1. Real Estate Basics Part 1 –
Carpet Area, Built-Up Area &
Super Built-Up Area
Let’s admit it - the terms and jargon thrown at us by Agents and Realtors have us staring at
them cluelessly most of the time. While buying a house, terms such as carpet area, built-up
area and super built-up area moslty evade our realm of understanding, or at least cause
some confusion. In every residential complex, there are these three ways of calculating the
area, or the square footage. They may not all sound very different, but there is in fact a BIG
difference between carpet area and built-up area!
Not knowing what each actually means is what could give Developers a chance to
take you for a ride. However, it is not rocket science. Just a little reading and you will
be pretty thorough with the terms. Here are some of the basics of Real Estate you
should know.
Carpet Area
Carpet area is the area that can actually be covered by a carpet, or the area of the
apartment excluding the thickness of inner walls. Carpet area does not include the
space covered by common areas such as lobby, lift, stairs, play area, etc. Carpet
area is the actual area you get for use in a housing unit. So when you are in search
of a house, look at the carpet area and then make your decision, because that is the
number that will give you an idea of the actual space at your disposal. Focusing on
the carpet area will help you understand the usable area in the kitchen, bedroom,
living room, etc. Nowadays, many builders don’t even mention carpet area at first,
and usually charge on the basis of built-up area or super built-up area. Carpet area
is usually around 70% of the built-up area.

2. Built-Up Area
Built-up area is the area that comes after adding carpet area and wall area. Now, the
wall area does not mean the surface area, but the thickness of the inner walls of a
unit. The area constituting the walls is around 20% of the built-up area and totally
changes the perspective. The built-up area also consists of other areas mandated by
the authorities, such as a dry balcony, flower beds, etc., that add up to 10% of the
built-up area. So when you think about it, the usable area is only 70% of the built-up
area. So, if the built-up area says 1200 square feet, it means around 30% (360
square feet) is not really usable, and the actual area you will get to use is only the
remaining 840 square feet.
Super Built-Up Area
Super Built-up area is a builder’s BFF! It is the area calculated by adding the built-up
area and common area that includes the corridor, lift lobby, lift, etc. In some cases,
builders even include amenities such as a pool, garden and clubhouse in the
common area. A Developer/Builder charges you on the basis of the super built-up
area which is why it is also known as ‘saleable’ area.

3. Now let us consider this case – the rate is Rs. 2,000 per square foot and the super
built-up area is 1,200 square feet, then the base cost will come up to 24 Lakhs.
When there is more than one apartment on a floor, the super built-up area is
calculated in a different manner. Let us assume this is the case.
— The area of Apartment 1 is 1000 square feet
— The area of Apartment 2 is 2000 square feet
— The total common area is 1500 square feet, out of which the share of Apartment
1’s common area is 500 sq. ft. while the share of Apartment 2’s common area is
1,000 sq. ft.
Then the super built-up area of Apartment 1 is 1,500 square feet and of Apartment 2
is 3,000 Square feet. The super built-up area, as seen in this example, is divided in
the ratio of the apartments’ built-up areas (in this case 1:2).

4. Considering the fact that Builders and Developers usually price their apartments
based on super built-up or ‘saleable’ area, being unaware of the fundamental
difference between carpet area and built-up area and other terms leaves one running
blind. Often the actual usable area is much lower than the super built-up area. Some
Builders take into account the carpet area while charging you, but this is only in the
rarest of the rare cases. 90% of the developers calculate the base cost on the basis
of the super built-up area; the more the amenities the higher the super built-up area.
Real Estate can be complicated, and you cannot change the rules and practices, but
you definitely can make an informed decision when you’re aware of the various types
of calculations for square footage, a seemingly major but actually simple job!
Real Estate Basics Part 2 – OSR,
FSI, Loading & Construction
Stages
Do you find yourself constantly googling terms when you’re talking with a real estate agent?
Don’t worry, you’re one among many! While doing business that involves an under-
construction building, it pays to know the real estate terms associated with the building
stages and other processes. Loading Factor, FSI and OSR are terms used with respect to the

