Must-knows before buying a house

Source: http://timesofindia.indiatimes.com/biz/india-business/Must-knows-before-buying-a-house/articleshow/5195429.cms


For most NRIs as well as the rest of Indians, buying a house is perhaps their biggest one-time investment. A decade back, most of the salaried people in the country and abroad would put their lifetime savings at the fag end of their career to buy a home for themselves. In the past one decade, this cycle has changed considerably and many youngsters in the age group of 25-35 years, especially in the IT sector, have started investing in property.

But, the pitfalls while selecting a property, especially for NRIs, are many and it has been seen that people while buying property overlook some important factors and suffer later. As the investment involved in purchasing a property is substantial, it is essential that buyers go about it in an organized and methodical way.

When buying a property, ensure that the title of the land in question is clear. The property title is the legal document that confers ownership of the land on the seller. V Ramesh from California bought a house without checking the title. Soon thereafter he got a legal notice from the actual owner. Rues Ramesh, "I was shocked when I got a legal notice and realized my folly when it was too late." Cases such as these are common among NRIs who simply grab the first property they like without checking the title.

Not many are aware that the purchase price of the property is not the only cost to be borne. You need to factor in other hidden costs such as brokerage, stamp duty, legal fees, inspection fees, mortgage fees and the like. Ensure that you've budgeted for these too lest they spring up unpleasant surprises later.

A commencement certificate is issued by the local authorities to allow the builder to begin construction once all norms have been met. Unless the commencement certificate is granted, the construction is illegal or may never happen. If you don't verify the project's commencement certificate, you could end up paying money for a property that will never be constructed. And that's exactly what happened to Sameer Shah when he paid a huge amount for an apartment in Mumbai which was under construction only to realize later that it was an illegal construction. He says, "I have filed a case against the builder, but I don't have any hope of recovering my money."

Another important document is an occupation certificate which is issued by the local municipal body after the builder has provided basic amenities like electricity and water besides having constructed according to the permission granted. Do not sign on the dotted line until you check this document.

Suresh Prabhu bought an apartment in a newly constructed building in a posh locality. But after all the formalities had been completed he got a shock when he found out that the building did not have an intimation of disapproval (IoD). An IoD is a set of instructions that a builder has to fulfil in order to construct the building. It is valid for one year and has to be reissued if the construction is not completed in a year's time. Unfortunately, Suresh was unaware that the builder had flouted this regulation and that it had got into a legal wrangle. He waited for nearly two years for the possession of this apartment.

There have been several cases in which builders have failed to provide adequate water supply connections leaving residents high and dry. In such instances, residents have no choice but to depend on water tankers. Ensure that your property has adequate water supply connections.

Acute power shortage is a reality in several areas in India, even in metros like Delhi, Mumbai and Chennai. Voltage fluctuations too are common which can damage delicate electrical equipment. Take this into account before you narrow down on a property.

A buyer needs to get the survey number of his property. This is the unique identification number given to a plot of land to help identify the same as an authorized building. Certain areas like forest or agricultural land are out of bounds for residential purposes. Finding out the survey number protects you from being taken for a ride by a builder who constructs houses in a prohibited area and charges you for it. Such a building could be declared illegal and demolished by the authorities without paying you any compensation. So beware!

A background check on the reputation of the builder needs to be done, as you may land up buying a property from a builder with a dubious reputation. There have been instances where builders have constructed poor-quality flats or have swindled people of their money. Ensure that you buy property from a reputed builder.

Buying an apartment not only involves a substantial investment but also has long-term repercussions. It pays to do your homework before embarking on this exercise, to prevent your property from becoming a millstone around your neck.