Supreme Court’s epic judgment to demolish illegally constructed flats in the Campa Cola Society in Worli, Mumbai came as a jolt to the residents who were oblivious to the irregularities since they bought the flat in 1991. Built between 1981 and 1989, the society had seven high-rise buildings. A few of the buildings had 17 or 20 floors though the realtors had permission to construct only five. Consequently, all floors beyond the fifth were declared unlawful. Another eye opener came when Allahabad high court summoned Supertech to knock down its 40-storey buildings in Noida. Despite the verdict to bulldoze the towers since they were built against the obligatory building laws, the real estate firm moved to Supreme Court to stop demolition. This incident incited panic among home buyers and other builders who have put up illegal storeys in Noida extension. The Possangipur village in Janakpuri, New Delhi is yet another example of unlawful settlement. Such incidences invoke apprehension among buyers.
The tall claims by the realtors to have all the necessary approvals from the concerned authorities can trick people into buying illegal properties. Besides litigations, these building issues add to the burden of owners as they have to pay the rentals as well as EMIs against home loans. Generally, the housing project court cases stretch for years and even if the verdict is in favour of the buyers, the builders appeal again. These delays amount to delayed possession and loss for both builders and buyers. But that does not mean that every property transaction is shrouded in doubt. There are numerous legal and valid properties available in your city but it takes due diligence and a vigilant buyer to cut a perfect deal.
In order to make a lawful real estate transaction, it is crucial to ensure few aspects related to property acquisition. We have compiled a list of points to check if your property is legally clear in India. Take the help of realty specialists, if you want to be on the fair side of the deal.
- Want to purchase a property, check its agreement papers
When a buyer approaches a builder for a property transaction, they should ask the builder for all the agreement papers. Right documentation can prove if the property is legal. It is the same as your mark sheet or degrees that certify your qualifications. Imagine walking into an interview without your documents and certificates! Would you be able to convince the recruiters verbally that you are duly qualified for the job without showing them the right documents? No. Similarly, builders advertising their properties as legal and splashing their websites with ‘construction in full swing’ images should not be reasons enough for you to ignore the agreement papers.
In case of doubt about the papers or the builder, the buyer can always approach sub-registrar or Municipal Corporation to get the relevant documents. If the builder doesn’t have the appropriate papers, registered documents relating to the same real estate project are obtainable at the applicable sub-registrar’s office. Registered documents are available for inspection by the public. In case the papers are not registered, the transaction would be deemed illegal. On the other hand, if the authorities deny offering the documents, then it raises suspicion as nobody will refuse to share the documents that are in fact meant for public review, if the project is legal.
Another feature to check at the time of possession is the OC. At the possession nears, the seller sends your particulars to the concerned authority, who then issues your OC (occupancy certificate) or NOC (no-objection certificate). These documents are important since an OC certifies that the home/flat you intend to occupy was constructed according to the approved design. If you don’t have an OC, basic facilities like water connection and sanitation amenities may not be provided. Therefore, it becomes crucial to check the legal property documents prior to you making payments for the same.
- Ensure the property conforms to the approved layout
Every residential project necessitates authorization for each sq. ft that would be used for habitation. Changes, however minute they may be, are not acceptable. You can be penalized for modifications that were not approved, for instance, extending roof to the garden area. The zoning plans and development laws of different states recommend FAR (Floor area ratio) or floor space index that indicates the area that you are authorized to construct on a specified size of plot. The Indian government declared the legal FAR (Floor Area Ratio) to be 3.5, but the majority of builders followed only 2.75 FAR. The ratio determines the proportion of the entire floor space in the building with respect to the overall plot size. The built up area would comprise the essential framework, walls, lobby area, staircase, etc. The total built up area is calculated by multiplying the recommended FAR with the total plot space. For instance, a realtor has a land of 2,000 sq. mt and the development laws permit a FAR of 1.5 sq. mt, then the realtor is authorized to build a structure on 3,000 sq. mt. This could mean three storeys building of 1,000 sq. mt each or six storeys building of 500 sq. mt each etc.
FAR varies from city to city and state to state. Any construction that exceeds the allowed limit is deemed illegal. So, before making the payment for the short listed property, ask the realtor to share the sanctioned plan and evaluate it against the actual residential area. This will ensure whether the construction is in line with the approved plans. Examination of the project layout to check if the building is authorized by the government and the concerned authorities is a necessary step towards ensuring the property is legally clear. The design approval will help to track legal rows over ownership titles, property boundaries etc. It can be done when you go for the land survey ahead of buying the property.
