Legal review essential during property purchase
While purchasing property, it is important to make a legal review and peruse documentation, Says Ashish Gupta (Friday December 28, A Times of India Presentation)
Legal review is essential while undertaking property transactions –especially purchase of property, the legal aspects, especially the documentation should be carefully looked into.
Documentation is one of the critical steps in whole process of acquisition of housing property. This is of particular importance in case of housing societies where in a builder develops, constructs and sells a number of flats in a multi-storey building. The promoter who intends to construct a building of flats should enter into a written Agreement for sale with each of the person who are to buy or have bought such flats. It is also necessary that the agreement should contain the particulars of the property and also, annex to such agreement the prescribed documents or the copies there of related to the property. The agreements need to be stamped as per the rates prevalent in the State where the property is situated.
In case of building which is yet to be constructed, the agreement has to contain the particulars regarding the liability of the promoter to construct it according to the plans and specifications approved by the local authority. The other particulars in the agreement should pertain to the possession date, price to be paid by the purchaser and the intervals at which the instalments for the full payment are to be made specifying the stage of construction, the precise nature of the body to be constituted of the persons who would take the flats, details regarding the common areas and facilities specifying the percentage of undivided interest in the common areas and facilities appertaining to the apartment agreed to be sold, a statement of the use for which the apartment is intended. Further, in case there are any escalation clauses, they should be specifically mentioned in the Agreement. Also, the penalties / damages payable in case of delay in completion of project beyond the agreed time period must also be stated.
The copies of the title certificate issued and a copy of the approved plans and specifications, a list of fixtures and amenities including provisions for lifts to be provided for the flat to be sold, should be attached to the agreement. A promoter, while he is in possession, and where he collets from persons who have taken over flats or are to take over flats, sums for payment of out-goings even thereafter, has to pay all out-goings until he transfers the property to the buyers. The out-goings would include ground rent, municipal and other local taxes, taxes on income, water charges, electricity charges, revenue assessment and interest on any mortgage or other encumbrances, if any. The buyer should also ensure that the area of the apartment has been mentioned in the agreement. It is also mandatory for the developer / promoter to convey the land in favour of the society/association of flat owners/condominium/company within a specific period (usually 4 months) of completion of the project. In the sale agreement there should be a declaration/representation by the promoter/seller that he has not encumbered the property in any manner whatsoever or entered into any other agreement to sell/lease/license with any other party. It needs to be specified whether the property is vacant or in possession of any other than the seller.
In case one is opting for a housing loan, the bank gets a legal review of the property done so as to ensure genuineness of the transaction.