Buying Process

 

Any of the following persons can be a buyer:

 

  1. Individual
  2. Company
  3. Partnership firm
  4. Proprietary firm
  5. Co-operative housing society

 

Buying your home

 

When you buy a house you are investing in a home for your family. It may well be the biggest financial investment you have ever made and its future value will play a part in the life of your family for years to come.

 

Ask yourself a few sensible questions.

 

  1. Is it the right size?
  2. Will it be big enough for you in five years?
  3. Will it be too big?
  4. Is the location right?

 

Can you afford it?

 

The first thing you need to do is decide how much you can afford. You will need to look at how much money you have available yourself and how much you can borrow. There are a number of different financial institutions which offer loans to people buying a property, for example, Banks. You should find out if you are able to borrow money and if so, how much?

 

Before finally deciding how much to spend on a property, you need to be sure you will have enough money to pay for all the additional costs. These include:-

 

  1. Survey fees
  2. Valuation fees
  3. Stamp Duty Land Tax.
  4. Land registry fee
  5. Local authority search fees, if any, charged by the mortgage
  6. VAT
  7. Removal expenses
  8. Any final bills, for example, water and electricity, from your present home which will have to be paid when you move.

 

You will also have to pay a deposit on exchange of contracts, up to 10% of the purchase price, a few weeks before the purchase is completed and the money is received from the mortgage lender.

 

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How to find a property

 

There are a number of ways in which you could find a property to buy:-

 

  1. using estate agents
  2. looking at the property pages in local newspapers
  3. contacting house building companies for details of new properties being built in the area
  4. looking on the internet.

 

Deciding on a property

 

When you find a property you should arrange to look round it to make sure it is what you will need and to get some idea of whether or not you will have to spend any additional money on the property, for example, for repairs or decoration. It is common for a potential buyer to visit a property two or three times before deciding to make an offer. Following should be keep in mind:-

 

How far is it from the market?

 

The house itself may be ideal. But have you checked public transport facilities; even a motorist may need them occasionally.

 

What about schools?

 

Consider your needs and those of your family now - and in the years to come.

 

Have you had a really good look at the property?

 

In daylight and at night, so you can gauge the volume of traffic and consider access facilities. Perhaps even identify potential problems with neighbours.

 

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Is the property structurally sound?

 

(a) Property Assessment Report

 

A physical visit to the property to assess its locational advantages and other associated factors like proximity to utilities, hospitals, schools, etc. shall be undertaken. An assessment report will be prepared after the visit. The report will contain the below items:

 

  1. Approachability to the property
  2. Location and its pros / cons
  3. Details about the building & facilities available in the property
  4. Status of the construction if the building is under construction
  5. Digital images* of the property

 

With respect to purchase of vacant plot, the act of taking digital pictures may bring out any potential or anticipated threats to ownership of the property.

 

The property assessment report is prepared after visiting a property to assess its location advantages and other associated factors like proximity to utilities, hospitals, schools, etc. This activity may also help you to discover certain local threats to the property. Our visits to the property may bring out any possible litigation issues/ problems with title and could help in the decision making process.

 

(b) Legal Scrutiny Report

 

Scrutiny of property papers like Sale Deed, Mother Deed, Khata / Patta Certificates, Encumbrance Certificates, Tax Paid Receipts, various clearance / approval certificates, RTC extracts, etc to find out the ownership and marketability of the property.

 

All the property papers will be scrutinized by our legal experts and they will find out the ownership and marketability of the property. They will check whether the property is free from all legal issues.

 

(c) Authenticity Report

 

All the important property documents will be checked for their authenticity at the office of issuance (Sub-Register Office). This will help in identifying fake / counterfeit documents which could pass legal scrutiny

 

If the document is found to be fake or having discrepancies during the authenticity check we will immediately escalate it to you. Normally in such cases, our lawyers will not give a go ahead for the buy and will advise you to look for another property. However, if we have sufficient reason to believe that the seller himself is not aware of the discrepancies prior to our finding we can request them to bring the required documents reissued from the respective government authorities after rectification. Once this is done our lawyers can review it again and advise you accordingly. Additional fees may be applicable for such extra work and it would depend on the complexity of the cases and place of issuance.

 

(d) Draft & Check - Sale Agreement & Sale Deed

 

Our legal team will check the finer prints of the sale agreement and sale deed and will suggest modifications as per your requirements or you can request us for the draft documents.

 

(e) Registration & Execution of Sale Deed

 

Execute the sale deed and register the property in your name at the sub-registrar’s office on the designated day and complete the transaction.

