Precautions to be taken while buying a flat

Mr. Madhusudan Kulkarni

When selecting a flat in view of the adverse times, it is necessary to verify all related criteria. Today, large residential projects are coming up in many places. It is important to verify a number of documents when buying a flat in a project or before buying a flat in another co-operative housing society. There is a good chance that you will be deceived if you are not aware of the details of the contract, verification of documents, quality of construction, amenities, etc. when you buy a flat. In this article, we will learn what precautions are necessary to avoid falling victim to fraud.

1. Precautions necessary about the builder

Ensure that the builder is a civil engineer himself and his study and experience in this business is good. You should only go in for a flat with a builder who will be able to complete the construction in adverse circumstances by investing his own wealth and is financially strong enough to complete the work of the flat-owner on time. He should also be trustworthy in society and his business practices should be good.

Sometimes, the customers are lured by various facilities shown in advertisements, and the purchase of flats is done Online. In fact, with passage of time, customers find that the quality of work is not as mentioned in the advertisement and realise that they have been cheated. By then, a lot of loss has taken place.

Since builders as mentioned above are rare, registration should be done with the builder who completes transactions as per the above criteria.

2. What to look for in terms of area and licenses obtained for the area ?

A. The area where we are going to buy the flat, the area and all infrastructure such as roads, water and electricity are available. Your plot in the layout of the area should be decided in this context.

B. Study the original copy of the approved layout. In addition, peruse other terms and conditions.

C. Make sure that the land is non-agricultural (NA). Plots should not be bought in layouts approved by the Gram Panchayat.

The Gram Panchayat does not have the powers to give consent to the layout. There is a Rural Town Planning department for this purpose.

3. What precautions should be taken in the context of legal matters ?

A. Inspect 7/12 extract or PR card entries. In the State of Goa, this is called Form I-XIV (Form 1 and 14).

B. In the column on the right side of 7/12 extract, make sure that there is a record of other rights, inheritance, bank loan taken by the owner or any other such entries. Preferably seek a computerized 7/12 extract. The 7/12 extract also contains records of previous transactions. It mentions the land area and who is the current owner of the land. 7/12 extract is essential for this purpose.

C. Your advocate should verify the search report of at least previous 30 years.

D. A pre-purchase public notice should be published by your advocate in a local newspaper that has the highest circulation. The notice should give full details of the flat – ‘We are buying this flat. If anyone has any objection, he should bring the original documents of the flat and inform our advocate within 8 to 15 days to confirm the veracity of the documents’. The flat should be bought only if no one objects. Certificate of non-encroachment of the flat should be obtained from the concerned office.

E. The builder of the flat should have paid all the taxes, dues and make the flat free of any encumbrance.

F. If the names of joint ownership of the land are recorded in 7/12 extract and the joint owners are siblings of the seller, it should be ensured that the land purchase deed is signed by all. Otherwise, there should be a no-objection letter from the relatives concerned for the sale deed. Such a letter should also be registered.

G. The type of present company of the builder (proprietor, partnership, private limited company, etc.) should be ascertained, its registration letter should be sought and mentioned in the contract.

H. ‘Deed of Declaration’ is very important. It includes the total area, the built-up area, the details of the collective property in which all will have equal rights, the rights of FSI or TDR claims in the name of the Society. Therefore, a Deed of Declaration should be asked for.

I. Ascertain whether the assurance given by the builder about the facilities orally or through a press release has been recorded in the declaration.

4. What to look for when buying a flat ?

A. Ensure that the housing project is registered in a residential zone. (It should not be in the green zone.)

B. The land on which these flats are built, the builder is legally authorised for constructing such flats. At present, there are no claims, lawsuits or other legal disputes over the property, and no one will object after you move into the flat. This can be ensured by contacting other flat owners and Government offices.

