Legal Checklist for Buying a Residential Property in India

Buying your first home can be quite an emotional decision for many. But you cannot forget that this would be one of the biggest legal transactions of your life, and stay vigilant to protect yourself from undue stress.

Whether you are a first-time home buyer or looking to purchase a resale property, the legal process for buying a residential property includes the following steps:
• Property search
• Legal due diligence and documentation
• Negotiation and agreement
• Home loan approval
• Registration
• Possession and handover

Although the specifics of these steps may vary, you will be following this process in general; and you cannot afford any missteps – especially when it comes to legal due diligence and documentation.

So what are some of the key legal aspects and requirements you must understand to safeguard your investment and ensure a clear title on your residential property?

Property Documents

The first and most important step is to verify the property title with the necessary documents going back at least 30 years (minimum 12 years if previous documents are not available). These documents can help you verify:
• The title documents (indicating the transfer of title over the years)
• Nature of the title
• Development agreement or power of attorney
• Pending and past litigations against the property

This can help you ensure the nature and marketability of the title and establish a clear title free from encumbrance.

Seller Identification
The next – and equally important step – is to identify the seller and their ability to convey the property. This includes information like:

• Residential status of the seller (in case you may need special government authorization for the sale)
• Identity and consent of all owners (in case of jointly held properties)
• Court order authorizing the sale and appointing a guardian (in case of property held by a minor or an individual of unsound mind)

Documents like Aadhaar numbers, PAN, passports, or income tax returns can help you ascertain the identity(s) of the seller(s) and establish they have the proper authority to sell the property.

Conversion and Land-Use Permissions

Many state and national laws restrict the ways land can be used, making ascertaining the type of land the property is on – residential, commercial, industrial, or non-agricultural – essential. So ensuring the property stands on non-agricultural residential land is essential as non-agriculturists may get in trouble for purchasing agricultural property.
Additionally, you must ensure that the property complies with the zoning plan. If the actual land use differs from the zoning plan, getting the necessary approval from the Town Planning Authority for a change of land use is mandatory.

Construction Approvals

In case you are buying an apartment or a constructed building, validating the construction plan and necessary approvals from relevant authorities is crucial. This includes approval and NOCs from different departments – like the Pollution Board, Environment Department, Traffic and Coordination Department, and many more – to ensure access to infrastructure facilities – like water, electricity, sewage, environmental clearance, fire safety, and more.

Occupancy Certificate

Occupancy certificate – indicating the property meets all regulatory and statutory requirements and is fit to occupy – from the competent authority is mandatory. Use – or sale – of property without such approval leaves buyers vulnerable to penalties and risk of demolition.

Tax Payment Status

Non-payment of taxes can affect the marketability of a property. So ensuring the seller has cleared all their dues – tax and utilities – is crucial. Otherwise, the buyer will be liable to clear all pending dues against the property.

Encumbrance

Be sure to check any registered encumbrance on the property before buying the property. You can search at the jurisdictional sub-registrar office, the website of the Ministry of Corporate Affairs (in case of a corporate seller), or issue a public notice to find any third-party claims against the property.

Physical Survey and Property Access

It is advisable that a buyer undertakes a physical survey to confirm the extent and measurement of the property against the information provided by the seller.
Especially when purchasing land, identifying the boundaries, access, and any other physical attributes can help ensure you can enjoy your property properly.

RERA Compliance

Any project falling under the scope of the Real Estate (Regulation and Development) Act, 2016 (RERA) has to be registered with the RERA authority. So be sure to check the RERA registration of the property – and the real estate broker – before purchasing the property to establish the credibility of the project and the seller.

Loan Outstanding

In case you are buying a resale property, be sure to verify whether there is a loan outstanding against the property. You can ask the seller to clear the outstanding loan amount to get the original property documents from the bank and register the property in your name to get a loan of your own. Or you can apply to transfer the loan from the seller’s name to yours and continue to make payments. In any case, be sure to get copies of the title documents, loan outstanding statement, and no dues certificate from the bank to ensure a clear title.
This is a general legal checklist you must consider before buying a property in India. However, it is advisable to work with a skilled legal expert to conduct proper due diligence, examine every small legal facet, and ensure the safety of your investment.
Need help to understand the legal requirements when buying a property? Squarea expert team can direct you to the right resources and help safeguard your real estate investment. Get in touch with us today to find the home of your dreams.

For more details on this subject, please email hello@squarea.io