 

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Is the property leasehold, freehold?

 

Freehold property

 

If the property is freehold, this means that the land on which the property is built is part of the sale and no ground rent or service charge is payable.

 

Leasehold property

 

A property may be leasehold, which means that the land on which the property is built is not part of the sale. The length of a lease can vary and you should check that the length of the lease on the property you are interested in buying.

 

Making an offer

 

When you decide you would like to buy a particular property you do not necessarily have to pay the price being asked for it by the owners. You can offer less if, for example, you thinks there are repairs to be done which will cost money.

 

If the property is being sold through an estate agent, you should tell the estate agent what you are prepared to pay for the property. The estate agent will then put this offer to the owners.

 

If the owners do not accept the first offer put to them by you, you can decide to make an increased offer. There is no limit on the number of times you can make offers on a property. If you make a written offer it will always be made subject to contract. This means that you will not be committed to the purchase before finding out more about the state of the property. If you make an oral offer this is never legally binding.

 

When the offer has been accepted

 

When your offer for the property has been accepted you will have to consider the following:-

 

  1. whether a holding deposit is payable
  2. arranging a mortgage
  3. whether a survey is necessary
  4. who will do the necessary legal work
  5. whether you want to buy with someone else

 

Holding deposits

 

Once the owners have accepted your offer the buyer may be asked to pay a small deposit to the estate agent. This is usually very less. It is meant to show that you are serious about going ahead with the purchase. It is repayable if the sale does not go ahead.

 

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Arranging a mortgage

 

If you have not already begun to arrange a mortgage, you should start to do this now. It should take about three weeks from the application for the mortgage to the formal offer being made by the lender. However, this time-scale may vary.

 

Whoever agrees to lend the money will want to have the property valued. This is to make sure that the lender could get the loan back if for any reason you stopped paying your mortgage and the house had to be sold again. The valuation will be done by a surveyor on behalf of the lender but you will have to pay for this valuation. The fee will be payable in advance, usually when the you send a completed mortgage application form to the lender.

 

Arranging a survey

 

The valuation which is done for whoever is lending the money is not a survey. You should consider whether or not to have an independent survey carried out in addition to the valuation. The survey would not only consider the value of the property but would also examine the structure of the property and should identify any existing or potential problems.

 

There are two levels of survey that you can choose between:-

 

  1. a full structural survey. This is suitable for a property which is large, more than 80/90 years old or in doubtful condition
  2. an intermediate or ‘house/flat buyers report’ that gives a report on the condition of the parts of the house that are easy to see and to get at and may recommend further tests or investigations.

 

Choosing who is to do the legal work (conveyancing)

 

  1. The legal process of transferring the ownership of the property from the present owner to the buyer is known as conveyancing. You should decide who you want to do the conveyancing work. You can do it yourself or through attorney.

 

What will the legal costs be?

 

Stamp duty and land tax has to be paid on all transactions where the purchase price is above a certain level.

 

You have to pay to have your new property registered with the Land Registry. A scale of fees applies, depending on the purchase price.

 

Local Searches and Land Charge Searches, together with Mining, drainage and environmental searches if necessary, are essential to provide you with the maximum amount of information about your property.

 

If you purchase a leasehold property, there are usually notice fees to be paid to the Ground Landlord

 

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The legal side of buying your home

 

It is our task to see that you can move into your new home secure in the knowledge that the often complex legal groundwork has all been done for you.

 

We submit the necessary enquiries and searches to the authorities responsible and handle the work involved obtaining the results of these searches. Local Searches and Mining Searches can take several weeks to be returned to us and need to be applied for as soon as possible.

 

We check all the documentation on your purchase. We also ask any additional questions that arise at this stage.

 

We ensure that the legal title to the property is in order, but you have the responsibility of satisfying yourself on the state and condition of the property. We strongly advise you to consider a comprehensive survey.

 

When you come in to sign the contract and pay the deposit, we will discuss the result of our investigation and explain to you any points that have arisen or problems that have emerged.

 

The final documentation

 

We prepare the final documentation once contracts have been exchanged and a moving date agreed. All that should be necessary then is for you to sign those final documents before the moving date.

 

We obtain your mortgage from your lender, but any additional money due from you is required at least three days before the moving date.

 

We pay stamp duty and deal with registration of your title before sending the deeds to you or your lender.

