BUYER'S GUIDE

What should a buyer keep in mind while purchasing a residential apartment?

Some important points to keep in mind while buying a residential apartment are:

  • Locality – Proximity to workplace, educational institutions, hospitals, shopping areas, entertainment center, transportation, pollution levels.
  • Quoted area of the flat i.e. Carpet, Built Up and Super Built Up Area
  • Car parking space
  • Quality of construction
  • Reputation of the builder or seller
  • Sufficient water and electric supply and other utilities
  • Cost components like price, stamp duty, registration charges, transfer fees, maintenance charges and other payments
  • Appreciation of the property for resale and rental
  • Other distinguishing features or advantages of the property
What do you mean by Carpet Area, Built-Up Area and Super Built-Up Area?
Carpet Area is the area enclosed within the walls, actual area to lay the carpet. Carpet Area is the total usable area enclosed within the four walls of an apartment or commercial space. It refers to the actual area over which a carpet can be laid if required by the owners. It does not include the thickness of the inner walls. 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 in addition to the 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 make up the Super Built-Up area. At times it may also include the common areas such, swimming pool, garden, clubhouse, etc. The term is therefore only applicable in the case of multi-dwelling units.
What points should be included in the checklist for buying residential or commercial property?

The checklist should include the following points:

  • Property identification
  • Crosschecking current market rates of properties in the vicinity and last known transactions and current market trends
    Formulation of commercial terms
  • Distinguishing between negotiable and fixed terms and conditions of the contract, like price, payment schedule, time of completion etc
  • Availing services of experts like Sky Ways Proptech Associates for legal opinion, valuation or property related matters
  • Verifying clear titles of the property and acquiring photocopies of the all deeds of title related to the property to be purchased. Examination of the deeds to establish the ownership of the property by seller, preferably through an advocate
  • Ascertaining 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
  • Finalizing 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 paid for the property i.e. property tax, water and electricity charges, society charges, maintenance charges
  • Request vendor to obtain, if applicable, a consent, permission, sanction and a No Objection Certificate (NOC) of various authorities like society, income tax authority, Municipal Corporation, the competent authority under the Urban Land Ceiling and Regulation Act and any other authority
  • If a loan is required for property purchase, financial institutions must be contacted for a pre-approval letter. As many options are available for loans, BOP can also assist in loan requirement procedures and options
  • Permanent Account Number (PAN) of vendor and purchaser under Income Tax laws must be ascertained
  • Payment of stamp duty on the formal agreement or dopossession of the property and s/he must check the receipt of original documents from the Vendor of the property
  • Ensure that property holder’s name is changed in all related records like society, electric company, Municipal Corporation, index II etc.After payment of the entire sale price, the buyer can take over legal
What is a Draft Sale Deed?
A Draft Sale Deed contains 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 ‘khata’, title of the seller of the property, indemnifying the purchaser in case of defect in the title and easement rights and is prepared by the purchaser’s advocate.
What is Khata?
A Khata is an account of assessment of a property which records the details about the property such as size, location, built up area and so on, for the purpose of payment of property tax. It is also a kind of identification of the person who is primarily liable for payment of property tax. It is one of the required documents in case the buyer requires a building license, trade license or loan from banks or any other financial institutions.
What is the difference between a Khata and Title Deed?
A Khata is an account of assessment of a property for the payment of tax. The Khata does not confer ownership. However, the Title Deed is the document through which a person derives a title or ownership of the said property.
What is a leasehold property?
A leasehold property is that which is leased to a lessee for a stipulated period. The lessee pays lease premium and annual lease amount as fixed and mutually agreed upon by the lessor and lessee. The land ownership rights remain with the lessor and a prior sale-permission is normally required if you plan to transfer the property.
What are legal aspects related to buying a property?

