Real Estate and construction in India

Real Estate Laws in India have been governed by both State laws and the Central laws. The reason behind it is that as provided under the Constitution of India, ‘Land’ falls under the State List, on the other hand ‘Transfer of property and registration of deeds and documents’ will fall under the Concurrent List. Hence, the process of buying and registering a property may seem complicated. First, we shall discuss the basic rules of real estate law in India.

The matter related to the property purchase in India falls under RERA. in order to have a better understanding over the subject of real estate, it is advised that you seek legal advice from an experienced real estate lawyer. 

The Real Estate (Regulation and Development) Act, 2016, and the authorities provided under it,  i.e. The creation, promotion, and sale of real estate developments are governed by the Real Estate Regulatory Authority, or RERA. RERA was established with the objective to protect the interests of the consumers in the real estate sector. A mechanism has been established under the Act for speedy dispute redressal through the Real Estate Regulatory Authority or RERA and the Appellate Tribunal. The Act  also stipulates the compulsory registration of projects and key players in the real estate sector.

Indian real estate law does not provide for a system of registration of land. However, the concept of registration is related to the documents under which the title will be transferred from buyer to seller. Any instruments or documents which are related to the land are required to be registered as per the Registration Act, 1908. In India, the process for registering papers has been clearly laid out, and a strong government apparatus records and preserves these documents.

The Indian Stamp Act, 1899 governs the payment of stamp duty in relation to the land. It deals with  a major component of the costs involved in property registration and has to be paid to the state governments by the buyer. As it is collected by the state government, the rates for stamp duty will vary from state to state. Generally, the stamp duty will be paid in terms of a percentage of the total transaction value. 

Another Act which plays a crucial role when buying or selling the property is Transfer of Property Act, 1882. As per Act, ‘sale’ is transfer of ownership in exchange for a price paid or promised or a price which is partly paid and part-promised. In case of tangible immovable property, the transfer can be made only by registered documents, as has already been provided in the Registration Act, 1908 as mentioned above. Under Section 55 of the Act, it is the duty of the seller to disclose to the buyer any material defect in such property or any problem in the seller’s title of which the seller is aware while the buyer could not have known, but with reasonable care, could discover. Such misrepresentation on the part of the seller will give the buyer the right to compensation or indemnity from the seller.

Although the seller has disclosed every information about the property as well as his title, the buyer must exercise due diligence and check the title of the seller. 

Documents to check before buying a home

Following certificates should be checked properly, before one decides to buy a residential or business property

• Completion/Occupancy Certificate: would be issued by the respective municipal authority on the completion of the project. This document shall be required when applying for loans from banks as well as for applying for water and electricity connections. 
• Building Plan: would contain a blueprint of the project with the layout of the housing spaces and utilities. Due diligence must be done by the buyer in order to ensure that the building plan has been completely approved by the local municipal authority.
• Encumbrance Certificate: could be obtained from the office of the sub-registrar where the property has been registered. Such a document would certify that the property has no current monetary or legal liabilities. It is important to verify that no dues are there on the property (such as property or other taxes, electricity bills, and water bills) and that the legal ownership of such property is in the name of the seller, and that such seller is  authorised to sell the property.

List of required documents for buying property

It is advised that the following documents are kept handy by all parties involved, i.e. the  purchaser, seller as well as the witnesses. Each party will be required to submit their Aadhar Card, PAN Card, or some other document proving their identity which is issued by a government authority such as the Voter ID Card or passport, including two passport-size photographs.

Other required documents are

• Original copy and two photocopies of the sale deed
• Copies of the Certificate of Incorporation of buyer and seller, if there is a company buyer and not an individual buyer.
• A copy of the latest property register card so as to indicate that the property does not belong to the government.
• A copy of the municipal tax bill so as to indicate the year in which the property was constructed.
• When the signatories of the property are representing someone else, they will have to produce a document proving the power of authority.

Conclusion

Buying a property and getting it registered with the proper authorities may seem like an overwhelming job. However the whole procedure could be completed without a y hiccups with the help of a professional. A real estate lawyer near you could easily help you throughout the whole procedure, without you having to face legal difficulties. As a number of documents could be required, a real estate attorney could guide you properly.

Lead India offers you a team of experienced advocates who have been successfully helping people with their real estate issues. Hence, if you wish to talk to a lawyer or seek free legal aid online, you may contact us.