- Dirt cheap! Check if it is legal too.
It should undoubtedly raise an alarm when you come across a project that is available for a cost that is way below the market price. No, the builder is not doing some kind of ‘service’ to the society. Then why has he quoted the price so cheap? The reason is that we tend to get excited at the sight of discounts. The sales people talk us into believing that it is a lifetime opportunity to buy a project at this kind of price. They let us assume that since property prices will appreciate anyway, it will be a win-win situation for us. Attention buyers! It’s not a matter of Rs.100 or Rs.1000, but property deals run in lakhs to crores. Builders seek buyers for their unlawful projects. If the builders do not have the right documents or the demand for their project is too low, they are likely to sell the property below the market price. You do stand to benefit with the pricing part, but beware of the fact that the authorities may drive you out of the house if it is found to be illegal.
- Approval from the leading banks
It should come as a warning sign to you if a leading financial institution turns down your loan against the plot/land you are intending to buy. Banks or housing loan institutions are very vigilant and attentive when they sanction home loans. They verify the title papers and authorization documents to certify that the plan is completely legal. In this way, seeking financial assistance from a renowned depository or non-banking investment company helps you confirm if the building for which you have applied for a loan is legal. Banks usually refuse loan requests for housing projects that lack a valid title, an OC or a NOC (no-objection certificate). Therefore, a loan plea rejected due to lack of documents is a warning you cannot ignore. A property is essentially legally valid if it is approved by the leading banks. Banks approve of only those properties which possess clear authorizations with legal documents. The banks check the title approval and other necessary documents so you can be sure that the land lacks any litigation.
- Check legal dues or mortgages
A person who owns a land/plot can avail a credit against the same. As a buyer you must ensure whether the property you are buying was mortgaged or not. Another important document to verify is the encumbrance certificate. The title document of the seller should be free from encumbrances. The encumbrance certificate lists the particulars of preceding registrations. This document can be obtained from the office of the sub registrar’s. This certificate not only proves free ownership but it also confirms that the property does not attract any mortgages or legal dues. You must also check whether the owner had paid the property tax regularly. It explains responsibility of the owner in relation to submitting taxes on time and possessing valid documents.
Check if the builder owns the legal title to the property. You can take advise of a property lawyer to verify it the title is valid or not. You can even search the paperwork related to the property’s title deed at the office of the sub registrar’s. The description will enclose the details of the possessor of the property and the changes in the title, if any. Khata is a legal certificate that sustains the ownership documents and has a record of the current owner of the property. The same may be checked with the neighbourhood municipal records. It becomes necessary to verify if the Khata is modified in the name of the current owner, as it essential to acquire electricity approvals, home loans, etc.
- Is the property part of a registered society?
In case the property you are intending to purchase is not a new construction, then being a part of a registered society enhances its likelihood of being lawfully valid. The procedure of registering a society entails a legal course as it necessitates having all papers in line.
The registration of the society ensures that the property you are investing in is a legally valid one; therefore, it is perfectly legal to make an investment here.
A house is one of the most valuable purchases that you ever make. That makes it absolutely imperative for you as a buyer to act responsibly when purchasing a property. Procuring requisite information on the builder and the property is the first stepping stone towards a trouble free real estate transaction. Getting involved with an unlawful construction can be extremely taxing and loads of time and money would go down the drain straightening out the problems. There may be threat of demolition lingering perennially on the buyers who get trapped in illegal property acquisition. Bearing in mind the growing awareness about issues in relation to illegal buildings, procuring financial support on illegal grounds or further deal of unlawful construction is even more challenging.
Aside from the risk of a legal trouble, you also put your and your loved ones’ safety in danger. Illegal constructions are mushrooming in different areas of the cities to hold the increasing population. The builders tend to ignore conformity with reference to plot dimensions, street sizes, height of the flat, and total constructed area in such locations. The buildings that crumble are the ones that were constructed without appropriate permits and are devoid of structural security standards. Any property which is confirmed to be illegal is either forcefully vacated or demolished on court orders. It is like living with a dagger swinging on your head.
Thus, as a prospective home buyer, check all the above mentioned points off your check list before you give the final nod. Irrespective of the brand or reputation of the builder, it is crucial for every buyer to follow the lawful procedure of acquiring a property. A little awareness and precaution can save your hard earned money. Only a legally valid property can brings peace of mind.