Before buying an apartment, it is crucial to carefully examine all types of legal documents related to the building and the land. A buyer can ask for the certificates and documents cleared by the respective agencies or boards with regard to the property. Some points to be verified are as follows:

  • Check whether the property has clear legal titles or not
  • Check whether the developer has the right to transfer the property and whether he has taken transfer of property approvals from the statutory land development or planning authority or competent authority constituted under the Urban Land Ceiling and Regulation Act and the Income-Tax Act
  • Check if the developer has acquired approvals from the Municipal Corporation, Area Development Authorities, electricity boards, water supply and sewage boards
  • Scrutinize the contract and take help from legal experts before signing.
How well do you need to know the developer?
Most of the apartments are by property developers in India and it is essential to check the background of the developer, the builder, the designer and the architect. It must be investigated if there have been any problems with their other developments in past. The financial position of the developer should be strong so that he can complete the project on time if the project is under construction. Investors must find out if the developer has the essential resource and building consents before paying anything.
Do personal preferences help when buying a property?

Yes. In fact, personal preferences form an eminent part of the entire process. Some preferences which help in judging the property include queries like:

  • Does it have a view and sunlight or is it blocked by other buildings or is it facing the wrong way from the sun.
  • Checking whether there are any pending consents that will probably affect the apartment block in future, for example, plans to build a high-rise hotel next door
  • Is there a balcony so that the owner can enjoy the view or afternoon sunshine
  • Are there any other facilities in the complex, like a gym and swimming pool
  • Probable enquires about your neighbors to find out if noise could be a problem.

Are the near-by apartments rented. If so, do the renters constantly change as these types of neighbors could pose a problem later.

How well do you need to know the developer?
Most of the apartments are by property developers in India and it is essential to check the background of the developer, the builder, the designer and the architect. It must be investigated if there have been any problems with their other developments in past. The financial position of the developer should be strong so that he can complete the project on time if the project is under construction. Investors must find out if the developer has the essential resource and building consents before paying anything.
Do personal preferences help when buying a property?
Yes. In fact, personal preferences form an eminent part of the entire process. Some preferences which help in judging the property include queries like:

 

 

 

 

 

Does it have a view and sunlight or is it blocked by other buildings or is it facing the wrong way from the sun.
Checking whether there are any pending consents that will probably affect the apartment block in future, for example, plans to build a high-rise hotel next door
Is there a balcony so that the owner can enjoy the view or afternoon sunshine
Are there any other facilities in the complex, like a gym and swimming pool
Probable enquires about your neighbors to find out if noise could be a problem.
Are the near-by apartments rented. If so, do the renters constantly change as these types of neighbors could pose a problem later.

What is Stamp Duty and who is liable to pay the Stamp Duty, the buyer or the seller?
Stamp Duty (SD) is a tax, similar to income tax, collected by the government. SD is payable under Section 3 of the Indian Stamp Act, 1899. SD must be paid in full and on time. Stamp duty is collected on the basis of property value at the time of registration. SD’s amount varies from state to state and also property type – old or new. The SD is to be paid on the basis of the valuation of the property computed on the basis of circle rates, or the sale price specified in the sale deed, whichever is higher. Normally, a buyer has the sole liability of paying the stamp duty unless there is an agreement to the contrary.
What is meant by the market value of the property and is Stamp Duty payable on the market value of the property?
Market value of any property means the price at which a property could be bought in the open market on the date of valuation. The Stamp Duty is payable on the agreement value of the property or the market value, whichever is higher.
Who is the appropriate authority for knowing the market value of the property?
The Sub-Registrar of the area, in whose jurisdiction the property is located, is the appropriate authority for knowing the market value of the property.
What all I need to keep in mind while buying a property?

When buying commercial or residential property you must keep these points in mind:

  • Market Trends about prevalent rates of property in the vicinity and last known transactions.
  • Distinguish between terms and conditions of the contract which are negotiable and those which are fixed e.g. price, payment schedule, time of completion etc.
  • List your requirements with a reputed real estate consultant like BOP and 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.
  • The title of the Vendor to the property must be clear annd marketable.
  • 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 paid for the property i.e. property tax, water and electricity charges, society charges, maintenance charges.
  • Request Vendor to obtain, if applicable, consent, permission, sanction, no objection certificate of various authorities such as the (a) society (b) the income tax authority (c) Municipal Corporation (d) the competent authority under the Urban Land Ceiling and Regulation Act (e) any other authority.
  • Ask for a pre-approval letter from the lending institution.
What are the permission and papers that one should check with the builder when buying a flat in a building which is under construction?

