Legal Aspects

Before the property purchase, it is advisable to satisfy yourself by having your solicitor inspect the original title documents to that property. You have to make sure that there is no litigation on the land and there is no specific reservation on the land by the government of India. If the title were not clear and marketable, most of the major financial institutions would refrain from giving a loan to this property. Hence, as an additional measure, one could approach a financial institution to check if they would provide a loan for that particular property. For instance, if the construction is near a seafront, you will need to check for a Coastal Regulation Zone (CRZ) clearance.

If the project is being constructed over or in the close vicinity of a heritage building, you must check for any heritage reservations for the premises. The idea is to ensure that you do not get stuck with a property that is or may get caught in any sort of disputes. Lack of clearance of titles also means that you will not be able to avail home loans. They would probably have checked all the documents pertaining to the property.

If a loan is being advanced /granted one can probably assume that the title of the property may be clear, as the lending institution would have ensured so, since they would intend to take mortgage of that property, unless of course they are willing to create a charge on the property without the title of the property being clear or may be willing to accept a second/equitable charge on the property.

Documents required to be verified pertaining to the premises:

As per government of Maharashtra rules and Under the Maharashtra Ownership Flats Act, 1963 a promoter who intends to construct a building of flats has to enter into a written Agreement for Sale with each of the persons who are to take or have taken such flats. It is also provided that the agreement should contain the particulars and also annex to such agreement the prescribed documents or the copies thereof.

In case of a building, which is yet to be constructed, the agreement has to contain the particulars regarding the liability of the promoter to construct it according to the plans and specifications approved by the local authority. The other particulars which the agreement should contain are possession date, price to be paid by the purchaser and the intervals at which the installments for the full payment are to be made specifying stage of construction, the precise nature of the body to be constituted of the persons who would take the flats, details regarding the common areas and facilities specifying the percentage of undivided interest in the common areas and facilities appertaining to the apartment agreed to be sold, a statement of the use for which the apartment is intended. The Act also specifies that copies of the title certificate issued (as specified earlier in this manual) and a copy of the approved plans and specification a list of fixtures and amenities including provisions for lifts to be provided/provided for the flat to be sold should be attached to the agreement.

A promoter, while he is in possession, and where he collects from persons who have taken over flats or are to take over flats, sums for payment of out goings even thereafter, has to pay all out goings until he transfers the property. The out goings would include ground rent, municipal and other local taxes, taxes on income, water charges, electricity charges, revenue assessment and interest on any mortgage or other encumbrances, if any. One should also ensure that the area of the apartment has been mentioned in the agreement. It is also mandatory for the developer/promoter to convey the land in favour of the society/association of flat owners/condominium/Company within a period of 4 months of completion of the project.

In the sale agreement there should be a declaration /representation by the promoter/seller that he has not encumbered the property in any manner whatsoever and entered into any other agreement to sell/lease/license with any other party. It needs to be specified whether the property is vacant or in possession of any other party other than the seller.

Documents required to be verified pertaining to a resale flat:

If you purchased premises in a registered co-operative society the share certificate of the society bearing the name of the seller Previous chain of conveyance/sale deeds, Sub - Registrar's receipt 37 (I) clearance if applicable 230 A certificate from the Income Tax authorities (to be obtained by seller) Original stamped receipts of payment made to previous sellers No objection certificate from the society for transfer and sale of flat Last receipt for the out goings bill paid to the society and electricity bill Set of society transfer forms for transfer of ownership Certificate of Title from an advocate

When one sets out to purchase a flat in a registered co-operative society the documents that need to be checked initially are –

The share certificate issued by that the society in favour of the owner.

Previous set of original conveyance/sale deeds. If the deed has been lodged for registration, then one should ask for the certified true copies of such conveyance, sale deeds, etc along with the original receipt of the Sub - Registrar where the document has been lodged for registration.

Original stamped receipts for payments made to the previous sellers.

Permissions & Approvals:

Before starting of the construction work at the site the builder must seek several permissions and get the approvals from different authorized government bodies. Without these clearances, the construction may come under litigation. The following are the list of the documents and approvals that the builder must possess for all building work to commence in Mumbai:

ULC order (in specific cases)

IOD and CC of the project

MCGM approved plans

Agreement for sale:

Once you found any property and decided to buy, you must check personally and ensure that the builder or any officer or any associate person or any associate company of the builder have not sold the property to another buyer. To overcome with this potential problem you and the builder must sign a contract that binds the builder to sell and you to buy the property you intend for. It also allows time for you to finance the purchase and collect the documents needed for the final deed. Considering the importance of this contract, it is advisable to appoint a legal professional to prepare this agreement.

Stamp duty:

When you desire to buy a property and enter into an agreement, the stamp duty amount is calculated for you by your solicitor as per the agreement value or market value of the property, whichever is higher. Then you have to get the pay-order of the given amount, which will be addressed in favour of "SUPERINTENDENT OF STAMPS, Mumbai". The pay-order is given for franking of the agreement. After all the above preparation the said agreement is duly filled and signed by the respective parties.

As per the Bombay Stamp Act, 1958, the purchaser must pay a 5% stamp duty on the purchase of any property in Mumbai. Without the payment of this stamp duty, your solicitor will not be able to officially register your new house in your name, even when the house is transferred within the family.

Registration:

The stamp duty paid document has to be registered under the Indian Registration Act with the sub-registrar of Assurances, of the jurisdiction where the property is situated. The basic purpose of registration is to record the ownership of the flat. Until the title deeds in your name are registered or recorded, you are not officially the legal owner of the house.

Compulsory Registration of Documents - Section 17 of the Registration Act, 1908

For the registration of the original document printed on one side along with two photocopies of the original; have to be submitted to the registering officer. The registration procedure also requires the presence of two witnesses and the payment of the appropriate registration fees. Once you are done with the above process, a receipt bearing a distinct serial number is issued. The following requirements for completing the registration are usually stated on the receipt.

The registration fee currently fixed for registering documents relating to property transactions is approximately 1% of the market value or agreement value, whichever is higher, subject to Maximum of Rs.30,000/-.