Documents To Check Before Buying A Property

Checking all documents is very vital for any property investment, be it an empty plot or a fully furnished apartment. We provide here-under a list of important property documents we need to check before buying any property.

Project Compliance are very important to Initiate , Keep Moving & Complete any project. These can also be called as approvals required for a project.

Rules governing Land & Project vary from State to State and there are no uniform laws, but still we have tried to list down broadly some laws , which are more or less common , with slight variation , to all states. Time required for each compliance vary from state to state . Time taken for each compliance also depends on a number of factors like how strong is the follow up, relation we develop with concerned authorities etc.

1. Sale Deed

A Sale Deed is the core legal document that acts as proof of sale and transfer of ownership of the property from the seller to the buyer. A Sale Deed has to be compulsorily  registered.

It is important that before the Sale Deed is executed one should execute the sale agreement and should check for compliance of various terms and conditions as agreed upon between the buyer and the seller. Before executing the Sale Deed, the buyer should check whether the property has a clear title. He/she should also confirm if the property is subject to any encumbrance charges.

A seller should settle all the statutory payments such as property tax, cess, water charges, society charges, electricity charges, maintenance charges etc., (subject to the agreement) till the date of  execution of Sale Deed.

2. Mother Deed

Mother Deed, also known as the parent document, is an important legal document that traces the origin/antecedent ownership of the property from the start (if the property has had various owners). It is a document that helps in the further sale of the property, thereby establishing the new ownership. In case of absence of the original Mother Deed, certified copies should be obtained from the registering authorities. Mother Deed includes the change in ownership of the property, be it through sale, partition, gift or inheritance.

It is very important that the Mother Deed records the references to previous ownership in a sequence and should be continuous and unbroken. In case of a missing sequence, one should refer to the records from the registering offices, revenue records or the recitals (preamble) in other documents. The sequence should be updated until the current owner.

3. Building plan Approval

A building plan is sanctioned by the concerned Development Authority. A building owner has to get an approved plan from the jurisdictional Commissioner or an officer authorized by such Commissioner. However, the authorities sanction a building approval plan based on the zonal classification, road width, floor area ratio (FAR) and plot depth.

A set of documents are required to be submitted by the owner in order to obtain a building approval plan. The documents vary from state to state , and a list of documents required can be had from concerned authority’s website or from their local office.

It is mandatory that the building owner hires a registered architect who will draw a plan meeting the applicable bye laws. One can get a building approval plan within 4-5 working days if all the requirements are met.

Above a certain height and depending upon distance from nearest airport approval of concerned Airport Authority is also must without which the construction of the building is illegal.

4. Commencement Certificate (For under construction property)

A Commencement Certificate is a legal document issued by the local authorities after the inspection of the site. This document states that project meets the give criteria and helps in the commencement of a construction on a site by the Real Estate Developer. Failing to acquire a Commencement Certificate will result in the construction being considered illegal, levy penalties and can even attract an eviction notice.

5. Conversion/ Change of Land Use(CLU) Certificate

With a majority of land in India being agricultural in nature, a Conversion Certificate is mandatory to be obtained from the lacal body for the property and this document is called Change Of Land Use ( CLU) Certificate . Further, the competent revenue authority requests the Department of Town and Country Planning to issue an NOC for the conversion of land for residential purpose. There are a certain set of documents to be submitted by the owner to acquire a Conversion Certificate.

6. Khata Certificate and Khata Extract

Khata is derived from the word ‘account’. It is an account of a person owning a property. It typically consists of (a) Khata Certificate and (b) Khata Extract. A Khata Certificate is mandatorily required for the registration of a new property and the transfer of a property. Khata Extract is nothing but obtaining the property details from the assessment registrar. The Khata is widely referred to as A Khata & B Khata(Revenue records extract).

‘A’ Khata has properties listed under Municipal jurisdiction with legal property construction and ‘B’ Khata has properties under local jurisdiction with violated property constructions.

One should avoid buying a B Khata property as it will be deemed as an illegal construction. Nevertheless B Khata may be converted to A Khata under certain schemes by paying penalty to the Government.

