In today’s discussion, we will delve into the 12 essential legal documents you must verify before purchasing real estate. Have you ever encountered situations where individuals unknowingly purchase property that is either owned by someone else or has been mortgaged to a bank? Such instances can lead to financial entanglements and unnerving legal disputes. To safeguard your time, finances, and tranquility, it’s crucial to rigorously check the following legal documents before acquiring a property.
1. Title Document: The title document is foundational. It outlines the rightful owner from whom you are acquiring the property. This document essentially signifies ownership. Always request to see the original title deed, as a copy won’t suffice. This step will ensure that the seller legally owns the property. A buyer needs to examine original documents such as the sale deed, which shows the history of the property, the gift deed, if the property was gifted rather than sold, or the conveyance deed, proving the seller's acquisition through official means. Verifying these documents is vital for peace of mind.
2. Channel Document: Next is the channel document, often referred to as hawala documents. This occurs when a property transitions from person ‘A’ to ‘B’ and then from ‘B’ to ‘C’. It’s critical to scrutinize all transaction trails established over time. Therefore, checking the entire chain of ownership is imperative.
3. Encumbrance Certificate: An indispensable document, the encumbrance certificate reveals any taxes owed, mortgages, or penalties on the property. It’s common for buyers to overlook this certificate, but for safety’s sake, head to the sub-registrar office, fill out form number 22 (available in nearly every state), and pay the nominal fees to obtain all relevant details regarding the property’s history. This includes previous buyers and sellers, tax obligations, and any pending penalties. Note, however, that if no information is available in the registry, you won’t be able to obtain any details.
4. Occupancy Certificate (OC): The fourth document is the occupancy certificate, which is often provided when you are acquiring property from a developer. It is vital to check if you have received this OC from the relevant governmental authority and review any sanctioned plans concerning the property from the builder.
5. Possession Letter: The possession letter, or allotment letter, is your next concern. Ensure that the builder has issued a possession letter for the property you are considering. This letter is issued by the government once all specified regulations have been complied with.
6. Mortgage Check: Investigate whether the property you want to purchase is under any mortgage or loan. If it is encumbered, that property should ideally be avoided by prospective buyers.
7. Tax Receipts: On every piece of land, municipal tax obligations exist. It is wise to verify whether the prior owner has settled all applicable land taxes to prevent inheriting liabilities and to clarify ownership.
8. Utility Bills: Check all utility bills, ensuring the previous owner has paid them up to date. Outstanding bills for services like electricity and water can become your responsibility if left unchecked.
9. Car Allotment Letter: If you are considering purchasing property in a metropolitan area, ascertain the presence of a car allotment letter confirming your entitlement to a designated parking space.
10. Residents Welfare Association (RWA) Clearance: For individuals buying properties within buildings governed by a residential welfare association, ensure that the previous owner possesses a No Objection Certificate (NOC). Often, maintenance dues go unpaid, and the next owner can end up holding those financial responsibilities.
11. Mutation Document: Mutation, often called Jama Bandi, is essential. This document serves as extra proof that the government registry holds the former owner's name. When acquiring a property, it's imperative to register it in your name promptly.
12. Conversion Certificate: Conclusively, the conversion certificate holds significant importance. Given that land may be categorized as agricultural or non-agricultural, purchasing residential or commercial property on agricultural land without proper conversion can lead to complications. Ensure the seller has legally converted the land to non-agricultural status by checking for this certificate.