Factors to Keep in Mind before Buying a House in India – Dhiraj Kumar Patwari

Buying a house is one of the major milestones for any family in India. It is often seen as a symbol of stability and financial security. According to a global survey, approximately 44 percent of young Indians are likely to purchase a house in the next two years. High-paying jobs, easy home loan facilities and changing lifestyle preferences, especially after COVID-19 pandemic, are believed to be the three main driving factors for this trend. However, buying a house is not easy as it may seem, since there are several factors, including legal to keep in mind before making a property purchase.

Right Property

The first step, however, is to do a thorough research and find about properties – ready to move or under construction houses – that fit your requirements in terms of infrastructure, amenities, location and accessibility. Once you zero down on potential houses, find out whether they are being offered by reputable developers and builders.

Title Deed

The next step is verifying the ownership of the selected property by examining the Title Deed, which can be obtained from the seller (builder or developer). This document can be verified at the land records office or through a qualified legal consultant to check whether ownership of the selected property is with the seller; whether there are any disputes with its ownership and whether the seller has the permission to sell the property.

Encumbrance Certificate

Another important document to obtain and verify is the Encumbrance Certificate. You can apply online on authorized government websites and obtain it. This certificate mentions whether the selected property has any encumbrances, meaning unpaid taxes, mortgages or easements. Not verifying this aspect can get you into trouble as these debts are attached to the property and you would become responsible for it once the property ownership is transferred in your name. This certificate is also a requisite at the time of applying for a home loan.

Approvals and Permissions

An important aspect to consider before buying a property is whether the builder or developer has all the permissions and approvals from the government bodies and local authorities for construction and development of the property in question. So, getting out information from the property seller with regard to building permits, zoning regulations and environmental clearances is advisable, since properties without appropriate approvals get into legal issues and financial obligations in the long run.

Structural and Legal Compliance

Today, compliance for building codes and standards have become mandatory for new built properties with regard to structural integrity and safety standards. Properties constructed without approved plans and specifications get into a lot of troubles, including penalties and even demolition. Hence, it is better to verify with the seller as to whether the property that you might have selected, complies with all building construction regulations as set forth by the authorities.

Documentation and Contracts

If you are done verifying all the above documents and compliances and have decided to go ahead with the purchase, then the next and a crucial step is to carefully review all documentation related to the property sale, which includes the sale agreement, deed of conveyance and other contracts. It is worth mentioning that you should take special care while going through the terms and conditions, including delivery timelines, warranties and payment schedules. Once satisfied with the documentation, you can move ahead with the buying process.

Escrow Account

Once the payment schedule is agreed with the seller, you must consider using an escrow account to hold your funds till the complete process of house ownership transfer and possession certificate is not fulfilled by the seller.

Additional Costs

There are other costs apart from the property cost that comes as a revelation to many, especially the first-time buyers. These additional costs include house registration fees and stamp duty and an annual property tax. In addition, you may also have shell out money for services of lawyers, notaries, home inspectors, etc. in case you hire their services. Property insurance is another aspect that you also need to keep in mind.

By considering the above factors, you can plan to buy a house in India so that your dream home becomes a reality sans legal issues and unwanted financial headaches.

About Author

Dhiraj Kumar Patwari is a Wealth Management Consultant, based in Bhubaneswar. He is a volunteer for Friends of Tribals Society (FTS), which is dedicated to the upliftment of tribals. FTS runs One Teacher School (OTS) or Ekal Vidyalaya, which imparts non-formal primary education to children between 6 and 10 years of age. As on March 31, 2023, FTS was running 84,033 Ekal Vidyalaya supporting basic education of 22,28,160 students.