The document discusses steps homebuyers should take to safely purchase property and avoid fraud. It recommends buyers check developers' credentials, project approvals, agreements terms, and inspect completed projects before buying. This includes verifying land ownership and acquisition documents, required permits, and occupancy certification. Banks can also assist by vetting projects they finance. Thorough due diligence on specifications, pricing and payment plans is advised to avoid overpaying or delays. Overall, buyers need to be cautious as real estate regulations in India remain lax.

1. * THE TIMES OF INDIA, NEW DELHI
WEDNESDAY, JULY 24, 20136 TIMES CITY | HOME RUN
AREA OF FLAT
The buyer should check the area
of the apartment as usually the area
marketed and sold is the super built-up
area which is then used to work out the
cost of the apartment. The developer charges
for the built-up area, which includes the area
enclosed by the walls and the area occupied by
the walls, while the actual usable area is the
carpet area which is the area within the walls
Purusharth Aradhak | TNN
Noida/Ghaziabad: The failure of
Noida, Greater Noida and Ghazia-
bad authorities to ensure transpar-
encyinpropertydealsallowsfly-by-
night operators and even estab-
lished developers to get away with
many malpractices. Cases of
projects being abandoned midway
and buyers being fleeced on the pre-
text of cost escalation are common.
Police say they receive at least
one complaint of property related
fraud every day. But cases are sel-
dom registered as black money and
influential people, including politi-
cians, are often involved. This year,
around 200 cases of property fraud
have been registered in Noida and
Greater Noida, with NRIs being the
target most of the time.
Recently, a large real estate firm
opened bookings for flats in Noida
Extension which are not incorpo-
rated in the sanctioned layout plan
and have not been approved by the
Greater Noida Authority. When
buyers complained, their booking
amounts were seized.
AftertheNCRPlanningBoardap-
provedtheGreaterNoidaMasterPlan
2021 last August, homebuyers in No-
ida Extension were hit by a clause in
their contracts. “The flats were
booked without levying service tax
on the booking amount (10% of the
total price). While the Noida Exten-
sionrowlingeredon,thegovernment
decidedtochargeservicetaxonbook-
ings. The developers then cancelled
many bookings claiming buyers had
paidlessthan10%of thepricein2010.
We realized they had deducted the
service tax from the booking
amount,” said Abhishek Kumar of
NoidaExtensionBuyersAssociation.
In some cases, buyers are lured
to raise funds for a project, which
is then sold to another developer,
who refuses to honour the booking
unless more money is paid. “I
booked a flat in March 2011. Things
were going well, but suddenly the
developer sold the plot to another.
Now, the new developer is asking
for Rs 16 lakh,” said Ravi Shankar
Trivedi, a buyer.
In one case, a developer pro-
posed a housing project without
the approval of Noida Authority
and got his layout plan ‘sanc-
tioned’ by the gram samiti. “Near-
ly 200 flats were booked and now
he has hired bouncers to keep us
away from his office,” said Sharat
Singh, another buyer.
Some developers are even sell-
ing plots on the riverbed for farm-
houses. Surprisingly, these proper-
ties are registered and get power
connections. “There’s no provision
to stop the registration of such il-
legal property,” said assistant in-
spector general of stamp and reg-
istration department AK Singh,
adding that the Centre needs to
amend the registration act.
Ayaskant Das | TNN
Noida: The National Capital Region’s
growth at the cost of villages has made
available land for affordable housing but it
has also laid a legal minefield with villagers
increasingly going to court on the terms of
compensation and the legality of land ac-
quisition, sometimes years after the proc-
ess is completed. This trend has made home
buying a fraught affair in the suburbs, as
exemplified by the Noida Extension crisis
that started two years ago.
Thousands of middle-income families
bought into the Noida Extension dream.
People locked up their life’s savings and
mortgaged their future freedom to banks
believing they were getting a gilt-edged deal
as the government itself had played a role
in land acquisition. But in 2011, the Alla-
habad High Court cancelled land acquisi-
tion in a couple of villages, leaving buyers
in a bind.
With the booking agreements loaded in
favour of developers, homebuyers found it
difficult to cash out. “The exit terms entitle
the developer to retain 10% of the total
price of the house. We had to sign these
agreements because we needed affordable
houses and all developers had similar
terms,” said Binu Nair, a homebuyer.
Other disturbing details also emerged.
Until the crisis erupted, the buyers did not
know the project land was leasehold prop-
erty. “We realized there were several goof-
ups in the acquisition process which led to
the crisis,” said Ajay Shetty, a homebuyer.
