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Make this New Year Resolution for Real

Saturday, December 30, 2017

With a New Year about to begin, all of us would have made resolutions. If home buying is among your New Year resolutions, here are basic steps to know about before proceeding. Advocate Tanmay Ketkar explains in detail

We are in a transition phase, a year is about to end, and a new year is about to commence. This is the time to think about the resolutions, those that were set for this year and those are to be set for the coming new year. Home buying is one of the most important resolution that one tries to accomplish. With changing time, the home or property is no more only necessity or a basic need. The property is also purchased as an investment, as a holiday home and so on.

Irrespective of the purpose of purchasing, everyone desires to have a safe, secure and a legal property deal. To do anything properly we need to follow some set of principles or logical steps, and purchasing a property is no exception to this. To have secure, safe and legal deal of property, purchaser needs to follow the four-step formula or process viz.

1. Investigation, 2. Finalising transactions and commercials, 3. Agreement and its registration, 4. Implementation and actual transfer of property. The best thing about this four-step process is that it can be applied anywhere and everywhere, irrespective of the purpose of purchase or nature of property. The purchaser can have pleasant experience by following this four-step formula.

Investigate well
First and most crucial step is the investigation. Whenever we start thinking of purchasing a property, we get various information about various properties from friends, relatives, internets, advertisements etc. Once we short list the properties, we can initiate the investigation of property. The investigation starts from permissibility of sell and purchase. There are some legal impediments and restrictions on selling properties, e.g. in Maharashtra non-agriculturist cannot purchase agricultural land or an allottee of M.H.A.D.A or S.R.A. cannot sell the property for stipulated period. If there is no such impediment we can proceed to investigate. The investigation will depend on nature of property i.e. open land or constructed premises.

As far as open land is concerned investigation starts from studying revenue records. Revenue records are the records maintained by the revenue department, some of the important records involve 7/12 extract, mutation entries, property card etc. The 7/12 extract and property card present the current picture of property, however to study the history we need to peruse the relevant mutation entries. The mutation entries will reveal the history and correct standing of the present owner, which will be decisive for our decision. For constructive unit, after studying land records we need to study and understand various sanctions and permissions. Building permission, sanctioned plan or layout will give us the idea about the legality of the structure. If land records and permissions prima facie satisfies us we shall then proceed to investigate the earlier transactions of the property. As a purchaser it is very important to know all past transactions and ascertain that there is no adverse claim on the property. We can have this information by taking a search at local registration office, in digital system now this can be done online as well. However, for some old record yet to be digitized we need to take actual physical search at registrar office. The search will reveal each registered agreement for a particular property.

Sometimes it so happens that an agreement and transaction is neither completed nor cancelled and the entry of that transaction continues to appear in search. Sometimes property is mortgaged for loan and it is not reversed even after repayment of loan. Such entries make the title of property defective. If such transaction or agreement is revealed, we must ask the owner (our vendor) to rectify the defect by registering the deed of cancellation or other necessary instrument. After this, we shall investigate whether the owner’s name is appearing on all relevant property documents i.e. revenue records, 7/12 extract or property card, society share certificate, electricity connection. Local body tax receipt, etc. If for any reason owner’s name is not appearing, it will create unnecessary trouble for transfer of property in purchaser’s name. Therefore, we must ask owner for explanation and shall ask the owner to get his name entered on all relevant record.

If everything appears proper in the investigation we can move to next step i.e. transaction and commercials. It is very important to specifically decide transaction and commercials to the last rupee. Apart from price or consideration, other important things like schedule of payment, possession of property, payment of stamp duty and registration charges, cancellation of agreement etc. are also to be decided. As far as possible all the terms and conditions shall be decided, it may take longer time, but it will leave no or very little room for a possible dispute.

Check agreement thoroughly
After commercials, next step is to reduce those terms and conditions in writing i.e. agreement. The seller and purchaser both must ensure that the agreement has same terms and conditions as finalised by both. The agreement does not have legal value unless and until it is registered. Once the draft of agreement is ready, both the vendor and purchaser shall carefully examine the draft for any clerical or typographical or other mistakes. Because once registered it is difficult and sometimes impossible to correct the defects or mistakes. Once draft of agreement is final, we must ensure that all relevant documents like 7/12 extract, property card, society share certificate etc are attached to the agreement. The registration cannot be done unless required stamp duty and registration fee is paid, deficit stamp duty would lead to non-registration or penalty. Therefore, we must ensure the proper stamp duty and registration fee is paid. After paying stamp duty and registration fee we can present the agreement for registration. The parties get to read a pre-registration information i.e. gist of agreement. This is the information going to be fed in government record. Therefore, both the vendor and purchaser shall again verify all the information in pre-registration information. Once verified, the agreement can be registered and on registration it creates a legal right, title and interest.

Agreement creates legal right, title and interest, however this right cannot be enjoyed unless and until the property is transferred in name of purchaser. Transfer of property involves transfer of possession and transfer of record. Generally, the possession and record are not transferred till final payment, which is fair. Once the final payment is done, the purchaser must ensure that the possession in given to him. After possession, the purchaser shall initiate the process of transfer of other relevant records of property like 7/12 extract, property card, society share certificate, electricity connection, local body tax receipt etc.

Adaptive to RERA
With new  Real Estate (Regulation and Development) Act, 2016 (RERA) in place, the formula needs to be adaptive to RERA. The transactions of properties in unregistered units are not covered under RERA. For all properties covered under RERA atinvestigation step purchaser must ensure that the project is either registered or exempted from registration, all the information is available on RERA portal. Purchaser can now have look at important documents like title certificate, building permission and sanctioned plan on RERA portal itself. At the agreement step, purchaser must ensure that the agreement presented of registration is RERA complaint and no adverse conditions are imposed. After agreement, purchaser must ensure that his booking is updated and consequently number of available units are changed. At implementation stage, purchaser must ensure that the possession is delivered on a date promised. If the possession is not delivered the purchaser has a choice to cancel the booking or ask for interest till delivery of possession.

Considering the prices, purchasing of property has become costly and therefore risky. With this four-step formula the risks involved can be minimised, if not ruled out. With this four-step formula the seller and purchaser both can have safe deal and pleasant experience. Those resolving to purchase a property in coming year  please also resolve to follow this four-step formula.

Four-step formula
1. Investigation
2. Finalising transactions and commercials
3. Agreement and its registration
4. Implementation and actual transfer of property

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