In India, the real estate market is often looked with a suspicious eye. And why not, we often come across many news citing developers and brokers’ fraudulent activities. It, therefore, becomes very important for any buyer to know what and how to buy, legally. What are the legal aspects that a buyer should consider; how he can safeguard his investment.
An owner of a property has three basic rights over that property, which makes him the “absolute owner.”
I. The right of ownership or title to the property.
II. The exclusive right to possess and enjoy the benefits of that property in any lawful manner.
III. The right to alienate that property. In other words, an owner can part with the property as and when he wishes, and in the manner he prefers to do so provided it is within the legal framework.
Legal procedures and market conditions have however, made it increasingly onerous for property owners to sell their property. For the benefit of such owners, hereinafter follows the basic procedure to sell a property legally in India.
I. Proper valuation: A seller can either self-assess his property or resort to an external source such as a real estate agent, to determine the market value of the property in question.
II. Self-selling versus hiring an agent: The seller has the option to either sell the property by himself, or to hire a real estate agent. Self-sellers may lack the knowledge of the market and also of the legal procedures involved in selling a property. Hiring a professional agent for a small commission is therefore advisable.
III. Advertising: The seller can advertise his property on various mediums such as internet, classifieds, pamphlets, word-of-mouth or through a broker. Once the buyer has been identified, it is advisable to do a background check on the buyer with special reference to his financial capability and reliability.
IV. Obtaining permissions: The seller must obtain No Objection Certificates (NOCs) from various authorities as required. These authorities maybe;
b. Income tax authority
c. Municipal Corporation
d. The competent authority under the Urban Land Ceiling and Regulation Act
e. Any other authority.
Thereafter, we come to the most vital stage of documentation. Of late, there has been an increase in the number of property related disputes that are a direct outcome of insufficient or improper documentation. It is therefore pertinent that both the buyer and the seller give due consideration to the documentation of the deal.
The following documents are necessary to this effect:
I. Letter of allotment: It confers the allotment of the property from the relevant authority or society, to the original buyer.
II. Previous sale deeds: The seller should have the original sale deed from the previous owner(s) of the property. It makes it possible to trace the ownership of the property. A property with clear documentation and title is likely to command a higher price in the market.
III. Sanctioned plan: The approved building plan and occupation certificate issued by the competent authority. For example; in Delhi that would either be the DDA or NDMC depending on the area of jurisdiction.
IV. Encumbrance certificate: This is an evidence of free title. A property free of encumbrances commands a higher price in the market.
V. Sale Deed or agreement: Once the aforesaid documentation has been completed, the seller executes a sale deed in favour of the buyer on the basis of agreement to sell entailing all terms and conditions duly listed on a non-judicial stamp paper. After complete clearance of documents, both parties sign the sale deed.
Disclaimer: While the aforesaid are the broad guidelines for selling a property in India, it is advisable to seek expert advice on the subject before entering into a sale.
An MBA by qualification, Akhilesh has dabbled into various businesses. He is a keen debater, data miner and analytically inclined. His blogs tend to present a fresh perspective on any given matter.