5. area you will be charged for. The base cost may say something but the end result could cost
you a lot more - the base cost may be in your budget but when costs like the common areas,
maintenance charges, etc. are factored in, the total cost shoots up.
Want to read up about Carpet Area, Built-Up Area and Super Built-Up Area? Know
what exactly Developers mean when they use these terms, in Part 1 of our Real
Estate Basics blog post series: http://bit.ly/1QmOjyJ
In this post, we demystify construction jargon such as Loading Factor, OSR and FSI
for you, so that you are not taken for a ride.
Loading Factor
Loading Factor can be defined as the area which includes the proportionate share of
the common area for a flat which is determined by applying a multiplier to the carpet
area. In general, builders include space around staircases and elevators as common
areas while calculating the loading factor. Thus, loading factor, when combined with
the carpet area, gives the super built-up area of a flat.

6. For example, if a builder puts 1.25 as the loading factor, then it means 25% of space
has been added to the carpet area of the flat. If the carpet area of a flat is 500
square feet then the super built-up area of the flat can be calculated as:
500 square feet + 500 x 25% = 625 square feet.
OSR (Open Space Ratio)
Open Space Ratio (OSR) is a terminology commonly used in the development
of residential spaces. OSR is calculated by dividing the total amount of open space
(which is commonly owned on the residential land parcel which is proposed for
development) by the total area of the entire land parcel (which is proposed for
development). Areas on private lots which are buildable and any commonly-owned
open space that is less than 320 contiguous square feet are not counted as open
spaces. Although, areas like parking lots and recreation areas are included in open
spaces.
For example, if there are 4 acres of common open space and 8 acres of land parcel
proposed for development, then the open space ratio is 50%.

7. FSI (Floor Space Index)
FSI, meaning Floor Space Index, also known as Floor Area Ratio (FAR), is the ratio
of total built-up area to the total area of the plot. The municipal council of a particular
area is responsible for establishing the FSI limit in a certain range in order to
regulate the amount of construction and the size of the buildings in that area. Since
FSI is a measure that combines the height and footprint of a building, regulating it
ensures flexibility in the design of the building.
For example, if for a particular plot area of 10,000 square metres, an FSI of 1 is
allotted, then the construction of 10,000 square metres would be allowed for the
project.

8. Construction Stages
You may choose to stay away assuming that the various construction stages don’t
concern you, but if your business involves an under-construction flat, these stages
will definitely help you.
Knowing the real estate terms of all the stages in the building construction process
and their significance will save you much trouble:
1) Mobilisation
Mobilisation is the process of making the plot ready for construction. The process
generally involves building a fence around the plot, making necessary services
available, transport of construction tools and equipment to the plot and building a
shed for the labourers.
2) Ground Work
The process of levelling the ground of the plot, benchmarking and cleaning the plot
comes under the phase of ground work.
3) Sub Structure Work
Sub structure work involves the construction of structures like the foundation, neck
columns, grade beams, the ground floor, etc.
4) Super Structure Work
Super structure work involves the construction of the structures that are situated
above the ground like columns, slabs, beams, staircases, etc.

9. 5) Masonry Work
Masonry work is a phase in which everything comes into shape and gets a face. It
involves plaster work and levelling of the walls and ceilings. This stage is what
prepares the project for the services work.
6) Services Work
Services work includes electrical work, sanitary work, plumbing work, etc. It involves
fixing lights and fans, bathroom fittings, toilet equipment and anything else that would
be provided by the builder.
7) Finishing Work
At this stage, it is time to give the final touch to the property. It involves painting and
any kind of carpentry work like doors, door frames and, in some cases, false wooden
ceilings.
8) Completion
Completion stage of the building construction process involves cleaning of the built
property, final inspection and handover of the property to the buyer.
Real Estate Basics Part 3 – 6
Must Know Facts About
Property Prices & Payment
Plans When Buying a Home
Did you know that you pay 15-25% of the total price of the new house you’re buying just for
the extra costs that you hadn’t even considered? Think about buying a new house, and the
first thing that comes to your mind is the money involved. How much will the booking amount
be? How much will the stamp duty and registration charges be? How much will the
maintenance charges cost?

