Legal Documents to Check while Buying Apartment from a builder

While planning to buy an apartment from a builder, as a prospective homebuyer, you must check a list of items including authenticating all legal documents, pertaining to the property, before buying an apartment. This article discusses the legal documents to check while buying an apartment from a builder

A checkoff list for prospective homebuyers must include checking and authenticating all legal documents, pertaining to the property, before buying an apartment. It is imperative to do this because property-related documents are legal papers that hold vital information regarding the property. The documents establish the legal status of the property and whether it is a clear title. To safeguard the interest of the
home buyer, the property documents must be in order and up-to-date.

Things to Check While Buying Apartment

It doesn't matter whether you are looking for apartments in Thrissur or Delhi, or Texas or any other parts of your country, you need to make sure that the project you are considering has all the legal documents. We have compiled a list of documents that must be verified before buying an apartment.

Sale Deed

A Sale Deed is the most important legal document relating to an apartment or any property that someone buys. It is a legal document that corroborates the sale and transfer of the said property, from the seller to the buyer. It establishes that the ownership of the transferred property now rests with the new buyer.
The Registration Act, 1908 requires that sale deeds are registered at the sub-registrar's office, in the presence of the buyer and the seller, and two witnesses. However, before registering the sale deed, the two parties must execute a sale agreement. And, the buyer must verify that the sale agreement conforms to the terms and conditions agreed upon. The buyer must confirm that the property has a clear title and check if it is subject to a lien or encumbrance, before going ahead with the purchase.
The seller should have paid all statutory bills, such as property tax, maintenance/society charges and water, electricity and piped-gas bills etc.before the registration of the sale deed.

Mother Deed

Mother deed or the parent document contains ownership records of the land and traces the history of the property. If the construction is on pockets of land bought from several people, the mother deed will have a record of every sale that was made. The document helps establish ownership of the land, and whether the sale of the land was legal. The document includes details of the present and past holders of the property and mentions how the transfer of ownership happened – through sale, inheritance, gift or partition.

Building Approval Plan

The building approval plan is sanctioned by the development authority of the area that the land comes under. Any development that takes place without a building approval plan is deemed illegal, under the law. There are procedures in place based on which the approval is granted. Building approval is based on zonal classification, plot depth, floor ratio area and road width etc.
The builder is required to submit various documents when applying for the approval; these include the title deed, city survey sketch, property assessment extract, property drawings, property PID number etc.

Commencement Certificate (Under-construction property)

Commencement Certificate is issued by the local development authority, under which the land falls. The certificate is issued after an inspection of the site, by officials from the development office. The legal document affirms that the project meets the stipulated guidelines and has a clearance of the office. It is illegal to construct a structure without the commencement certificate. The authorities are authorised to levy hefty fines on offenders.

Conversion Certificate (Agricultural to Non-Agricultural land)

The law prohibits the construction of residential and commercial properties on agricultural land. The builder must acquire a conversion certificate from the local revenue body, authorised to change the status of agricultural land to non-agricultural land, before commencing construction.
The procedure involves two Govt. bodies – the revenue body gets a NOC for the land conversion, from the Dept. of Town and Country Planning. The builder is required to submit specific documents while requesting the conversion certificate. The documents include village map, attested copy of the land tribunal, zonal certificate, and the title deed etc.

Encumbrance Certificate (EC)

The encumbrance certificate or the EC is a legal document relating to a specific period, evidencing the sale, purchase or mortgage of a property. The document reflects if there is a lien against the property and whether the seller has liabilities on the said property and if it is given as a security against a home loan. In short, the document indicates the ownership status of the property.

The EC can be obtained from the sub-registrar's office, after a request is made, through a duly submitted application form, mentioning the residential address in full, along with the survey number of the property. Buyers must get a copy of the EC, before getting the property registered on their name to verify its legal status and ownership.

Betterment charges receipt

Betterment charge is a fee that the Govt. levies on the builder. It is also known as development charges or improvement fees. Builders are charged a fixed amount, which they pay to the panchayat or municipal body. The money thus collected is used for development and better infrastructure in the area.

Power of Attorney (POA)

Power of Attorney involves a legal process wherein the owner of property legally authorised another person to act on their behalf, with all or specific matters concerning the property. There are two types of POA – Special Power of Attorney and General Power of Attorney. The POA transfers the legal rights of the owner of the property to another. Big projects builders and developers usually give POA to officials in their business, so they become legally authorised to transfer apartments to the buyers.

Latest tax paid receipt

Property Tax is paid annually to the Municipal Corporation (in cities and towns) and to the Panchayat (in districts and rural belts). Every property owner is obligated to pay the tax to the authorities concerned. Buyers must ask to see the latest receipt of the payment, in original. They are advised to check on whose name the receipt is issued, and the date on the tax receipt.
Buyers must also ensure that the builder has paid the water and electricity bills and that there are no dues pending. Always ask for the soft copy of the latest receipts.

Completion Certificate (for a constructed property)

The development authorities issue the completion certificate to properties which are complete and ready for moving in. The certificate is issued after an inspection, where the inspector checks that the building complex is in compliance with the laid down rules and that there are no deviations from the approved plan.

This document is crucial, because if the construction is later found to violate the rules, then it stands to be demolished. A building can have only the number of floors that it has approval for, and it must not be taller than the height mentioned in the approved plan or have more housing units. It must also be in line with all the other mandatory guidelines issued by the authorities.

Occupancy Certificate (for a constructed property)

Occupancy certificate is issued after construction is over and after a thorough inspection of the site, by the authorities concerned. It is done to ensure that the building is constructed in accordance with the laid down safety standards and other norms.

All documents mentioned in this article are legal documents that buyers have full rights to ask off the builder. Some of the documents are voluminous and go into several huge books – one such example is the mother deed. The legal language used in some of the documents may not be understood by a layperson, so buyers are advised to employ the services of a legal firm/lawyer for proper scrutiny of the documents.


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