Due diligence in real estate transactions relates to the investigation of real estate property records and anything which is relevant to the sale or purchase of the property. It also ensures that local laws and regulations do not impose restrictions on sale transactions. The procedure of due diligence for real estate property is time-consuming and complicated, due to the involvement of various regulatory authorities. It is the most important aspect of a transaction involving real estate. The primary objective of due diligence is to gather information regarding the property.

Due diligence is conducted mainly to verify the ownership of the property and the presence of any encumbrance over the property. This is done in order to protect the buyer from any pre-existing claim that may have been existing on the property. Such claims can create a problem while transferring a property later.

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What if I unknowingly buy a land that is under government acquisition?

Assetscan-due diligenceWhile purchasing property, it is important to conduct due diligence regarding the title of the property. An exhaustive search has to be done to identify the true owner of the property, as only the true owner of the property has the right to sell. It is important for the buyer to conduct thorough due diligence before buying land.

  • It is important to determine the true owner of the land before having bought it. If the land is acquired by the government, the owner/seller of the land loses all rights to sell that property.
  • In the event that such a sale has taken place and that the property is owned by the government, the buyer can sue the seller to recover his original cost and any other costs that the court would grant. 
  • However, ignorance of the law is not an excuse, and the documents should be thoroughly verified before the sale deed is executed.  

I purchased a property which is not sanctioned by the local authorities, what can I do?

Sanctioned plans and completion certificates are very important documents in real estate. Before buying a property, it is important to verify if the property has been sanctioned by the local authorities. If the property is not built according to the sanctioned plans, the completion certificate would not be granted to the builder. The property which has been bought without it being sanctioned by the local authorities can immediately be demolished by the authorities without giving any prior notice.

The following documents are necessary for the builder to get sanctions from the local authorities:

  • Building Plans are a set of drawings that consists of the floor plan, site plan, cross-sections, elevations, electrical, plumbing and landscape drawings.
  • Layout approval, approval of the detailed layout of the site, including the boundaries of the property, nearby roads, and neighboring buildings.
  • Basic amenities: The builder should get approval from the concerned authorities for electricity, water for potable and non-potable use. The building should comply with building laws for sanction or approval of basic amenities.
  • No Objection Certificate (NOC) 
  • Completion Certificate, a document which is awarded after the inspection of the building, stating that it has been constructed according to the building plan and satisfies the necessary standards set by the municipal corporation.
  • Clear Title: The builder has to get a clear title for the land or plot. The clear title would ensure that the property is clear, marketable and it traces any charges or encumbrances created on the property and its present status.
  • Approval for conversion of land, a document which states that agricultural land has been successfully converted into non-agricultural land to be used for commercial purposes. 

What if there is a difference in the sqft for what you paid for and what you registered for?

The square footage (sqft) of the property is an important aspect which is used mainly for valuation purposes. The square footage is an important specification that prospective buyers look for while buying property. A difference of a few hundred square feet will lead buyers to overlook the property, as they would be searching for a property with minimum square footage. Buyers, before buying the property will look at the square footage advertised by the seller and will presume the same to be true. It is important to ensure that there is no difference in the square footage for what is paid and what the property is actually registered for.

Thus, it is significant to ensure that the square footage of the property is accurate and does not mislead potential buyers.

  • If the property is to be sold to a prospective buyer, the actual available property has to be ascertained by getting the property measured by a government surveyor, based on the revenue records held by the land revenue department.
  • After getting the surveyor report, a notice may be issued to the seller of the property demanding him to execute a rectification deed in respect of the actual available area and register the same in the favor of the seller.
  • If the seller doesn’t comply, the buyer can approach the registrar’s office with an application permitting the execution of a rectification deed in the absence of the seller. 


It can be seen that the process of due diligence is important and involves the preparation of a checklist in accordance with the laws of the state. It looks into the investigation of pending litigations, encumbrances, charges that may exist on the property. The due diligence done should also cover aspects as to whether the property that is part of the sale transaction already has structures or buildings constructed on it. If yes, the approved plans, permits, and no-objection certificates have to be verified. Rules regarding the widening of roads, levels of construction have to be considered. 

It is advised that before entering into real estate related transactions, people should determine and ensure that the title documents, encumbrance certificate, possession certificate, etc are valid. It plays a significant role before the purchase or sale of a property.