Laws for Land and Disputed Properties

The real estate market in India has matured of late, with a number
of professionally managed established real estate developers working
on large residential townships, condominiums, and commercial properties.
However, the opportunity is also being used by fly-by-night operators
to make a quick buck by some unscrupulous elements.

Home buyers and investors are wary of unprincipled and dishonest
operators in the business, and NRIs even more so, who have been
victims of fraud and deceit in property matters for obvious reasons.

Cases of deceit and trickery in getting sale deeds of the same
piece of land registered twice and thrice abound, thanks to the
nexus between revenue officials, the police, property dealers
and their lawyers.

State Governments and state judiciaries have made efforts to
take up cases of NRIs in the fast Track Courts, as in Punjab,
where property cases filed by overseas Indians are among the highest
in the country. Land grabbing by impersonation, fake deals, building
scams is what an NRI investor needs to be aware of before he signs
on the dotted line.

In case of delayed possession of property, an errant builder
often gets away lightly in spite of persistent follow-up. He ends
up paying only a 10 to 12% penalty on the amount he has received
from the investor, which he makes up in any case, citing inflationary
costs of construction as the main reason.

Property builders have tried to woo NRIs with false claims of
projects, backed by fake videos and information. The National
Real Estate Development Council (NAREDCO) has proposed legislation
on Real Estate Management. This would bring about transparency
and ethical practices in the Indian real estate sector

A few precautions any NRI investor or home buyer should
exercise are suggested here:

The real estate developer’s track record
Track record of the developer refers to the maturity of the developer
in terms of delivery of projects in the past. Track record of
the developer is basically a function of various factors including:

• Projects that the developer has completed
  in the past.
• Whether these projects have been delivered
  as per agreed time schedule.
• Whether transfer of title in these projects
  have been smooth.
• Type of customer service that the developer
  has provided.
• Litigation history if any.
• Quality orientation of the developer

Insist on Original Documents
The clear title of the seller is the most important element
in the purchase of a property. This ensures that the seller owns
the property and has the right to sell it. It also certifies that
it is not mortgaged or charged and is thus unencumbered. The title
can be proven at the office of public records. Details of the
sale deed are maintained by the office of the sub-registrar in
every district and the revenue department maintains revenue records.
Obtain a certified copy of the above deed.

If the land falls under a village survey, the important documents
are: Forms 7/12, 2 and 6, which prove the possession and certify
whether the land is agricultural or non- agricultural. Permission
needs to be taken by the builder from the revenue authorities
to convert the land for non-agricultural use and an NOC also needs
to be obtained. NRIs are not permitted by law to acquire agricultural
property, plantation property and farmhouses in the country, so
do not allow any promoter to dupe you.

If the property falls under a city survey, a property card is
available which authenticates ownership. The municipal tax assessment
is also testimony to the ownership. Certification of these documents
ensures a clear title of the seller.

Whether an investor goes in for finance or not, it is prudent
to ask for examination of the loan papers. These papers would
have complete details of ownership, plans, sale deeds, etc. The
investor can go by the legitimacy of these documents because they
would all have been scrutinized by a bank or a financial institution.

Some builders appoint a solicitor to determine the title deeds
of the property. The solicitor goes through the property records
of the last 30 years and issues a certificate of title to the
builder. A genuine builder would offer the certificate free of
cost to the buyer.

Some real estate developers promise not to construct on land
they have not acquired, or not received permission for. But most
often, they do not stop short of booking and collecting cash,
and closing shop soon after.
Verify the ownership from the respective Development Authority
or Municipal Council of the city in which your property is to
be registered. Try and contact the original allottee of the property
and trace the line of owners yourself.

In case of a power of attorney, read clauses carefully to check
if the attorney holder has the authority to sell it.In addition,
doubt if considerations only involve cash documents, are on plain
paper, any original documents are missing or documents are only
notarized.

Check Approved Plan of Property to be Purchased
The investor needs to check into not just the layout
of the residential apartment or commercial space he intends to
buy, but also the layout of the common space available to other
members of the township, condominium or commercial space he is
going to be a part of. The cost of the unit the investor is paying
for includes the cost of these common spaces.

The purchaser should insist on an agreement for sale in under-construction
schemes, and demand a sale deed on completion of the unit. The
sale deed ensures final transfer of the property in the name of
the buyer and his name appears in the public records.

Stamp Duty and Registration
One needs to be careful here. Sometimes, the stamp duty
is not payable and the registration not asked for. In such cases,
a declaration should be taken from the builder that these are
not applicable.

In the case of cooperative societies which are promoted by builders,
a share certificate is in order, along with an allotment letter.
It is essential to check on the owner of the land once the building
is completed.

Arbitration
Investors should stay clear of the arbitration clause
sometimes added on to the agreement by the builder. Buyers should
not agree to the arbitration clause as other conditions relating
to arbitration such as place or arbitrators are not negotiated
when the contract is signed. In an extreme case, insist on a sole
arbitrator acceptable to both.

Building Use Permission (BUP)
Building use permission is granted by the competent civic
authorities to the builder. Only when the BUP has been granted
can the builder hand over the house for possession.
Developers need to conform to various regulations for smooth development.
Basic requirements like sanction plans, commencement certificate,
environment clearance, approval and other major clearances that
may be required in course of the development include:

• No Objection Certificate (NOC) from
  Department of Fire Services
• Power Load Sanction from the local Electricity
  Board / Distributor
• Approval for drainage and sewerage connections

• Approval for water supply
• Approval from Pollution Control Board

• Approval from Department of Public Health

Confirm that your property/ apartment/office space conforms to
all construction laws and bye-laws. Very often the builder gets
the building use permission in spite of the construction having
violated quality and space rules. The space meant for a parking
lot could have been used for some other unauthorized purpose.

Delivery, Maintenance and Associated charges:
Another key area is maintenance of facilities. Developers
often charge separately for creating a maintenance purpose as
well as for regular maintenance after the possession. The fees
to be charged for regular maintenance need to be indicated in
the agreement with the customers during purchase of property.

Completion Certificate
The investor must exercise his right to the detailed
drawings/plans covering structural details, plumbing, electrical
fittings, drainage and water supply. This will help maintain the
building in the future. The completion certificate of the project
can be obtained from the architect.

This certificate confirms the builder’s adherence to the norms
laid down by the civic authorities to the approved plan, and protects
you from chances of litigation with the local authority. Inquire
thoroughly if the property has been mortgaged or attached in any
court case and, more importantly, check on encroachments on the
property you are buying.

Insurance
It is worthwhile to go in for insurance of the residential
or commercial property you have acquired. The builder should have
initially insured the flat /office, and the purchaser can take
over after possession is obtained.

Signatures
Check for variations in signatures repeated on documents
The vendor and witnesses signing the papers in your presence Fingerprints
should be preferred over signatures, being more fool proof.

An awareness of real estate practices and keeping these precautions
in mind would help keep malpractices and disputes at bay.