C. Ensure that the person from whom you are buying the flat owns it.

D. Ensure that no loan has been taken on this flat as collateral. If the flat is mortgaged to a bank, it should be confirmed that the bank has a No Objection Certificate (NOC) for the sale of the flat.

E. Ascertain that no transaction has been done of these flats earlier. Ensure that there are no disputes regarding the flat up for sale and it is the same as shown to you.

F. Take an arrear certificate proving that there is no pending legal liability or mortgage on the property concerned. (This gives all the details related to the transactions done in a certain period.)

G. Ensure that the builder has registered the power of attorney from the landlord of the site for developing it. All the documents such as property card, electricity, gas bills and Society’s No Objection Certificate (NOC) should be verified. If no documents are available, check if the power of attorney has been issued. (This is required to prove that the property is ‘authorised on behalf of the owner’ when selling or buying the property.). The project should have Nill Encumbrance Certificate as well as permission and no objection certificate from the City Development Authority, Water Supply and Drainage Board, Electricity Board, Municipal Corporation.

H. If the construction project falls under the Real-Estate Regulatory Authority (RERA), check that builder has all the registration documents.

5. What to check if the flat is in a Housing Society ?

A. The seller should be a member of the Society.

B. After the sale of at least 60% flats, a meeting of all the members should be convened and the registration as Society, Company or Apartment Association, whichever the majority of flat-owners choose should be got done by the builder.

C. Before making the Society, Company or Apartment Association, its rules should be read out to all the tenant members and these should be approved in the meeting.

D. Ensure that ‘one-time maintenance charges’ taken from the members or the corpus fund in the name of the society has been deposited in the bank.

E. Make sure that the allotment letter with the seller is registered.

F. Check the share certificate issued by the housing society to the seller of the flat.

G. Ensure that no payments to the society are pending.

H. Verify the original ‘Deed of Conveyance’ (applicable to housing societies).

I. If the original owner has taken a loan from a bank, the deed of purchase or transfer should not be made without the consent of the bank.

J. See the attested copy of the record of land purchased by the Society.

K. Ensure that the site has non-agricultural (NA) consent.

L. Check the Society’s ‘No dues’ certificate.

M. Check the entries in 7/12 extract or PR card for the last 3 months.

N. If the original owner has repaid all loan of the bank, the owner has a ‘No dues’ certificate and a ‘rights-waiver’ certificate from the bank.

O. If the property in question is a jointly owned property and one of the owners has died, the transaction should be done only after getting the certificate of inheritance.

P. If the builder is not going to carry out the transfer through the Society, the alternative arrangement should be verified about the transfer and ensured that the method is appropriate.

6. Care should be taken regarding the construction map

(*) A. Even if your land is in a Gram Panchayat or Municipal Council area, you have to submit the construction plan so as to get approval for the construction. When the plan is submitted to the concerned department for approval, it has to be signed by the civil engineer or architect who is registered as a chartered engineer or architect with the concerned department. Then only the plan will be approved.

(*) B. This plan is often signed by the builder; however, he is not necessarily a civil engineer. Therefore, the 7/12 extract and the proposed plan should be verified by an expert.

C. Ensure that the rules of the Gram Panchayat or Municipal Council are followed. Ascertain whether the construction plan is within the approved limits of FSI by the local body.

(*) D. Ensure that the approved plan is signed by a civil engineer or architect of the local body.

(*) Note – Show all the documents to a knowledgeable Civil Engineer or Advocate.

7. What other aspects regarding construction need to be studied ?

A. See if the construction is as per the approved plan.

B. Before or during the construction of a flat under the project, you have to enter into a written agreement with the builder or the contractor and register it with the Deputy Registrar of the Taluka.

If there is any problem in the future, you can approach the Courts. (Some builders avoid making a written agreement.) This agreement must contain the following aspects.

C. How will the construction area be calculated in the context of the rates quoted by the builder before starting the construction. It must be specific about the carpet area, built-up area, or super built-up area. The fixed rate should be inclusive of Goods and Services Tax (GST) and be recorded in the contract.

