When investing in property, a key initial step is to confirm that the immovable asset has all the required clearances, approvals, and documents. For a newly launched project, verifying these documents becomes even more critical. This article explores the essential documents you need to review before committing to a newly launched project.
What is a newly launched project?
A newly launched project is one that the developer has announced, and in some cases, the foundation stone has been laid. Such a project has obtained the necessary approvals from the state regulatory authority and has been assigned a registration number. A new launch project helps the developer generate interest, secure investment through bookings, and gradually commence construction.
Why should you invest in a newly launched project?
Although investing in a ready-to-move project offers a shorter delivery timeline, a newly launched project presents its own set of advantages:
- Early-bird benefits: When potential buyers invest in a new project, developers often offer early-bird discounts, schemes, or payment plans. Taking advantage of these offers can help reduce the buyer’s overall spending on the project.
- RERA registration: Ready-to-move projects may not be registered with the Real Estate Regulatory Authority (RERA) if they were completed before the act was implemented in 2016. Without RERA registration, buyers may not receive adequate assistance in case of discrepancies. New launch projects must register with the State RERA board, making RERA authorization a crucial prerequisite for investment.
- Cheaper price: Newly launched projects are typically priced lower as there hasn’t been time for price appreciation. This first-mover advantage can reduce a buyer’s expenditure by around 10%-30% compared to future prices.
- Scope for better returns: Investing in a new launch project allows buyers to put their money at the inception, offering an earlier start to their Return on Investment (RoI). As the project progresses and prices increase, early investors stand to benefit more when selling.
Documents to check for a newly launched project
Before investing in a new launched project, it’s crucial for a buyer to verify the following documents:
Development agreement
This document is exchanged between the landowner and the developer, stating that the developer will construct a property on the given plot using his own investment. It outlines details such as the land parcel, land use zoning, expected project deadline, and compensation or profit-sharing arrangements for the owner.
No Objection Certificates (NOC)
Developers must obtain various NOCs at different construction stages from departments like sewage, environment, traffic, airport, forest, and pollution control. Authorities may issue an Intimation of Disapproval (IoD) if regulations are not met. These NOCs are also required for securing a home loan for an under-construction property.
Master plan
A common tactic among real estate agents today is to sell properties by making lofty claims about upcoming amenities like shopping malls, hospitals, or new transportation links. Before trusting such assertions, it’s crucial to examine the area’s master plan thoroughly. This plan provides a detailed vision of the area’s future development. Request the master plan from the seller or local authorities to verify the authenticity of these claims and ensure the proposed developments likely to materialize.
Title deed
A crucial document that specifies ownership information, indicating who the current owner is and if he has the right to transfer ownership once the project is completed. Buyers should inspect the original title deed and have it scrutinized to ensure the land is free of legal issues.
Commencement certificate
This certificate is issued by the local civic body or municipal corporation, allowing the developer to begin construction. It marks the transition of a newly launched project to an under-construction status.
Layout approvals
The construction plans must comply with planning authority guidelines and have their approvals. Buyers should keep a copy of the approved layout plans to report any deviations to regulatory bodies. This document is also required for securing a home loan, along with a construction progress report.
Encumbrance Certificate (EC)
Obtained from the local municipal body or sub-registrar’s office, this certificate confirms that the land has no legal encumbrances or monetary liabilities. It can provide details of the land’s legal status for up to the last 30 years.
Agriculture to non-agricultural land conversion certificate
It’s essential to ensure that the land you’re considering for residential construction is not agricultural land, as using agricultural land for residential purposes is illegal and can lead to legal complications. Verify that the property is legally converted from agricultural to non-agricultural use by obtaining the agriculture to non-agricultural Land Conversion Certificate.
Land use certificate
Additionally, ensure the land use matches the intended purpose of your purchase. Constructing residential property on land designated for commercial or industrial use, or using residential property for commercial purposes, is illegal. Obtain a Land Use Certificate to confirm the land’s designated use and avoid legal issues. This certificate provides clarity on whether the land is suitable for residential, commercial, or industrial use, ensuring your property investment aligns with legal requirements.
Purchase agreement
This agreement binds the developer to deliver as promised, including transferring property ownership to the buyer upon project completion. It details clearances and approvals the developer must adhere to, along with project specifications, payment terms, completion deadlines, and penalties for non-compliance.
Home loan sanction letter
The developer must obtain this letter from the necessary banks. Buyers need to submit it when applying for a home loan.
Housing.com POV
Investing in a newly launched project can offer significant benefits, from early-bird discounts and lower initial prices to potential for higher returns as the project progresses. However, these advantages come with the responsibility of thorough due diligence. Ensuring that all necessary documents are in place and verified is crucial to safeguard your investment. By diligently checking the development agreement, title deed, NOCs, commencement certificate, layout approvals, encumbrance certificate, purchase agreement, and home loan sanction letter, you can mitigate risks and make a well-informed decision. Taking these steps will not only secure your investment but also provide peace of mind as you move forward in your property acquisition journey.
FAQs
What is a development agreement and why is it important?
A development agreement is a contract between the landowner and the developer, outlining that the developer will construct a property on the specified plot using his own investment. It includes details about the land, zoning, project timeline, and compensation or profit-sharing arrangements. This document is crucial as it defines the terms and responsibilities of both parties, ensuring transparency and protecting the buyer's interests.
Why should I check the title deed before investing in a new project?
The title deed is essential as it verifies the ownership of the land on which the project will be built. It ensures that the developer has the legal right to construct and sell the property. Checking the title deed helps avoid legal disputes and confirms that the land is free from any encumbrances or ownership issues.
What are No Objection Certificates (NOCs) and why are they required?
NOCs are approvals from various governmental departments like sewage, environment, traffic, airport, forest, and pollution control, certifying that the project complies with all necessary regulations. These certificates are required at different stages of construction to ensure that the project meets legal and environmental standards. NOCs are also necessary for obtaining home loans for under-construction properties.
How does RERA registration benefit me as a buyer?
The Real Estate Regulatory Authority (RERA) registration ensures that the project complies with the regulations set by the RERA Act, providing a layer of protection for buyers. Projects registered with RERA are subject to strict guidelines regarding transparency, timely delivery, and quality. In case of any discrepancies or disputes, buyers can seek redressal through the RERA tribunal, offering better legal protection.
What is an Encumbrance Certificate and how does it protect my investment?
An Encumbrance Certificate (EC) is a document obtained from the local municipal body or sub-registrar’s office, confirming that the land is free from any legal or monetary liabilities. It details any registered transactions, such as sales, mortgages, or leases, that have taken place over a specified period (often up to 30 years). This certificate ensures that the property is not subject to any legal claims or debts, protecting your investment from potential legal issues.
| Got any questions or point of view on our article? We would love to hear from you. Write to our Editor-in-Chief Jhumur Ghosh at jhumur.ghosh1@housing.com |
