Clear title is a necessary prerequisite and thorough due diligence when purchasing a property: It means when a home with a clear title is transferred to someone else, that person becomes the sole undisputed owner, and no other the party can make any kind of legal claim to its ownership. See the titles of the document of the last 40 years.
No encumbrances or liens: such as taxes and loans: please check that the property has no previous taxes pending or previous unpaid loans.
Make sure that the sale deed includes no conditions: It is important that the the seller clearly states whether or not there are any conditions attached to the sale of the property, such as a no-return policy or other contingencies.
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To make sure that you get a good deal when you buy a property, there are certain factors that you should consider and precautions that you should take. A clear title, along with no encumbrances or liens. To ensure thorough due diligence when purchasing a property, make sure that the sale deed includes no conditions such as restrictions on future mortgage payments or other restrictions on the use of the property.
In today’s videos, we’ll discuss some of the main points on the entire registration process of a property in India. Although this process is quite complex, it may require a lot of time and effort from the registry office. So let’s start registering property in India with Propertywala.
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The first step is to choose the property and look for all the details in the property. Negotiate with the seller. Pay 10% booking amount. Then we have an agreement to sell. This means the buyer will pay the seller according to the agreed sale price. In this way, the seller will sign a deed of sale as per the discussed amount in the agreement to sell.
Buyers should check that there are no liens or other encumbrances on the property before they make an offer.
Calculate Stamp Duty. Stamp Duty is the tax levied on the transfer of real property in the state. The stamp duty calculated varies from state to state, and it’s calculated on either the circle rate or the market rate, whichever is higher. It’s generally 3-10% of the property value and 1% is the registration charge.
Now, we’ll discuss the method of payment for stamp duty-
So, there are 3 methods to pay a stamp duty which are given below:
Method 1 – Non-Judicial stamp paper (picture). If stamp duty is 1 lakh, buy papers worth Rs 1 lakh. The sale deed will be printed on stamp paper.
Method 2 – Franking method – Print the sale deed on plain paper. Pay stamp duty in the cheque, cash, online, or dd draft. Then the bank attests to the sale deed.
Method 3 – E-Stamping (picture) – it will mention all details – generated online – Go to Stock holding corporation of India – www.shcilestamp.com. This will be paid at authorized centers only like. Collect e-stamp then.
Now, buyers should also be aware of the Stamp duty calculation. They should also know that this tax is payable when they register their property.
First, you must calculate the property’s value.
For example, if the actual value is Rs. 40 lakhs and the circle rate is Rs. 50 lakhs, then you have to pay stamp duty at the highest rate out of the two. Hence, in this example, because the circle rate is greater than the actual rate then you have to pay a stamp duty of Rs. 50 lakhs.
And in another case, let’s assume that you bought a property in India with a market value of Rs 90 lakhs and the circle rate was Rs 80 lakhs. In this case, you would have to pay a stamp duty of Rs 90 lakhs. Therefore, you can calculate your stamp duty. In addition, you can also estimate stamp duty online because it varies differently and is higher in large cities and towns than in small towns or cities.
The next thing is a draft and print sale deed or conveyance deed, or gift deed. It mentions all details like name, address, age of both the buyer and seller, etc. It also has details about payment like it is done through cheque, cash, or any other method. After that, you have to print the sale deed on stamp paper and then sign each page of the sale deed. Two witnesses also have to sign the last page of the sale deed.
After drafting and printing the sale deed, you must register it at the sub-registrar office. The office should be located in a fixed zone of your property’s locality. To schedule an appointment online or to obtain a token number, contact the sub-registrar office by phone or in writing. Both buyer and seller should attend the registration; witnesses should be present as well. If either of them cannot attend, they must appoint someone to act on their behalf with power of attorney. All parties should bring documents such as an Aadhaar card, an identity document, and three photographs that will be attached to the sale deed. Then signatures will be taken in the presence of the sub-registrar; fingerprints will also be taken for security purposes.
After that, you have to collect the registered sale deed. The deed can be collected within 15-20 days. If you took a bank loan, the bank will collect the original deed.
Now that the registration process is over and the property transfer is complete, you need to change the name in the land records. This process is called a mutation. If your property is located in a rural area or outside municipal limits, you will have to change the name in land records. The mutation is named differently in different states. For example Jamabandi in Haryana, Punjab, and Rajasthan; Khatauni in Uttar Pradesh; 7/12 in Gujarat and Maharashtra; and Khatian in Orissa, West Bengal, and Bihar. After registering your property in your name, the whole process of registration of your property is done.
Therefore, this is the process to register a property.
What are the steps in the process of buying a property?
Let’s first discuss the steps in buying a property. When purchasing a property, the first step is negotiating the price with the seller. To confirm the booking, you must pay an advance to the seller. A builder must first pay a 10% deposit and sign a booking form before purchasing a property. After the buyer and seller agree on terms, they sign a contract that includes a time period for payment (generally two to three months). But this is not a sale deed. It’s important to note the information, facts and details in a sale deed and here’s everything you need to know.
