Appropriate verification before entering into a property purchase agreement ensures clear title of the property and investment safety.
List of documents required before buying a property in India
- Verification of title and ownership of the seller.
- Verify identity of the seller.
- Conversion and land-use permissions.
- Construction approvals.
- Occupancy certificate.
- Status of tax payment.
- Physical survey and access to the property.
- Compliance under the Real Estate (Regulation and Development) Act, 2016 (RERA).
Leaving scope for a mistake may lead to Losses, cause serious troubles or impose penalty. Property investments are highly capital intensive and made out of hard earned money. Hence, makes it necessary for a buyer to prepare list of documents required before buying a property in India and conduct title verification to ensure clear title and investment safety.
In this article, we will discuss about the documents required from the seller, before entering into a property purchase agreement. In other words, we can say, The process required to be followed before buying a property.
1. Verification of title and ownership of the seller
A person cannot convey a better title, than what he himself has.
First of all, The buyer should undertake title verification, to ascertain the existence of the title with the seller. Secondly, The nature of the title, its marketability and the ability of the seller to on clear and marketable title.
Examination of documents relating to transfer of title –
The legal documents to title of property shall be verified for a minimum period of 30 years.
In case the documents as aforesaid, are not available for 30 years then for 12 years or 12 saala.
The seller shall provide the following documents/information:
Title documents of the property
The legal document evidencing the title of the seller property. For Instance, Government order for grant, succession certificate, sale deed, gift deed, will, partition deed, etc., evidencing the transfer of title over the years, justifying the vesting of property with the seller.
Nature of title
Whether the property is leasehold or freehold or having development right.
Development Agreement and Power of Attorney
In case where the seller is claiming development rights of the property, the development agreement and power of attorney in his favour.
A power of attorney proves the validity of the transfer of the property and states that an authorized person approved the sale or purchase. Hence a very important legal document for title verification of property. Obtaining loan from bank requires original Power of Attorney.
Further, the office of the jurisdictional sub-registrar of assurances shall issue duly stamped and register all title documents of the property.
The mutation register is a proof of entry in the local revenue records. The Mutation Registered in his name also called as extract or locally called as daakhil kharij/Khata should be obtained from the seller.
Further, it provides detail of the previous owner as well. Hence, banks require before the loan is sanctioned Mutation to confirm :
- the legal title of the property.
- to ensure, the compliance of the norms issued by municipal corporation/development authority, acting as governing body.
Hence, mutation is a most essential item in the list of legal documents required to be verified before buying/purchasing a property.
Approved Building Plan
The buyer must obtain a copy of approved building plan. Compare the approved building plan with the actual property site to ensure the compliance of the rules and regulations of the municipal corporation/development authority, acting as governing body.
A developer or housing authority issues an allotment letter which is one of the most important document in relation to property ownership. Allotment Letter states the description of the property and details of the amount paid by the buyer to the developer. Do keep in mind that an allotment letter is not the same as an agreement to Sell. Both are altogether different but essential item in the list of documents required before buying a property.
Developer/authority issues Allotment letter over letterhead while a sale agreement is documented on a stamp paper.
Further, the allotment letter is executed only with first owner and passed on to the subsequent owners. Whereas, the sale agreement is executed in each and every case, be it primary sale or secondary sale.
Agreement to Sell
This legal document lists all kind of information about the property ― the terms and conditions, the possession date, the payment plan, the specifications, the details about the common areas and facilities, etc.
Further, the agreement binds the developer to complete the construction of the property on time. Buyer has to obtain original agreement to sell for property purchase and acquiring home loan.
Information on pending or past litigation.
Bank Loan Cases
The original title documents of the property must be available with the seller.
However, list of the original documents of property submitted to the lending bank in case the seller has taken bank loan is required.
If the prospective buyer needs any guidance on Key check list of legal documents required before buying a property in India or Title verification before entering into a property purchase agreement to ensure clear title of the property and investment safety, feel free to contact us via any of the suitable mode available here on website.
2. Verify identity of the seller.
Similar to verifying the title to the property, the buyer should also ascertain the identity of the seller. For instances:
- Residence status and nationality of the seller, in case of an individual.
- If the seller is non resident indian, higher rate of TDS @20% shall be applicable.
- Consent of government authorities, if required.
- Identification and verification of all owners, in case of properties held jointly.
- The constitution documents of the entity are necessary where the seller is a company, trust, partnership firm, society etc. to confirm its ability to own and transfer the property, besides ascertaining that the person executing and registering the sale deed is duly authorised.
- Order from the competent court, where the property owner is minor or person of unsound mind, permitting sale of the property and appointing a guardian.
- Power of Attorney where the sale deed execution is required by a person other than the legal owner of the property.
Identity proof of the seller should be verified mandatorily, hence forming an essential item in the list of documents required before buying a property.