If you are planning to buy a property in India, you must have an idea about a list of legal documents that you should check before buying a property from the seller. If any mistake/ incorrect information is provided by the seller or the buyer concerning documents, both parties can face legal action.
If you are buying property, besides, you will also need to claim ownership of the property. To claim and prove ownership of the property, certain legal documents need to be validated with legal advice. In this article, we shall talk about the documents a buyer needs to check before sealing a property deal.
Buying Property: Why Verify The Seller's Identity?
Just like how the buyer is advised to verify the identity of the property, the buyer must also identify the identity of the seller. This is to make sure and to investigate that there aren’t any specific conditions that inhibit the ability of the seller to transfer the property.
- The buyer must check the residential status and nationality of the seller and in the case of joint property, the identities of all the owners need to be checked
- If the seller of the property is a company or a business firm, then the documents of the company and whether the company has the legal right to sell the property must be checked
- The buyer must also check if there are any orders from the competent court, which permits/ inhibits the sale of the property
- If there are any guardians of the property
- If the property is owned by a minor or a person of unsound mind
List Of Documents Of The Property That Need To Be Checked Before Buying
If the buyer is purchasing an apartment or land with a constructed building, the approval document for the construction of the building must be checked. The buyer must also scrutinize the building plan and layout plan which is sanctioned by the local authorities. You should also check the approvals which are issued by the government and other authorities for providing infrastructure facilities, water, sewage, electricity, environmental clearance, fire safety approval, etc.
The occupancy certificate certifies if a building complies with various rules and civic bylaws. The seller must obtain the occupancy certificate from the competent authority, before transferring the property.
If the buyer is using the property without obtaining an occupancy certificate, a penalty can be imposed under the applicable building by-laws. The building can also be demolished by the authorities but that will be the last resort.
An Encumbrance Certificate or EC is a certificate of assurance that the property in question is free from any legal or monetary liability such as a mortgage or an uncleared home loan. The sub registrar’s office and the official web portal of the Ministry of Corporate Affairs will reveal information of any registered encumbrance on the property.
If you get Form15 Encumbrance Certificate, it means that the property has liabilities. If you get Form16, it means that the property is free from any encumbrance. An Encumbrance Certificate is necessary if the buyer applies for a home loan because the certificate establishes the eligibility for a home loan.
The sale deed is the document that is registered in the sub registrar’s office and this document is used to prove the ownership and the purchase of the property. The sale deed includes the details of the amount paid for buying a property and the date of transfer of the property from the buyer to the seller.
The sale deed also documents all the details of the property being sold and includes a statement from the seller, that the property is free from any encumbrance.
Property Tax Receipt
When buying a property, you need to check and ensure that the seller has paid all the taxes of the property and none of them have been left as due. The property tax receipt can also be used to establish the legal status of the property and serves as an important document of evidence.
Non-payment of property tax can constitute a charge on the property that affects its selling. Hence you need to check with the seller of a property if there are any defaults on the payment of property tax. You need to note that once the property has been transferred to the seller, you will be responsible for any pending property tax payments there may be.
Power Of Attorney
A Power of Attorney is a legal document where 1 person grants the right to execute i.e. power to transact in matters regarding property, legal and judicial proceedings, payments to the bank, etc, to another person. The power of attorney is required in case the seller has authorized or transferred his rights to any other individual as the acting owner of the property.
The bank statement is required to ensure that if any previous home loan is outstanding to the property that is being purchased. It is safe to procure the bank statement relating to a home loan.
If any loan is outstanding on the property that is being purchased, it is safe to procure the statements relating to the loan so that there is full disclosure in that regard.
The title deed is the most important of all the property documents and this document shows the ownership of the property. With the title deed, the buyer or the seller can claim absolute ownership over the property.
When buying a property you have to check and ensure that the title deed belongs and is in the name of the seller. If you have no idea of how to verify, you can take the help of a property agent to check this document. If the title of the property is not in the name of the seller, then legally the property should not be purchased unless the consent is from the real owner of the property.
A mutation document has all the details of the purchase of the property including the name of the owner, size of the property, location, and other important information of a property. This document is issued by the municipal authority in the name of the present owner.
The Mother Deed is a document that is needed while buying a resale property. You need to get this document because it has all the details of the ownership of the property right from the stage of construction of the building. There may be some situations where the owner may do a fraud activity by illegally taking ownership of the property, which can affect your investment.
Before buying a property it is very important for the buyer to check and to ensure that all the above-mentioned documents are in the possession of the seller. If there are any missing legal documents, it is better to avoid buying that property. If you are not sure how to check if the documents are original and correct it is better to take the advice of a real estate agent.
When purchasing a property, it is always best to consult a lawyer to verify the documents related to the sale of the property and to receive legal guidance on matters related to buying property and renting a property.