Buying an under-construction property? Mention these points in your sale agreement

 Buying an under-construction property? Mention these points in your sale agreement

       The agreement should include a thorough breakdown of terms and conditions, legal and commercial arrangements, and information about the property

An Agreement for sale is executed between the builder and purchaser before the construction completion.  It will have a stage-wise payment plan and the expected date of possession with certain obligations that the developer controls on the project site even after handing over the physical possession of apartments to the purchasers.  In the said agreement for sale, the developer’s obligation pertaining clauses are fully captured.

    To ensure timely delivery of the promised apartment without any hassle, the Agreement for sale must include the date of the agreement, credentials of the developer and the purchaser, description and particulars of the land including prior rights, title and ownership, and steps taken by the developer to obtain them and commence the construction activity.  The agreement must record the following undertakings to ensure that the developer is bound by the terms, which ensure timely possession of the apartment:

. The developer shall construct the project as per the layout and building plan approved by the concerned authority;

 .     The developer shall sell to the purchaser/allottee the promised apartment and allotted parking space/garage at agreed considerations as per the schedule agreed between them;

 .     The developer shall observe and perform all the terms and conditions of local authorities to obtain an occupancy certificate and completion certificate;

  .     The developer shall deliver the promised fixtures, fittings, and amenities as represented by him to the purchasers;  

        . The developer shall refund the amounts received from the purchaser if there is a delay in handing over the possession and consequently a demand is made by the purchaser to that effect;

       .  The developer shall indemnify the purchaser in case of failure of compliances and fulfillment of any provision, formalities or documentation on part of the developer;

       .   There are no encumbrances upon the project land, except those disclosed in the title report and informed to the purchaser at the time of entering a transaction;

         .     There is no litigation pending before the court of law, save and except those disclosed in the title report and informed to the purchaser at the time of entering the transaction.

Procedure for taking possession

      .        The developer must obtain the occupancy certificate for the building from the concerned competent authority before it can offer possession of the apartments;

         .          The developer can intimate the purchasers that the apartment is ready for occupancy; and can request to take over possession of the apartment within 15 days of the written notice;

          .           In the event, that the purchaser fails to take possession of the apartment despite receiving the above-written communication, then the such purchaser shall be liable to contribute towards maintenance charges as applicable.

Post-handover of the possession

   . Defect liability period:  For five years, from the date of handing over the apartment to the purchasers, if the purchaser notifies the developer about any structural defect in the building or the apartment, then such defects are to be addressed by the developer and pay for it or compensate for such detect as per the law;

     . Formation of the housing society or association: The developer shall within three months of registration of the society or association transfer the right, title, and interest of the structure of the building and project land on which the building is constructed, in favour of such society or association.  The purchaser should join such a society or association by executing necessary applications for membership;

     .  Maintenance charges:  The purchaser shall agree to pay the maintenance charges as intimated by the developer or association of the purchaser.

 

                                                            -The author is the founding partner at Vis Legis Law

                                                  Practice, Advocates

                                               -The views of the author in this article are personal and do not                                                                                            

                                                            constitute professional advice of Times Property.

Thanks - TIMES PROPERTY

Buying an under-construction property? Here’s what you need to know

 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;

Additionally, as an abundant precaution, a buyer can also consider issuing public notice in the newspapers before purchasing a property

Check for utilities before investing in a plot

 Check for utilities before investing in a plot

   Installing utilities on a property is not an easy task; it entails time, effort and money.  However, if you are prepared to undertake this activity, you can convert your land into a profitable asset

     Installing utilities on your land can be an expensive and time-consuming process.  So, you should calculate all the overhead costs along with the price of the land.

      If you want to buy land and build on it, you need to be aware of the property’s utility easements before you invest in it.  The land you intend to buy must include basic utilities such as water supply, electricity supply and sewage disposal, to begin with.

Why buyers must check for utilities?

      If you’re looking to purchase land that is beyond city limits, then the chances of public utilities being available are not as high as compared to land that is close to residential areas.  This is because utilities are rather uncommon in far-flung vacant plots, especially those that are located on the outskirts and further away.  If the land is situated close to a city or town, then there is a greater possibility that it has the necessary utilities.

      Buyers must look for this because it can be expensive to set up the utilities on a plot if there are none, and this additional expense can affect the final cost and might make you want to reconsider the deal.

