Trap 23. ‘Sign Up For The Property Now, I Will Show The Papers Later’

Whenever you are finalising a property, it is essential that you thoroughly check the documentation before signing on any dotted line.

One of the major reasons for this is that many resale properties in India have an unclear title, or are built on lal dora land or have other encumbrances, such as a legal dispute between potential owners. A quick look at the number of property cases in India will prove this. So, checking the documentation with a fine tooth comb is a must before you decide to buy it.

“If the seller insists on receiving a substantial sum of money before showing the title documents to the purchaser, it’s best to steer clear of that deal,” says Soumya Banerjee, partner AQUILAW, a Kolkata-based law firm.

Banerjee adds: “Check the title document by which the seller became the owner of the property concerned, and antecedent title documents  by which the property got devolved to the present owner.”

The title deed verifies details of the land ownership and includes information about the property’s location, area, boundaries, and survey number. The parent deed shows how the seller originally acquired the property.

Says Banerjee: “It’s important to check for any discrepancies between details in the title and the parent deed to avoid complications. Documents, such as the Will, legal heir certificate, and death certificate of the previous owner, may be required if ownership was obtained through inheritance.”

Further, mutation documents evidencing the seller’s name being recorded in the records of the concerned municipal and/or land revenue authorities and documents showing payment of property tax and revenue should also be checked. This will ensure that the ownership records of a property in the local land revenue department were updated with the name of the new owner after it was sold, inherited, or transferred.

“These documents are just a basic checklist, and further documents/information may be required to be checked to reduce the title-related risk of the concerned property. The nature of such documents may vary from state to state,”  Banerjee adds.

For instance, different states have different zoning regulations and documents regarding how land on which property stands can be used. So, one should ensure that the way one wants to use the land follows the zoning criteria, such as residential, commercial or agricultural.

However, when dealing with a real estate developer for an under-construction or new property, the documentation to check may vary.

“Beware of one-sided transaction documents that favour the developer. The document may contain onerous clauses for the buyer which should be negotiated with the help of a legal advisory,” Banerjee adds.

Property transaction documents can be unclear about when the property will be delivered and maintenance responsibilities. They can also have onerous clauses, like losing your deposit if you back out of the deal even for a good reason.