There is an old English proverb, “Precaution is better than cure”, which would be most appropriate when buying an immovable property.

Although there are several laws in place that protect a purchaser of property, self-help is the best help and one must do due diligence before buying property.

Although the below mentioned list of precautions to be taken are not exhaustive, some of the important aspects one must look at are briefly as follows, though they may vary case to case:

Title of property

Clear title to a property is one of the most important factors to be considered before purchase. There are various means to investigate the title such as:

(i) by studying the documents of title to ensure that the owner has proper ownership to the property. The documents of title should be studied very carefully as any shortfall may lead to a defective title.

(ii) taking inspection of the original title deeds.

(iii) taking search of the land records and the records of the Sub-Registrar.

(iv) taking search of the records of the society where the property is in a society.

(v) issuing public notice in newspapers calling for claims in respect of the property.

Inspect sanctioned plans

Sanctioned plans and commencement certificate by the concerned authority should be inspected, especially for buildings under construction.

If the building is not built in accordance with sanctioned plans, the completion certificate will not be granted. For buildings that are complete, occupation certificate/completion certificate should be verified.

??Power of Attorney

Many a times property is sold through a person holding power of attorney (POA) on behalf of the owner. This POA should be closely scrutinised to ensure that it is properly executed.

The Bombay Stamp Act, 1958 was amended a few years ago whereby heavy stamp duty is attracted on a POA in case the POA for sale of immovable property is executed to a person not closely related to the executant. Thus in most cases a POA is executed to a close relative as defined under the Act.

Tenure of Land

This aspect should also be considered. For example, if the land is leasehold and the residue tenure of lease is short and if there is no provision for renewal on old rent, additional ground rent may be payable by the purchaser on renewal of the lease. It is also possible that there may be no renewal clause at all.

NOC and Dues

Although no-objection of a society is not required for sale as per the new model bye-laws, it is preferable to obtain such a noobjection as well as a no dues letter from the society if the premises are in a society.

In case the building is not conveyed to the society by the builder, then noobjection of the builder should be obtained. It should be verified that the seller has paid all his dues such as property tax, service-tax, VAT and other outgoings to the society or the builder, as the case may be.

Income-Tax

One may investigate whether there are any proceedings against the seller under section 281 of the Income-tax Act, 1961. Further if the seller is a nonresident of India, TDS may be deductible from the consideration paid unless certificate for non-deduction or lower deduction is obtained from the concerned Income-tax officer.

Permitted user and Restrictions

This aspect should be verified as well. For example, one should see whether the property is residential or commercial as per the Development Control Regulations. Other factors such as heritage rules, set-back for road widening may apply to certain buildings, which should also be considered.

Documentation

Proper documentation should be put in place for purchase of the property. The sale document should be properly stamped and registered and the original title deeds should be taken by the purchaser from the seller