By Nitin Saxena
Buying property in our country is a cumbersome and tricky affair. The purchaser has to undergo tremendous pressure and has to run from pillar to post to obtain clearances from the authorities concerned. The constant upswing in the real estate prices is the main reason that forces the purchaser to be on guard while purchasing real estate. Any lapse or carelessness can jeopardise his investment and prevent him from getting a good title to pass on to others. A bad investment decision with regard to purchase of property can be avoided, provided one takes complete care and avoids man-made red tapism. We offer a few tips.
In the real estate business, your property is worth what someone else is willing to pay for it. The value of an asset depends on four basic attributes: utility, scarcity, demand, and transferability. Property prices generally depend on the supply and demand condition in the market. Prices fall when the supply outstrips demand and rise vice versa. Demand for real estate decreases during a slow down and rises during an upturn. Real estate prices are even taken as lead indicators for the economic climate.
The legal maxim says that ?no one can pass a better title than that he has.? So, if the owner of the property has a defective title, then the purchaser will also get a defective title from him. So, the purchaser should examine the title of the property carefully. He should obtain a copy of the title deed from the previous owner, and try to establish the ?chain of title? for at last 12 years previous to the date of present ownership. Since any sale of property worth more than Rs 100 should be registered, the purchaser should apply for the certified copies of the previous transactions, and examine them carefully to avoid future complications.
If necessary, he can take the help of a local advocate and request him to prepare a search report. The advocate should also be instructed to verify and advise the title position on the basis of records available at the office of the sub-registrar of assurances, along with a non-encumbrance certificate issued by a competent authority. The chain of titles should be clear; the purchaser should avoid purchase of property if there is any missing link in the flow of the title.
In metros like Delhi, Mumbai, Kolkata, buying of property has become difficult, as it is done in innovative ways to avoid stamp duty or to circumvent the provisions of law. If the property is a flat in a society belonging to its original member, then the purchaser should take a no objection certificate from the society, and also the share standing in the name of the original member should be transferred in favour of the purchaser. If the previous owner owes any money to the society, then the society naturally defers to give the no objection certificate.
In Delhi, the Delhi Development Authority has imposed a condition in the transfer deeds-the original owner can transfer the property, if he returns back 50 per cent of the difference between the first purchase price and the sale price. To avoid this, the property dealers have facilitated the transfer through the power of attorney. The power of attorney sale should be accompanied by a will which names the person who will inherit the property.
In Kolkata, in the posh residential area of Salt Lake, land was given on lease to the owners by the state government. So, transfer by way of sale was not legally possible. The interested parties developed the way out to transfer by sub-leasing the property, followed by scores of documents. All these appear to be simple as long as things move smoothly. But the purchaser is exposing himself to dangers and the transaction may be challenged any time by any interested party. To avoid future problems, the purchaser must study the original title deed. As far as possible, the earlier transactions should be limited. The more the earlier transactions, the more the documents that the purchaser gets and there is the possibility of any of the previous owner creating problems for the present owner.
Similarly, if one is purchasing property from a private builder, it is the duty of the purchaser to see that the builder has purchased property, which is free and marketable and the builder has authority to sell. The builder has to possess the right to transfer the property. The purchaser should also cross check the sanctioned plans to see that no extra construction or unauthorised construction has been done.
Another area in which the purchaser has to do homework pertains to the area of the house he is going to purchase. Generally property is purchased on the basis of Rs per sq. ft. In order to confuse and mislead the purchaser, the builder uses various concepts like ?carpet area?, ?construction area? etc. The total area includes that available for car parking and staircase. The purchaser should pay as per the area he is actually getting. To ascertain the same, he can take the help of a surveyor. The builder generally charges for the constructed area or the super built-up area.
Similarly, in case of purchase of property from a second seller, the purchaser should demand the earlier electricity bills, water tax receipts and receipts of municipal taxes from the previous owner.
The precautions to be taken are endless but we have discussed only a few measures to be taken, so that the purchaser can get a better and marketable title. If the aforesaid checks and cross-checks are followed by purchaser, then he can protect his investment from cheats and fly-by-night operators, and can safely pass on the wealth on to the next generation.
(Writer is recipient of a national award and can be contacted at 5/11, Kalkaji, New Delhi.)