Buying a real estate property is a huge commitment and it is very important that you take all due care while purchasing the same in order to avoid any legal complications in the future. Before you make the purchase of the property it is important to make sure that the title is clear and marketable. The foremost thing that the buyer should consider while purchasing a property is the legal status of the property. It is recommended that you prepare a checklist of the various documents to be cross-checked as it aids the procedure of purchasing the property. 

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What are the important documents for real estate transactions?

 

The purchase of the property should be carried out exercising due diligence. Various documents need to be cross-checked to ensure that there are no legal and financial liabilities pending on the property. Listed below are some important documents that need to be checked in order to avoid future hassle.

  • Title deed: 

The buyer should ask the seller to provide the original title deed of the property and should get it checked by a lawyer. The buyer should also make sure that the property is not currently pledged for the sake of a loan at the time of purchase. The important document should contain the name of the seller and it needs to be verified. The owner’s ability to contract should also be checked. 

  • Encumbrance certificate:

Encumbrance means the charges of liability of the property that is presented as security for a home loan. Encumbrance certificate includes all the transactions that are registered during that period of encumbrance.  It shows transactions such as purchase and sale, mortgage, etc. Encumbrance certificate can be obtained from the jurisdictional sub-registrar office by providing the sales deed along with the complete details about the property as required. The application for the encumbrance certificate can also be submitted through government portals.  It is basically an important document showing that the property has no legal or monetary liabilities.

  • Tax receipt:

The buyer before making the purchase of the property should ensure that all the taxes relating to the property is paid and there are no arrears from the government and municipal authorities. The buyer can do so by collecting the latest tax receipts and cross-check the same. On the failure to do so, the buyer may be levied with the pending tax dues, resulting in a further financial loss to the buyer.

  • Release certificate: 

You should ensure that the seller has repaid the loan in cases wherein he has pledged the property. You can confirm and cross-check the same through the payment receipts and the release certificates. You may also obtain a No-Objection Certificate from the lender before purchasing the property as in the absence of the same, you may be required to pay off the debt. 

  • Sales deed:

It is a core legal document that acts as conclusive proof of transfer of title from the seller to the buyer. It has to be mandatorily registered to legal validity according to Section 17 of the Indian Registration Act, 1908.  A sales agreement is executed to ensure that the parties comply with the various terms and conditions of sale after which the deed is executed. Before executing the same, the buyer should ensure whether the property has a clear title and if it has any encumbrance charges against it. 

  • Mother deed:

The Mother deed or the Parental deed is an important document that traces the ownership history of the property. It is an important document and also helps establish ownership. In the absence of the same, certified copies of the same needs to be obtained from the registering authority. It should also be in the correct sequence. This will help in verifying the legality of the ownership. 

  • Commencement certificate: 

A commencement certificate is an important document that is required for the sale of properties that are under construction. It is provided by the local authorities after site inspection and approval of the plan. It is proof that the construction works have commenced with the due compliance of the necessary criteria and not having this certificate can make the construction illegal.

  • Completion Certificate and Occupancy Certificate:

A completion certificate is a certificate that is offered for properties or buildings after the construction works are completed. An inspection is carried out to ensure that the property is constructed in accordance with the legal conditions necessary such as distance from the road, height, and construction as per the approved building plan. During the inspection, the authorities ensure that there is no addition made to the sanctioned plan.  

The occupancy certificate is also issued after the construction and inspection by the municipal authority. The occupancy certificate is an important document in cases of buying the property, acquiring bank loans, transferring Khata, etc. It is proof that the building is available for occupancy. Occupancy without the Occupancy Certificate is considered illegal and can lead to the eviction of the buyer from the property, by the municipal authorities. 

  • Mutation certificate:

This important document contains all the vital information about the property such as the owner’s name, location, size, etc. This document is not only responsible to identify the owner but also helps in establishing any liabilities against the property even though it is not legally binding. It can be obtained from the land revenue department and it is recommended that the owner of the property obtains a mutation certificate every six months to identify any false liabilities that have been charged against the property.

  • Khata certificate:

Khata certificate certifies the ownership of the property while Khata extract contains details such as the amount of property taxes to be paid on the property, location of the property, built-up Area of the property, size of the property, etc. The Khata certificate becomes an important document when the buyer is making an application for electricity connection, water connection, applying for a loan from a bank, and needs the property as collateral for the loan, apply for a license of any sort from the government, etc.

The Khata is widely divided or referred to as A Khata and B Khata. A Khata is inclusive of those having legal constructions while B Khata has properties that are under local jurisdiction with violative property constructions in them. Therefore the buyers should ensure that the property that you are purchasing is not listed within B Khata as they are deemed as illegal constructions. However, such properties can be converted to A Khata property by paying the penalty to the government. 

  • Power of attorney:

The power of attorney becomes an important document when the transaction is carried out by someone who is not the actual owner of the property. It should be cross-checked with the identity of the holder to ensure that he is being vested with the power to sell the property on behalf of the actual owner.  

  • Compliance with Real Estate (Regulation and Development) Act, 2016:

Real Estate (Regulation and Development) Act, 2016 also referred to as RERA mandates that the developer should register the property under RERA and the buyer of the property is responsible to verify the same. The information can be accessed from their website and this is an important way to check the credibility of the developer and aids the buyer in making an informed decision about the property. 

Summing up, it is to be stated that it is the responsibility of the buyer to ensure that the important documents relating to the property are clear and that the property is free from any form of liabilities before the purchase of the same. It is always recommended that a legal attorney is hired to ensure that there is no legal complication involved in the purchasing of the property. Listed above are some important documents that need to be cross-checked in order to make an informed decision.