Documents to be verified before booking a property

No Comments Sub Category: Property Posted On: Jan 21, 2014 Property documents are one of the most important items required while buying a property. Various documents need to be verified diligently before booking a property. This, in turn, will keep you away from varied legal disputes and aggravations. The following documents need to be thoroughly checked and clarified: 1. 2. 3. 4. 5. Systematic Registered Agreement for sale entered into between the previous parties. 7/12 Extraction and Village form No. 6 (Mutation entries) of the said property. Noting of the appropriate names in the Property card. Approved Location Plan stating the right locations. City survey plan from the appropriate authority and, or survey plan from the revenue department. 6. Layout Plot Plan approved by the local authority. 7. Architect certificate about the Layout Plot Clarity on the common areas and the facilities by each of the entries or the structure constructed or to be constructed on such Layout Plot. 8. Latest Title and Search Report for minimum of last 25 years from an advocate/solicitor regarding the subject property 9. Non-agricultural Order attached along with the appropriate clearances from the authorities. 10. Clearance Certificate under Urban Land Ceiling Act, 1976 giving clear noting of the subject property. 11. Building/Structure Plan approved by the appropriate authority as per the Development control rules and regulations. 12. Clear Commencement Certificate 13. Clear Completion Certificate 14. Clear Occupation Certificate 15. Systematic List of Flat Purchasers. 16. Proof of payment of Stamp Duty 17. Registration compliances of the subject property. 18. Development agreement or agreement for sale executed between the landlord and the builder for development or for transferring the right, title and interest in the land and in favour of the builder. 19. Any other correspondence regarding the land or building related documents or any other papers in support of the application. 20. Draft conveyance deed/Declaration proposed to be executed in favour of the applicant. 21. Consulting a good property lawyer for better clarity is suggested before finalizing any transactions.

More detailed

Check for rate of property currently going on in that location by asking a few people/agents etc. so that you will not land up putting up more money in the deal.
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Check if the house you are purchasing is a well maintained society registered property, so that most of the legal matters are taken care of and you are at lower risk of being cheated. Check both Original documents and also previous sale documents (if any) before giving token money for the deal. Check if that property can get loan from banks. If the property is very old (e.g. 10 to 12 years), you can benefit and save money while paying stamp duty which has to be made. Check if all previous dues have been paid (like electric bills, yearly municipal charges for property, society charges etc.). Ask your advocate to calculate required Stamp Duty and registration fees along with the advocate fees and be ready. Property clearance note and No Objection Certificate (NOC) from society is a must before you register any property. Do not try saving Stamp Duty charges as during litigation in most cases you cannot fight legally with it. Its always a good idea to meet the society secretary of the property (i.e. flat) you are purchasing. This will keep you aware of some society pending, share certificate related, maintenance related and NOC related to the seller. Check the important documents before you give the token amount to purchase that property, some of the documents are Society NOC, Name of the Electricity Bill and Property Tax receipt (known as Gharpatti in Hindi), Name of the Maintenance receipt, all the previous sequence of purchase/sale of that property agreement, complete copy of the plan (floor plan) of that building, and also check if the local Governments stamps are visible on the same. Most importantly, spend on the one hundred rupees stamp paper and get the signature, left thumb print with photo attached on the seller before giving the token amount and make the terms very clear on registration date and what if for some reasons, the deals get cancelled. Check if the property was already mortgaged before and if the things are already cleared and settled with the final note of settlement. One of the best ways is to check for all the sequence of original documents of the flat you are purchasing. If you are the first time buyer or, say, this is your first property to be purchased, keep some extra cash handy as you might need it for miscellaneous expenses such as post registration, society charges to be paid extra to the builder and some renovations etc.

Taxes to be paid while registering the property No Comments Sub Category: Property Posted On: Jan 21, 2014 Various taxes need to be paid at the time of property registration. These taxes are paid to the local government authorities of every city so as to keep an account of the true value of the property. The following taxes need to be paid by the buyer at the time of property registration.

Tax Deduction at Source (TDS)

Section 194 (A) has been inserted in the Income Tax Act, 1961 by the Finance Act, 2013. It provides for tax deduction at source on transfer of certain immovable property other than agricultural land of Rs. 50 lakh or more. Any person, as per the new provision, being
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a transferee responsible for paying to a resident transferor by way of consideration for transfer of immovable property other than agricultural land, shall at the time of credit of such sum to the account of the transferor or at the time of payment of such sum in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, required to deduct an amount equal to 1% of such sum as income tax thereon specially when the value of the immovable property is Rs. 50 lakh or more.

Stamp Duty
Stamp Duty means a tax payable on certain legal documents specified by statute. The duty may be fixed or ad valorem meaning that the tax paid as a stamp duty may be a fixed amount which varies based on the value of the products, services or property on which it is levied. It is basically a kind of tax paid on any transaction based on exchange of documents or execution of instruments. The buyer is liable to pay Stamp Duty to the concerned authorities. For more information on Stamp Duty please visit STAMP DUTY DETAILS.

