Buying ready property? Collect these 12 documents from builder

Sukanya Kumar
RetailLending.com
We do a lot of due-diligence while buying a property from an individual re-seller of a ready property, but almost do nothing while buying from a developer. The reason behind it is the comfort shared by the lender stating they have already scrutinised the title and it is 'clear' for you to go ahead and buy quickly. Mostly, builders refer these lenders to you and the target of both is to conclude your business and move ahead.

What we fail to understand at this stage is that one day you will be a 're-seller' and your buyer and his lender will ask for whole lot of papers from you which neither your lender will give you nor the builder, as they will have no direct interest in the paperwork then.

"I don't have any papers. This is a property built by a renowned builder and banks have approved it. I never needed any of it while buying myself." - heard this many times from a potential seller. At least 50% of them land up not being able to sell the house, because the new buyer wants to send one set of papers to his personal lawyer for clearance, plus his new lender (these days there are a lot of fresh lenders in the market who did not exist 5 years back) wants it too!

So, be wise and take all the relevant papers that your future buyer will seek from you. Here's the list:

1. Commencement certificate(CC): When the building construction starts, the builder needs to get this document from the local authority, without this the construction cannot start.

2. Approved Plan: A plan submitted by the builder will be sanctioned by the authority again. A copy of this plan with seal and signature will be provided by the builder.

3. Joint Development Agreement(notarised): If the land on which the property constructed by the builder has not purchased outright by the builder but is a joint-development with the landowner, then this document will be available. This should be notarised in registrar's office and stamp duty paid by the builder.

4. Sharing Agreement: If the property is under a joint-development scheme, then some of the inventory will be with the landowner. The description and the unit numbers shared by the builder and the landowner will be detailed in this document.

5. Chain Deed of last 30 years: Acquisition of the land parcel will have to be from a legitimate source and any issues (cases pending, probate etc) will trigger issue in future. So, it is important to know the history of the land (all agreements that establish the change of ownership) and the documents through which the title has passed.

6. Khata extract/Mutation certificate: Even after registration, the title may not pass to the new owner without this document.

7. No Due letter: The builder should issue a 'no-due' letter to you to avoid any pending payments, levy, interest or penalty.

8. Possession letter: Without this document you cannot even move your furniture in the house. It may sound to you that why will this piece of paper required by your future buyer, may be after five years, but you will surprised to know that some lenders/lawyers do seek this paper as well.

9. Nil Encumbrances certificate (EC)/Search Report: A lawyer's report that the property is not encumbered. This is done by a court-search by the lawyer. It is to confirm that the property was not sold to any other party in the meanwhile.

10. Updated tax receipts: Builder often delay on the tax payments, especially when the project gets delayed. they generally do pay at the time of the possession/registration in your name. It is good to take the tax receipt from the builder so that your tax payments post that is effortless.

11. Occupancy certificate (OC): This is one of the most important documents. The builder receives this paper from the authority certifying the building to have been constructed as per than plan approved and is habitable without a demolition risk. This certificate is issued after installation of the water connection, sewerage and many other mandatory amenities a building should possess in recent times.

Most lenders do not approve loans for properties not having this document, so please pay special attention to this.

12. Copy of your registered deed: Do not be surprised when I tell you that we have come across many people who do not even have this. The builder would have submitted the original directly to the lender in a hurry to receive the loan disbursement and did not send even a copy to the borrower. So, please collect your copy-either from the builder or from the lender without feeling lazy and thinking you are safe. Do not omit the slight possibility of lender losing the original!

Hope the above checklist helps you complete your paperwork and you be content with the matter that it's going to a piece of cake for you while selling! Happy Homes!
Source : Money control