8. While signing the contract, documents and entries as given ahead should be included

Some builders try to give verbal assurances for selling the flat. They avoid mentioning this in the written agreement. It is important to consider all the aspects without believing or falling victim to verbal assurances. If there is any change likely in the construction, the builder should be asked about the budget and only then should it be changed. Instead of verbal assurances from the builder, take it in writing and show it to your civil engineer and advocate.

A. Name of the project, description of the floor, its direction in the project, its demarcation, its area (carpet, built-up, super built-up), demarcation of the floor of the flat (that is being bought) on a photocopy of the approved plan. Ensure that the flat number and its parking space are clearly mentioned.

B. A standard specification table provided by the builder on the standard facilities being provided by him should be attached to the contract.

C. The builder and you should sign the area map showing the parking space assigned to you.

D. The builder will arrange for water and electricity connections to the flat along with the meter and the buyer will pay the deposit for these.

E. An advocate should be consulted on who should be a witness for the construction contract. After the builder submits the draft-contract, it should be verified by the advocate and then only the final contract should be entered into. If possible, a knowledgeable civil engineer should accompany you when negotiating or entering into a contract, so that any fraud is prevented.

F. While the flat is under construction, you have to pay a certain amount to the builder at each stage. All the amount should be paid only by cheque, and the receipt should be taken at the same time so that it is on record. Do not pay cash. (This amount will be calculated as the completed work area multiplied by agreed construction rate.) This amount should be paid through a person who is known to both. The stages of payment for construction are given ahead.

The rates and payment stages of the flat are based on the floor on which it is located. If the construction project is under the Real-Estate Regulatory Authority, the amount to be paid at any stage of construction is fixed under this Act. Pay accordingly. Where this law does not apply, payment should be made as per an example given ahead. The amount to be paid at each stage must be mentioned in the written registration agreement.

Stages in payment %
While entering into a contract to buy a flat 10
After footing concrete is done 10
After concreting the slab above stair- case and parking 10
After concreting of the slab, staircase and the ground floor 10
After concreting of the slab, staircase and the first floor 10
After concreting of the slab, staircase and the second floor 10
Construction, door, windows and frames are fixed 8
After plastering of inner and outer walls 7
Flooring, skirting, kitchen platform, w/c 8
Plumbing, water tank, pipe fitting, CP fitting 7
Electrification and colouring 5
After buider submits occupation/ completion certificate and handing over the flat 5
Total 100

This is the ideal way to deal, and can vary slightly. Even a one-sided transaction can lead to money laundering or fraud.

9. Care required about the quality of construction, its adherence, etc.

Take the help of an expert civil engineer for ensuring the quality of material used by the builder for the construction of the project and the mode of its operation. If you find any flaws, talk to the builder directly.

10. Action required while taking possession of the flat

Once the builder tells you to take possession of the flat, you should get the flat and documents verified by a knowledgeable expert civil engineer and lawyer. Slab contraction joints should intersect at the openings for columns. Once the construction is over, properly check that there are no cracks in slabs and walls, construction is leak-proof, the slope of water flow is appropriate, doors and windows are proper, there are no gaps in the flooring and skirting, the plastering is level, water and electricity  are connected. Slab contraction joints should intersect at the openings for columns.

Deed of purchase / Conveyance deed should be made only after confirmation of these aspects. Complete all the transaction accounts, receipts, documents and get a certificate of possession from the builder.

After completion of the construction, a revised map should be made along with the changes in it and a certificate of completion should be obtained accordingly. Only after taking the purchase deed and occupancy certificate from the builder should the flat be taken into possession. If you want to buy a flat, go in for one which is ready.

– Mr. Madhusudan Kulkarni, Sanatan Ashram, Ramnathi, Goa.

There is a good chance you will be deceived if you don’t know the details of the contract, verification of documents !