Buying property ???

Discussion in 'Housing' started by Shanvy, Aug 31, 2008.

  1. Shanvy

    Shanvy IL Hall of Fame

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    hi all,

    This particular post is a detailed guide for somebody who is on the look out for buying property. Ofcourse, the idea germinated when I saw an article in the property plus last week, that you cannot hold the registrar for registering a poramboke (unapproved, government) land. It ultimately means that you and I as the buyer should be more careful in scrutinsing the details....here is a guideline to all of you....hope it is of use...go through it carefully, though it is a little long....


    Buying land is a dream for some. It is an investment to build their dream home and for some it is an investment for a rainy day

    So you have searched, discussed and zeroed in on a property of your liking, what is the next step, you may say registration, no hold on there, there are a few more procedures in between that would make you sleep better after registration.

    Check the type of the plot, the survey number holds a key. Once you get hold the survey number of the property, the first thing you do is to find out if it is residential, industrial or agricultural land. If you are an NRI you cannot buy an agricultural land. If the property was in the industrial zone, other than the drawbacks of pollution, water contamination, the worst is paying electricity bill at a commercial/industrial slab when you plan to construct later.
    There are three levels of documents that support title. These are title documents, approvals or other municipal records and revenue records.


    Checking the title deed should show the name of the seller. The deed also will give you an idea if there are co-owners to the property. It is always better to ask to see the original deed than a copy to ensure that the deed has not been pledged by the owner in any bank or to any other person. If possible you could take it to your lawyer for verification of anything misinterpreted there.


    Taxes do pay a vital role. When you are buying a property, say flat/house, you need to check out if the taxes have been paid upto date. (Note: this is not done by the Registrar office.) An example. One of the flats in my apartments was brought by a person, some time back. Though we are 9+ year, there was no assessment done by the previous owner. The taxes were not paid. The registration was done, and the new owner did not know about it until I questioned him casually. Now he has around 50k to be paid for the entire back log. The same goes for electricity bills (but our TNEB does remove the fuse). If there are some other payments to the water board, society etc…ensure that all is paid.



    When buying, this entire outstanding are paid by the seller unless, you have a different arrangement. You can always ask the neighbors and people around.



    Checking the records, at the municipality and cmda (not sure of the procedures, will come back on them later); this helps in knowing if building is approved, or if the layout has been approved by the town planning. Trying to get approval later you will have to pay lot of money along with running around.


    Encumbrance Certificate is an important document that is needed to check for anything that affects or limits the title of a property, such as mortgages, leases, easements, and liens. In regards to property transaction encumbrance certificate is a document issued by the Registrar’s office. The encumbrance certificate contains all the transactions registered relating to a particular property for a period (as required). It is advisable to get encumbrance certificate before effecting any transactions. This will also help in arriving at proper entitlement of the property. You can apply for 13, 21, and 30 years if you want to know the details about the ownership of property. There was online application for EC which has been stopped for sometime by the TNgovt. EC reflects the change of ownership. You need to apply for EC after your registration to see if your purchase has been reflected in the EC. If there was any mortgage to a bank, it reflects otherwise if it was to a private person, there are no chances of knowing it that is why you need to request for the original documents, which cannot be produced if mortgaged.In case of flat purchase, the encumbrance certificate is required to be verified for the entire site and the not the flat alone.


    If there are any loans, as for a certificate saying release of the property. Sometimes, the seller and buyer come into agreement that the seller will repay the part of the loan also. these have to be done in close consultancy with your legal person.


    When you are consulting your legal person, you need to provide with all the documents, from the 13, 21, 30 year old documents, where the possibilities of an agricultural land conversion to residence, or it being an unapproved land layout comes into light. Sometimes, a co-owner gone unnoticed who could cause problem in the later stage get highlighted. When you apply for a housing loan, the bank assigns a lawyer. Sometimes the properties are preapproved by a few banks. In spite of all this there is no harm in going to your lawyer for a second opinion.


    Now that the EC, deed is clear, the next step is to measure the land, through a licensed surveyor, the 60x40 plots don’t create many problems. But the ones with 30x35x40x40 could. Accurate measurements are needed to keep calculate the value of the land and also not landing into any legal issues tomorrow. <st1:place w:st="on">Lot</st1:place> of times, the boundary walls between properties has been cause of heartburn and legal hassles between neighbors.

