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Keeping it Legal

April 16, 2018

It is important to keep in mind the legal requirements for the purchase of your home. This Akshaya Tritiya, ensure you check all the legal boxes and move forward as a home-owner.

Have you had your eye on that home you have been planning to invest in? As Akshaya Tritiya approaches, there is no better time than now to ink that deal. Home-buying is a very important decision as it involves an emotional as well as a rational bent and the popular belief is that transactions done on this day continue to grow and prosper. And buying a home is one of the biggest legal transactions.

Now, buyers who believe in making this investment should be vigilant and ensure that the seller does not take undue advantage of this emotional occasion. Experts warn that the buyer, if not mindful, may sacrifice on some of the crucial aspects and end up losing life savings. Home-buyers should always check all the legal aspects of the property and whether they have been complied with. "While signing off on a deal, several aspects should be kept in mind such as ensuring that ownership is clear, and due diligence of ownership is done by a reputed lawyer," says Sudip Mullick, Partner, Khaitan & Co, adding that title documents of erstwhile owner, NOC from society/association of owners, etc, are essential documents that should be procured.

Legal Checklist

If the buyer is purchasing a flat from the reseller, several aspects should considered before deposit money is parted: Validate that the person selling the property is the real owner and not nominee.

A share certificate on its own is not conclusive proof that the seller is the beneficial owner;

If the shares are held in joint names, speak with both parties as it is possible that the co-owner may not want to sell the flat or the sale price is not acceptable. It does not matter if the co-owner is the wife or parent;

Speak with the society committee members to understand the transfer formalities;

Discuss with the seller the modalities regarding closure - possession of the flat should be accompanied against payment of consideration, execution and registration of the sale agreement. Also, discuss whether transfer charges will be shared or not;

It is essential to hire a competent professional for tasks such as preparing a sale agreement, title verification, checking whether stamp duty has been paid or not, checking ready reckoner rate for stamp duty purpose, whether conveyance is in favour of the society, etc;

Income tax has to be deducted on the payment made to the seller and if the seller is a non-resident, higher rate of TDS will apply. Also, if the stamp duty ready reckoner rate is higher than the purchase price, there are income tax incidences and hence, it is imperative to do your homework before concluding the deal;

Procure services of professionals to determine if there are any outstanding taxes (income tax, property tax) against the seller (also in the case of the seller executing the agreement as Power of Attorney holder).

Document checklist

Purchase agreement under which the seller acquired the legal title; Share certificates issued by the society - this evidences the name which society recognises;

Letter from the society that it has no objection for transfer of flat in favour of the buyer;

Obtain the last electricity bill, landline telephone bill, property tax to ensure that there are no arrears;

Taking possession of transfer forms duly executed, previous original agreements, letter in favour of Electricity department for transfer of electric meter;

A specific power of attorney from the seller to represent before electricity/ telephone or other departments to have the records amended in favour of buyer will be useful.

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Source: content.magicbricks.com