Home buying is a legally sensitive process and if neglected can lead to litigation or property disputes. So, make sure you check out for due diligence checklist before investing in any property.
Due diligence assessment removes uncertainty from key decisions that must be made when analyzing the cost or benefit of any real estate transaction. A comprehensive inquiry should be designed to provide a buyer with a clear picture of where their strategies and decisions are taking them or to put it simply, what is it that they are buying.
The process of due diligence of a property is to eliminate unknown risk. Potential buyers need to ensure that their properties are legally suitable and from a practical business perspective for their intended use. In-depth due diligence is necessary to determine what a property is really worth.
In addition, an investor must have an understanding of zoning and land use issues. Upon identifying a property, the potential buyer should determine that a property’s intended use is within the law of the land.
Checks before investing in a house
While investing in a property, make sure all chain deeds are in order. Conduct searches in the registrar’s office and courts to be sure about the land.
After conducting the searches, if the land comes out clean, you may go ahead and buy the land. Before buying the property, a complete title search of the property must also be done. You should also engage a lawyer to conduct searches in the registrar’s office and the courts.
To find out if a property has a clear title one must instruct a lawyer to do a due diligence search. Upon completion, the builder receives a Completion Certificate (CC), which documents if the building is in accordance with Building Standards.
The Occupancy Certificate (OC) is the permission to occupy a building, given by the municipal authorities, after verification of all supporting documents. The legal possession of the flat by the owner is valid only with the CC and OC.
Many builders and developers sell the property without this document, leaving property owners in the lurch. The certificate is denied to a builder if he fails to adhere to the Municipal Corporation norms, fails to provide amenities or undertakes construction not in accordance with the approved plan. It ultimately affects the owners.
Checks before investing in a plot
When buying a property, no amount of scrutiny is enough. It always pays to be cautious. Examine all the title documents and permits in order to establish the chain of ownership and usage of the premises.
“Ask for a Title clearance certificate along with the search report. Also, get your lawyer to vet the draft agreement of the builder with the buyer. Without doing this you should not ideally part with any money.
“The buyer should have a proper checklist in place; this must include the approved usage of the property, notices of any pending or threatened litigation or government action relating to the real estate or seller, any applicable condominium documents, service contracts, all construction-related documents including warranties, as built plans and specifications etc.
Checks for resale property
When you are planning to buy any resale property, the first and foremost is to check the title deed of that property. Title deed is the legal document, which proves the ownership of a property.
Make sure through the title deed that the property is solely in the name of the seller and no one else and he has all rights to sell it. The best practice is to get the property deed reviewed by an expert lawyer just to make sure that there are no loopholes.
Many property owners take bank loan by pledging their property. So, check if they have paid the entire amount due when you are going to buy that property. If they have paid the entire amount due then the bank would have issued them a release certificate.
Tips for investors
From a legal perspective, before buying a property whether a new construction or a resale one, a complete title search of the property must be done. Here are some tips for consumers:
- Complete Title Search of the Property
- Check for Statutory Clearance
- Chain Deed to the Property
- Quantum of Penalty if any
- Payment Plan
- Time of Delivery
- Plan Sanction Approvals
- Engage a Lawyer to Conduct Searches
An appropriate check before investing in a property is a step towards a hassle-free living for the rest of your life. Property buyers have to be very conscious while putting their money into the market.