BUYER'S GUIDE

Before you purchase a flat, you can have a title and document search conducted by a competent advocate. It is a professional job that can be done with professional assistance.

If you want to purchase a property, you have to look at the sanctioned plan, approved layout plan, ownership documents, partnership deed, carry out search, etc. You can use the services of an advocate before you purchase a property for advice.

The lawyer can be allowed to take inspection of all original documents pertaining to the property.

The following documents are required to be registered compulsorily under the Indian Registration Act, 1908:

1. (a) Every time the immovable property is sold/purchased, the agreement needs to be registered.
2. (b) Instrument of gift of immovable property;
3. (c) Other non-testamentary instruments which maintain or operate to create, declare, assign, limit or extinguish, whether in future or in present, any right, title or interest, whether vested or contingent, of the value of one hundred rupees and upwards to or in immovable property.
4. (d) Non-testamentary instruments which acknowledge the receipt or payment of any consideration on account of creation, declaration, assignment, limitation or extinction of any such right, title or interest;
5. (e) Lease of immovable property from year to year or for any term exceeding one year or reserving a yearly rent. But the State Government may publish an order in official gazette exempting any district or a part of a district or a lease that does not exceed the term of five years and the annual rent of which does not exceed Rs. 50/-.
6. (f) Non-testamentary instruments transferring or assigning any judgment or order of a court or any award when such judgment or order or award declaration or operates to create, declare assign, limit or extinguish, whether in future or in present, any right, title or interest, whether vested or contingent, of the value of one hundred rupees and upwards to or in immovable property.
7. (g) Authorities to adopt a son that is not conferred by a will.

Regarding the authenticity of documents, you can take the help of an advocate for verification.

For both commercial and residential properties the calculation of the floor space measurement is the same. They are measured on the basis of the following three areas:

This is a total internal area of premises measured from the internal walls.It does not include the space which is covered by the common areas such as lobby, lift, stairs, play area, etc. You can say it is the actual area that you get to use.

This is the total area of premises measured from external perimeter wall surfaces and incorporates an allocation of common areas on the same floor excluding lift, core and fire stairs.

This incorporates built up area but also includes a proportional allocation of all common areas including stairs, lift cores, ground floor lobby, and caretakers office/flat etc. throughout the entire building

A freehold property (plot or a flat) is one where there is a whole and sole owner(s), ownership is full and unconditional (within the provisions of the laws of the land) and there is no lesser / lessee involved.

The valuation process evaluates the market value of the property. Demand and supply forces operating in the market, as well as other factors like type of property, quality of construction, its location, the local infrastructure available, maintenance, are all taken into consideration before the market value is decided.

The Sub-Registrar of the area, in whose jurisdiction the property is located, is the appropriate authority for knowing the market value of the property.

A ready reckoner is usually published on the 1st day of January every year or at the end of a financial/budget year.

The market value of the property as ascertained by the stamp duty authorities on the basis of a ''Ready Reckoner'' which gives the per sq. meter value of each village, zone and sub-zone. The ready reckoner is normally published on 1st January of every year. The Stamp Duty is payable on the agreement value of the property or the market value whichever is higher. Usually, different rates for stamp duty are applicable for the residential and non-residential property. In Gujarat, the rate of stamp duty is 4.9% and 1% registration charges for both residential and commercial property.

The registration fee in case of sale of immovable property is 1% in Gujarat of the market value.

It is advisable to go personally but in case it is not possible, a power of attorney can be issued to some other person. This Power of Attorney should mention all the relevant clauses and must be registered before the Sub Registrar.

Yes, the POA holder of the developer is present at the member escorts our customers for registration.

Every document which is required to be registered under the Registration Act, except a Will, should be presented at the office of Sub Registrar of Assurances for registration within the prescribed time of four months from the date of its execution. A document is registered with a sub-registrar appointed by the State Government, under the Indian Registration Act, 1908. It is advisable to register documents after the booking amount.

An instrument, which is not registered, is inadmissible as evidence.

Stamp Duty is a tax, similar to sales tax and income tax collected by the government, and must be paid in full and on time. A stamp duty paid instrument/document is considered a proper and legal instrument/document. The liability of paying stamp duty is that of the buyer unless there is an agreement to the contrary. The document can be stamped online as well.