When buying a flat from a builder in an under construction building, one needs to check out these important points:

  • Approved plan of the building along with the number of floors, just to make sure that the floor on which you are buying flat is authority approved.
  • Whether the land on which the builder is building is his or he has undertaken an agreement with a landlord.
  • If so, check the title of the land ownership with the help of an advocate.
  • Check the building bylaws as applicable in that area and ensure that the builder is building without any violation of front setback, side setbacks, height, etc.
  • Check if the specifications given in the agreement to sell of the sale brochure match that of the ground or not?
How can knowing the Carpet Area, Built-Up Area and Super Built-Up Area of a flat help in the purchase of an apartment?
The break-up of areas is extremely essential as builders can have a loading factor between 10% to 40% on the built up area to calculate saleable area. It would then imply that if the area is quoted as 1,000 sq ft super built up area, the carpet area could be anywhere from just 600 sq ft to 900 sq ft. If this break up is not mentioned in the agreement, then the buyer should demand that the vendor/ builder mention it in the sale deed.
What constitutes completion of the sale?
The transfer of a property is concluded when you have a sale deed/ agreement for sale with actual possession. Generally, in all cases the entire amount is paid simultaneously with the handing over of physical possession and signing of the transfer documents.
Should I inspect a property before buying it?

It is definitely important to inspect the property before purchase as probably it is one of the largest single investment made by most buyers. It is crucial to know all the details of the property and ascertain need for any major repairs / modifications before it is purchased. It is easy to crosscheck the commitment made by builder and actual implementation if a pre-purchase inspection has been carried out. A close inspection points out the positive and negative aspects of the property, as well as the maintenance that will be necessary to keep it in good shape.

Few important points to check while inspection is:

  • Plumbing systems, drainage, water faucets and sanitary fittings.
  • Electrical systems, circuit breakers, wires, capacity of the electric meter and functioning of light fittings.
  • Roof, walls, ceilings, floors, paint work.
  • Foundation, basement and visible structures.
  • Doors and windows, latches, locks.
  • Structural stability of the building.
Within what time period should an agreement/deed have to be registered?
The property agreement should be registered with the Sub-registrar of assurances under the provisions of the Indian Registration Act within 4 months of the date of its execution.
What points should be included in the checklist for buying residential or commercial property?
  • The checklist should include the following points:
  • Property identification
  • Crosschecking current market rates of properties in the vicinity and last known transactions and current market trends
  • Formulation of commercial terms
  • Distinguishing between negotiable and fixed terms and conditions of the contract, like price, payment schedule, time of completion etc
  • Availing services of experts like Sky Ways Proptech Associates for legal opinion, valuation or property related matters.
  • Verifying clear titles of the property and acquiring photocopies of the all deeds of title related to the property to be purchased.
  • Examination of the deeds to establish the ownership of the property by seller, preferably through an advocate
  • Ascertaining 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
  • Finalizing 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 paid for the property i.e. property tax, water and electricity charges, society charges, maintenance charges Request vendor to obtain, if applicable, a consent, permission, sanction and a No Objection Certificate (NOC) of various authorities like society, income tax authority, Municipal Corporation, the competent authority under the Urban Land Ceiling and Regulation Act and any other authority
  • If a loan is required for property purchase, financial institutions must be contacted for a pre-approval letter. As many options are available for loans, BOP can also assist in loan requirement procedures and options
  • Permanent Account Number (PAN) of vendor and purchaser under Income Tax laws must be ascertained
  • Payment of stamp duty on the formal agreement or document for transfer of the property, signed by both the Vendor and Purchaser
  • After payment of the entire sale price, the buyer can take over legal possession of the property and s/he must check the receipt of original documents from the Vendor of the property
  • Ensure that property holder’s name is changed in all related records like society, electric company, Municipal Corporation, index II etc.