A sale is completed when the seller transfers ownership rights to the buyer. The deed of sale is drawn up and registered with a specific state authority, making it valid.
What is Sale deed?
The deed of sale is a legal and final document transferring ownership of a property. It describes the terms of the sale and is signed by both the buyer and the seller. Depending on its purpose, a contract of sale may also be called a contract of sale or a contract of sale mortgage. A bill of sale is governed by the common law, the Contracts Act, the Transfer of Property Act, etc. It uses certain terms that are standard across all jurisdictions, but certain details relate more specifically to the Indian context such as consideration (usually the same as the amount paid).
Benefits of Sale deed:
Protects Parties – A well drafted deed protects both the buyer and the seller by preventing ambiguity and minimizing legal risks.
Defines The Area – Buyers find it helpful to specify the square footage and locations of properties on paper.
A sale deed is a legal document that concludes a sale. It is enforceable by law.
Clauses / Elements in the Sale deed you should know:
The sale deed includes the following details:
Details of the party – The details of the party include the names, ages, and addresses for both buyers and sellers.
Details of the property– The location of the property, a description of the property, and construction details.
Payment details – Payment details will show you the price of your property. It also lists the payment mode like a credit card (Visa, MasterCard, Discover) or direct transfer from a bank account.
Handing over the original papers of the property and the possession details.
No dues on the property – On the property, no dues, such as loans, tax, liability, and other dues.
Indemnity clause – An indemnity clause in a sale deed provides protection for the buyer’s interests. It is important to draft the document with care to avoid future disputes. Indemnity clauses under the sale deed seek compensation if there are any losses or expenses in the future.
What is the process for executing a Sale deed?
Draft sale deed – To execute a sale deed, you need to first draft a sale deed. This document records all of the property owner’s rights, duties, and interests in the property. This includes encumbrances, liens, loans, taxes, mortgages and deeds for neighboring properties if they do not belong to the same legal entity.
Pay Stamp Duty – Stamp duty is a tax paid to the Indian government on the sale of real estate. It is usually paid by the buyer and varies from state to state. For more details see our detailed video on stamp duty.
Signed – Both buyer and seller must sign the sales deed. This document ensures that they have both agreed to the terms of the sale transaction. The deed must be registered within four months of the date it was signed in order to be valid.
Registered – A sale deed serves as both proof of ownership and an essential legal document required for taxation purposes. It is an affidavit signed by both the seller and buyer. This is submitted to the revenue department when registering property under several tax laws. It must be registered within 4 months of signing the document. If this deadline is exceeded, you risk losing your right to purchase the property.
The seller gives the original documents – The seller delivers the original documents and the buyer pays to execute the sale deed.
The following are the important, procedural, and legal terms you should know about sale deed if you are planning to sell your house.
When you start your property search, you will be amazed by the extra charges involved in buying a house or investing in property.There are two options: buying a ready-to-move-in property or an under-construction property. However, most people prefer to buy a ready-to-move-in property because it is less risky than an under-construction one. So, let’s assume that a property is coated at Rs. 3000 per square feet—this is its basic rate—but there are also other charges on top of that which people often fail to consider and which can be more than 40% to 50%. Let’s discuss all the additional charges so that you can make an informed decision about the total price of any given property before agreeing to purchase it.
Let’s look at an example:
Suppose a property’s basic price rate is Rs. 45 lakhs. When we make the final payment for this property, it will be around Rs. 58 – 67.5 lakhs—which includes the basic price of the property and the extra other charges when you buying a house. We will discuss all these charges in detail below:
First comes the basic charge. It is the charge excluding all the extra charges. Before RERA Act came into force, properties used to be sold on the super built-up areas; after the enactment of the RERA Act, properties are supposed to be sold based on the carpet area. For example, if the property has a carpet area of 1500 square feet and the rate per square feet is Rs. 3000, then its total basic cost would be Rs. 45 lakh. And this is just the basic cost; you will also have to pay multiple charges on it, as mentioned below.
PLC (PREFERENTIAL LOCATION CHARGES) –
Property taxes are charged according to the property’s location. Like; a corner flat, park-facing, sea-facing, lower floors, or higher floors. For example, sea-facing view residences have higher PLC charges than non-sea-facing. Therefore, if you own any such property there is a PLC charge coated. Generally, PLC charges are Rs 150-200 per square feet.
PARKING CHARGES –
When you purchase a property, you will pay a parking fee of 5-7% of the base price of the flat. For example, if you purchase a property for Rs. 45 lakhs, you will be charged Rs. 2 to 2.5 lakhs for the parking facility.
INFRASTRUCTURE DEVELOPMENT CHARGES (IDC) –
An infrastructure charge usually consists of complete internal infrastructure within a complex. For example, water and electricity supply, as well as sewage treatment plants may be charged separately. Developers usually charge these services together because it costs less to do so. However, if we add them together in one place according to IDC’s input-demand curve, there will be an IDC charge added at around 6% of the base price of the flat or house.
