Legal Tips To Buy A Resale Property
A resale property is a good option from a buyer’s perspective. Buying a house in resale means you will not have to spend any money as rent. You will also not have to eagerly wait to get the possession of your dream home; you will have it ready to move in. You also save money as you do not have to pay many taxes, as is the case with under-construction properties.
Here are 10 things to bear in mind before you seal the deal:
- All the documents that are required in the primary sale of property are also required in the resale of the property. It is important to ensure that the seller produces all the relevant original documents.
- If you are buying an apartment in a housing complex, you can’t ignore the original sale deed and the society share certificate because the property transaction can’t take place without them.
- The buyer should also be mindful of the fact that property transfer and re-registration are necessary in case of resale of a property, too.
- Apart from the sale deed, other papers that are needed in the sub-registrar’s office are a letter from the society giving details about the number of floors in the building, the construction year, the apartment’s built-up area and the number of elevators, etc.
- It is also crucial to check whether the seller is the true owner of the property. The buyer should seek clear ownership history if the property has changed hands multiple times. The registrar will establish the authenticity of these documents.
- Ensure that the seller doesn’t have any dues pending to the society or against the house which you may have to pay later.
- Also required is an assessment bill to the society from the local civic body, a copy of the property card and a receipt for the payment of the registration fee.
- In case the property is mortgaged, the owner needs to give an undertaking to the bank that he has agreed to give property documents to the buyer upon the home loan foreclosure. When you transfer the money to the seller’s account, the bank will release the original property documents along with an NOC.
- Other challenges that a buyer of a resale flat may face include the absence of proper chain of documentation, especially in cases where the property has changed hands a couple of times in the past. If the property is over three decades old, it is possible that it was never formally registered. Registering it at the current point in time would put the onus of paying the stamp duty in arrears on the buyer.
What If Your Bank Loses Your Sale Deed?
After a home loan borrower pays his outstanding debt in entirely, a no-dues certificate is issued by the bank. After that, the bank returns him the sale deed that is kept with it after property registration. That is a simple fact home loan borrowers are aware of. Now, what happens if the bank, somehow, loses your sale deed? It is the responsibility of the bank to apply for a new copy of the sale deed from the Sub-Registrar’s Office. Meanwhile you could also file a complaint with the district consumer disputes redressal commission to claim compensation for loss of time and money. The bank will also have to pay dearly for causing you mental agony. A recent ruling by the Maharashtra State Consumer Disputes Redressal Commission is case worth discussing here.
Case study 1
On January 9, 2020, the National Consumer Disputes Redressal Commission (NCDRC) directed State Bank of India to pay Rs 5 lakhs as compensation to a Kolkata-based borrower over the public lender’s failure to trace the title deed documents submitted with it. Additionally, the bank will have to pay the borrower Rs 30,000 as litigation cost.
The borrowers had taken a loan of Rs 13.5 lakhs from SBI against the title deed of the property.
“No one in the market will agree to purchase an immovable property on payment of its prevailing market value if he knows that the original title deed of the property will not be delivered to him by the seller,” the NCDRC said.
Case study 2
It was in 2004 that Pradeep Shetty took a loan from Standard Chartered Bank Lower Parel branch. While the bank issued a no-dues certificate to Shetty after he was done paying all his EMIs (equated monthly installments), it could not return the sale deed document to the borrower owing to its loss. According to the complaint filed by Shetty, his plans of selling the property, for which he had taken a loan of Rs 9 lakh from the lender, are struck owing to the loss of the sale deed.
In 2015, the district consumer commission directed the British banking major offers the man Rs 60,000 as compensation. Of this, the Rs-50,000 penalty on the bank was for losing the paper while Rs 5,000 for causing mental agony to the borrower and another Rs 5,000 for the cost he incurred to file the complaint. Dissatisfied with the compensation amount, Shetty approached the Maharashtra State Consumer Disputes Redressal Commission. The state commission has now increased the compensation amount to Rs 1.15 lakh—it increased the penalty for causing mental agony to Rs 50,000 from Rs 5,000. While giving the bank an earful on its oversight, the consumers’ panel also told it to pay an additional monthly penalty of Rs 50,000 in case it fails to return the lost sale deed in a matter of three months.
“Considering the increasing prices of flats in Mumbai, the complainant may suffer on account of not selling the flat and to get the full and expected consideration. Therefore, a balanced view has to be taken,” the panel said in its order while directing the aggrieved man to co-operate with the lender while the latter tries to obtain another copy of the sale deed from the Sub-Registrar’s Office.
Homebuyers are often misinformed about the documents involved in a resale property transaction. Inputs from realtors, relatives and consultants can leave the prospective homebuyer baffled. HOMEVEST GROUP shares a document checklist to consult before buying a resale property.
Buying a property is a daunting task. A homebuyer must be well acquainted with all obligations revolving around buying a property especially a resale one. A resale property has always been considered as a sound purchase for end use or investment purpose. A primary benefit of opting for a resale property is that you can choose to move anytime you want or lease out the property for rental income. Unlike an under-construction property, a ready-to-move unit will allow you to save your expenses on current accommodation, which can be used to pay instalments for your home loan. Given that additional advantage over under-construction projects, demand for resale properties has increased manifold.
There are several legal documents that a prospective homebuyer must check or verify before making a final purchase decision.
What should one ensure while buying resale property?
Experts recommend that prospective homebuyers should be well acquainted with certain procedures and norms while finalising their purchase decisions. BRIJESH, a NOIDA-based realty broker, advises that all property buyers must CHECK PAPERS involved in property buying process and ensure that the property has a clear title of ownership and has received all necessary government approvals.
What are the documents required for purchasing a resale property?
A sale deed is the first document to verify while buying a resale unit. It is considered as the core legal document which acts as a proof of sale and transfer of the property. Make sure that you read the fine print and question all terms and conditions before signing the sale deed.
A buyer must check whether the property has a sanctioned building plan or not. Usually, a building plan is approved by the local municipal authority. The building plan includes a blueprint of the property, equipment layout, and utilities. Any unauthorised or additional construction carries the risk of being demolished or denied occupancy.
A Completion Certificate (CC) is issued by the municipal authorities on the completion of the project. Meanwhile, an Occupancy Certificate (OC) is issued by a local government agency once a project is completed and deemed fit for habitation. Such certifications indicate that the property has been built in sync with the approved layout and other laws. Both these documents are required while availing loans from banks and financial institutions or while applying for water, sanitation, and electrical connection.
Another vital document to verify that the property does not have any dues is the encumbrance certificate. An encumbrance certificate proves that the property has no monetary and legal liabilities. The certificate can be easily obtained from the sub-registrar’s office where the property has been registered.
Tax paid receipts
One must also consider checking all latest tax paid receipts, in case of buying a resale property. This would eliminate the odds of any outstanding dues attached to the property.
Which are the commonly overlooked documents while buying resale property?
A homebuyer must check mutation deed and attain a copy of all previously registered agreements in case of resale property.
Home loan clearance document must be verified. Another important document to cross check while buying a resale unit is the latest statement from the financial creditors, including banks.
No objection certificates (NOCs) must be acquired from all respective departments such as electricity or water board.
Possession certificate is issued by the builder to the first owner. You must also attain possession papers if you are planning to buy a resale unit. This document is not re-issued at the time of resale; however, the seller would hand over to the buyer.
A conversion order is a certification acquired to change the property status from an agricultural land use to a residential use or commercial use. This document should also be verified to avoid any legal hassles in future.
At last, it is necessary to be an informed homebuyer as it would write-off all legal hassles in the future. Homebuyers are advised to seek help from a legal expert for vetting all documents if required.
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