What are the Property Buying Rules?

Buying property in India involves a number of

to ensure that the transaction is valid, secure, and transparent. Whether you are buying

,

, or

, it’s essential to follow the required steps and adhere to the applicable rules. Here’s a summary of the key property-buying rules in India:

1. Verify the Ownership of the Property

• Check Ownership Title

  : Verify that the seller is the

  legal owner

  of the property. Request original documents like the

  Title Deed

  ,

  Sale Deed

  , or

  Conveyance Deed

  .

• Chain of Title

  : Ensure the property has a

  clear title

  . There should be no disputes over the ownership or any

  encumbrances

  (such as mortgages, loans, or pending dues).

• Property Search

  : Perform a

  title search

  or verify the ownership by checking the land records at the

  Sub-Registrar office

  or

  Revenue Department

  .

2. Confirm Legal Compliance

• Land Use and Zoning

  : Verify that the property is used for the purpose it is being sold for (e.g., residential, commercial). Obtain a

  land use certificate

  from the local municipal body.

• Building Approvals

  : Ensure the property has all

  necessary approvals

  for construction from the local authorities (such as

  Commencement Certificate

  ,

  Occupancy Certificate

  , and

  sanctioned building plan

  ).

• RERA Registration

  : For real estate projects, check whether the project is

  registered with RERA (Real Estate Regulatory Authority)

  . Verify the

  RERA registration number

  of the builder, which ensures that the project adheres to legal norms.

3. Ensure the Property is Free from Liabilities

• Check Encumbrances

  : The property must be free from any

  encumbrances

  (liabilities, pending dues, or mortgages). Ensure that the property is not involved in any legal disputes.

• No Pending Dues

  : Check for pending utility bills, property tax, or maintenance charges. The seller should clear any dues before the sale.

4. Due Diligence in Property Documentation

• Sale Deed

  : The primary document for property transfer in India is the

  Sale Deed

  . This document should be executed on

  stamp paper

  as per the stamp duty rules of the respective state.

• Agreement for Sale

  : This is an agreement between the buyer and the seller, mentioning the terms and conditions of the sale. This document must be signed before the final Sale Deed.

• Power of Attorney

  : In some cases, the property might be sold through a

  Power of Attorney

  . Ensure that the POA is

  valid

  and notarized.

• NOC from Housing Society

  : If purchasing a flat or unit in a society, get the

  No Objection Certificate (NOC)

  from the housing society, especially for transfer or sale of flats.

5. Tax Compliance

• Tax Receipts

  : Ensure that the property has

  paid property taxes

  and the receipts are up to date. Any outstanding tax liabilities should be cleared before completing the sale.

• GST for Under-construction Property

  : If you are buying an under-construction property, be aware of

  GST (Goods and Services Tax)

  , which is applicable at different rates for residential (5%) and commercial properties (12%).

• Stamp Duty

  : Pay

  stamp duty

  as per the Stamp Act of the state where the property is located. The stamp duty varies by state and the nature of the transaction.

• Registration Fees

  : The

  Sale Deed

  or

  Agreement for Sale

  must be registered at the local

  Sub-Registrar Office

  . Registration fees are usually 1% of the property value or as prescribed by the state laws.

6. Agreement and Documentation

• Agreement for Sale

  : Draft and sign an

  Agreement for Sale

  , which includes the price, payment schedule, property details, timelines, and clauses on possession, maintenance, and construction.

• Possession Clause

  : The Agreement for Sale should clearly mention the

  date of possession

  of the property and any liabilities (like pending construction work).

• Loan and Mortgage Details

  : If the buyer is taking a

  home loan

  , the mortgage and loan details should be agreed upon with the lender, and the

  bank’s sanction letter

  must be obtained.

7. Payment Process

• Down Payment

  : Typically, the buyer must make a

  down payment

  (which can range from 10% to 20% of the property value) before entering into the sale agreement.

• Payment Schedule

  : For under-construction properties, ensure that the builder provides a

  payment schedule

  that aligns with the construction progress.

• Bank Loan

  : If taking a loan, ensure that the loan disbursal is properly handled by the bank, with a clear timeline for the full disbursal.

• Handover and Possession

  : The property should be handed over after full payment, and the

  possession letter

  should be issued to the buyer.

8. Due Diligence for Builders (for New Projects)

• Builder’s Reputation

  : Research the builder’s reputation, track record, and reviews before proceeding with the purchase of under-construction properties.

• RERA Registration

  : Ensure that the project is registered with

  RERA

  . The builder is obligated to provide information such as

  project completion dates

  ,

  approvals

  , and

  floor plans

  as per the RERA guidelines.

9. Transfer of Title and Registration

• Sale Deed Registration

  : Once the full payment is made, and both parties sign the Sale Deed, it must be registered at the

  Sub-Registrar office

  . The property title officially transfers to the buyer at the time of registration.

• Possession

  : After the registration, the buyer receives possession of the property, and the title documents (Sale Deed) are handed over.

10. Post-Purchase Considerations

• Mutation of Property

  : Once the Sale Deed is registered, the buyer should apply for

  mutation of the property

  in the local

  municipality or revenue records

  , so that the buyer’s name is recorded as the new owner.

• Electricity and Water Connection Transfer

  : Ensure the

  electricity, water, and other utility connections

  are transferred to the new owner’s name.

• Property Tax Transfer

  : Make sure that the

  property tax records

  are updated with the buyer’s details.