Two years on, most homebuyers have
remained invested in the projects hoping
to see them completed after the cases are
settled. They have entered into new agree-
ments with developers that allow more time
for delivery and possession of flats.
“The irony of the entire episode is that
the state government is yet to take any step
to prevent a repeat of the Noida Extension
crisis. Despite our persistent efforts and
appeals, the government has not opened
any window or facility to help homebuyers
know the status of mandatory clearances
of projects,” said Devender Kumar, anoth-
er homebuyer.
How to buy a flat and not lose sleep
Scams thrive on lax laws Farmers a new variable
in suburban realty deals
It’s the biggest investment of your life and usually requires immense sacrifices. But staking your
savings and signing on for a bank loan do not guarantee that your dream home will materialize.
As a homebuyer, you need to run many checks on the property you are eyeing. Here’s how...
Prabhakar Sinha | TNN
M
ost middle class peo-
ple in the country
dream of owning a
house. Also, invest-
ing money in real
estate is always re-
warding. But since the government is
yet to prepare an ownership registry of
allthepropertiesinthecountry,inmany
cases, the title of a property is not clear.
Besides,asthereisnoclearlandacquisi-
tion policy, a real estate project can run
intotroubleandthedreamsourquickly.
Besides, multiple agencies are required
to give approvals before a project can
takeoff andbecompleted.Unlessbuyers
are diligent and ensure that the prop-
ertytheyarepurchasinghasnoencum-
brances, they can easily land in trouble.
Inordertohelphomebuyerstakethe
necessary precautions before entering
into a deal to buy a house, TOI is taking
you through the various approvals and
measures that a buyer should look for.
CHECKING CREDENTIALS
ShwetaJain,executivedirectorof Cush-
manandWakefield,saysthatquiteoften
projects face hurdles in obtaining legal
approvals from all the authorities. This
not only leads to delay in implementa-
tion, but also, sometimes, can force the
developertoscraptheprojectwhichcan
cause a huge loss to the buyer.
Beforefindingoutwhetherabuilder
has secured all the approvals to start
construction,youmustchecktheowner-
ship of the land on which the project is
tobedeveloped.Forthis,youcanaskthe
developertoshowtheallotmentletterof
the land, if it has been purchased from
a government agency.
If the land has been acquired from
farmers, check the title paper which
mentions the owner. This will also help
you determine whether the title of the
property is clear or not. The next step
should be to find out whether the devel-
operhassecuredalltheapprovalsornot.
Themajorsetof approvalsthatmust
be obtained by a builder are building
plans and floor plans, structural safety
certificates, no-objection certificates
fromthecivicauthorities,environment
clearances, urban land ceiling certifi-
cates, commencement certificates and
title deed. They will also have to secure
an NOC from the water authority to use
water for construction.
WRITTEN AGREEMENT
You must insist on a written agreement
withthedeveloper.Itshouldclearlymen-
tion the specifications of the apartment
andallthetermsandconditions,includ-
ing payment plan, time of delivery and
quantumof penaltyif anypartydefaults
— construction deadline in the case of
the developer and payment schedule in
caseof thebuyer.Thiswillalsotakecare
of hidden costs, if any.
COMPLETED PROJECT
If one is buying a house in a completed
project, the buyer should physically
check the occupation certificate, fire
safetyequipmentandmechanism,water
and electricity connections and prop-
erty tax receipts for the project.
This is very important as the coun-
try does not yet have a real estate
regulator and well-laid-out guidelines
for the sector.
The occupation certificate from a
government authority, in particular,
is very important. It signifies that the
building is complete and fit for living;
and, that, it has not only got all the
approvals in place but also that it has
adhered to all the norms and building
bylaws.
In NCR, purchasing a property is
even more risky if one does it through
power of attorney – in this, the title of
the property remains with the original
allottee but the rights to its use and all
other benefits vest with the last buyer,
whocanalsotransferthepropertyrights
toanewbuyer.Eventhesharecertificate
of a property in a society continues in
the name of the original allottee.
In this situation, it is difficult to find
out who is the last owner. This leads to
fraud many a times, and a person who
is in possession of the property can
claim to be the owner of the property
withfalsedocumentsandevensellitoff.
This is one reason why banks refuse to
give a loan to a buyer who is buying a
property from a person who owns it
throughpowerof attorney.Therefore,it
is advisable to buy freehold property
from the legal owner alone and get it
registered in your name.