7. Encumbrance Certificate (EC)

Encumbrance means charges on the ownership or liabilities created on a property that is held against a home loan as security. An EC consists of all the registered transactions done on the property during the period for which the EC is sought. Simply put, it is a certificate sought for a particular period evidencing the property purchase/sale, the presence of any transaction or mortgage.

One should submit a copy of the Sale Deed to obtain an EC. A person applying for an EC should fill in the Form 22, affix a non-judicial stamp and submit it to the jurisdictional sub-registrar’s office. Complete residential address, property survey number, property location, the sought period, property description, its measurements and boundaries should be mentioned in the Form. A nominal fee amount will be charged on a yearly basis. The time taken to obtain an EC will be between 3-7 working days or more depending on the period sought.

8. Betterment charges receipt:

Betterment charges are also known as improvement fees/development charges that are to be paid to the Municipal Authority before a Khata can be issued. Currently the developers are entitled to pay a fixed amount as betterment charges to the municipal body. A receipt of the same should be obtained at the time of property buying.

9 Registration

Buyer must get the property registered in his/her name by paying the Stamp Duty as specified by local government. This Stamp Duty has to be borne by Buyer. After paying this Stamp Duty , the property stands transferred in Buyer’s name and seller has no rights whatsoever on that property.

10. Latest receipts for payment of various bills & statutory charges

Receipts for property tax bills ensure that taxes for the property are paid up-to-date to the government/municipality. For properties falling under the Municipal Committee jurisdiction, it is mandatory for property taxes to be paid up to date so a buyer could get a Khata issued in his name.

It is therefore important for the buyer to make inquiries with the government/municipal authorities to ensure that all the dues are cleared by the seller. The buyer should ask the seller for the latest original tax paid receipts and bills and check the details of the owner’s name, the tax payer’s name, and the date of payment on the receipt. If the owner does not have the tax receipt, the buyer can contact the municipal body along with the survey number of the property to confirm the ownership of the land.

Buyer should also ensure that other bills such as the water, electricity maintenance etc. are paid up-to-date.

11. Completion Certificate (for a constructed property):

A Completion Certificate is issued by the municipal authorities denoting that the building is in compliance with their rules in terms of height, distance from the road, and is constructed as per the approved plans etc. This document is important at the time of purchasing a property and seeking a home loan.

12. Occupancy Certificate (for a constructed property):

When the Real Estate Developer applies for this Certificate, an inspection is carried out by the authorities to ensure that the construction meets all the specified norms. This certificate is obtained after the completion of the construction. It is important at the time of buying a property, seeking a home loan, before the Real Estate Developer allows people to take possession of the property and, for the transfer of Khata. Basically, it certifies that the project is ready for occupancy.

While it is important to seek all the above documents from the seller at the time of buying a property, it is also critical you deploy a competent property lawyer for vetting of the said documents. Specific advice should be sought about your specific circumstances.

13. Environment Clearance

Environment clearance is another important document which is required before the start of construction. A set of documents including the Maps of the project are required to acquire this clearance.

It depends on the area of the project that whether the approval will be given by state Environment Committee or it will go to center . Currently if the project area is less than 50000 than it comes under the preview of State government and higher than that it goes to center.

14.    Water & Pollution Control Board Clearance

These are two more clearances which are required to be taken before starting the construction at sight. Here the same set of documents go which go for environment clearance.

15.  Group Housing Approval By Ministry of Housing

Ministry of Housing under the instruction of Governor issues the approval signed by Under Secretary and under the instructions of Governor.

 16.    Site Survey Plan

Than we have to get a Survey of our site from Professionally Accredited agency. The purpose of this survey in addition to other things is to see if there are High Tension wires with in a distance of 300 Meters. From site or there is any government water or sewerage line going beneath the project site and a whole of other information. This report is submitted to Development Authority.

17.    Lease Deed

In certain states including Rajasthan , Parts of U.P. , Parts of M.P. still government doesn’t register land in the name of buyer but issues him Pattas, which is a 99 Years Lease in favor of owner. These governments are in the process of regularizing land documents and once that is complete these pattas will be converted into registries. But otherwise these Pattas are bankable documents.

18.    Registration of Pattas

These pattas thus issued are duly registered in the office of Registrar by paying the applicable Stamp Duty.