Buying a ready-possession flat seems like a dream come true for many homebuyers no waiting period, immediate possession, and reduced risks of project delays. However, while the property is ready for occupation, the process of verifying the necessary documents should not be taken lightly.
One must still exercise caution and conduct thorough due diligence to avoid any legal issues or financial losses later. Here are the key red flags to look out for when verifying documents for a ready-possession flat.
Title of the Property: Discrepancies or Unclear Ownership
A clear and marketable title is essential in real estate transactions. The title should be free of encumbrances (legal claims or liens). Some red flags to watch for include:
Discrepancies in Title Documents: If the title is unclear or contains discrepancies, it could indicate unresolved ownership disputes. Ensure that the title document reflects the current owner and no third party holds any claim to the property.
Joint Ownership Issues: In the case of joint ownership, ensure that all owners have consented to the sale. Lack of consent from one of the joint owners can lead to disputes and legal complications.
Missing or Incomplete Sale Deed
The sale deed is the core document that establishes the sale of the property between the buyer and seller. Red flags include:
Unregistered Sale Deed: If the sale deed is not registered with the local sub-registrar’s office, it is not legally valid. You may risk losing the property in case of legal challenges.
Incomplete or Missing Information: The sale deed should clearly outline the terms and conditions of the sale, including the consideration amount, property details, and transfer of rights. Incomplete or vague clauses can lead to disputes later.
Occupancy Certificate (OC) Missing or Unavailable
An occupancy certificate (OC) is issued by the local municipal authority, certifying that the building is compliant with approved plans and is ready for occupation. A lack of OC can be a significant red flag:
Lack of Compliance: The absence of an OC could indicate that the builder has not adhered to safety regulations or zoning laws. This could put you at risk of fines or even demolition orders.
Problems with Utility Connections: Without an OC, getting basic utilities such as electricity and water connections in your name might be challenging.
Encumbrance Certificate (EC): Hidden Financial Liabilities
The encumbrance certificate is a vital document that confirms whether the property is free from financial liabilities like mortgages, unpaid loans, or legal disputes. Red flags include:
Outstanding Loans: If there is an outstanding loan or lien on the property, you could potentially be held responsible for clearing it unless explicitly clarified in the sale agreement.
Pending Litigation: The EC should clearly state if the property is involved in any ongoing litigation. Failure to disclose this could result in unforeseen legal disputes after purchase.
Deviation from Approved Plans
Builders must construct the property as per the approved building plans sanctioned by the municipal authority. Common red flags to look out for include:
Unauthorized Construction: Any deviation from the approved layout or building plan without official sanction could result in fines or demolition of the unauthorized sections. Check that the flat conforms to the approved layout and that no additional floors or unauthorized extensions have been constructed.
Changes in Layout or Utility Areas: Ensure that common areas, parking spaces, and amenities like clubhouses are consistent with the original approved plan.
RERA Registration: Lack of Compliance
Under the Real Estate (Regulation and Development) Act, 2016 (RERA), all real estate projects must be registered with the RERA authority. Lack of registration is a red flag:
Non-compliance with RERA: If the project is not registered under RERA, it might indicate that the builder is not adhering to regulatory norms. You should check the RERA registration number and verify project details on the RERA website.
Misleading Information on RERA: Ensure that the project status, possession date, and other details match what has been advertised. Misleading information or discrepancies in RERA records should be viewed with caution.
Society Registration and Conveyance Deed: Pending Registration
Once the construction is completed, the builder should hand over the management of the building to the housing society. The conveyance deed transfers the ownership of the land and building from the builder to the society. Red flags in this regard include:
Society Not Registered: If the housing society is not registered, the residents may face difficulties in managing common amenities and maintenance.
Conveyance Deed Not Executed: A delay in executing the conveyance deed means that the builder still retains control over the land and building. This could lead to complications in property management and ownership rights in the future.
Hidden or Additional Charges
One of the most common complaints from buyers of ready-possession flats is hidden or additional charges levied by the builder after the sale has been agreed upon. Look out for these potential red flags:
Unexplained Maintenance Charges: Ensure that all maintenance charges, property taxes, and other related costs are clearly outlined in the agreement. Unexplained or exorbitant charges could be a way for the builder to extract more money from you.
Additional Fees for Amenities: Some builders try to charge extra for amenities like parking, gym access, or club membership that should already be included in the total cost. Ensure that these are clarified upfront.
Incomplete NOCs and Approvals
Before a flat can be legally sold, the builder must obtain several no-objection certificates (NOCs) and approvals from various authorities, such as the fire department, water authority, and electricity board. Some key red flags include:
Missing NOCs: If the builder cannot provide valid NOCs from relevant authorities, this could indicate that the project has not met the necessary safety and legal requirements.
Lack of Clearances from Environmental and Fire Authorities: For larger developments, clearance from the environmental authority and the fire department is critical. Ensure that these approvals are in place to avoid future regulatory hurdles.
Delays in Possession and Handover
Even though the flat is ready for possession, any delay in the actual handover should raise alarms. Possible red flags include:
Excuses for Delayed Handover: If the builder gives excuses for delays in handing over the flat, such as pending paperwork or unresolved issues, this could indicate deeper problems with the project.
Handover Without Completing Legal Formalities: Ensure that possession is not handed over until all legal formalities, including the registration of the sale deed, are completed. Taking possession prematurely could expose you to legal and financial risks.
Buying a ready-possession flat may seem like a hassle-free process, but the importance of verifying documents cannot be overstated. Any red flags in the title, sale deed, occupancy certificate, or other crucial documents could lead to serious legal and financial implications.
It’s vital to thoroughly investigate the property and its associated paperwork, preferably with the help of a real estate lawyer, to ensure a smooth and secure transaction. By being vigilant and identifying these red flags early on, you can safeguard yourself from potential pitfalls and ensure that your dream home purchase is a sound investment.