Matters to be considered while purchasing land or house

We have seen the process involved in ensuring the legal title of a seller in the article  How Do We Ascertain The Clear Title Of The Seller Of A Property? There are certain other precautions to be taken when we agree for a property transaction. These are applicable for getting housing loan too.  They are mentioned below:

1.    Reputation of the Developer /Promoter:

In the case of flats and villa projects, the track record of the developer/builder/promoter with regard to timely completion and quality of construction should be ascertained before finalizing a property.  Enquiry shall also be made about the timely payment of regulatory dues like income tax, PF, statutory dues etc  to avoid any attachment over the property under sale.

2.    Ensure  that the Property is Free from Debt and Other Charges:

It should be ensured that the builder/ developer/seller  has not mortgaged the property under construction/ the property for sale,  for raising project loans/housing loans. Banks normally extend loans by creating equitable mortgage of properties.  Equitable mortgages are not registered with Sub-Registry Offices (SRO) and hence will not be reflected in the Encumbrance Certificates (EC).  Ensuring that the possession of original title deed is with the developer/seller will ensure that the property is free from equitable mortgage.  In the case of properties where the original deeds are missing, such properties shall be purchased only from credible sellers and after taking necessary precautions like newspaper publications etc. and under the guidance of a legal advisor.

3.    Water and Electricity connections:

Ensure that property you are buying has adequate water supply and electricity connection and is free from water shortage, voltage fluctuation, power shortage etc

4.    Documentation and Related Charges:

Proper documentation should be carried out for getting absolute  right over the property.  The buyer may get the draft of the document vetted by the legal advisor before registration. The document should be sufficiently stamped and properly registered by paying the stipulated registration charges. The registered deed should be collected by the purchaser.  The buyer should make required provision for such charges to avoid last minute tensions.

5.    Margin for Housing Loans:

Banks will normally finance 75-90% of the property value only. The remaining portion of the purchase consideration shall be brought in by the purchaser/borrower. The amount shall be made available from the savings of the borrower, if any housing loan is raised for acquiring the property.

6.    Building Insurance and Home Insurance

Building/ Property insurance with suitable clauses will compensate the owner of a property from damages on account of natural calamities whereas home insurance will provide adequate compensation against theft loss etc.  Such insurance policies shall be selected after verifying the features of each policies, premium and claim settlement track record of the insurer.

7.    Good neighbors and locality:

When flats are purchased, it is difficult to ensure that we get good neighbors. But when house/villa/ land is purchased it can be ensured. The area selected should  be a good one with proximity to schools, hospitals, markets, parks, and other services.