How to understand the documents required for buying a property?
Buying a property is a significant milestone in anyone’s life, representing a major financial commitment and a long-term investment. Whether you are a first-time homebuyer or a seasoned investor, understanding the documents required for buying a property is important. To avoid any complications, it is imperative to be well-versed in legal and financial aspects. Legal considerations involve verifying the property’s ownership and title, ensuring that it is free from any encumbrances or legal disputes. On the financial front, getting a property needs proper planning, evaluation, due diligence, arrangement of funds, and more.
List of Essential Documents for Buying a Property in India:
When it comes to buying a property in India, various legal property documents play an important role in the entire process. These property document lists are not only important for legal compliance but also serve as evidence of ownership and ensure a hassle-free transaction. Whether you are buying a residential property, a plot of land, or commercial property, it is important to get familiar with the property document list.
1. Sale Deed
A sale deed is an important document that contains evidence of a sale. This acts as legal proof of ownership and transfers the property’s title from seller to buyer. This is usually executed before the agreement and after the compliance of terms and conditions. It is an imperative document for a first-time home buyer.
This document contains details of the property, such as its description, location, boundaries, and purchase price. To make it legally valid, it should be registered with a sub-registrar. This is generally required by the banks where a buyer avails himself of a loan. While creating this document, an individual may approach the local authority for help. Following are the features of a sale deed that must be checked while buying property:
– Sale deed must be registered within 4 months from the date of execution
– It must be registered in the sub-registrar office
– It can be an important document in the future for sale of the property
– It acts as documented proof of property ownership
– A sale deed will be invalid if it is not registered under the given time frame
– It must be registered in the sub-registrar office
– It can be an important document in the future for sale of the property
– It acts as documented proof of property ownership
– A sale deed will be invalid if it is not registered under the given time frame
2. Encumbrance Certificate (EC)
This is the proof of free title and ownership, which confirms that there is no pending legal or financial liability on the property. It is obtained from the sub registrar’s office and covers a specified period, usually up to 30 years. The EC is essential to ensure that the property is free from any mortgages, loans, or legal disputes.
3. Possession Letter
It is created by the builder to specify the date on which the buyer will take possession of the property. However, this is not proof of property title. To do so, the buyer must get an occupancy certificate.
4. Khata (Patta) Certificate
Khata or Patta Certificate is a Record of Rights (RoR) which establishes the owner’s identity including the details of a property such as its location, area, and size for the purpose of property tax payments. This is important to obtain utility connections like electricity and water. While registering a new property as well as transferring the property, a Khata (Patta) certificate is required.
5. Title Deed
It establishes the rightful owner of the property and provides a chain of ownership records. The buyer must verify the title deed and make sure that it is clear and marketable.
6. Building Approval Plan
This document essential if the property is under construction, as it is issued by the local authority or municipality to ensure that the construction adheres to the approved layout and building norms. The building approval plan verifies the legality of the property’s construction and its compliance with regulations.
7. Power of Attorney (POA) (if applicable)
It is required when the property is being purchased through an agent or representative. It grants the authorised person the power to act on behalf of the buyer or seller in property-related matters.
8. Completion Certificate
It is issued by the local development authority after inspecting the property and ensuring that it complies with the approved plans, safety standards, and building codes. It is essential for obtaining utility connections and occupancy certificate.
9. Occupancy Certificate (OC)
The Occupancy Certificate is issued by the local municipal corporation after the building’s construction. To avail home loans and get the necessary approvals for rental or commercial purposes, it is important to get the OC, as it certifies that the property is fit for occupancy.
10. No Objection Certificates (NOCs)
Various NOCs may be required, depending on the location and nature of the property. Some common NOCs include the Non-Agricultural Land Certificate, Environmental Clearance Certificate, Fire NOC, and Society NOC (in the case of purchasing a property in a cooperative housing society).
11. Sale and Purchase Agreements
This is one of the most important documents to check, which includes the terms & conditions that are agreed upon by the seller & buyer. The pricing of an apartment is an example of this, where the agreement would include the agreed-upon price of the flat.
12. Payment Receipts (Under Construction / Ready to Move)
The payment receipt is proof that a buyer has paid the token money to the developer. The seller may sign on the revenue stamp to acknowledge that the payment has been made.
13. Identity and Address Proof
The buyer needs to make sure that the seller has valid identity proof such as passport, Aadhar card, or PAN card. Additionally, address proof documents like utility bills or bank statements can be provided to establish the residential address.
14. Mortgage Documents (if applicable)
If a buyer is availing a home loan for the purchase, they should keep all the relevant mortgage documents handy. These can include loan agreements, sanction letters, and property-related collateral documents.
15. Compliance under RERA (Regulation and Development) Act, 2016
Developers should register their project with the RERA authority. A buyer should verify if the property has been RERA-registered or not. RERA for each state also gives the details of any complaint filed against the project. To operate legally, all real estate brokers should also be registered with the state RERA.
| Required Documents | For Under Construction Property | For Ready-to-Move Property | ||
|---|---|---|---|---|
| Fresh/Primary Sale | Resale/Secondary Sale | Fresh/Primary Sale | Resale/Secondary Sale | |
| ATS (Agreement to Sell) | Yes | Yes | ||
| Plan for Building Approval | Yes | Yes | ||
| Allotment Letter | Yes | Yes | Yes | Yes |
| Builder Buyer Agreement | Yes | Yes | Yes | Yes |
| Payment Receipts | Yes | Yes | Yes | Yes |
| Possession Letter | Yes | Yes | ||
| Builder NOC | Yes | Yes | ||
| Sale Deed | Yes | Yes | Yes | Yes |
| Trailing Sale Chain Deed | Yes | |||
| Encumbrance Certificate | Yes | Yes | ||
| Completion Certificate | Yes | |||
| Occupancy Certificate | Yes | |||
Complete Checklist for Legal Documents Required for Purchase of Property
Buying property is a significant financial decision and it is important to ensure that all legal aspects are in order. There is a comprehensive checklist of legal documents to gather & verify while purchasing property. These documents serve as evidence of ownership, validate the legality of the property, and safeguard against any future disputes. Here’s the complete checklist:
- Sale Deed
- Title Deed
- Building Approval Plan
- Property Tax Receipts
- Khata (Patta) Certificate
- Encumbrance Certificate
- Completion Certificate
- Occupancy Certificate
- Power of Attorney, if applicable
- Society NOC, if applicable
- Legal Search Report
- Lender Release Letter, if applicable
Final Thoughts on Legal Property Documents
In conclusion, purchasing a property involves a significant investment and a series of legal procedures that require thorough documentation. To ensure a smooth property transaction, it is crucial to have all the essential documents in place. These documents include the sale agreement, title deed, occupancy certificate, completion certificate, and building plan approvals. When it comes to buying a property, these documents serve as evidence of ownership.
While understanding the importance of these documents is important, it is equally important to seek professional advice and follow the legal procedures involved in property transactions. Engaging the services of a qualified real estate lawyer or a property consultant can prove invaluable in navigating the complexities of property documentation. These professionals have the expertise to verify the authenticity of the documents, identify any red flags, and guide buyers through the legal processes.
Buyers should also ensure that they follow all legal procedures stipulated by the governing authorities. This includes verifying the property’s ownership and title status, conducting due diligence, and complying with all regulatory requirements. Failing to follow these procedures can lead to legal complications, financial losses, or even loss of property. By paying attention to these aspects and obtaining the necessary documentation, buyers can navigate the property buying process with confidence and enjoy the benefits of owning a property with peace of mind.
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