Real Estate Frauds, Delay In Flat Possession; Check These 5 Legal Things Before Buying A House

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Buying a house or a commercial property is not an easy task as it may sound while speaking. It is not just the availability of funds with you that decides whether you can own a property or not, but there are other crucial aspects which are extremely important before you plan to sign the deal papers.

There have been cases where some builders construct buildings without obtaining the necessary approvals from the concerned authorities, or they construct buildings in areas designated as green belts or open spaces. Later, the residents face legal issues and encounter difficulties.

Cases of some developers and brokers misrepresenting the size, location, and amenities of a property to lure buyers, have been frequently reported.

Non-delivery of promised amenities like swimming pools, parks, and clubhouses, delaying possession of a property beyond the promised delivery date, cause financial and mental stress to the buyer.

Amid these circumstances, it is important for a buyer to do a thorough check before trusting a real estate player.

The government has introduced various laws in India to protect homebuyers from real estate frauds, such as the Real Estate (Regulation and Development) Act, 2016, which seeks to regulate the sector, promote transparency, and protect the interests of buyers. There are several other laws which exist to regulate different aspects of real estate across states in the country.

Heena Chheda, partner, Economic Laws Practice, said that the path to investing in real estate is often confusing and overwhelming due to the complexity of the measures required to be taken commercially and legally.

“It will be prudent to ascertain the crucial information such as consideration, extra charges, taxes if payable, area of the property, the timeline for delivery of possession, market expertise of the developer, etc. so as to make a commercially sound decision,” Chheda said.

Chheda highlighted that legal knowledge and the language used in real estate are full of jargon, it is advisable to consult a legal advisor before investing in real estate property so as to ascertain the following aspects of a deal;

(a) Whether the seller is the actual owner and in possession of the property:

It is important to ensure that the seller is actually the owner of the property, has a full and clear title, and is legally capable of selling the property. The title of the seller may be checked by verifying copies of all previous chain title documents, stamp duty paid, title certificate, and all the revenue records of the property.

Further, one must also ascertain that the seller is in the custody of all the chain title original documents for the property. Public notice inviting claims against the title of the seller to the property should be given. One must physically as well as based on all bills raised ascertain that the seller is in complete possession of the property.

(b) Are there any encumbrances/ pending dues:

It is important to ascertain if there are any pending mortgages or other outstanding outgoings/liabilities in respect of the property. For the aforesaid purposes, one may request the seller to share an encumbrance certificate for the property, engage an agent to cause searches with the office of sub-registrar of assurances having jurisdiction, RoC searches (in case the seller is a company), and verify the bills and receipts of the electricity bills, maintenance bills, property tax bills, etc.

(c) Has the property been registered with Real Estate Regulatory Authority (RERA):

In the case where the property is proposed to be purchased in a flat/apartment/commercial premises/plots in a plotted development in an ongoing project, it is important to ascertain whether the project has been registered with the applicable RERA Authority.

(d) Is there any prior requirement to be complied with before purchase:

Often, the sale and purchase of the property may require certain legal requirements to be complied with prior to purchase for eg. obtaining a no-objection from the housing society in case of a flat/premises, or prior approvals from development authorities or government officials.

Obtaining such approvals generally require payment of certain charges/premium. One may check for the requisite approvals and the cost for obtaining the same by verifying the title documents, bye-laws of the housing societies, and circulars that may have been passed by the government authorities from time to time.

(e) Checking certain crucial approvals/permissions:

One should ascertain if all the approvals, permissions, sanctions, and NOCs have been obtained from authorities for the concerned property. While in the case of land deals, one needs to check non-agricultural permissions, layout plans, zoning remarks, permissible FSI, etc., and in the case of flats/apartments one needs to check the sanctioned plans, commencement certificates, and occupation certificate/completion certificate (applicable in case of ready to occupy flats).

A Completion Certificate (or the Occupancy Certificate) is granted by authorities after the entire structure has been inspected and completion is done as per all the laws and rules set by the municipal corporation or the local development authority. This document is required to avail utilities such as water supply, electricity supply, and drainage system.

(f) Checking the admeasurement of the property:

This is one of the crucial factors in property deals. For flats/apartments, one must ensure that the area being sold corresponds to the area captured under the sanctioned building plans. For lands, one must cause a survey of the land to ensure that the area of the land corresponds to the area recorded in government/revenue records.

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