The instruments like Agreement to Sell, Conveyance Deed, Exchange of property, Gift Deed, Partition Deed, Power of Attorney, settlement and Deed and Transfer of lease attract Stamp Duty on market value of the property.

Yes. Stamp duty has to be paid on the gift but the rate of duty is lower. In Gujarat, the sale of a flat attract levy of duty of 5% and a gift attracts levy of 2%.

Delay in payment of stamp duty attracts penalty at the rate of 2% per month on the amount of the stamp duty that has to be paid, up to a maximum of twice the amount of the stamp duty payable. An instrument, which is not properly stamped, is inadmissible as evidence.

In case you wish to ascertain the correct stamp duty payable on an instrument, an application can be made to the Collector of Stamps.

The stamps are required to be purchased in the name of any one of the executors to the Instrument.

Yes, a POA can be either revocable or irrevocable, depending on what sort of a POA one has made.

Yes, the same is required to be registered in the office of the Sub Registrar in the city you are staying in.

Yes, the Power of Attorney Draft can be signed and attested by the Indian Consulate/ Indian Embassy/or local notary. Once the Power of Attorney is received in India, the same has to be submitted to the Collector of Stamps for adjudication. After the same is adjudicated the POA holder can submit the same at the time of registration of the document.

• Special Power of Attorney &
• General Power of Attorney. Both can be revocable or irrevocable and should confer the authority as desired by the person issuing the POA.

What is the difference between a general and special power of attorney A general power of attorney gives broad authorizations to the agent. The agent may be able to make medical decisions, legal choices, or financial or business decisions. A special power of attorney narrows what choices the agent can make. You can even make several different POAs, with different agents for each. For example, you could create a special power of attorney which only allows your spouse to make medical decisions on your behalf. You could create another POA which would grant a business partner the ability to use certain assets to care for your business in the event you become incapacitated.

In other words, special powers of attorney allow you to be more specific.

As per Section 55 of the Gujarat Rent Control Act, 1999 registration of Leave and License Agreement is compulsory and it is the responsibility of the landlord to ensure registration. If the same is not registered, the landlord would be prosecuted and on conviction, he's subject to up to three months imprisonment or be subject to fine not exceeding Rs.5000/- or with both. Further in the absence of a Registered Agreement, the contention of the tenant, about the terms and conditions on which the premises have been given to him by the landlord shall prevail unless otherwise proved.

Formerly leave and license agreements used to be signed in multiples of 11 months or 12 months. After the Gujarat Rent Control Act, 1999 came into force from 1.3.2000 there is no stipulation as to whether leave and license agreement should be in multiples of 11 or 12 months, and there is no stipulation as to total time period. However, leave and license agreement generally does not exceed 3-5 years. If it does, it's then called a lease deed.

As per Section 55 of the Gujarat Rent Control Act, 1999 registration of Leave and License Agreement is compulsory and it is the responsibility of the landlord to ensure registration. If the same is not registered, the landlord would be prosecuted and on conviction, he's subject to up to three months imprisonment or be subject to fine not exceeding Rs.5000/- or with both. Further in the absence of a Registered Agreement, the contention of the tenant, about the terms and conditions on which the premises have been given to him by the landlord shall prevail unless otherwise proved.

Lease is defined under Section 105 of The Transfer of Property Act, 1882 and a lease of immovable property is a transfer of a right to enjoy such property for a certain time or in time without end on consideration to be rendered periodically or on specified occasions, while a license is defined in Section 52 of the Indian Easement Act, 1882, and it does not create any interest in the premises in favor of licensee excepting a mere right to use and occupy the premises for a limited duration. Both documents have now to be registered. A lease deed is required to be stamped and registered. However, the stamp duty payable on thelease is more than on Leave and License for a period up to three years. For a period exceeding three years, the stamp duty is same for both agreements. The implications of entering into a lease agreement would be:

• i) That stamp duty would have to be paid
• ii) That the document would have to be registered
• iii) That Municipal taxes may go up
• iv) Of course, Income-tax would have to be paid on your income; and
• v) The question of Wealth-tax would have to be considered. One property is exempt from Wealth-tax. However, if you have any other property, this implication would have to be considered.

