What do you have to do before you book an apartment? of Ramalingam, financial planning, financial articles
Ramalingam K, Certified Financial Planner and Investment AdvisorDirector, Holistic Investment PlannersChennai
What factors are you looking for when comparing properties? Without a doubt, the location, price and ownership of the property will be the first and most important parameters to be shortlisted. Aside from these primary ones, however, there are a few more things that need to be checked before closing a deal.
Now let’s find out what legal documents to request before making any financial commitment. Obtaining and reviewing copies of the following required permits and clearance certificates will help avoid future judicial clutter.
This, also called the Land Register, is a relevant document as it gives you the information you need about the ownership rights, obligations, and mortgages (if any) to the property. Therefore, this document is a confirmation of whether the property is registered and its building rights have been transferred. You can obtain a copy of this from your client and have it verified by the land registry.
- Project start certificate:
This document is required to mark the start of construction on the property. After analyzing the foundation of the structure and checking its boundaries, you can have this clearance certificate issued by the town planning and engineering department. This is also a good indication that the builder is getting the necessary licenses and permits
for the card. Even before you even start digging, you need to sanction all of these things.
- Review plan approval:
It is advantageous to provide evidence of the building and site plan for approval. This is like an extra check to make sure the plan doesn’t violate or break any laws in force in the construction area. In addition, you should also make sure that the living space on which your apartment is booked is well approved in the development plan.
The design plan must correspond to the ABC guidelines. NBC, or National Building Code of India, is a code that understands the regulations governing building activities across the country. This must be clarified with the local community authorities.
Some construction projects also claim a green stature. Either the Indian Green Building Council or GRIHA should certify the project. GRIHA is the Green Buildings Rating System India, an initiative of TERI University. These certifications focus on assessing a building based on energy, water and waste management. GRIHA is currently the most popular rating system in India that also has standardized norms.
- Land Use Certificate:
Owning a home in a commercial or industrial area is illegal. Therefore, make sure that the property you have purchased is in the residential zone by filing an application with the urban development authority and checking the relevant certificate. In the expanding cities, you can often find agricultural land that is converted to non-residential use by paying some government fees. In such situations, check the Deputy Zonal Commissioner (or Tehsildar) confirmation order. This contract is a license to build housing on the property.
Often times you will find builders claiming that future infrastructure development is planned in the area, such as a freeway or an upcoming subway. Before you believe anything blindfolded, you need to personally look at the master plan of the area for verification. You can easily find such plans at the city planning office.
If necessary, request a clearance certificate for your urban property line from your client. You can also check the environmental clearance with the NOC, as well as with the electricity and water authorities, if any.
To check whether or not your project has clean and transparent papers is a very easy and convenient way to check that there are credit approvals from the financial institutions. Banks have pretty strict lending rules due to which they perform all major due diligence before they release the loans. This may not always be error-free. There have been many cases in the past where the builder was supported by a bank, but the project ran into financial difficulties.
Therefore, it is always beneficial to seek professional help. If necessary, you can even get a paid opinion from a lawyer specializing in real estate transactions and even have your document review done.
Once you are sure that the above documents are in their correct place and the review is complete, you can make your final decision without much worry or concern. To decide whether or not this type of real estate investment needs to be part of your portfolio, you need to have a financial plan with all of your financial goals in mind.