    Now an agreement is drafted, putting in all details about the seller, buyers, the land, the surrounding boundaries everything. Do check the agreement for the incorporation of all details and also for any mistakes. If there are mistakes then you have to have an addendum registered and attached.


    After registration, a copy of the registered deed is received. In matters relating to land acquisition, notice is usually served on the basis of patta. Patta is a revenue record. Those who have brought a property, but do not have a patta, can land up in problems because government recognizes patta. Further, patta is issued on actual measurement basis and often there may be a difference between the extent shown in the relevant title document and the extent as covered by the patta. . Apply for a patta by filing application for transfer of registry have to be made to the Divisional Officer or the Tahsildar or Deputy Tahsildar or the Revenue Inspector as the case may be. The said officers may dispose of the matters of by themselves or on enquiry and after receiving reports as per procedure. They then send a person to physically measure the land and then file the reports. And then a patta issued.


    The expenses incurred along with the cost of the property would be, the stamp duty, the legal fees, the registration charges and also patta charges if you apply for one. Stamp duty would be a chunk ..a percentage on the cost of the property is charged as stamp duty., it is 8%?? I am not sure ..but according to a duty calculator it showed 13%..for Tamilnadu, which differs according to the States.

    Happy investing.
     
    Last edited: Aug 31, 2008
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  2. Sriniketan

    Sriniketan IL Hall of Fame

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    Shanthi,
    A very detailed explanation, which would avoid troubles after buying a property..
    Thanks for sharing it here...I had bookmarked it for future referance..

    sriniketan
     
  3. Shanvy

    Shanvy IL Hall of Fame

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    hi sriniketan,

    Thanks for stepping in buddy. i hope it is useful to all.
     
  4. mangaii

    mangaii Finest Post Winner

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    Hi Shanthi madam,
    This article provides lot of useful information.
    I was not aware of the fact that NRI's cannot buy agriculltural land.Its a new information for me.I was under the impression that people who are not Indian citizens cannot buy agricultural land.
    I think the stamp duty is 8% and also when we buy the flat during construction phase its very less (I beleive its just a percentage of value of UDS(?) land and not total flat cost).
    Thanks for the article
    Mangai
     
  5. Shanvy

    Shanvy IL Hall of Fame

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    Mangai,

    nice to know it is useful
    Regarding agricultural land, nri's cannot buy them, you can inherit from a resident indian, it is clearly told by the RBI.

    REgarding a flat, when it is a first registered, it is the UDS (undivided share of land) only when it is the second sale, you have to register for the whole area of your flat.

    i also think it is 8%, but when i used the calculator, it showed more than 8. did not want to confuse..will give the correct detail after checking.
     
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  6. Nandshyam

    Nandshyam IL Hall of Fame

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    Mangaii,

    This has been for a long time I guess. []Reserve Bank of India

    It's to protect Indian farmers from foreign investors taking away agri land and also for reasons NRI might leave the land without using it and thus making it barren.

    But if you inherit it, I guess that should not be a problem. Also, if you are OCI, I guess its possible [not sure about it though]

    Or you can have trustworthy residents buy it for you.

    About Stamp duty, I guess it depends on where the purchase is done.

    Anywhere in mumbai its flat 10-10.5%. In Bangalore its 10.5% and in TN its 8-8.5%

    In some states like in Andhra if its men, its more and women less [ many people buy in the name of their wives/moms]

    http://www.laws4india.com/indianpropertylaws/notifications/so130stampact.pdf


     
  7. Nandshyam

    Nandshyam IL Hall of Fame

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    Shan.. Awesome as usual...

    Will be very helpful for newbies :)

    Thanks much for ur effort...
     
  8. Shanvy

    Shanvy IL Hall of Fame

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    Nandu dear,

    Thanks for going through. if it helps even a few, i am happy.

    Just sharing the knowledge, and improving it further...:cheers
     
  9. shvap_786

    shvap_786 Gold IL'ite

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    Dear shanthi...

    very nice information... thnx for posting... i admire all ur posting in this coloum... personally i i'm interested in RE...
     
  10. Shanvy

    Shanvy IL Hall of Fame

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    vahee,

    thanks dear. it is really happy that you find it informative.
     

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