Purchasing Real Estate – Legal Checklist

Purchasing Real Estate

Purchasing Real Estate – Legal Checklist

Purchasing Real Estate

Purchasing Real Estate requires a significant amount of capital, and any mistakes made during the process can cause significant problems for the buyer. This necessitates that a buyer exercises extreme caution when inspecting the property documents. The buyer can ensure that the investment brings peace of mind and a sense of security by seeking proper legal advice, scrutinizing documents, and verifying relevant information pertaining to the property.

Property documents checklist

It is a well-established legal principle that a person cannot convey a better title than the one he possesses. As a first step before Purchasing Real Estate, the buyer should conduct due diligence to determine the existence of the title with the seller, the nature of the title and its marketability, and the seller’s ability to convey a clear and marketable title free of encumbrances. Documents must be examined for a minimum of 30 years (and if documents are not available, for a minimum of 12 years), and the seller may be required to provide the following documents/information:

  • Title documents of the property: Government grant order, succession certificate, sale deed, gift deed, will, partition deed, and other documents evidencing the transfer of title over time, culminating in the vesting of property with the seller.
  • Nature of title: Leasehold, freehold, or development right.
  • In the event that the seller claims development rights to the property, the owners must execute a development agreement and a power of attorney in favour of the seller.
  • All title documents must be duly stamped and registered at the jurisdictional sub-registrar of assurances’ office.
  • Khata registered in the name of the seller.
  • Information on pending or past litigation.
  • Availability of original title documents with the seller.
Verify the identity of the seller

In addition to verifying the title to the property, the buyer should determine the identity of the seller and any specific conditions governing the seller’s ability to convey the property. To illustrate, consider the following examples:

  • In the case of an individual, the seller’s residence status and nationality, as well as whether consents from government authorities are required for the sale.
  • In the case of jointly own properties, all owners must specify.
  • Where the seller is a corporation, trust, partnership firm, society, or other entity. The entity’s constitution documents are required to confirm its ability to own and transfer property, as well as to ensure that the person executing and registering the sale deed is duly authorised.
  • Orders from the competent court authorising the sale of property and naming a guardian in cases where the property is held by a minor or a person of unsound mind.
Conversion and land-use permissions

With increasing urbanisation and the amalgamation of revenue lands with urban conglomerates, the conversion of property for non-agricultural use assumes critical importance, as several state laws restrict the purchase of agricultural property by non-agriculturists. Secondly, the buyer must examine the Master Plan to ensure that the property has been developed in accordance with the zoning plan – such as residential, commercial, industrial, public/semi-public, parks and open spaces, and so on. For land uses that differ from the notified zoning, a permit requires from the Town Planning Authority.

Construction approvals

For the Purchasing Real Estate or land with a built-up building, the buyer should also examine the building plan / layout plan sanctioned by the local municipal authorities, as well as approvals issued by government, statutory, and regulatory authorities for infrastructure facilities such as water, sewage, electricity, environmental clearance, fire safety approval, and so on.

Occupancy certificate

Prior to conveying the property, the seller must obtain an occupancy certificate from the appropriate authority. In addition to the risk of the property being demolish, use of the property without obtaining occupancy exposes the buyer to a penalty under the applicable building bye-laws.

Status of tax payment

Property tax arrears are a charge on the property, affecting its marketability. A buyer must confirm that the seller has paid property taxes to the municipal authorities.

Request receipts for all utility bills from the seller. Whether it is utility bills or other debts, you will have to pay them after you buy the property.


In the case of an organization (if the seller is one), information is available on recorded encumbrances via the web portal. To solicit claims, the buyer may publish an advertisement in the newspaper prior to closing the transaction.

Physical survey and access to the property

The buyer may conduct a physical survey to confirm the property’s size and extent before Purchasing Real Estate. To ensure enjoyment of the property, it’s best to identify and map its boundaries, access, and any other physical features.

Compliance under the Real Estate (Regulation and Development) Act, 2016 (RERA)

The RERA requires developers to register their projects with the authority established by the Act. A buyer who intends to purchase a property in a project covered by the RERA should check to see if the property has been registered with the authority. The information available on the official RERA web portal for each state also provides details of any cases/complaints filed against the developer of the project and default by developer, if any, and thus provides useful insight into the credibility of the developer and the project, allowing the buyer to make an informed choice.

In order to operate legally, all real estate brokers must register with the state’s RERA. As a result, hire a property broker only after requesting his RERA registration before Purchasing Real Estate. Also, keep in mind that agents’ RERA registrations require renewal on a regular basis. Check to make sure you’re dealing with the right person. Regulatory bodies have the advantage of requiring a standard operating procedure and penalizing violators.

Risks of proceeding with a property purchase without due diligence

Unless the seller’s credentials and ownership of the asset can be verified, a buyer should avoid signing a deal. People will sometimes try to sell disputed properties for a low price. This prospect may appear appealing at first, but it will eventually prove to be a major headache. Avoid buying from a seller who uses unaccounted funds to save taxes to make the purchase. This could also lead to a slew of problems in the future.

Some quick tips for buyers:
  • Never agree to sign on the dotted line, without doing your own research.
  • Even if an agent or a developer recommended by people know to you, check their RERA ID and registration.
  • Never agree to offer money in black, in lieu of tax discounts.
  • Do not agree to buy/sell a property on someone else’s behalf.
 Should I check the PoA?

A power of attorney, or attorney-in-fact, appoints a person to act on another’s behalf. If you are purchasing a property, make sure to review these documents to determine the rights of the PoA holder.

ALSO READ: What Is Carpet Area, Built-Up Area And Super Built-Up Area?

Do banks do due diligence on the buyer’s behalf?

If you have submitted the necessary paperwork and documentation, the bank will review it. However, do not completely rely on the bank. Indian courts hear numerous property-related cases each year, a good reminder not to rush into home buying.

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