How to look for utilities?

The first thing you must procure is the property card or the property details from the seller.  Once you have the property’s address, search online (on the official government website) to confirm if public utilities are available on that land.  Sachin Chopda, managing director of a leading construction company, says, “Once you get the address of the property, search online or ask the local municipal authorities about the availability of the utilities in the area.”

Account for the difference in costs

Installing utilities on your land can be an expensive and time-consuming process.  So, you should calculate all the overhead costs along with the price of the land.  Depending on the land, the site development costs can differ drastically, and in the case of commercial development, the charges may differ even more.

          Neeraj Maheshwari, a civil contractor based in Palghar, says, “The location of the property plays an important role because depending on that, you may have to run overhead power lines instead of underground power lines.”

Other factors to consider

Even if you secure all the necessary government permissions, you still need to account for resistance from neighbours, if any.  For instance, you may need to get permission from your neighbours to install power poles on their property.

      Normally, it takes a month for the utility connections (water and electricity) to become operational.  Securing permissions from the respective municipal authorities can take days, sometimes weeks.  Maheswari concludes, “When considering the timeline for securing permissions, it is best to factor in delays.  This way, you’ll avoid any disappointments.”

All you need to know about gifting property

 All you need to know about gifting property

   If you are planning to gift property to your loved ones, then do it now.  We discuss the implications of gifting immovable property to your near and dear ones

If gifting a home or a piece of land has been at the top of your mind then don’t hold back.  And to make your life easier, here, we tell you how to make the gifting experience a smooth and seamless one.

How property is gifted

Any immovable property - a house or plot of land - can be gifted legally.  The person gifting the property is known as the donor and the one receiving the gift is known as the donee.  For the gift of property to be legally valid, the property should be gifted and accepted during the lifetime of both the donor and the donee.

What is a gift deed?

The gifting of property is clearly defined under section 122 of the Transfer Of Property Act, 1882, where any immovable property, such as real estate, can be transferred through a gift deed.  A gift deed is similar to a sale deed except that no money is paid in the transfer of the property, whether it’s a built house or land.

Contents of a gift deed

A typical gift deed must contain the following:

The names, addresses, and relationship of the donor and donee;

The complete description and details of the house or land that is being gifted should be mentioned clearly;

The gift deed should specify that the donor is the complete and bona fide owner of the property that is being gifted and property exists in entirety;

The donor should explicitly mention the intention to transfer the possession of the property that is being gifted to the donee;

The donor should also indicate that they are transferring the property - gifting it actually - only out of love and affection towards the donee, and no other selfish interest, monetary consideration, or transaction of any type is involved;

It is important for the donor to clearly specify in the gift deed that ownership of the gifted property is being transferred voluntarily and freely to the donee, and the donor is gifting the property without any threat, fear, blackmail or coercion;

The gift deed should clearly state the rights of the donee regarding the gifted property.  A donee’s rights include the right to enjoy the property peacefully and to sell, mortgage, or lease the property whenever they choose to;

In the gift deed, it is important to mention that the donee accepts the gift of property.

Registration of the gift deed

A gift deed is required to be signed by the donor and the donee in the presence of two witnesses, following which the gift deed is registered.  You must remember that it is mandatory for the gift deed to be registered with the sub-registrar office under section 17 of the Registration, Act, 1908, and as per section 123 of the Transfer Of Property Act, 1882.  Your gift contract would be considered invalid if it is not registered legally.

A nominal registration fee is required to be paid along with the submission of the gift deed,  purchase agreement with Index II of the property, society registration certificate, and Aadhar and PAN cards of both parties.

Stamp duty

A gift deed is liable for a stamp duty on it and this fee varies from state to state.  If the property is gifted to a close relative, a lower stamp duty is applicable, compared to the normal transfer of property to another person.  The two percent stamp duty in Maharashtra for gift deed of residential and agricultural properties is between husband, wife, son, daughter, grandson, granddaughter, or wife of deceased son and includes a local body tax (LBT) of one percent and metro cess of one percent.  So the total stamp duty will be this two percent plus Rs 500 with the registration fee of Rs 1,000.  For other relatives, it is three percent plus one percent LBT and one percent metro cess i.e., a total of five percent plus registration fees of Rs 1,000 as per Article 34 of the Maharashtra Stamp Act, amended in 2017.

