Buying an under-construction property? Here’s
what you need to know
Ensure the ownership of the seller by
conducting title diligence before buying an under-construction home. Read on for more such insights
Due diligence is a must before you buy your dream home, believe
experts. No matter how well you know the
project, the developer, or the area, here are a few things you must verify
before investing in an under-construction property.
1. Check the reputation
Gerald Manoharan, partner, J Sagar Associates
reiterates the fundamentals of home-buying (know who you are buying the home from). “Buyers should check the reputation and
expertise of the developer in completing projects on time and also ensure if
the developer has a proper team or is capable of providing timely updates and
answers. Buyers should make enquiries
about the number of units that have been sold.
This helps analyse if there are any hidden issues in the project. Buyers should also ensure that the project
has permanent and demarcated public access.”
Vinod Sampat, a lawyer, lets us in on an old trick that to check the
reputation of a developer. “A home
aspirant should check if the builder has completed and handed over 50,000 sq ft
of space. This gives us an idea about
his ability to deliver and not just launch a project. You have to go through the builder’s
credentials on RERA’s website and see if there are any litigations filed
against the company. Ensure that the
developer has been in the profession for at least eight years.”
2. Ask for proof of permissions
Ask the developer to share a few details that
will help you in verifying if the building is legitimate or not. Even if the project is registered, it needs
to be up to date with respect to its permissions.
“In any under-construction project, the buyer should verify if the
building designs and plans have been finalised and approved by the concerned
authorities and if such plans have been provided for any future developments,
which the developer may not disclose upfront.
The buyer should also verify that the ‘carpet area’, ‘built-up area’ and
‘super built-up area’ are depicted in the floor plans so that there are no
misrepresentations or deviations on completion of the project. Buyer should also ascertain that all
pre-construction approvals and sanctions including the commencement certificate
have been obtained by the developer. The
buyer should enquire and get an understanding of whether the developer will
retain any right to any of the common amenities in the project such as the
clubhouse. A buyer should check with the
developer if any advertising hoardings or telecommunication/mobile towers are
proposed to be installed in the project.
This could harm the value of the project.”
3. Take a home loan from a reputed financial
institution
“Developers usually have an agreed-upon
payment plan with the homebuyer. The
buyer thus must make sure that they take a home loan from a reputed bank and
not from a bank that might not be able to disburse the loan on time.”
4. Ensure the project is free from all kinds of litigations and approved by all the authorities
Before you make any transaction or hand over
any amount, Manoharan specialist advises that you must know the master plan of
the region as it will help in understanding if the project is being done on a
piece of land that is free of any legal troubles. He adds, “As a very first step, upon finalising
a project and giving a token/booking amount to the developer, the buyer should
immediately collect a copy of all the documents regarding the land and
undertake title due diligence to ascertain the title with the developer/seller,
the nature of the title and its marketability and the ability of the
developer/seller to convey clear and marketable title free from all
encumbrances to the buyer. Buyers must
ascertain that the land has been converted to non-agricultural use and must also
examine the master plan of the region to ensure the land is developed as per
the zoning plan.”
5. Verify documents
Additionally, a buyer should also insist on an inspection of the original documents of the title that are in possession of the
developer/seller. In case of a financial
institution funding the project, the original documents could be verified with
them;
If there are any third-party claims on the
property, the developer is mandated under the provisions of the Real Estate
Regulation and Development Act(RERA), 2016, to disclose such claims before the
relevant state RERA;
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