Service Tax
Service Tax is levied on an under construction property for the services provided by the builders, where a building structure (or a part of a civil structure) is offered for sale but the payment is received prior to the issuance of completion certificate. It is only levied on services offered and hence cannot be taxed on land costs. It is levied as per the rates in force on the total value of the services provided by the builder. Service tax of 12.36 percent is levied on 25 percent of the total purchase cost of under construction property. In other words, service tax of 3.09 percent is levied on the total price (100 percent) of the under construction property. According to the Budget 2013, an amendment has been introduced to these provisions. The abatement has been reduced from 75 percent to 70 percent for flats above 2000 sq ft or costing Rs 1 crore and more. So in such cases, the service tax will be levied on 30 percent of the total amount or a service tax of 3.71 percent is levied on the total cost. Service Tax is levied by the central government and hence, it is applicable to all states.

Value Added Tax (VAT)

The VAT is an indirect tax and one of the major source of revenue in a state. The VAT system of taxation was adopted by most states in India in the year 2005 by replacing the General Sales Tax Laws with New Value Added Tax Acts and the supporting Value Added Tax Rules for proper administration and collection of Tax. Every state or union territory follows its own method of the tax assessment and collection from the dealers who fall under the purview of VAT. Earlier the rate of VAT in Maharashtra was 5% on total value of the property for sale, without including land cost. But since early 2010, the VAT applicable is 1% on the total cost which is inclusive of the land cost. In Karnataka, VAT levied is 5% on total cost of the property. The Haryana Government has recently announced its plans to impose 4 % VAT on the builders, developers and promoters of real estate projects in the state. The recent Supreme Court verdict on VAT in real estate states that this tax may be levied on real estate transactions in addition to stamp duty. The court has supported the judgement of the Bombay high court which had directed the builders to pay a 5 percent VAT to Maharashtra government on under-construction residential units sold during 2006-10.
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So far, only few states have been levying VAT on construction. Now, following the Supreme Court verdict it is likely that many other state governments may start levying VAT on real estate transactions. However, though the tax is levied on the sellers it may get passed onto the buyers only.

Registration of Property is Compulsory Comments(9) Sub Category: Property Posted On: Jun 13, 2011

Registration of the property is a full and final agreement signed between the two parties. Once a property is registered, it means that the property buyer in whose favor the property is registered is the lawful owner of the premises and is fully responsible for it in all respects. The law does not recognize unregistered owners and does not give them any rights over the property. Therefore, Registration of Property is Compulsory to prevent fraud or future litigation. Whenever a property buyer buys a piece of land/immovable property, he/she needs to register the same with the authority concerned. Once a property is registered, it means that the property buyer in whose favor the property is registered is the lawful owner of the premises and is fully responsible for it in all respects. Through registration of Sale deed, a person is able to acquire the rights of the property on the date of execution of the deed. Registering the documents relating to the transfer, sale, lease or any other form of disposal of a property is compulsory under section 17 of the Indian Registration Act, 1908. The aim of the registration is to prevent fraud, in addition to create and maintain an up-to-date public record. The registration can take place at the Sub-Registration Office within which the property is located or in the District Sub-Registrar Office of the District where the property is located.

Procedures for Registration of Land

Property Registration in India is compulsory under section 17 of the Indian Registration Act, 1908. The registration of property is to be done in the Registrars Offices by the Sub-Registrar. Following are some procedure or process of property Registration.

Verify the property title: The property documentation will vary depending on whether the property is being transferred from the developer or seller. The process of due diligence gets easier in case of a secondary sale as the first owner of the property would have all the documents in place for the registration of the property. If the title were not clear and marketable, most financial institutions would refuse to finance the property. A bank or a housing finance company carries out the due diligence process before approving the project and the housing loan. However, the onus lies on the buyer to verify the property title before registration. Find Sub Registrar Office: One has to present the Sale Deed in the concerned Sub-Registrar Office where the land is situated. Your lawyer or attorney will help you to find your property location and concerned registrar office. Page 4

Stamp Duty and Sale Deed: The Schedule of the property should be correctly mentioned in the Sale Deed and if any structure is situated over the landed property that has to be mentioned in the Sale Deed along with its cost. Preparation of property Sale Deed is done by an authorized attorney on behalf of the purchaser. The stamp duty is usually a percentage of the transaction value levied by the state government, on every registered sale. The levy of stamp duty is a State subject and thus the rates of stamp duty vary from State to State. Take appointment: The registration fee should be paid a few days before going for registration and the receipt is to be shown to the Sub-Registrars Office one day before the actual date of registration. An appointment has to be taken over the phone and registration has to be done at the office of the Sub-Registrar. Submission of Documents: After detailed verification of Sale Deed, the registration process will be completed as per the Registration Act. Once the registration is complete the duly registered document may be collected by signing in the dispatch register or by giving a letter of authority to someone to collect it on your behalf. The final sale deed should be stamped and registered at the appropriate Sub-Registrars Office. The sub-registrar keeps a copy of the documents and returns the original documents to the buyer within 30 minutes. Mutation of the title: Once the registration is complete, the purchaser has to apply to the local municipal authority to get the title of the property concerned transferred in his/her name. This is commonly referred to as mutation of the title of the property.

