Tuesday, February 16, 2010

what to look for when you buy a pre-owned home

Home property buyers have two options viz., buy a new home or buy a pre-owned home. This article aims to bring out the issues to be checked out while buying a pre-owned home. Well, these are the things that you need to check out when buying a pre-owned home in India. In some parts of India there are professional real estate agents/ companies who do all the pre-verification of documents even before advertising a sale. Such properties are the safest and even in such cases you need to check out the credentials of the real estate agent and/or the real estate company. However, it is always better that the prospective buyer get things verified from his own available sources and not just rely on the real estate company/ agents. There are some properties that are available for sale directly by the owner and one has to exercise more caution when buying such properties.

  • Many of the property sellers would not even give a photostat copy of the property documents for fear of misuse and they insist on a token advance amount before parting with copies. So, first indicate the tentative price that you are willing to pay for the property and then pay a token amount which is not more than 5% of the value of the property.
  • Insist on a proper receipt and make sure that the receiver of the amount indicates the purpose for which the amount was received by him/her. Insist that the receipt be as detailed as possible to include the property details in full like the survey number, Door no., name of the area/village and district also.
  • Ask them to provide copies of all the documents available with them and just not the latest copy of the registration deed made by the prospective seller when he/she bought the property.
  • Always go for a pre-owned property that is less than seven years old.The scope of this article does not permit me to write the reasons why one should go for a property less than seven years. 
  • If the property is an individual home check if the colony has an association/ committee to look after the welfare of the colony and double check whether all the dues to the association are paid and upto date.
  • Obtain a no encumbrance certificate from the registrar office to know the latest ownership of the property and check whether any general power of attorneys are given which are live.
  • if there are any GPA holders rope them in while giving an advance payment.
  • Check whether the door number/ house number indicated in the property document is same as the one in the municipal records. If there is a deviation let the current owner get the changes carried out before entering into a purchase agreement.
  • Check whether the property tax is paid update and also check whether the electricity bill and the water bills are paid update. Make sure that the name of the subscriber on these bills is the same as that present in the registered property document.
  • After you are satisfied with all these issues enter into an agreement of purchase and make sure that you don't pay more than 20% of the property value at the time of the agreement. Insist on a proper receipt for the money paid towards the agreement of sale/purchase.
  • Make sure that the agreement document is drafted by an advocate/lawyer/attorney and let two independent witnesses sign the agreement document. Make sure that the seller gives you atleast six months to get the property registered during which time period the sale can be concluded.
  • spend some money on giving legal notices in two prominent newspapers that you intend to buy so and so property and if someone has some grievance let them meet your lawyer/ advocate/ attorney.
  • Make sure that an exit clause is provided in the agreement document to safeguard your interest if any adverse issues are found at a later date and before registration.
  • Insist on original property linking documents for the last thirty years.
  • If all these issues are fine, buy the pre-owned home and register the property by paying the registration charges for full value of the property and help build the nation.
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