Buying A Property?? Be Diligent & Do Due Diligence; Trust It’s Really Not Tough
In 2011 a businessman purchased a flat from a local builder for Rs. 35 lacs; Rs. 15 lacs he paid in cash as down payment & Rs. 20 Lacs he paid through home loan (may be facilitated by the builder himself). In October 2017 he was served a notice from one of the NBFC to vacate his house for not serving the loan of Rs. 40 Lacs which he had never taken at all. This nightmare happened with the person living in Ghaziabad who was served another notice from one of the NBFC to vacate his house on 23rd March, 2019. The victim first asked the builder about it who first committed to pay this loan amount but thereafter denied to do so, rather lodged one FIR against the victim for building pressure. Then the victim approached the Senior Superintendent of Police, Ghaziabad to help him in the matter and not this matter has gone to the court. We all can understand that now under what kind of pain & harassment this home buyer would be in the years to come.
Whatever happened with the person above can happen with anyone of us if we don’t take few precautions while dealing with such kind of matters, do not forget that the “Precaution is better than cure”. Lets understand about few things to be taken care of while entering into a real estate deal.
With the emergence of ultra-luxury offerings, where huge investment is involved, a sample flat has become mandatory. As the product is high-end, so is the sample flat. Also, to make it more exciting for the buyers, builders are ready to spend a little extra, to make the show flat look like a dream home. While you visit a sample apartment, always ascertain what will be included in the finished product and what will not, like wall finishes, furniture, fittings, modular kitchen, artwork, decorative walls and so on because the builder can use all state of the art facilities in the sample flat but any of these may not be provided as standard amenities, in all the flats being sold.
Loans make many things accessible and homes are no exceptions. For millennials, loans are a part of life and they may not think twice before buying a home with a loan. Still there are huge number of people who don’t want to avail any loan and prefer to buy property only with their own money. In a normal scenario its not a bad idea but to avoid any kind of complications with respect to the title or the value of the property or any kind of fraud. Its advisable to go for a loan to buy the property, may be for a very small percentage of the property value only and now let’s understand why it is so.
In addition to your identity and residence proofs, income & tax related documents the bank will ask you to submit all the legal documents related to the purchase of the house. One critical stage in assessing home loan applications is the legal and technical verification of the property. Banks and financial institutions verify the property against which the loan is taken. Lenders also verify the property for which you are taking the loan. During credit appraisal, original property documents e.g. Title Deeds, No Objection Certificates of authorities and other ownership papers etc are used for legal verifications. to verify that the property has a clear title, and that the home loan is being disbursed to the right owner of the property for legal and valid reasons. No lender ever funds disputed properties or properties that do not have clear ownership titles. The sole motive behind legal and technical verification exercise is to ensure that the property has a clear title, is free from encumbrances, technically sound and meets the valuation standards of the bank.
Banks have best of legal experts to do legal checks as explained above which may not be accessible to you otherwise. Though this is not a 100% full proof course of action as there are cases where banks have disbursed loan for disputed property, still we have to understand that these are just exceptions and if we select our lender judiciously, we can avoid an unwanted trouble.
One of the important step of property loan process is the property valuation exercise. The report submitted by bank’s own valuers is important for the bank and irrespective of the price you are willing to pay for the property the bank will not go beyond the valuation done by its valuers. It’s advisable that you should never go by the prices quoting in the market, especially when you are buying resale property. The buyer should make an attempt to know the valuation of the home arrived at by the bank before entering into an agreement to buy that property because in India specially after the demonetisation, banks have been going low on property valuation to account for the price correction in real estate market.
Taking a loan from the bank may for give you the peace of mind if you avail a property loan from an independent lender of your choice and not the choice of the builder/seller of the property. This is so because you have all stake in the deal and the lender of your own choice would give you a fair deal which may not be the same otherwise as any possible clove knot between the builder and the lender of his choice may put you in trouble in future.
Legal, Taxation & Finance Experts are there to help you on property related matters, do not hesitate to take their advisory. Trust, any reasonable money paid by you to them would come to you in return as your peace of mind by having a trouble-free property.
Although there are several laws in place that protect a purchaser of property, self-help is the best help and one must do due diligence before buying property. Although the above-mentioned list of precautions to be taken are not exhaustive, some of the important aspects one must look at though they may vary case to case.
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