What factors do you look for, while comparing properties? Without any doubt, the property’s location, price and possession, will be the first and foremost parameters one might consider for his/her short listing. However, apart from these primary ones, a few more things are necessary to check before finalizing upon a deal.
Let us now find out those legal documents one must ask for, before making any kind of financial commitment. Asking and checking for the copies of the following necessary permissions and clearance certificates, will avoid you from being stuck into any judicial tangle in future.
The ownership rights, obligations and mortgages (if any) on the property. Therefore, this document is a validation of whether the property land is registered, and its development rights transferred. You can obtain a copy for this from your builder and get the same verified from the land record office.
Certificate of the Project’s Commencement:
This document is necessary to mark beginning of the property’s construction. Post the analysis of the construction’s foundation and inspection of its boundaries, one can get this clearance certificate issued from town planning and engineering department. This is also a good indication of the builder obtaining the required licenses and permissions for the map. Even before you actually start digging up, you must have all these things sanctioned.
Verify of the plan’s approval:
It is advantageous to verify for the approval of the building and layout plan. This is like running an additional check to ensure that the plan does not violate or break any by law applicable in the construction area. In addition, you should also make sure the floor area, where your flat is booked, approved well in the building plan.
The design plan must be in accordance with the NBC guidelines. NBC, or National Building Code of India, is a code to understand the regulation of building’s construction activities throughout the country. One must get this checked with the local municipal authorities.
Some construction projects also claim for a green stature. In this, either of the Indian Green Building Council, or GRIHA should certify of the project. GRIHA is Green Buildings Rating System India, which is a TERI University’s initiative. These certifications focus on a rating a building, based on energy, water and waste management. GRIHA stands as the most popular rating system available in India right now, also having standardized norms.
Certificate for Land Use:
Having residential property in a commercial or an industrial zone is illegal. Therefore, ensure that the property you purchase lies in the residential zone, by applying to the urban development authority and check the certificate for the same. With the expanding cities, you may often find agricultural land converting to non-residential purpose by paying some fees to the government. During such situations, check for the endorsement order from the zonal deputy commissioner (or tahsildar). This order is a license for residential construction on the land.
Many a times, you will find builders claiming future infrastructural development planned in the area, such as a highway or an upcoming metro. Before believing everything blindfolded, you must look at the area’s master planning personally for verification. You can very easily find such plans available with the town planning department.
Check for the NOCs:
Wherever applicable, ask for a No Objection Certificate of your urban land ceiling from your builder. You may also check the NOC for environmental clearance, as well as from the electricity and water authorities, if present.
Take the Expert Opinion
To verify whether or not, your project has clean and transparent paper work, a very simple and convenient way is to check if the same has loan approvals from the financial institutions. Banks have quite tough rules for lending, due to which they do all the important due diligence before clearing the loans. This may not be always error-free. There were many cases in past where the builder had the support from bank, still the project landed in to financial troubles.
Therefore, it is always on your advantage to get some professional help. If required, you may even seek for a paid opinion from an advocate specializing in property transactions, and even get your document verification done.
Once you are sure of the above-mentioned documents to be in their proper place and done with the verification, you may proceed with making your final decision without much anxiousness or worrying around. To decide these kinds of real estate investments need to be part of your portfolio or not, you need to have a financial plan mapped with all your financial goals. If you are looking out to create a financial plan for yourself, then you may want to check our financial planning process.
(The author is Ramalingam.K an MBA (Finance) and certified financial planner. He is the Director & Chief Financial Planner of holistic investment planners (www.holisticinvestment.in) a firm that offers Financial Planning and Wealth Management. He Can be reached at firstname.lastname@example.org)