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We prep you on all the questions to ask and boxes to check before you buy your dream home.
In terms of commitment, taking on a home loan is up there with getting married. And you can’t get out of this one citing irreconcilable differences. Deepa Suryanarayan preps you on all the questions to ask and boxes to check before you walk off into the sunset with the keys to your dream home
Buying a house is the biggest investment that most people make in their lifetime. If you are putting your life’s savings or signing on a bank loan to make this happen, the stakes are really high. But you know this already. You’ve spoken to your bank, you’ve asked friends who have taken the plunge, you’ve even window-shopped in neighbourhoods you like. You’re now ready. Here’s what to do next. As a first-time home buyer, you need to carry out a thorough check (several, actually) on the property you are eyeing. Approval is required from several agencies before a project can take off and be completed. And you have to stay sharp to make sure that the builder delivers his promises. We tell you what to expect.
CHECK THE CERTIFICATES
This is the most basic rule of property buying. A builder needs to have several certificates and documents in place before announcing a project, including building plans and floor plans, structural safety certificates, no-objection certificates from the civic authorities, environment clearances, urban land ceiling certificates, commencement certificates and title deed and an NOC from the water authority to use water for construction.
“However since procuring these takes time, and since real estate (land) is so expensive, a lot of builders try to bypass some of these requirements,” says property consultant Shaili Vasudev. “Some builders get these certificates even as the building project takes shape. And sometimes, there are issues—if the project is located on land that has been declared as forest area or the land has been acquired from farmers, and the title of the property is not clear (which means the farmer is still the owner of the land on which
your building is coming up). These issues can quickly escalate and put a spanner in the works as far as the building project is concerned. Investing in such a project would be a definite no.” Once the sale has been done and the entire amount has been paid, getting many of these certificates becomes the building society’s or thebuyer’s headache.
GET IT IN WRITING
You must insist on a written agreement with the developer. It should clearly mention the specifications of the flat and the terms and conditions,including payment plan, time of delivery, etc. “Insist on a receipt for any payment you make, no matter how small the amount,” says property lawyer Raju Trivedi. “Although there are several guidelines and laws in place, the real estate sector is largely an unregulated sector. So in many cases, the title of a property is not clear, and the seller claims to have the power of attorney to sell. A lot of people make the mistake of believing such people and end up losing their savings.” There are three ways you can stay on top of things.
1. Engage a lawyer to verify that all the above documents are in order. There is no way a person untrained in tricky property laws can understand the fine print in documents.
2. If you are worried about documentation, take a home loan. Since the flat itself is considered as collateral by the bank, obviously bank officials need to do all the checks, including a background check on the builder, to ensure that the market value of the collateral does not go down. “So, even if my client does have savings, I always tell them to take a small loan, which ensures that the bank is involved in the process,” says tax consultant Nikhil Ranade.
3. Monitor structural and finishing specifications and supervise the project by visiting the site frequently. You can lodge a formal complaint with the developer and also approach the consumer court if the builder doesn’t adhere to the specifications mentioned to you at the time of booking the flat.
DOC CHECK
With these documents, it pays to be a little obsessive because these are absolutely crucial.
1. Title deed of the property: The land owner should have complete rights to sell the property to the builder.
2. Property tax paid receipts: These should be available for at least the last 15 years for the land on which the apartment is built, to ensure that property taxes are all paid up.
3. Building plan and floor plan: These must be government-approved. Make sure the builder sticks to the specifications mentioned in the plan. For instance, constructing extra floors, building extra terraces illegally or not building a refuge area for the fire brigade to have easy access to the building in case of a fire, can all result in several other certificates being denied to the society.
4. Commencement Certificate: This is given by the municipal corporation in the initial stages of construction.
5. Sale agreement: This, of course, is between the developer and buyer of the flat.
6. No Encumbrance Certificate: This sets your mind at rest that the property has not been previously mortgaged as security for any loan.
7. Occupation Certificate: This is issued by the municipal corporation, and it will ensure that you have legal electrical, water and sewage lines, among others.
8. Completion Certificate: This is issued by the municipal corporation only if the building is constructed according to the approved plan.
9. No-Objection Certificate: This is given by the land owner to the builder and is crucial.
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