Comply with legal requirements to avoid fraud while purchasing land and getting a house constructed on it through a contractor

Mr. Madhusudan Kulkarni

Most of the time, we buy vacant land or construct a house on it. First of all, while selecting a site for construction in view of the adverse times, all criteria should be verified. It is important to check documents before buying land or constructing on it. If you want to build a house on it, you have to comply with quite a few formalities by submitting many documents. Since you have very little knowledge about it, you have to depend on the builder. You are forced to follow what he says. In such a case, there is a strong possibility that you will be deceived because you do not know the details. Here, we will learn about precautions to avoid falling victim to fraud.

1. Make sure that all land documents are legally in order

When buying vacant land, it is important to make sure that all its documents are legally in order. For this we need to make sure of the following points :
A. Make sure that the person you are buying the land from owns it.

(*) B. To be certain of this, you should inspect the records of the change in ‘6D’, as well as the 7/12 extract. (These documents prove the ownership of land. The names of such documents are valid in Maharashtra and may vary depending on the State) If land is bought in a city, the PR (Property Register) sheet should be studied fully.

(*) C. Ensure that no one has encroached on the land, no mortgage has been taken (if there is a mortgage, it will be recorded in the 7/12 extract), and there are no disputes regarding the land.

(*) D. Ensure that the land shown to you and the place mentioned in 7/12 extract is the same. Also, the 7/12 extract should be the latest, within 3 months of your inspection. Make sure that the area in the 7/12 extract and the area shown to you are the same. If not, the City Survey Map or Land-record Map needs to be corrected.

E. Ensure that there is an approach road from the land connecting to the main road and that there is no dispute about it. Also, check the width of this road. Ensure that this is not a private road but is registered as a ‘Government road’ and consent has been given for construction of the building accordingly.

F. Ensure the land you are shown is not already sold to someone else. This should be ascertained by going to the office of the Sub-Registrar in the area where land is located, as well as from the appropriate offices of the Village Talati or Taluka Land Records Office.

G. All documents should be shown to an experienced civil engineer and advocate before purchase. They should also be consulted about the price of the land. Only then should you decide to buy it.

H. After deciding to purchase the land, show the ownership title and the above-mentioned documents to an advocate who is an expert in the field and ensure that there are no legal issues in purchasing the land. For this. the advocate would give a ‘Search Report’ and the ‘Title Opinion Report’. Only then should further action be taken.

I. A pre-purchase public notice should be published by your advocate in the local newspaper that has the highest circulation. The notice should give full details of the land, saying, “We are buying this place. If anyone has any objection, he should bring the original documents of the land and inform our advocate within 8 to 15 days and confirm the correctness of the documents”. The land should be purchased only if no one objects to it. Certificate of non-encroachment of this land should be obtained from the concerned office.

2. More documents should be confirmed before construction

Even if your land is in the Gram Panchayat or Municipal council area, you have to submit a construction plan for approval. When the map is submitted to the concerned department for approval, it has to be signed by a civil engineer or an architect, only then the map will be approved. This map is often signed by the builder; however, he is not necessarily a civil engineer. So you are more likely to be deceived. Therefore, all documents should be verified to avoid fraud while constructing on vacant land.

A. The 7/12 extract of the place and the proposed map should be got verified by an expert.

B. Ensure that the rules of the Municipal council or Gram Panchayat are followed. It should be ascertained whether the construction plan is within the approved limits of FSI by the local body.
(*) C. Ensure that the approved map is signed by a civil engineer or architect of the local body.
(*) Note – All these documents should be verified by an expert civil engineer and advocate in the relevant field.

3. Requirements for entering into a written agreement or contract with the contractor or builder while constructing

When constructing on vacant land, you have to enter into a written agreement with the builder or contractor you wish to entrust the construction to. This agreement has to be registered with the Sub-Registrar of the Taluka. If there is any dispute in the future, you can approach the Courts. (Some builders avoid a written agreement.) This agreement must contain the following aspects.

A. The rates at which the builder is going to construct must specify how will the construction area be calculated (For example, the carpet area, built-up area, super built-up area). The rate fixed should include Goods and Services Tax (GST), and this condition should be mentioned in the contract.

B. It is important to know if your contractor or builder is registered under GST, as well as under Tax Deduction at Source. Also, make sure that your building is under the RERA (Real Estate Regulatory Authority) Act.

(*) C. The contract should clearly mention the quality of materials to be used for construction, quality of construction & time required for completion of construction.

D. The contractor or builder should be trustworthy in the town. The construction that have been carried out in the past by the contractor or builder should be shown to your engineer. Only if they are of good quality, enter into agreement with him.

E. You have to pay a certain amount to the builder at each stage of construction before and during the construction. All the amount should be paid only by cheque, and the receipt should be obtained at the same time, so that it is on record. Do not pay cash. (This amount will be a percentage of rates which are pre-decided for each work and the extent completed by the contractor.) (Please see Table ahead.)

F. This amount should be paid through a mediator who is known to you and the contractor. The stages of payment for construction are as follows

This is the ideal way of dealing. This can vary slightly at your discretion. Even a one-time payment in lump-sum can lead to money getting blocked or fraud.

The amount to be paid at each of these stages must be mentioned in the written agreement. This schedule is for the ground floor construction. Do not fall prey to any misleading statement from the builder. Advocates should be consulted about who should sign as a witness on the construction contract. After the builder has handed over the contract to you, it should be verified by the advocate and then the final contract should be made. If possible, take your expert civil engineer with you when discussing or negotiating a contract, so that fraud does not occur.

Some builders try to give verbal assurances to get the contract. They also avoid mentioning these assurances in the written agreement. It is important to write down all aspects in the contract without believing verbal assurances. Sometimes, if there is any change in the construction plan, an estimate should be taken from the builder and only then should it be changed. Instead of talking about it verbally, take it in writing from the builder and show it to the civil engineer and advocate known to you. (Payments for flats can also be made as per above stages.)

– Mr. Madhusudan Kulkarni, Sanatan Ashram, Ramnathi, Goa.
(Seekers and readers should preserve this article.)

To avoid fraud while buying or renting a house or purchasing land, seekers should inform their responsible local seekers !