Avoiding pitfalls while purchasing property

Avoiding pitfalls while purchasing property Courtesy: Property Plus, The Hindu http://www.hindu.com/pp/2007/02/17/stories/2007021700450100.htm Taking basic precautions and safeguards will reduce the likelihood of buyers being taken for a ride or ending up with a messy property deal. It always pays to do things properly, writes RENU RAMANATH. So, that dream piece of land overlooking verdant valleys and misty meadows is beckoning you from a huge hoarding. Or, the perfect home with the perfect kitchen, located in the perfect neighbourhood is smiling at you from a website. But, just beware, and think hard before you write out the cheque transferring your hard-earned cash to the makers of your dream home. That dream could turn sour. Even before you realise, you might end up with a pile of complicated documents that promise you nothing, and much worse, leave a hole in your pocket. Purchasing property never appears so easy than it does these days. Your dreams are just a call away - the advertisements assure you. And in these times of hurry, you might tend to think, the fewer the formalities the better. But no! Fewer formalities are ok, but never at the cost of your not verifying the original documents of the land or apartments into which you are going to pump in all that money. With more and more people ending up with pending cases and land locked up in court stay orders, the more time you spend going over the documents of the proposed site or apartment, the better. Legal terms Mostly, you might find hard to decipher the high-sounding and complicated language of the revenue documents, especially if they are written in the old style of Malayalam. The terminologies may leave you totally baffled, like `kudikkadam,' `kaivasham,' `possession certificate,' `encumbrance certificate' and what not. The laws related to the transaction of land have become much more streamlined these days. With the village offices and taluk offices on the way to being computerised, more orderly documentation processes are taking place. No sub-registrar office will allow registration of land without the production of the complete list of the required documents. Even with all these safeguards on, people still continue to get cheated. Or that is what gets proven by the increasing number of land-related cases pending before courts at various levels, dragging on for years. Caught unawares Often, an unaware buyer ends up with land that had been pledged earlier, patta land for which no transaction is legally valid or property to which no proper road or other amenities exist. So, how to avoid all those pitfalls while purchasing a piece of land or an apartment or villa? The safest way to go about any land-related matter these days is to seek expert legal opinion. If possible, go through a lawyer for the whole business of transaction. An experienced lawyer can check the documents and spot irregularities, if any, in the documents and take care that all the documents, including agreements between the buyer and seller are in order. Physical verification of the land or the site for the proposed apartment complex or villa project is a must these days. This is especially needed in case the buyer is an NRI. In case the buyer is unable to be present for verification, make sure that another reliable person, preferably a lawyer, is there to check the premises. There has been an instance of a whole lot of NRI buyers ended up with flats in a project located close to a bone meal factory near Kalady. The buyers realised the fact only after the construction was completed. Physical verification After site inspection verifying the location and neighbourhood, the buyer can demand the original documents from the seller. Any further proceedings should be undertaken only after verifying the original documents. The original title deed can provide the history of the plot and reveal the status of the land. It is also possible to get a location sketch from the concerned Village Office. Get one and verify the claims of the seller. The immediate parent document of the original title deed (called `munnadharam,' in Malayalam), should also be sought from the seller. The seller has the responsibility to provide various documents including the possession certificate produced from the local Village Office and encumbrance certificate from the Sub-Registrar Office. Usually the possession certificate is issued for the past 13 years, but all nationalised banks these days demand possession certificate for 31 years, if you are taking a loan. Any way, it is safer to demand a possession certificate for the past 31 years, as you will get a complete picture of the history of the land with this document. Taxes Verifying the property and building tax receipts are also a must. The seller has the responsibility to produce the latest tax receipts. However, in the case of property owned by businesspersons as part of business ventures, it is necessary to verify the income tax receipt, obtainable from the taluk office. Verify whether there are any tax dues. The income tax dues will be recorded only at the taluk offices, and not at the village offices. Another issue that might crop up while purchasing land in forested are the provisions of Section 15 (1) or (2) of the Kerala Land Assignments (Regularisation of Occupation of Forest Lands prior to 1-1-1997) Special Rules 1993. Often the documents of patta lands given by the Government would contain only a mention that this Section was applicable to the land. Some document writers may not be aware of the exact nature of this provision, and the buyers may end up in a tangle as Section 15 (1) and (2) forbids a transaction pertaining to the patta land to any person other than the legal heir of the patta holder. Even if the land is registered in the name of the buyer, the registration will not be valid. Such patta lands occur not only in Munnar or Marayoor or Idukki, but in many parts of Ernakulam district like Manjappra, Ayyampuzha and Malayattoor as well as Athirappally and Chalakudi areas in Thrissur district, points out Krishnakumar, a property-related lawyer. Builder's reputation However, the issues related to buying apartments are totally different and perhaps more complicated, than buying land, though people may believe to the contrary. The reputation of the builder may help to some extent to cut down the chances of a deal going wrong, as established builders are unlikely to risk their name through means that might give rise to charges of fraud. Often the ownership of the land in which the apartment will be built causes the most complications. If the builder has completed the purchase of the land from the original owner before starting construction, the deal could be less complicated. But, sometimes, the builder will launch the project possessing only a power of attorney from the owner. The owner, in turn, might have pledged the land earlier for a bank loan and the reason for selling it in the first place might be the inability to pay back the loan. In such cases, the owner of land enters into an agreement with the builder hoping to make use of the money from the transaction for settling the bank loan and the release of the original documents from the bank. The builder also depends upon the instalments paid by the prospective buyers who have booked the apartments to complete the construction. If everything moves according to the plan, such deals often end up in a happy note for all those involved. But, there are chances of the builder ending up with inadequate bookings. This might upset the planning, leaving the apartment buyer burdened with hassles. Undivided ownership There are chances that the individual buyers of apartments will be given undivided ownership of the land on which the project stands. So, checking the original documents in the possession of the builder and verifying the legal status of the land of the proposed project is a must for every prospective buyer. All this does not mean every land deal is fraught with dangers and pitfalls. Only that every prospective buyer has the responsibility and right to demand and obtain the original documents and verify the legal status of the land/apartment up for sale. That dream plot or flat can, of course, become a sweet reality. Only that, watch where you step while moving towards it. Courtesy: Property Plus, The Hindu - http://www.hindu.com/pp/2007/02/17/stories/2007021700450100.htm