Now the process or registration of properties in India is computerized. Under the computerized Land and Property Registration system, registration is easy. It facilitates transparency in valuation and eliminates middlemen. The application form can either be downloaded online or obtained from the concerned authoritys office. After due verification of details, the Deed is drawn up and the registration process is complete. Before purchasing land, you have to make sure you do proper research work about the form of land, buy lands through genuine and authentic seller, developer, brokers or agents. Whenever a property buyer buys a piece of land/immovable property, he/she needs to register the same with the authority concerned. The law does not recognize unregistered owners and does not give them any rights over the property. Registration of the property is a full and final agreement signed between the two parties and once it is submitted at the local registrars office and the registration is complete, the buyer legally becomes the owner of the apartment. Important Charges to be paid post possession No Comments Sub Category: Maintenance, Owners Posted On: Jan 21, 2014 There are various charges that have to be incurred by the owner of the property post possession. These charges are largely categorized as Maintenance Charges, Non-Occupancy Charges and Holding Charges.

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Maintenance Charges
In real estate, the residents or owners of the property in a specific area are charged for maintenance and operations of the commonly-owned property areas. This charge is called Maintenance Charge and sometimes Service Charge. Generally maintenance charge is levied periodically. It is required to fund operations related to upkeep, maintenance and up-gradation of areas which are not directly under any individuals ownership. Maintenance charges are applicable right from the time a flat is occupied by any prospective buyer. However, payment of maintenance charges is carried out on a monthly basis.

Non-Occupancy Charges
Non-occupancy charges become applicable to be paid if the ownership has been transferred by the Society/builder to the owner but the flat/unit is lying vacant even when it is in a ready-tomove condition. Criteria to levy Non-Occupancy charges A person purchases a flat in a Cooperative Housing Society for his own residential usage. He (as member) is bound by law to pay the Society Maintenance Charges for his flat whether he is personally residing or even if the flat is kept locked and being unused. The member has to pay the full Society Maintenance Charges without any concessions. Simple Understanding Members flat Closed/Locked/Vacant/not occupied for any period is equal to self-occupied, which is further equal to regular full maintenance charges and non-occupancy charges cannot be levied. Criteria = Possession should remain with the member itself. Period. Members flat occupied by non-family members, that is Ren tee/Lessees/Licensees is equal to non-self-occupancy which is further equal to compulsory levy of non-occupancy charges subject to a fixed 10% of the consolidated Service Charges (excluding Statutory Charges). Criteria = Possession should remain with the Renter/Tenant Family members means a group of persons which includes husband, wife, father, mother, sister, brother, son, daughter, son-in-law, brother-in-law, sister-in-law, daughter-in-law, grandson and granddaughter.

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Non-occupancy charges cannot be levied to the above family members of the bona fide member. However, intermittent joint-stay of other family members or friends will not attract nonoccupancy charges. Flats in the name of Trusts/Corporates In case of CHS Flats owned by Trusts or Corporate, non-occupancy charges cannot be levied on the guests staying in such flats. Guests = Bona fide staff members (Directors, Executives, Managers and so on) However, for this the Company should submit a Board of Directors (BOD) resolution to the Society detailing the name of person who is authorized to stay in the flat. Other than the BOD resolution, the company need not submit any other document (means Form-Appendix No. 27 or Form-Appendix No. 11, or Rs. 100/- as Nominal Membership fees or Notarised photocopy of the Leave & License (L&L, Rent) Agreement or Police verification report of its staff). A company-owned flat cannot be used as a regular Transit/Guest House Similarly, an individual owner-member may also give his flat on rent/lease to a corporate, but subject to compliance and requirements of the CHS bye-laws. However, here the Corporate cannot use this tenanted flat, as a Transit/Guest House, for its staff members.

Jurisdiction of a Society
If an owner-member wants to rent/lease out his flat, then he/she is obligated to comply with the basic requirement under the Cooperative Housing Society bye-laws. A society is concerned only with the compliance of the bye-laws norms, which means: a. Prior permission of the Society vides bye-law Form-Appendix No. 27; b. Form-Appendix No. 11, along with cheque of Rs. 100/- as nominal Membership entrance fees; c. Certified Photocopy of the Leave & License (L&L, Rent) Agreement, duly stamped and registered; d. Police verification report of the tenant.

Maintenance Charge vs Holding Charge

Maintenance charges are the charges, either annually or monthly, applicable to be paid by the owner once he/she has taken possession of the property. These charges are paid for the general maintenance and upkeep of the building and/or society.

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On the other hand, holding charges are to be paid by owner/holder who is a non-occupying owner (i.e. one who has not yet occupied the property) to the Developer, or Society, or Government Development Agency.
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