Buying a pre-owned property? Check these documents first!

Resale properties are considered a good option, and it’s not just the lure of quicker possession. For instance, resale properties are priced lower than new home listings owing to depreciation in value. Also, prospective buyers get a clear idea of the total costs involved, which facilitates better planning. 

While purchase of resale property offers multiple advantages, the actual purchase process requires careful scrutiny of documents, and other verification. Here’s a to-do list that guide you on how to buy pre-owned property:

Important documents to check

While you spend time quite a bit of time checking out latest real estate listings, remember to be as thorough when the sales goes through. Here are various documents that need to be scrutinised before you buy resale property. The following need to be mandatorily checked.

• No-objection certificate: The NOC is an important document that applies to both new and resale properties. Depending on the location and the type of house listing, a developer may need to secure as many as 19 NOCs from various departments. When you look at a resale property in a housing society, you will require an additional NOC from the society stating that the owner does not owe the society any dues.
• Sale deed: Registered in the jurisdictional sub-registrar’s office, this document proves ownership of the property. Details include the consideration paid, the date of transfer of the property, and particulars of the buyer and seller. The sale deed documents all details about the property being sold, and includes a statement from the seller that the property is free from encumbrances.
• Encumbrance certificate: One should check for any liabilities on the property, such as a pending loan/mortgage. If you get a Form 15 encumbrance certificate, it means that the property has liabilities. Form 16 implies that the property is free from any encumbrances. The EC is necessary when the buyer applies for a loan, as this establishes eligibility for the loan.
• Occupancy certificate: This certifies that the building is compliant with various rules governing electricity, sanitation, other amenities, and civic bylaws. The certificate is issued by the local development authority or municipal body. Check if the owner is in possession of the certificate, and request a copy of the same.
• Building approval certificate: Ensure that the apartment complex has a building approval plan at the time of construction. Do not be complacent even if the building or society has been in existence for years; courts and municipal bodies can take action against non-compliant buildings at any time. So please ensure that the building has an approval plan from the local body/corporation.
• Possession certificate: Seek a copy of the possession letter, which is a supporting document attesting to the purchase. You need to get a copy of the original possession letter that was issued in favour of the seller. Additionally, you also need a possession certificate from the seller in your favour.

Other factors to verify

You will need to check some additional factors to be assured that your possession of the pre-owned property is trouble-free and without legal complications. Here’s a list:

• Debt/mortgage: In addition to the encumbrance certificate mentioned above, one must ascertain that that property is free from debt. Seek a release certificate from the bank/financial institution that financed the property. You can check with the Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI). This registry contains details of loans extended for properties – loans with a repayment tenure of one year remaining. This does not cover non-banking financial companies (NBFCs), so in such cases it would be necessary to check with the jurisdictional registrar’s office.
• Dispute/litigation: Avoid taking possession of a property that is under litigation or dispute. The records in the sub-registrar’s office pertaining to the land will contain a section that lists court proceedings. Additionally, a simple RTI application with the sub-registrar’s office can also get you the required information.
• Age of building: A quick perusal of the records will let you know the age of the building. A building that is not too old, or one that has not undergone major structural rework will effectively reduce the expected costs towards repair/renovation.
• Society regulations: Housing societies often impose certain restrictions on the kind of structural rework that can be made by the owner of a property. Ensure that you take possession of a property in a society that permits you to make any modifications that may be necessary.
• Restrictions on resale: This can apply to pre-owned properties promoted by development authorities, which may come with lock-in periods and restrictions on resale. So check if your intended purchase meets all your expectations.

Before you sign on the dotted line and buy a resale property, remember to thoroughly check these important documents for pre-owned property first. Engage the services of a professional lawyer to ensure everything goes without a hitch.