NRIs and OCBs can make investments in India in consonance with Indian law, RBI rules and regulations as well as other regulations set forth by the Foreign Investment Promotion Board (FIPB). NRIs and OCBs can make up to 100% equity investment in real estate sector and the nation's civil aviation sector. Further, all investments, except for the real estate investments, are fully repatriable. For real estate investments, the lock-in period on original investment is 3 years.

Reserve Bank has granted general permission to certain financial institutions deals in housing finance to grant housing loans to non-resident Indians for the acquisition of houses/flats for self-occupation subject to certain conditions.

They are required to file a declaration in form IPI 7 with the Central Office of Reserve Bank at Mumbai within a period of 90 days from the date of purchase of immovable property or final payment of purchase consideration along with a certified copy of the document evidencing the transactions and bank certificate regarding the consideration paid.

Yes, Reserve Bank has granted general permission for sale of such property. However whether the property is purchased by another foreign citizen of Indian Origin, funds towards the purchase consideration should either be remitted to India or paid out of balance in NRE/FCNR accounts

Yes. Reserve Bank has granted general permission to a foreign citizen of Indian Origin to acquire or dispose of properties up to two houses by way of gift from or to a relative who may be an Indian Citizen or a person of Indian origin whether resident in India or not, subject to compliance with applicable tax laws.

Yes. Under the general permission granted by Reserve Bank properties other than agricultural land/farm house/plantation property can be acquired by foreign citizen of Indian Origin provided the purchase consideration is met either out of inward remittance in foreign exchange through normal banking channels or out of funds from the purchaser's NRE/FCNR accounts maintained with banks in India and a declaration is submitted to the Central Office of Reserve Bank in Form IPI 7 within a period of 90 days from the date of purchase of the property/final payment of purchase consideration.

One can choose not to grant the Power of Attorney (POA) to the developers. However, this will mandate the mailing of all documents to your foreign residence and associated time delays.

According to Reserve Bank guidelines for NRIs, the loan amount shall not exceed 80% of the cost of the dwelling unit, also depending upon the bank norms. Own contribution, which is the cost of dwelling unit financed less the loan amount, can be met from direct remittances from abroad only through normal banking channels, your Non-Resident (External) [NR (E)] Account and /or Non-Resident (Ordinary) [NR (O)] account and /or Non-Resident Special Rupee account [NRSR] in India.

Repayment of the loan, comprising the principal and interest including all the charges are to be remitted from abroad only through normal banking channels, your Non-Resident (External) [NR (E)] Account and /or Non-Resident (Ordinary) [NR (O)] account and /or Non-Resident Special Rupee account [NRSR] in India.

Yes. We very well understand that as an NRI you have a different set of needs with respect to your real estate management and investment requirements and we also understand that it needs special set of services to cater to your requirements. The good news from India is that government has allowed 100% revivalfor NRIs. Reserve Bank has granted general permission to certain financial institutions providing housing finance e.g. HDFC, LIC Housing Finance Ltd. etc. to grant housing loans to non-resident Indian nationals for acquisition of houses/flats for self-occupation subject to certain conditions.

The Home Loan Buying Process simplified for you!

We at Pratham know the importance of buying a dream home of your choice. For some it may involve investing their entire hard earned savings and so a home loan is always there to guide you in the financial pathway. Because buying a home is not just a property nvestment it’s more than that. It brings along with it a sense of pride, achievement, freedom and most important security.

Read on to know more about the Home Loan buying process.

Applying for a home loan involves various stages. We have listed them as follows

• Application Form
• Personal Discussion
• Bank’s Field Investigation
• Loan sanction
• Offer letter
• Legal Procedures
• Valuation Check
• Valuation
• Registration of the documents
• Disbursement

Filling up the application form is the first process. The contents of an application form may differ from person to person but most of the information required is similar. Most of it is regarding your personal and professional details, your complete information on the financial assets.

Documents to submit

While submitting the application form a bank asks for many important documents.