EXTERNAL DEVELOPMENT CHARGES (EDC) –
In some cities, there is also an external development charge. For example, in Gurgaon and Faridabad. This charge goes to the government and includes the infrastructure of a complex—for instance; road facilities, sewage, water, and electricity. The EDC charges are applied to all these expenses so it is approx. 5% of the base price of a flat. The total cost of IDC and EDC ranges from Rs. 300 to 400 per square foot.
CORPUS FUND/ IFMS –
Builders collect corpus funds, also called IFMS. It is interest-free maintenance security, similar to an emergency fund, and not like regular monthly maintenance. To purchase a property costing Rs. 45 lakhs, builders can collect from Rs. 50,000 to Rs. 1,00,000.
POWER BACK-UP –
The power backup charge is provided on an kWh-basis for each flat in the complex. Backup is available from 3KVA to 5KVA, ranging from 1 lakh to 1.5 lakhs.
AMENITIES AND CLUB CHARGE –
These charges apply to luxury flats with a clubhouse, swimming pool, and gym. The developer will charge you for these amenities at a lump sum of Rs. 50,000 to Rs. 1.5 lakhs.
STAMP DUTY AND REGISTRATION CHARGES –
In this case, stamp duty varies from state to state. So you must pay the stamp duty according to the state. Therefore, stamp duty and registration charges are 5-10% of the property value.
GST –
In an under-constructed property, both stamp duty and GST are levied where GST is 18% on ⅔ of the property cost. Therefore, the effective GST rate is 12%. It is the payable tax and added as a extra other charges before buying a house.
BROKERAGE –
Most resale property or ready-to-move-in property transactions are closed through a real estate agent or broker, who typically charges 1% to 2% of the property’s final value as a fee.
Find out whether the location is close to amenities such as apartment complexes, shopping malls, recreational facilities, industrial belts, and schools.
Step 2: Analysis of the plans and policies of the local civic bodies.
Step 3: Prepare the necessary documents
Salary slip
Statement from bank for the previous financial year
Identity proof, PAN card
IT returns of the last three years
Whole set of house documents
Form 16 for the previous 3 years
In case of flat (if you will have to furnish it), the MoU between the builder and you
Written statement from developer about the advance payment
It is never easy to find answers for the questions like how to buy a house, which option is best for me, or whom to rent my house, etc. Although these questions are important to one, but people forget the most basic question which is ‘when to buy?’.
Someone has rightly said “Never bite off more than how much you can chew”. One must always be realistic and look forward to a house according to his own budget.
The financial planners advice you to have a thumb rule that never go for a property for which the EMI loan amount exceeds 40% of your take home. You must be careful enough and make sure that the return on investment pitch given to you by the broker or the builder doesn’t fool you.
Next, the reverse mortgage schemes offered by the financial institutions can be of great use in the latter years of life if so required. At any point of time, one must not give a thought to how much money he can save in the long run if a house is purchased.
Another area which one must consider is that the decreasing interest rates and the increasing real estate rates are not always a nice combination. Thus, one must be careful enough while selecting his dream home.
Finally, especially for the individuals who are on the drive of establishing themselves, the financial advisers suggest not to have heavy loan burdens as it may hinder their growth.
Here are some tips that will make your dream of owning a property and the journey involved easier.
1. Choosing The Right Property
Try and get all the information about the builder and the price of the property you are willing to buy in the market along with other general information.
2. Buying a Pre-Launch Property
Many times developers build properties according to the need of the market within a limited time. This is called soft or pre-launch. This property is cheaper than others by 10-15%.
3. Broker’s Fees
If you plan on buying a property through some broker then his fees will be decided by the property. His fee is to be paid, first, when giving the token money and second, at the time of registration.
4. Token Money
Once you have decided to buy a property, token money is to be paid at that time. According to the price of property token money can vary from Rs.50, 000-5, 00,000. It can vary according to the agreement.
5. Preparing The Budget
Actual price is often known as the Base rate. There are some other prices like car parking, society or club membership, electricity and water. Add all these up and then finalize your budget. Other than this you will have to pay for stamp duty and registration charges.
6. Down Payment
Under-construction or ready flats have different down payment schemes. After giving the token money this comprises of 10-20% of the actual property cost in case of under construction flats where as for ready made property down payment is all the money minus token money.
7. Bank Loan
All procedures regarding bank loan must be completed before giving the token money. Bank decides the credit limit after checking property papers and your income details.
8. Property Registration
After giving down payment and receiving letter of approval from the bank, you must get your property registered.
9. Flat Possession
After the work is finished developer gets a certificate and thus he hands over the property possession to the customer. Customer should check all the details and clear all payments at this time.
10. Facilities Provided By The Builder
After the possession has been given to the customer, builder has the maintenance responsibility of 18 months.
11. Housing Society
After the completion of maintenance period the developer makes the housing society. They get a bank account in the name of the society. This society chooses its representative’s and continue the maintenance work throughout.
