Buying a home? Check this out first!

Amrish Modia, a local businessman, read an advertisement regarding the sale of a residential apartment with a rider 'Brokers excuse'. The ad was placed by the owner himself who invited Modia to inspect the flat and the property documents.

Finding the seller transparent and friendly, the businessman inspected the documents and paid Rs 30,000 as token money for the flat. Since he did not need a home loan, Modia promptly paid the first instalment of Rs 700,000 and received a receipt on the owner's letterhead. They agreed to draft the sale deed at the time of possession.

Three weeks later, during a casual talk with a property agent, he came to know that the property had already been sold to a party two months ago.

Modia is not alone. A number of residential property owners advertise in newspapers and on the internet directly, attracting home seekers who wish to save on the estate agent's fee.

While most sellers may have nothing to hide, there have been a number of cases where deals went sour because of double sale, ownership disputes, disputes with the society, joint ownership, issues relating to mortgage and power of attorney. In one case, the seller had cheated in business dealings and simply didn't want his creditors to know.

"Buyers will be at an advantage if they hire a local broker or consultant, as the pros and cons of any property are best known to him and he will ensure that legal formalities are completed," says Sunil Bajaj, consultant and member of the Estate Agents' Association of India.

But Prakash Toraskar, head of Reliable Estate Consultants, cautions: "It is important to find an honest, reputed broker. An unsuspecting buyer can be duped if the agent, in cahoots with the seller, gets a society's no objection certificate (NOC) wrongfully, say, by offering a bribe."

Ramesh Makhija, partner, Makhija & Co, a law firm, warns: "The court will show no sympathy to the aggrieved party if proper legal steps have not been taken."

Business Standard spoke to a cross section of international property consultants, local brokers, bankers and property lawyers to find out how to minimise risk of loss while buying that dream house.

Here is a routine checklist, which prospective buyers should adhere to:

• Call for original property documents. The non-availability of such documents should be taken as a red signal. It could mean that the title of the seller is not clear and there could be a lien, mortgage or other encumbrance on the property.
• Find out the marketability of the title. Examine the title certificate of the property. Conventionally, a 30-year title investigation report is obtained from the sub-registrar's office. Obtain an abstract of the title from the property registration card.
• The original sale agreement should have the municipal-approved plan of the flat, carpet area with the area of the balconies shown separately, price of the property including the proportionate price of common areas and facilities shown separately and intervals at which installments may be paid.
• Check if proper stamp duty has been paid.
• If the property is in a co-operative society, examine the original share certificate. It mentions the latest owner's name.
• Obtaining a society's NOC may not be mandatory under the new Model Bye-laws of the Co-operative Housing Society, but it is advisable as it offers clarity about the title of the property, pending society dues, property disputes and hypothecation, if any.
• Meet the secretary and chairman of the society as well as neighbours before buying.
• An income tax clearance certificate would ensure that the seller has discharged his income tax liabilities to avoid attachment of the property.
• Obtain a copy of the latest society bill and electricity bill.
• Ensure that the consent, sanction or no objection certificate of the urban land ceiling authority and the municipality if applicable have been obtained. 
• If possible, consult a property lawyer, especially where the sale is through a power of attorney. A good lawyer will undertake proper investigation and issue prominent public notices to clear interest of other properties in the property concerned.
• Getting a home loan sanctioned ensures that the documents are in place as banks or institutions conduct due diligence before disbursing loans.
• Finalise the terms and conditions of the sale deed and provide for the duration of their compliance.
• Ensure payment and discharge of encumbrances that are to be cleared before purchase.
• Obtain physical delivery of the property and of the title deeds.
• Complete the transaction of sale by executing and registering the deed. An unregistered sale agreement has no validity in a court of law.

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