Checklist for NRI’s before buying a property in India
credits: Vishal Creative Solutions
Buying a property is one of the biggest decisions in one’s life and thus, before going for it, a buyer should know the legal process of buying a house in India. An NRI should be more vigilant as he/she lives thousands of kilometers away from the place of buying a property in India.
Below are a few legal and other checks which an NRI should conduct before finalizing a deal:
Verify the title of the property Before buying a property, the buyer should confirm the property title and its validity. It should be ensured that the property title is free of any unpaid dues or mortgages. The buyer should go ahead only after scrutinizing the documents for a period of at least 12-30 years, depending on the level of discrepancies. For the verification of the title, an NRI buyer should always seek assistance from a professional, such as a lawyer.
Check your seller Apart from the title, the buyers should also verify the identity of the seller(s) by verifying the documents including PAN Card, Aadhar Card, etc. (for an individual) or registration number or TAN number (if the seller is an organization). The NRI buyer should seek reference from the seller, and hire a professional such as a lawyer (or a Chartered Accountant) to conduct due diligence on the seller.
Check land use, construction approvals and Occupancy Certificate While Occupancy Certificate (OC) is one of the most crucial documents to check before transferring the property title, a buyer should also look into the documents related to the land use for the area on which the construction has taken place. A buyer should check if the land is for residential, commercial, industrial, non-agricultural or mixed-use. In case if the land is for any other use, he/she should seek for the ‘land conversion documents’ to ensure if the land and its usability have been converted legally by the government or agencies prior to the purchase.
A buyer also needs to check whether all the construction approvals are in place. For a ready-to-move apartment/house, verification of building or layout plan is required. Additionally, the buyer should also check if the construction is sanctioned by the municipal authority, government bodies, statutory and regulatory authorities for various clearances, including electricity, water, environment and fire safety.
Checking for an OC is one of the most crucial aspects of this verification process. A missing OC could create severe problems for the buyer ranging from hefty penalties to demolition of the property.
Ensure payment of all the taxes, mortgages and other claims After verification, it is very important to ensure that the property doesn’t come with pending dues. A buyer should verify from the municipal authorities that the seller has paid the property tax, as tax due results in hefty penalties. Additionally, the buyer should also check government websites for property registration details and public notice in newspapers before completing the transaction. The buyer should also look out for any mortgages of third-party claims before taking a decision.
Physical Visit After conducting all the mentioned checks before purchasing a property, an NRI investor or home buyers should not forget to conduct a physical check (and verification) of the property by sending in a family member, friend or reliable acquaintance. This visit should be conducted to check the location of the projects, look out for any seepage or construction quality issues, check the area, landscape and view of the apartment (or property), verify the amenities and other factors such as Vaastu compliance. If you are planning to rent out the property, this physical verification should also try to evaluate the scope and efficiency of property management.
If an NRI customer is buying an under-construction property or a project which started after 2016, he/she should also check for RERA (Real Estate Regulatory Authority) compliance. After the introduction of RERA in 2016, which provides protection of homebuyers, including NRI home buyers, it has become a practice for homebuyers to check the RERA registration number of the projects on various state RERA websites. These websites provide information about the cases or complaints registered against any developer and any instance of default in payment by the developers. To know more about RERA, visit http://mohua.gov.in/cms/real-estate-regulatory-authorities-of-states--uts-under-rera.php.
For an NRI, it is always advisable to take professional legal help as proper scrutiny of legal documents is not possible without having someone on the ground doing all the ground checks. Additionally, legal help can also guide the NRI buyer with the various rules which exist in India for taking a home loan or procedures for efficient fund transfers to India.