LEGAL ASPECTS TO CONSIDER BEFORE MAKING AN INVESTMENT IN REAL ESTATE
If you are someone who has never ventured into this sector ever before, investing in real estate can be a formidable affair. Since investing in real estate usually calls for the savings of a lifetime, it is crucial to be conscious of the legal facets of plunging into real estate to warrant a smooth transaction. Investments in real estate are often precarious with the ever-changing laws that may influence the business deals.
Here are a few important legal aspects to examine prior to investing in real estate:
- VERIFY THE TITLE DEED
No one can repudiate the claim that the civil courts in India are loaded with litigations where in almost every dispute, the reason is “property”. Among those, half of the disputes fall into a class where the buyer has filed the suit due to his misstep to inspect the title of the property accurately at the time of its acquisition. A first-time buyer or an able buyer – whoever he may be, a good amount of base work has to be done before investing in real estate whereupon he needs to research and authenticate a lot about the documents. Before rushing to the Sub-Registrar office for registering, the cautious buyers are needed to check the title of the property which can easily be done with the help of an Advocate.
- PROPERTY TAX RECEIPTS
Property tax is the yearly amount paid by a land owner to the local government or the municipal corporation of his area. The property encompasses all tangible real estate property, his domicile, office building and the property he has chartered to others.
So, Authenticating the property tax receipts not only tells you the right ownership but also allows you to find any outstanding. If the builder or the owner is not able to pay the taxes, you will be accountable to clear the dues after you invest in that property. To steer clear of such extra burdens, verify the land receipts when you are going through the legal documents.
- CHECK ENCUMBRANCE CERTIFICATE
An encumbrance indicates to the charges made on the property in question, whereby it is held as a security for any liability of its owner, which has not been discharged as of that date. An Encumbrance Certificate or (EC) is a certificate of assurance that the property in question is free from any legal or financial obligation such as a mortgage or pending loan. This could be applied and accessed online which assures that the Land is free of encumbrances and this makes sure that the Property is free of any Encumbrances / Liabilities / mortgage. It is also a clear Title evidence Certificate.
- CONVERSION CERTIFICATE
The permission given for the land conversion is called land conversion certificate. In India, by default, all accessible land is agricultural land. So, land conversion certificate is a compulsory document needed to be procured before any real estate development.
- SANCTIONED BUILDING PLAN
Every property must have a sanctioned building plan issued by the regional building development authority to go ahead with the construction. This sanctioned building plan is approved by the authorities only after receiving necessary documents from the developer, which is in compliance with the existing legal building norms. Make sure that you authenticate this document to avoid legal complications in future.
- ENVIRONMENTAL CLEARANCE
Environmental clearance is a process to obtain clearance from the government for the projects which may environmental pollution. Government has given a list of projects which are required to have an environmental clearance like mining, thermal power plants, infrastructure etc.
- MANDATORY NO OBJECTION CERTIFICATE/SANCTIONS
It is a statement of approval given to an individual or a company to proceed with the construction or investment. NOC is a document without which the concerned property is bound by legal difficulties. Check NOCs from Fire Department, Pollution Control Board, Railway and National Highway Authorities, Aviation Clearance whichever is applicable for the property you are going to invest in.
- CHECK RERA REGISTRATION
From 1st January 2020 onwards, all real estate developers are bound to register their ongoing and upcoming projects under the RERA (Real Estate Regulatory Authority) Act to make sure that the projects are in line with the present real estate regulations and laws. RERA registration is relevant for all projects where the land to be expanded is 500 sq.m or more, and the number of apartments is 8 or more inclusive of all phases. So, if you are investing in real estate, always verify and authenticate the RERA registration number.
- OCCUPANCY CERTIFICATE
Occupancy Certificate or Completion Certificate is a document provided by the local planning authorities to substantiate that the property is constructed in conformity with the required rules and is apt for possession. Without this certificate, the property will not be considered as legally fit for use to its residents.
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