Legal review essential during property purchase
While purchasing property, it is important to make a legal review and peruse documentation,
Legal
review is essential while undertaking property transactions - especially
purchase of property. While purchasing property, the legal aspects,
especially the Documentation should be carefully looked into.
Documentation is one of the critical steps in
the whole process of acquisition of housing property. This is of particular
importance in case of housing societies wherein 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 persons 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 thereof
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 a 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 specification, 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
collects from persons who have taken over flats or are to take over flats, sums
for payment of outgoings 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 party 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.
Ashish Gupta