Taxation on gift

Any gift, including property of any type, is not taxable under section 56 (2) (vii) of the Income-tax Act, 1961, if it is received by an individual or Hindu undivided family from a blood relative, as inheritance, as a wedding gift or in contemplation of death.  On the other hand, if the aggregate of gifts received under other circumstances besides these exceeds Rs 50,000 in a year, then the gift becomes taxable.

All you need to know about property allotment letter

 All you need to know about property allotment letter

An allotment letter is a legal document that serves as proof of ownership or possession of a property

       “ A property allotment letter is an official  document issued to the allottee of a property.  It is usually issued by the legal owner.  In case of a new project or redevelopment project, the developer/ builder of the property issues it.  It serves as proof of ownership.  The allotment letter includes relevant details such as the name of the allottee, address and details of the property, tenure of allotment, and other important terms and conditions, “.

Why is it important?

A property allotment letter helps to establish the ownership of the property and is a crucial document to have if dealing with any legal matters related to the property.

       “ It is also required to avail of certain services and facilities related to the property.  In most cases, it is not necessary to consult a lawyer to get a letter.  However, if the allottee has any doubts or apprehensions regarding the letter, they can seek the advice of a lawyer who is an expert in property law.  This document is also required when applying for a loan against the property,”.

What happens if you don’t have an allotment letter?

Vikram Choudary, a lawyer, shares insight on the consequences of not obtaining an allotment letter:

       You cannot claim to be the buyer of the said apartment;

       Your allotment  to your apartment will not be confirmed;

       The builder can treat the amount provided to him, as a deposit without any confirmation of the flat allotted;

        Developer will no longer need your permission or consent for any general changes and /or amendments to the layout plan or anything relevant where the buyer’s consent is required;

         The builder can sell the apartment to another person without your knowledge and consent.

How to get an allotment letter?

A promoter / developer is the one from whom the allotment letter should be asked.  He advises that one should do so at the time of booking itself or after the booking amount is paid.  As per RERA’s rules, it is compulsory to provide buyers with the allotment letter.

What is the process of acquiring an allotment letter?

Laying down a step-by-step guide on the process of getting an allotment letter,

1.       Pay the booking amount for the apartment you intend to book;

2.       Confirmation of the amount shall be received through a receipt mentioning the amount, your name, project details and apartment number;

3.       The developer is then supposed to initiate the paperwork for the allotment letter, and should give it to the buyer within a few days;

4.       If the developer fails to provide an allotment letter, buyers can serve them with a legal notice stating the violation of RERA law;

5.       If no allotment letter is provided,  a direct complaint can be made to RERA authorities as well.

-          Vikram Choudhary a Lawyer

-          Times Property

Is Indian real estate looking at a green future

 Is Indian real estate looking at a green future?

There is a noticeable shift among present-day consumers to lead a sustainable lifestyle.  Hence, developers too are increasingly adopting eco-conscious real estate solutions

Sustainability today has now become a key consideration while looking for homes or office spaces, with buyers preferring spaces that focus on net-zero carbon measures, health and well-being, and socio-environmental awareness.  The “Emissions Gap Report 2022: The Closing Window” by the UNEP suggests remedial action on six causes of greenhouse emissions, one of which is the built environment.  India’s real estate industry is expected to contribute 13 percent to the GDP by 2025 and become a 1 trillion market by 2030, according to the IBEF.  More than half of India’s 2030 building stock is yet to be built.  There is enough time and every reason to ensure that this construction is green.

India’s green real estate movement is underway

Most of India’s leading real estate developers are incorporating sustainability measures in their projects, focusing on both, asset performance and customer wellness.  Great attention is being paid to air, water, light, and comfort to ensure an enriching living experience at all levels – physical, mental, and emotional.  There is a strong growing focus on using environment–friendly materials during construction, and renewable energy throughout the building’s lifecycle.  More and more projects are employing circularity concepts such as “reduce, reuse, and recycle.” To augment their sustainability efforts, developers are working towards green certifications and platforms.

