on the value of property assessed till such payments are made, from whomsoever is the current owner [which in this case would be you].
5. Encumbrance Certificate:
An Encumbrance Certificate is a document issued by the Sub-Registrar that reflects the encumbrance on the property (if any) like mortgage, lien, charge etc. The Sub-Registrar issues such a certificate [upon request and a fee], which denotes the details of all the registered legal dues or any transaction pertaining to the property for the period requested for in the application submitted.
Why is this important? It is also important to check whether any lien, mortgage or charges created over the property you intend to purchase.
6. Khatha / Mutation Document:
It is a legal identification document containing all the details of a particular property, for instance, the name of the owner, size of the building, location, and other important information about the property which helps in filling the property tax with the concerned authority. The Khatha / Mutation Document is issued by the jurisdictional municipal corporation in the name of the present owner or owners.
Why is this important? It is an important document required for obtaining a loan from banks.
7. Compliance under the Real Estate (Regulation and Development) Act, 2016 (RERA):
RERA mandates that developers should register their projects with the authority constituted under the Act. A buyer, intending to buy a property in a project coming under the ambit of RERA, is advised to verify whether the property has been registered with the authority under RERA. Information available on the official web portal of RERA for each state, also provides details of any cases/complaints filed against the developer of the project and default by a developer, if any and thus, provides useful insight into the credibility of the developer and the project and helps the buyer make an informed choice.
With ever-changing norms and rules, as a residential property buyer, its best to check the property documents before buying a new property.