USING BANK FOR CHECKING
If youareplanningtobuyaflat,thebest
course of action is to buy it through a
bankloan.Aseniorofficialof HDFCLtd
says that since the bank accepts the
apartment–whichisyettobeconstruct-
ed in a new project – as collateral when
they give a home loan, they do all the
checks,includingthatof thecredentials
of thebuilder,toensurethatthemarket
valueof thecollateraldoesnotdiminish.
So,evenif youhaveadequatemoney,
take a small loan from a bank so that it
too is involved in the whole process.
Later, if you want, you can prepay the
loan as this does not attract any penalty.
When buying a property, no amount of
scrutiny is enough. It always pays to be
cautious. We tell you how to figure out
the value and track record of a devel-
operandgetthebestdealwhenyouhave
made your choice.
Background check of the devel-
oper: This will help assess the execu-
tioncapabilityof thedeveloperontime-
liness and quality. It will also help to
compare the project with that of the
developers’ competitors. The financial
soundnessof thebuildershouldalsobe
studiedasitwillindicatehiscapability
to execute and complete the project in
absence of external borrowings. The
developershouldhaveatraceabletrack
record which is a good reference point
for new launches and under-construc-
tion projects. The number of projects
delivered by the builder and the time
takenfordeliveryshouldbeconsidered.
It is also important to be aware of the
developers’involvement in any legal
feud in the past so one can judiciously
make the buying decision.
Fundability of the project and
financial institution affiliations: If
theflathastobemortgaged,itisalways
helpful to identify lenders and finan-
ciers for the project. This ensures au-
thenticityof thetitlesandapprovalsas
thesewouldhavebeeninvestigatedwith
greater diligence.
Specifications: The buyer should
monitorstructuralandfinishingspeci-
fications which are spelt out when the
projectislaunchedandmarketed.How-
ever,oneshouldsupervisetheprogress
through frequent visits to the site and
ensure the specifications, as shown in
the sample flats, are adhered to. In case
of anydifference,onecanwriteaformal
complaint to the developer and also ap-
proach the consumer court.
Price of the apartment: The total
priceof theapartmentisafactorof the
basic selling price (BSP) and the cost
incurred for external and internal de-
velopment,powerback-up,preferential
location charges, club membership,
maintenance and parking. The costs
that are not generally accounted for by
the buyer are stamp duty and registra-
tion charges and maintenance cost per
squarefoot.Mostbuildersmayalsotake
thesocietymaintenancechargesforup
to two years in advance. Typically, the
developer markets the projects on BSP
and mentions additional costs sepa-
rately. In certain projects, pricing may
vary depending on the amenities and
specifications. Brokers may offer dis-
countsandpaybackcommissionstothe
buyer. The buyer should compare the
prevailing rates and values with those
of similar projects in the area or com-
parable locations.
Mode of payment:Althoughthere
areanumberof paymentmodesoffered
bydevelopersforunder-constructionor
newly-launched projects, most preva-
lent are down payment, construction-
linked and flexi-payment plans. Down
paymentplanrequiresthebuyertopay
around 10-15% of the cost as booking
amount, around 80-90% within 45-60
days of booking and the remaining at
the time of possession. This plan is the
mosteconomicalasthedeveloperoffers
hugediscountsbuttherisksarehigher
if there is delay in completion. The
construction-linked plan has a rela-
tively lower risk although it may the
most expensive. In this plan, the buyer
pays 10% of the total cost of the apart-
ment or a specific amount for booking
andtherestispaidatvariousconstruc-
tionmilestones.Theflexiplanisacom-
binationof theearliertwoplanswhere-
byoneisrequiredtopayaround30-40%
at the time of booking and a similar
amountispeggedtoconstructionmile-
stoneswiththeresttobepaidatthetime
of possession.
IT PAYS TO BE
CAUTIOUS
Hurdles in
obtaining legal
approvals can
not only delay
implementation but
also, sometimes,
force a developer to
scrap the project
SHWETA JAIN
Executive director |
Cushman&Wakefield
The occupation certificate from
a government authority is very
important as it signifies that the
building is complete and fit for
living; and that it has not only
got all the approvals but also has
adhered to the norms
CHECKLIST
CERTIFICATE FROM SOCIETY | One should
check the share certificate issued by a society.
This establishes the identity of the seller. The
share needs to be transferred in your name as
the purchaser. This certificate forms a part of
your ownership deed.
NOC FROM SOCIETY | Check NOC issued by
the society in case of a resale. This NOC states
there are no dues payable by the seller to the
society and that the seller has complied with
the conditions laid down by the society.
OWNERSHIP TITLES FOR GROUP HOUSING
COOPERATIVES | It is essential to have the
shares or the ownership documents allotted or
transferred to ascertain the legal rights.
