Buying a house or any property is a complex process, especially considering the legal due diligence that should be undertaken. This is a key step in the home-buying journey to minimise the risks of any property-related disputes in the future. Before finalising a property, a buyer should check the property’s ownership to ensure it has a clear title and verify if there are no encumbrances, including legal or financial dues. Further, checking compliance with the local laws is also crucial. Without proper due diligence, a buyer may face potential legal issues or be liable for any unpaid dues. If you’re a first-time buyer, all this may seem overwhelming. To make things easy, you can approach an experienced lawyer. In this guide, we explain the key questions you must ask your lawyer before purchasing a property.Â
Does the property have a clear title?
A clear title refers to a property free from any disputes, encumbrances, liens or legal claims. This way, the seller gains rightful ownership to transfer the property, and the buyer can proceed with the transaction without any worry. By approaching a lawyer, a buyer will be able to understand the right process to verify the title. Some of the important documents the lawyer will ask for include:
- Original title deed: The original title deed can be accessed and shared to verify the ownership over the property. This will help ascertain whether the seller is the rightful owner. One can check the chain of property transfers for the past 30 years.
- Encumbrance certificate (EC): This is a legal document that indicates whether the property has any outstanding loans or pending legal disputes associated with it. The EC can be obtained from the sub-registrar’s office.
- Sale deed: This document verifies the sale of the property to the existing owner. The lawyer will help verify if the deed has been registered and check all the terms and conditions, including the transfer of ownership and payment details.
In addition to the above-mentioned documents, the lawyer will also review the possession certificate, mutation document, property tax receipts, and RERA registration to verify the title. If the property has a defective title, the lawyer will explain the risks and may help the buyer make an informed decision.
Does the property have all the necessary approvals?
Whether buying an under-construction or a ready-to-move-in apartment, the buyer must verify that the necessary building approvals are in place. The developer must obtain various approvals for the construction. Some of the key documents that should be checked include:Â
- Approved Building Plan: The construction must take place in accordance with the approved building plan sanctioned by the local municipal authorities. In case of unauthorised constructions, there are risks, including penalties and even demolition of the building.
- Occupancy Certificate (OC): The OC, issued by the municipal authority, certifies that the building is safe, habitable, and adheres to approved plans, safety regulations, and other relevant regulations.
- Completion Certificate: When purchasing a fully constructed property, it is essential to verify whether the builder has obtained a completion certificate. It certifies if the building complies with all relevant rules and regulations.
The buyer should also consult with a lawyer to verify whether the property is legally classified for residential use and is not involved in any disputes. The relevant records can be accessed from the Revenue Department or the Urban Planning Department.Â
Furthermore, no-objection certificates (NOCs) may be required from relevant authorities, such as municipal corporations and housing societies. This ensures that the party has no objection to the property transfer. Hence, the buyer should check with the lawyer about such requirements.
Has the property been involved in any legal disputes?
Seeking the assistance of a legal professional helps identify potential legal issues that a buyer might miss. Some of the common legal issues arising during or after property purchase include:Â
- Pending litigations: Properties involved in ongoing court cases could pose risks for a buyer.
- Disputed property ownership: There may be conflicting claims from different individuals over property ownership, leading to court cases.Â
- Undisclosed liabilities: There may be hidden debts or encumbrances on the property in question.Â
- Non-compliance with regulatory requirements: A property that fails to comply with local regulations may pose legal risks for the buyer.Â
What is the builder’s reputation?
When purchasing a property, prospective buyers should take the time to research the builder’s track record. This helps prevent potential problems, such as delayed or stalled projects, construction quality issues, and other issues. While there are ways to check builder’s details through online reviews and ratings, but taking the help of a lawyer will ease the process for a buyer. Lawyers can conduct proper research to identify any past or ongoing legal cases against the builder. They will also verify if the builder is registered with RERA and if the project has obtained all the necessary approvals.Â
Will you assist with agreement drafting and property registration?
Lawyers offer services for drafting sale agreements, which help ensure the documents are authentic and include reasonable terms and conditions. It helps safeguard the interest of the buyer. Furthermore, they will assist with all necessary paperwork and property registration at the sub-registrar’s office, following the relevant legal procedures.Â
The buyer should also ask for the fee for property document verification. Moreover, there are government fees applicable when obtaining documents, such as an encumbrance certificate. In cases where documents need to be notarised, the relevant fees may apply.
The costs involved in property document verification through legal professionals may vary depending on factors such as the type of property (residential or commercial), the nature of the transaction, and the number of documents.
Housing.com News Viewpoint
Approaching a legal professional and seeking their opinion on a property is a wise decision, especially for first-time homebuyers. This helps identify potential legal issues and minimise the legal and financial risks for the buyer.Â
FAQs
How to find out if a property is illegal?
To determine a property’s legal status, one should review documents such as the title deed and encumbrance certificate. Moreover, a property may be considered illegal if it does not comply with the local laws related to land use and zoning.
What are the documents property buyers must check?
Buyers should review all documents that establish the seller's identity, such as the title deed. Other documents to check include the sale deed, encumbrance certificate, property tax receipts, utility bills, occupancy certificate or completion certificate.
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 |
Comments 0