The report card

A report by CBRE earlier last year stated that nearly a third of the total office spaces in India’s six major cities are green–certified.  The green office stock grew from less than 80 million sq ft in 2011 to 212 million sq ft in 2021, increasing  its share in the total office stock from 24 percent to 31 percent.  When it comes to LEED, India ranks third worldwide in the number of LEED–certified buildings.  The concept of green buildings is catching fast in the residential segment as well.

Green certifications for healthy life and healthy valuations

The environmental and cost benefits of green certifications are well documented.  The environmental impact of buildings built as per LEED standards is much lower than those of conventional buildings.  Green buildings reduce carbon dioxide emissions, optimise energy and water consumption, generate less waste, score high on energy performance metrics, and provide healthier living spaces.  Moreover, properties with high sustainability ratings are attractive to investors, lenders, and fund managers.  Sustainable projects reflect the developer’s commitment to uphold environmental, social, and governance (ESG) principles – an important consideration nowadays while making tenancy decisions.  An analysis of LEED–certified buildings delivered between 2010 and 2020 revealed that these properties consistently yielded more rent than non–certified spaces and witnessed comparatively less vacancy.  Green homes, too, yield significantly better returns on investment in terms of the higher selling price or rental value; rebates on property taxes; better health and well–being; and savings on electricity, water, and maintenance.  Unsurprisingly, green–certified projects are preferred by value – and – environment – conscious consumers and corporations.

        The three Real Estate Investment Trusts (REITs) launched so far in India too, place a lot of emphasis on sustainability aspects.  Meanwhile, state governments and municipalities are incentivizing  green projects by offering fast–track environmental clearance; extra ground coverage; discounts in property tax; additional Floor Area Ratio (FAR); financial assistance, and more.  Environmental regulations stipulate rainwater harvesting, organic waste converters, and solar heating and lighting in most new projects.  The stage is nicely set for the real estate sector to help India meet its sustainability goals in the years and decades ahead.

Is Tambaram an ideal place for your real estate investment

 Is Tambaram an ideal place for your real estate investment?

  Tambaram enjoys good connectivity with other parts of Chennai.  Read on to know if you should buy a house in the suburb

  Part of the Chennai Metropolitan Area, the southern suburb of the state, Tambaram is one of the important localities in Chennai.  The suburb is located on the Chennai-Trichy Highway making it a hotspot among buyers.  The area scores well on the connectivity front as it is on the highway and is home to Tambaram railway station.

    Anarock Group shares, “Home to a railway junction, the region’s connectivity is one of its major bonuses.  Tambaram Railway Station is the main source of connectivity for the residents.  Trains from this station reach various points in and out of the city.  Tambaram is also well-connected via road to other key areas like Velachery Main Road, GST Road and Mudichur Road.”

Price point

As per Anarock’s research, the property prices here are currently around Rs 4,250 per sq ft making it one of the affordable areas in Chennai.  The research further added that as many as 1,520 units have been launched here between 2015 and Q2 2022.  Back in the pre-pandemic period, in 2019, average prices were at Rs 4,000 per sq ft, indicating growth even during the pandemic.  This means that even as an investment Tambaram is a good option.

  Compared to many other localities in Chennai, the property prices in Tambaram are still low.  The place has evolved as a preferred residential locality.  Also, being the hub of many industries and IT companies, many working couples prefer to buy a house in this area.  Tambaram majorly has apartments, which cover more than 60 percent of the total residential occupancy.

Rental aspect

Various key factors drive up the rental prices of the area.  Proximity to the airport, availability of various modes of transportation, and numerous educational institutions are among the key reasons.  Anarock research states, a standard two-BHK house with an area of 1,000 sq ft can yield rent of anywhere between Rs 11,000 and Rs 15,000.  This means that per sq ft, the rent yield stands at around Rs 11.

Social infrastructure

Talking about the social infrastructure, Chugh mentions, “Tambaram is one of the important localities in Chennai – be it for the IT companies, Tambaram railway station, or Tambaram Air Force Station.  The area has a well-developed social infrastructure and is home to many schools, colleges, banks, hospitals, and hotels.  Besides the essentials, it is also a hub for parks and libraries.”

    Being well-connected to other parts of the city like the IT corridor of Old Mahabalipuram Road (OMR) through Velachery Main Road and Grand Southern Trunk  (GST) Road, adds to Tambaram’s advantage.  The Chennai international airport is also around 10 kms away from the suburb.