Let us take the case of a person who is planning to buy a motor vehicle. What does he then do? Will he go to one outlet and buy what is readily available with the dealer or does he visit various outlets, know the details of various dealers in the market, the prices offered by them, the variation in the pricing of the models, the value additions, the goodwill of the company and so on. It is obvious that he does preliminary research and puts in the best of his efforts before arriving at a conclusion.

The same goes for the case of buying a flat. Before making any investment, the investor takes certain reasonable steps to prevent committing any mistake or breach of law. The investor performs these tasks meticulously because of the involvement of a high budget and any precarious step would result in heavy losses to the investors.  It is thereby pertinent on the part of the investor to conduct due diligence of the property title before making any conclusion of purchasing the same. This enables him to obtain relevant and reliable information that would come in the way of a good, marketable, and clear title.

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How to conduct due diligence of the title of flats?

The buyer has to conduct a scrutiny of the legal affairs pertaining to a property to be aware of the risks if any involved in the acquisition of the property. This will provide the buyer with a vivid insight into the nature of the property and the risk associated with its acquisition. The buyer has to ensure that he gets to know about the following:

  • Title:

The title indicates the right to property. The title need not necessarily mean ownership. It could also mean right over the property as owner, possessor, permanent lessee, etc. The chain of the title deeds must be checked with the stamp receipts/gift deed/lease deed through which the property has been acquired by the present owner. The bye-laws, rules, and regulations of the society have to be checked.

  • Government Records:

The classification of the property must be checked according to the government records along with the survey no., copy of the layout plan, and the sanctioned plan. The document must be certified by the concerned government officials.

  • Encumbrance Certificate:

An Encumbrance Certificate is a legal document that will help you find out if any changes are made on the property. The details can be availed by visiting the Sub-Registrar’s office.

  • Joint Names:

If the property is in joint names, a No Objection Certificate (NOC), should be obtained from the co-owners.

  • Tax Payments:

The inquiry has to be made with the government and municipal offices to make sure that all the tax payments have been paid as on the date.

  • Power of Attorney:

In some cases, the seller may not be physically present to facilitate the property deal. In such cases, a representative or agent would be appointed. The buyer should examine the power of attorney to see if the principal who has executed the power of attorney is the genuine owner of the property. The Power of Attorney must bear the photograph of the owner and the same should be registered in the sub-registrar office.

Where the owner of the property is an NRI, the Power of Attorney (POA) has been executed in a foreign country, then the POA has to be notarized before the Indian Consulate for authentication and thereafter it has to be attested by the Sub-Registrar of the area concerned to prevent subsequent claims by the third party it is advisable to give public notice by way of advertisement inviting objections, if any, before the purchase of the property. 

Every individual should carefully observe the various legal issues involved in real estate transactions and, if necessary, take the help of an Advocate for carrying out due diligence to ensure that his investment is solid and doesn’t land him into any form of litigation.