Frequently Asked Questions
A home is a keystone of wealth – both financial affluence and emotional security. Thus, it is important to know the relevant details and processes that are involved before, during and after the buying your dream home. We bring you some equally important guidelines that can help you with the various legal, tax and other technicalities for buying a home in India.
What are the important documents to be checked before buying a home/property?
Once you have finalised the home of your choice, it is necessary to check up on some important documents before proceeding further.
- Check out the approved layout plan, the building plan and ownership documents, carefully. It is advisable to get professional legal advice to help you verify the validity of the documents.
What precautions need to be taken while buying an under construction flat?
Opting to buy an under construction flat has its advantages as you pay less than for a ready to occupy ones. But, be vigilant and ask the builder to furnish all the relevant papers and permissions to ascertain the credibility of the project.
- Apart from checking the approved plan of the building along with the number of floors, make sure that the floor where you have booked your flat, has been approved.
- Check if the land, on which the builder is constructing the building, is owned by him or has been undertaken as an agreement with a landlord. If so, check that the title of land ownership is free and clear.
- Check the building byelaws as applicable in the area to make sure that there are no violations of front setback, side setbacks and height.
- Check specifications given in the agreement of sale to ascertain whether the builder is providing the same as promised. Conduct a thorough background check of the builder and his reputation.
- Ensure that NOCs for Ensure that urban land ceiling NOC (if applicable) as well as NOCs from the electricity, water and lift authorities has been obtained.
What exactly is built up area, super built up area, and carpet area and what is the difference between them?
- Carpet area is the area of the flat that does not include the area of the walls.
- Built up area includes the area of the walls
- Super Built up Area is generally applicable in multi storied units and includes the built up area along with the area under common spaces such as the lobby, lifts, stairs, etc.
What is the market value of the property?
- Market value means the price at which you can buy a home/property in the open market on the specified date of execution.
Where can you find the true prevailing market value of the property?
- The Sub-Registrar of the area, under whose jurisdiction the property is located, is the person most apt to for finding the market value of the property.
Who should pay Stamp Duty - the buyer or the seller?
- It is the buyer who pays the duty as the liability of paying stamp duty is that of the buyer, unless there is an agreement to the contrary. Section 30, of Bombay Stamp Act, 1958 states the liability for payment of stamp duty.
Is Stamp Duty payable on the market value of the property or on consideration as stated in the agreement?
- The Stamp Duty is payable on the agreement value of the property or the market value whichever is higher.
On what legal documents is a stamp duty levied?
- Significant legal documents required in property transactions such as Agreement to Sell, Conveyance Deed, Exchange of property, Gift Deed, Partition Deed, Power of Attorney, settlement and Deed and Transfer of lease attract Stamp Duty calculated as per the market value of the property.
Important Legal Documents necessary for property transactions
Owning a house is more than just a financial decision. Make sure that the legal status of the home is clear and without conflict. These precautions will help you avoid many unnecessary legal hassles in the future.
Let us find out more about all the various legal documents necessary for home buying transactions.
What is a Title Deed?
- A title deed is an investigation into the title of the land, over a period of 30 years, to ascertain whether the property is unencumbered and has a clear and marketable title. Always insist on checking the original title deed instead of just a photocopy.
Confirm that the seller is indeed the owner of the property.
Ideally you should get the title deed verified from legal experts to be on the safer side. If the title deed is not clear and marketable, getting finance from recognized financial institutions will become extremely difficult. Get in touch with a financial institution to check if they would provide a loan for that particular property.
What documents are necessary while buying an under construction home?
While buying an under construction home an allotment letter and development agreement are the vital documents. The allotment letter contains details regarding the agreed price, payment and construction schedule, house plans, delivery date and builder’s liability in case of late completion or problems after possession. It is issued to the buyer upon payment of the 15% of the property value to the developer.
The development agreement is inked between the builder and the landowner and contains details regarding the terms and conditions on which the landowner has permitted development of his property.
What are Stamp Duty and Sale Deed?
Stamp duty is usually a percentage of the transaction value levied by the state government, on every registered sale. The agreement of sale clearly states the stamp duty, which is usually paid by the buyer, and he gets his name registered in the land revenue records. The final sale deed should be stamped and registered at the appropriate local area office. Both the developer/seller and the buyer need to be present at the sub-registrar’s office, for registering the agreement.
Home Loan Processing
When you decide to buy a home, the first question that comes to mind is how to finance it? There are multiple options available to a buyer to avail the benefits of home loan options.
Formal loan application
The primary step is to fill out a loan application form for the financial institution/bank that you have chosen to get the loan from. The application form requires basic information regarding personal, residential, income, professional, educational details. It also includes details about the house, estimated costs, as well as your means of financing the property.
In addition, the banks will require adequate proof in the form of valid documents such as income proof, address proof, identity proof, bank statements, educational qualifications, and property details to support your loan request. The banks ask for such detailed documentation to ascertain your financial status and your capability to repay the loan amount.
All banks that offer home loan facilities charge processing fees that are generally non-refundable. The fees may vary from bank to bank but it is normally 0.25%-0.5% of the loan amount applied for. The fees are used by banks to start and maintain the home loan process including completion of various formalities during the entire period.