 

Documents required while buying commercial or residential property:

 

  1. Market Trends about prevalent rates of property in the vicinity and last known transactions.
  2. Identify the property you wish to purchase.
  3. Formulate commercial terms.
  4. Distinguish between terms and conditions of the contract which are negotiable and those which are fixed e.g. price, payment schedule, time of completion etc.
  5. Ask for photocopies of the all deeds of title related to the property to be purchased. Examine the deeds to establish the ownership of the property by seller, preferably through an advocate. Ascertain the survey number, village and registration district of the property as these details are required for registration of the sale. Previous encumbrances and loans, if any, on the property must be cleared before completion of purchase of the property. The title of the Vendor to the property must be clear and marketable.
  6. Finalise commercial terms of purchase of the property. Ascertain transfer fees, stamp duty and registration charges to be paid on purchase of the property.
  7. Ascertain outgoings to be paid for the property i.e. property tax, water and electricity charges, society charges, maintenance charges.
  8. Request Vendor to obtain, if applicable, consent, permission, sanction, no objection certificate of various authorities such as the (a) society (b) the income tax authority (c) Municipal Corporation (d) the competent authority under the Urban Land Ceiling and Regulation Act (e) any other authority.
  9. Will you require a loan for making payment of the consideration amount. Ask for a pre-approval letter from the lending institution.
  10. Permanent Account Number of Vendor and Purchaser under Income Tax laws Payment of stamp duty on the formal agreement or document for transfer of the property, signing by both the Vendor and Purchaser and registration
  11. After payment of the entire sale price, take over legal possession of the property alongwith documents of title in original from the Vendor of the property
  12. Change name of the holder of the property to the purchaser in the records of the society, electricity Department, Municipal Corporation etc.

 

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Stamp Duty :

 

Stamp Duty is a tax, similar to sales tax and income tax collected by the government, and must be paid in full and on time. A stamp duty paid instrument/document is considered a proper and legal instrument/document. The liability of paying stamp duty is that of the buyer unless there is an agreement to the contrary.

 

Market value of the property and is Stamp Duty payable on the market value:

 

Market value means the price at which a property could be bought in the open market on the date of execution of such instrument. The Stamp Duty is payable on the agreement value of the property or the market value, whichever is higher.

 

Formalities to be completed:

 

The formalities and forms may vary from State to State depending on where the property is situated.

 

  1. Every State has its set forms under the Registration Rules that are required to be filled and filed along with and at the time of Registration of Sale Deed/Transfer Deed.
  2. Under the provisions of the Income Tax Act and Rules for a transaction of sale, it is now compulsory for the Purchaser and Seller to give their Permanent Account Number and in the event of either the Seller and/ or the Purchaser would be required to fill Form 60 of the Income-Tax Rules.
  3. In case of either the Purchaser or the Seller being a Non-Resident Indian, not assessed to tax in India, such a Party would be required to file Form 60 of the Income-Tax Rules.

 

Permission and papers that one should check with the builder when buying a flat in a building which is under construction:

When you are buying a flat from a builder in a building under construction, you have to check the following things:

 

  1. Approved plan of the building along with the number of floors.
  2. Whether the floor that you are buying is approved.
  3. Whether the land on which the builder is building is his or he has undertaken an agreement with a landlord. If so, check the title of the land ownership with the help of an advocate.
  4. The building byelaws as applicable in that area and ensure that the builder is building without any violation of front setback, side setbacks, height, etc.
  5. Check if the specifications given in the agreement to sell of the sale brochure match on the ground or not?
  6. Whether urban land ceiling NOC (if applicable) has been obtained or not.
  7. NOC from water, electricity and lift authorities has been obtained.

 

Appropriate authority for knowing the market value of the property:

 

The Sub-Registrar of the area, in whose jurisdiction the property is located, is the appropriate authority for knowing the market value of the property.

 

Within time period should an agreement/deed have to be registered:

 

The property agreement should be registered with the Sub-registrar of assurances under the provisions of the Indian Registration Act within four months of the date of its execution.

 

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Completion of the sale:

 

The transfer of a flat is concluded when you have an sale deed/ agreement for sale coupled with actual possession. Generally, in all cases the entire amount is paid simultaneously with the handing over of physical possession and signing of the transfer documents.

 

Formalities by foreign citizens of Indian origin for purchasing residential immovable property in India under the general permission:

 

They are required to file a declaration in for IPI and with the central office of Reserve Bank at Mumbai within 90 days from the date of purchase of immovable property or final payment of purchase consideration, along with a certified copy of the document evidencing the transaction and the bank certificate regarding the consideration paid.

 

Precautions:

 

It was found that on the basis of advertisements issued in the newspapers or on the basis of brochures issued by the Builders and Developers copies of which are sent abroad, non – resident Indians used to purchase immovable property or flats. Subsequently, it was found that the Builders did not have a marketable title to the property and / or it was found that the plans were not approved by the Municipal authorities and / or the Builders do not have the necessary funds for making the construction, etc.