If you are buying the property directly from
a builder, you should check the title papers
showing who the owner is. This will tell you
whether the title is clear or the property is
under litigation, whether the land is freehold or
leasehold, whether the seller has the authority
to develop and sell the property, and if the
property is free of encumbrances. A clear title
can be ensured when there’s a conveyance
deed in favour of the seller.
CHECKING BY BANK | For those availing a loan,
the bank normally appoints its own lawyer to
check the title deeds. Or, you hire a lawyer and
ask for originals, don’t accept photocopies.
Another important document is the
completion certificate issued by
the municipal authorities. It shows
whether a building complies with the
rules in respect of height and distance
from road, besides other things, and
whether it is built according to the
approved plan. You should also check the
occupation certificate. It certifies that water,
sewage and electrical connections are in place.
Another document that needs to be checked
is the purchase agreement between the
developer and the authority or the agency from
which the developer has bought the land. It
ensures the seller (developer) is entitled to sell
the property, states if there is a mortgage on
the property, and shows if the mortgage money
has been paid off.
DEVELOPMENT AGREEMENT | If the property
has been developed jointly by the owner and
a builder, scrutinize the joint development
agreement, which mentions the terms of
development of the property.
Often a project faces delays in getting legal
approvals from a number of authorities. Non-
compliance may result in scrapping of the
project and reduction in market value. The
approvals to be obtained are building plans
and floor plan approvals, structural safety
certificate, no-objection certificate from
the civic authority, environment clearances,
urban land ceiling certificate, commencement
certificate and title deed. Upon possession, the
buyer should physically check the occupation
certificate, fire safety equipment and
mechanisms, water and electricity connections
and property tax receipts.
® Check with people living in a developer’s
earlier projects about the quality of work
® Prefer projects which are about to be
completed
® Check project’s legality—land title, status of
layout plan and other NOCs
® Check difference between super area and
carpet area of flat
® In the name of super area, developer adds
proportionate area of common facilities to each
flat. This ‘load’ can range from 15% to 45%
® Go for construction-linked plan because
you have to pay according to the pace of
construction
® For loan, avoid banks suggested by developer
® Seek service of bank lawyer who can provide
you the valuation and legal status of property for
a nominal fee, usually Rs 3,500-4,000
The risk of clear titles and documentation is
significantly less if the property is purchased
from the urban development authorities.
However, if the flat is to be purchased from a
private developer or colonizer, one should seek
legal assistance to check documents related
to land ownership, licences and approvals,
allotment letter, sanctioned plans etc.
TITLES AND DOCUMENTATION2
CERTIFICATES3
TITLE PAPERS4
MUNICIPAL CLEARANCES5
LIST OF APPROVALS7
For Delhi
Perpetual lease deed | Conveyance
deed | Sale deed in case of resale
properties | Mutation paid | Last paid house tax
receipt | Last paid electricity and water bills |
Completion certificate | Sanctioned plans
For Noida/Greater Noida
Allotment letter from Noida Authority (in
case of a plot or flat built by authority) |
Registered perpetual lease deed | Proof of
payment of lease rental, one-time or yearly |
Transfer memorandum and registered transfer
deed in case of resale property | NOC from
Jal Department | Share certificate and NOC
from society (where applicable as some old
sectors or group housings have been allotted
to societies) | Completion certificate for houses
with sanctioned building plans | Mutation letter
in name of current owner
For Gurgaon
Allotment letter/builder-buyer agreement in
case of DLF or HUDA properties | Registered
sale deed in name of current owner with all
originals from previous owners | Sanctioned
building plans and completion certificate
in case of independent houses | Mutation
letter from DLF or HUDA | Proof of up-to-date
payments of power and water and house tax
charges | NOC from RWA or maintenance office
in case of group housing
DOCUMENTS1
PURCHASE AGREEMENT6
DESIGN
AND LAYOUT
Buyer should find out
about contractor, architect
and structural engineer in
order to assess quality of work
as this is critical if flat is for
own use. Cross-ventilation and
ample sunlight should be
ensured.
This agreement has all the
clauses, terms, conditions and
legal implications for the buyer
and developer should there be a
default on either side. Important
points are interest, penalty and
default charges for a buyer and
clauses of refund of payment in
case the project is not completed
or is scrapped. Also, the penalty
in case of structural defects and
delay in construction should be
included. The agreement should
also include a clause to transfer
the undivided and common land to
the society and owners which will
ensure no further development
or construction by the developer
after the project is completed
and handed over. The agreement
should be registered.
BUYER-SELLER AGREEMENT