Purchasing a home can be challenging, especially for first-time buyers. There are so many intricate stages to complete, and the terminology employed is rife with legalese and jargon, adding to the confusion. Let us clarify the procedure for you and provide a straightforward explanation of the Indian real estate regulations.
State-specific legislation and central laws both apply to India’s real estate industry. This is so because “Land” is listed under the State List of the Indian Constitution, whilst “Transfer of property and registration of deeds and papers” is listed under the Concurrent List. This makes the procedure for purchasing and registering property seem complex. Let’s first comprehend the fundamentals of Indian real estate legislation.
Property purchases in India are governed by RERA: The creation, promotion, and sale of real estate projects are governed by the Real Estate (Regulation and Development) Act, 2016, and the entity created under it, the Real Estate Regulatory Authority, or RERA. It was created with the intention of defending the interests of buyers in the real estate market. It established the Real Estate Regulatory Authority and the Appellate Tribunal as a means of swiftly resolving disputes. Additionally, it requires all projects in the real estate industry to be registered.
A system of land registration is not contemplated by Indian real estate legislation. The term “register” refers to the legal paperwork used to transfer ownership from buyer to seller.
According to the Registration Act of 1908, all instruments and papers pertaining to land must be registered. In India, the method for registering papers is clearly established, and there is a strong government apparatus in place to register and manage these records.
The payment of stamp duty for real estate is governed by the Indian Stamp Act, 1899. It is a significant portion of the expenditures associated with registering property and must be paid to the state governments by the buyer. The charges differ from state to state because it is collected by the state government. The majority of states charge stamp duty as a percentage of the total transaction amount.
The Transfer of Property Act, 1882, is the other law that affects the purchase and sale of a property. The Transfer of Property Act defines a “sale” as the transfer of ownership in exchange for a price that has been paid in whole or that has been partially paid. Only registered documents, as listed in the aforementioned Registration Act, 1908, may be used to transfer tangible immovable property. According to Section 55 of the Act, the seller is required to inform the buyer of any serious flaw in the property or the seller’s title that neither the seller nor the buyer is aware of and that the buyer could not have discovered even with reasonable due-diligence. The buyer has the right to compensation or indemnity from the seller due to misrepresentation.
The buyer should perform due diligence and investigate the seller’s title even though the seller gives all relevant information regarding the property and his title.
Check these documents before buying a house:
* Even though it is not required by law, the buyer’s vigilance is crucial to becoming a bona fide purchaser. Before buying your home, it’s crucial to perform due diligence. Here is a comprehensive guide to acquiring apartments in India.
* Certificate of Completion/Occupancy: When a project is finished, local authorities issue a Completion Certificate (CC). This document is necessary to apply for water and electricity connections as well as bank loans.
* A local government agency will issue an occupancy certificate (OC) once a project is finished and judged fit for habitation, which means that it has been constructed in line with the relevant codes. This document is necessary to apply for water and electricity connections as well as bank loans.
* A building or site plan is a blueprint for the project that shows how the living quarters and utilities will be arranged. The buyer must use due diligence to confirm that the local municipal government has given the proposal its full approval.
* Encumbrance Certificate: The sub-office registrar’s where the property is recorded is where you can get an encumbrance certificate. It states that the property has no outstanding debts, both financial and legal. It is critical to confirm that the seller is legally the owner of the property, that they have your permission to sell the property to you, and that there are no outstanding obligations on the property (such as property or other taxes, energy or water bills).
Even though it is not legally needed, a society-issued no objection certificate can be obtained.
Conclusion:
Purchasing real estate and registering it with the appropriate authorities can seem like a daunting task. You’ll realise that, despite being somewhat complex, Indian real estate law is manageable if you have a fundamental understanding of the procedure.
(By Navin Dhanuka, MD & CEO, Unitern Advisors Pvt Ltd)
