It is a general rule to be cautious while investing in real estate since there are many emotional decisions involved it is necessary to take every step wisely. Whether a person is buying an apartment or consenting to the redevelopment of society, the most stressful task is finding a reliable builder.

The role of builders in real estate is fundamental as he is the one bridging all the gap between the investor’s need and successful project. Even though the implementation of the Real Estate (Regulation and Development) Act, 2016 have been successful in bringing transparency and increasing the efficiency of real estate project, it certainly becomes the prime duty of every person dealing in real estate to take all precautionary measures at the preliminary stage as well  in all stages thereafter to avoid the future difficulty.


The present article discusses all due diligence to be taken by a person at the time of investing in the real estate project.

Due diligence in real estate is mostly like an investigative process where the result will decide whether a particular real estate project is safe and wise to invest in it or not. The decision of which builder is to approach and confirming the same reduces almost 90% of the stress though the rest may depend upon the other factors for instance delay in project completion for unavoidable reasons.

There are several ways wherein the credibility of the builder can be ensured but the first thing first is-

Prepare a checklist:

They say “well plan is half done”, well this goes correct in every situation. It is always advisable to prepare a checklist mentioning all the documents and details to be asked from the builder to ensure his credibility. Now the builder may be an individual or a company or a partnership firm so apart from necessary identity details he must be insisted on producing the income tax filling return of directors of company or partners in case of a firm, in addition to this the copy of balance sheet may be asked to know the financial strength of the builder. Other such necessary details it is wise to ask the builder for a feasibility report. The report will contain the whole as to how the builder would develop the property. In the context of redevelopment, hiring outside guidance perhaps a project management consultant / an architect for a feasibility report is a smart investment. The society members can compare that with the builder’s feasibility report which will make it easier to decide upon selecting that builder.

I. Checking with approval plan:

One may ensure upon the building approval which the builder have got it from the local authorities. The grant of approval of local authority implies that the building in which you are planning to invest has gotten a green signal and that there are no issues related to it.  The authorities granting an construction approval such as municipal corporation/planning/development authority’s website  may be visited by the person that generally maintain the citizen inquiry icon.  Since the approval and building plan is granted green signal only after certain NOCs and submission of required document the below list will assist the buyer to make an enquiry.

List of documents List of Authorities
1. ownership certificate/Extract

2. Non-agriculture permission

a. The Revenue Department
3. Building layout approval document (the person may seek information regarding the site inspection from the Building Proposal Office of Municipal Corporation)

4. structural engineer approved structural plans submitted  by the promoter

5. Occupancy certificate/ Building Completion Certificate

b. The Development Authority/ or the local Municipal Authority (in case of Mumbai district this may be obtained from Bombay Municipal Corporation )


c. intimation of disapproval” (building permit)- the IOD requires NOCs from various government authorities and the Final clearance to build (Commencement Certificate) will only be given once the company obtains all NOCs and meet all IOD conditions.

d. Commencement certificate

e. The Building Proposal Office
6. NOC from Tree Authority f.       Tree Authority Committee/ Water and Drain Department/ Sewage Department/ Electrical Department/ Traffic and Co-ordination department/ Chief Fire Officer under Municipal Corporation
7. The Environmental clearance g. The Ministry of Environment, Forest and Climate Change / the State Environment Impact Assessment Authority (SEIAA)/ State level expert Appraisal Committee
8. The Ancient Monument Approval h. The Archeological survey of India
9. The Establishment consent i. The Pollution control board
10. NOC by Airport Authority of India j. The Civil Aviation Department
11. Borewell registration certificate k. The Central Ground Water Authority
12. NOC if project near the costal area l. The Coastal Zone Management Authority
13. The Lift Escalator Installation Approval 14. The Public Work Department

II. Credentials of builder:

The smartest and the simplest way of checking the efficiency builder is by looking at the project he has recently worked on. The factors such as timely completion of project or impressive plan, well execution can add up to the credibility of the builder.  Since the enactment of RERA 2016 has made all the developers/builders to registered the real estate project on its online portal maintained by state real estate regulators, it will be easy for buyers to check all the necessary details which they may be needed to decide upon his selection. The portal also publishes the court cases filed by home buyers concerning the project.

Other than this an independent research may be carried out by the buyers by checking the builder’s website, completed projects by him, and the kind of associations he has registered himself with. Basically, there are certain builder associations the code of conduct of which is binding upon the builders associated with it. Associations such Confederation of Real Estate Developers Association of India (CREDAI) and Builders Associations of India (BAI) provides a list of builders enlisted with them. The same may be looked upon by the buyers in their builder hunt process.

III. The construction quality of the project:

This may be checked by investigating upon the ready project built by the builder, as already mentioned above by accessing the online portal of state real estate regulators where the builder has likely submitted the quality assurance certificate.

IV. Hiring the Real Estate Agent/Broker:

Although with the advent of digitization of record investigation into real estate projects for purchasing property have become less difficult it is always beneficial to take outside help. Since investing in property involves a review of n number of documents this is where the help of real estate agents can be crucial.

V. Negotiating for good:

“Never negotiate out of fear, but never be afraid to negotiate.”

In terms of redevelopment of society or perhaps in all kinds of real estate buying the process of negotiating with the builder is as stressful as planning a wedding. The buyer has to be very attentive while negotiating the terms which eventually govern the agreement. In the context of societies redevelopment also the members should insist upon the managing committee to stick to the mutually decided terms and conditions. They must remember that even though they are getting a new apartment free of cost, the builder is also getting his profitable consideration out of that redeveloped area.  The member should take active participation in deciding the terms of a development agreement.  A lot can be said at this stage since the possible attitude of the builder can make or break the deal.

Real Estate Agreement:

The terms and clauses enumerated in the agreement decide the faith of the real estate project. Buyers need to ensure that all the decided terms and conditions are rightly contained in an agreement, this goes true with the development agreement also. The fact that a person is giving his everything into the dream apartment, one cannot afford to be ignorant. It is advisable to check with the model agreement provided under the real estate laws and guidelines issued from time to time. The one-sided nature of the real estate agreement would only invite difficulty in its fair execution. In this aspect, the buyers are expected to be sufficiently knowledgeable about the real estate laws, their rights, and duties that will help in the long run. Some relevant factors such as total promised area, parking space, balcony; additional amenities; the height of the flat, three-phase meter; bore well should not be compromised. In the context of a development agreement, the society must insist upon the individual agreement with each member, the condition of vacating place only after obtaining the necessary approval and executing the permanent alternate accommodation agreement etc. In the process of selection of builder, a draft of real estate agreement may be asked to ensure upon the above factors and they may conclude.

To sum up the article, these parameters are the foremost and the most crucial in the successful execution of the dream of real estate buyers, hence it is stress that the buyers must educate themselves in the sense of their right pertaining the knowing and asking details as a part of precautionary method in real estate investing process. As they say, it’s wiser to be cautious than to be hasty or rash and so do something you may later regret.

Author Bio

More Under Corporate Law

Leave a Comment

Your email address will not be published. Required fields are marked *

Search Posts by Date

September 2021