 

Some of the precautions that the purchaser has to take before buying the flat are:

 

  1. He should see that the promoter has made full and true disclosure of the nature of the title of the land on which the flats are to be constructed. He should see that a proper certificate is issued by an Attorney of Law or Advocate with a standing of not less than 3 years.
  2. He should see that promoter has made full and true disclosure of all encumbrances on such land including the right title or interest, claim of any party on such land.
  3. He should see that promoter has given plan and specification of the building built or to be built on the land. It should be ascertained that such a plan or specification has been approved by the local authority as per the provisions of the law for the time being in force.
  4. He should see that the promoter has made disclosure as to the nature of fittings, amenities (including the provision for one or more lifts) that are to be provided.
  5. He should call upon the promoter on reasonable notice if the promoter himself is the builder to disclose the description of the materials to be used in the construction of the building and, if the promoter is not himself the builder call upon him to disclose on such a notice the terms of agreement entered into by him with architect and contractor regarding the description or the material used in the construction of the building.
  6. He should call upon the promoter to specify the date on which the possession of the flat is to be handed over.
  7. He should call upon him to disclose the list of the members of the purchasers of the flat and the price charged for every flat and / or agreed to be charged.
  8. He should call upon the promoter to state in writing the addresses, nature of the organisation of the persons to be constituted to which title is to be passed on. Such organisation may be a Co-operative Society or private limited company etc.
  9. He should see that before taking possession the completion / occupation certificate has been granted by the local authority as required under the law.
  10. He can call upon the promoter to make full and true disclosure of all out goings such as municipal and other local taxes, taxes on income, water charges, electrical charges etc.
  11. The purchaser of the flat should call upon the promoter to make full and true disclosure of other information and documents in such a manner as may be prescribed under the law.

 

What if the documents submitted by the seller are incomplete?

 

In case required property documents are missing/in complete, seller would be responsible for procuring these documents & would be responsible to bear the expenses incurred in the process of procuring these documents.

 

Sale deed registration process differs from state to state within the country. Following are the few common steps that are followed at the time of sale deed registration:

 

  1. Convenient date for registration will be fixed after checking with the seller & buyer / POA holder (in case if is it issued)
  2. Coordination with the sub-registrar office in terms of the documentation requirement for registration, and intimation of the same to the seller and buyer or POA holder.
  3. Registration time will also be checked and intimated to the seller / buyer or POA holder
  4. Registration cost - stamp duty, service tax, etc will be calculated well in advance and an equivalent draft / banker's cheque will be made ready. Mode of payment will be discussed and the payments have to made by the buyer / POA holder at the time of registration.

 

The above details are provided for the purpose of reference only. The process & requirements for registration are subjected to change in government policies

 

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The documents required at the time of registration & registration fees?

 

The list of document & fee required to complete the sale registration process differs from state to state and will vary based on the regulations issued from time to time. Registration fee too keeps varying from place to place and regulations issued from time to time from respective government authorities.

 

Buying with someone else

 

You may choose to buy your property jointly with someone else, such as your husband, wife, civil partner, partner, relative or friend.

 

If you buy your property with someone else, you can choose to do this in one of two ways, as either:

 

  1. beneficial joint tenants, or
  2. tenants in common.

 

This is the case whether you own the freehold or leasehold of the property.

 

If you are thinking about buying a property with someone else, you should get legal advice on the best type of ownership for you.

 

Beneficial joint tenants

 

If you own your property as a beneficial joint tenant, this means that it belongs to you and the other owner(s) jointly. You can't re-mortgage or sell the property without the agreement of all the other owner(s). However if there is a dispute, an owner can apply for a court order.

 

As a beneficial joint tenant, you don't own specific shares in the property and you can't give away a share of the property in a will. If you die, your interest in the property passes automatically to the other owner(s).

 

Tenants in common

 

If you own your property as tenants in common, this means that it belongs to you and the other owner(s)jointly, but that you all also own a specific share of its value. It is up to you to decide how much each share will be.

 

You can give away, sell or mortgage your share. If you die, your share of the property does not pass automatically to the other owner(s). You can leave your share to whoever you like in your will.

 

For more information about owning your property jointly, see the Land Registry

 

Final payment to the seller

 

Normally the final payment to the seller is paid in the form of a draft at the sub-registrar's office at the time of registration. However, it also depends on the terms and conditions of the sale agreement between you and the seller.

 

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