They are as follows

• Proof of income
• Age proof
• Address proof
• Employment Details
• Financial Check

Along with the application form, the bank always asks for a processing fee. It varies from bank to bank but is usually around 0.25% to 0.50%.Most of the banks has flexible fee structures but the applicant has to do a little research when he applies for a home loan. The ‘Fee’ is normally collected to maintain your loan account and this includes work like sending the income tax certificates and maintaining the post-dated cheques.

After the first process is over the bank or the home loan providing institution evaluates your papers. Sometimes the bank calls you for a face-to face meet. This is sometimes to gather information which you may have missed filling in the application form.

This is an important part of the loan documentation process. It is very imperative that the bank will validate and confirm the information you provide. The bank will check all your information from your current residential address, to the place of your

employment, the details of your employer. The bank checks all these details which you have provided. This may often seem to you like an invasion of privacy but it is an important and a legal process. Because once your credentials are validated it helps establish trust between you and the bank.

This is perhaps the most important stage. If the bank is not convinced about your credentials or your information your application may get rejected. But if it is convinced it will sanction your loan. The bank cross-checks your repayment capacity based on various factors such as your income, age, qualifications, experience, employer and based on these parameters the bank roles out your maximum loan eligibility. After this the final amount is communicated to you. After this the bank issues a sanction letter. The letter may have certain terms and conditions which you may have to fulfill before the loan disbursal.

Once the loan is sanctioned the bank sends you the offer letter in which there are various important details mentioned

• The loan amount
• The rate of interest
• The tenure
• The mode of payment
• General terms and conditions
• Special instructions if any.

Once the documentation work is over the bank now focuses its attention to the property you are going to buy. Once you decide which property to buy you have to hand over the list of all the important documents to the bank so that they can keep it as a security for the loan amount which is given to you. After that the bank conducts a legal check on your documents to validate your authenticity. They are sent to a lawyer for a thorough scrutiny. The lawyer either gives you a go-ahead or asks for further documents which you have to provide in case the lawyer asks you to do so.

One of the most important steps in the loan sanction process. A bank has to be very vigilant about the property they plan to finance. They send an expert to visit the property you wish to purchase. Soon a site visit is conducted to verify a few things.

Banks carry out an independent valuation to check whether the transaction is in line with the existing market price of the area.

After all the checks are done the documents as cleared by the lawyer need to be finalized, signed,stamped,and requires the registration to be done. In case of any NOC’S pending it needs to be obtained in the format approved by the banks lawyer.

The Home loan agreement should be signed by all the borrowers. They also need to submit postdated cheques for the first 36 months (if that is the agreed mode of repayment) at this stage the original property documents need to be handed over to the bank. There are a few banks that create a document recording for handing over the property documents as a security.

Once the bank ensures that the property is clear and the original documents submitted and the necessary loan agreements implemented it’s time for payment.

The loans are disbursed depending on the stage of the construction of the property. In case of a re-sale or a ready possession property the disbursement is made full and final. In case you want to possess a property which is under construction the payment is made in a part which is also known as part disbursement.

The final payment does not the relationship with the bank. It is just the beginning. Some of the issues that need to be addressed in the end are

• Documents post disbursement

  The payment receipt is something which you would get once you hand over the re-seller or the builder the pay order that the bank has given you. This receipt should be handed over to the bank as a part of mortgage token.

• Repayment

  The loan is generally repaid by EMI’S using post-dated cheques which can be spanning from 12 months thorough 36 months. This process may be repeated until the complete loan is repaid. Some banks may also allow these installments to be paid by the ECS Facility.

• Income tax certificate

  Every bank will issue an income tax certificate which will serve as a proof to avail tax benefits.

• Pre-Payment

  One can prepay the loan in part or full at any given point of time.

• Loan Pre-Closure

  One has an option of repaying the loan completely at any moment of time. Every bank has conditions for pre-closure. Once you have pre-paid your loan completely see that all your original property documents are handed over to you.

  An NOC also should be issued by the bank. In case, of any guarantor, there would be issued with a letter stating that the liability is over. At this stage you may find that your original documents have not been received from the registrar. You need to follow up with this by showing the copy of the banks clearance certificate.