10. It is essential to understand where exactly you are investing or it could amount to a
loss you didn’t estimate. Explained here is everything you need to know about
payment details, terms and costs while investing in property.
Price Calculations
1) Base Price: This is the price of the property per square foot and the saleable
area. For example, if the price per square foot is Rs. 6,000 per sqft. and the saleable
area is 1,000 square feet, then the base price amounts up to 6,000 x 1,000 = Rs. 60
lakhs. Base price only gives you a vague idea of the total cost of the flat based on
property prices.
2) Car Park: This is the amount to be paid towards the car parking facility (Yes, it is
not included in the base price). You can opt for more than one parking lot if you own
multiple vehicles and if the option is offered by the builder.
3) Floor Rise: Most developers will increase the rate per square foot of the house as
the number of the floor increases in a high rise building, i.e. the rate for the first floor
will be cheaper than the rate for the fifth floor. In case you have a location preference
that is a popular choice of many – like a corner flat with a great view – then you will
be charged extra as ‘Preferential Location Charge’ for this facility.
Extras: The infrastructure costs, social costs, administration costs, maintenance
charges, added amenities and government charges are billed separately. These will
not be included in the agreement, but you are liable to pay these costs. These costs
can amount up to 15-25% of the total value of the house depending on the developer
and state. The costs may include maintenance charges for 1-2 years, clubhouse
charges, connection charges (which may include fees for electricity, cooking gas,
water supply, phone lines and other utilities and will depend on the project.)
There are also government charges and these include the stamp duty and
registration charges. You might wonder why you have to pay the stamp duty. The
stamp duty acts as a legal evidence in court and ensures that the property is officially
registered in your name.
An Example

11. To explain the terms clearly, let’s look at the given example. Let’s say a house has a
saleable area of 1,000 square feet. The rate per square foot is Rs. 6,000. Hence, the
base price adds up to Rs. 60 lakhs. Let’s say the car park will cost Rs. 2 lakhs. The
customer has selected a corner flat on the 4th floor. Hence, the floor rise cost is Rs.
25 (floor rise cost) x 4 (floor number) x 1,000 (saleable area). Hence, the total floor
rise cost is Rs. 1 lakh. The charges for the location (corner flat) is Rs.100 per square
foot. This adds up to 1 lakh. Finally, the total agreement value will be Rs. 64 lakhs.
Now we still have the additional costs. Assuming 20% to be the additional costs, the
all-inclusive price for the said flat will be approximately Rs. 76.8 lakhs.
Payment Plans
Different Payment plans can be adopted to pay the aforesaid amount. You can
choose between the two types of payment plans – time tied and construction tied.
1) Time-Tied Payments
When you opt for time-tied payments, you will have to pay the developer on a
monthly or quarterly basis regardless of the progress in construction. This means
that the developer will not guarantee the construction progress but will take your
money on a regular basis. Developers actually prefer this so that they can ensure
cash flow without guaranteeing construction progress.
2) Construction-Tied Payments
If this doesn’t sound satisfactory, you could opt for the construction linked payment
plan. Here, you will pay only when there is progress in the construction. This is
divided into the number of stages that the construction takes to complete – upon
completion of the foundation, the basement, the floor slabs, etc. The main benefit of
this approach is that the developer is accountable for your hard earned money
and the loans. You will pay him/her only if there is progress in the construction. This
way you can sit back and breathe easy as your investment is being put to good use.
For obvious reasons, most customers prefer the construction linked payment plan.
Payment Process

12. Now let’s look at the next important task – the payment process for the buying of the
apartment. You can make the payment via two methods: online and offline.
1) Online
In the online booking option, you can pay the down payment, which is usually 15-
20% of the agreement value, after which the allotment letter will be issued. The sale
agreement will be created once the payment is verified.
2) Offline
You can also pay the down payment in the offline mode. The down payment amount
remains the same regardless of the method of payment. The allotment letter will be
issued thereafter and the sale agreement will be created upon verification. Once the
sale agreement is created, the payment plan remains same for offline and online
bookings and is either time tied or construction tied (construction tied in most cases).
It’ll help you to note that, in certain projects, the developer may require an amount
more than the amount you paid online and the property prices, but this amount will
be less than the agreement value and will have to be paid before the allotment letter
is issued.
While you’re making all these payments to the builder, keep a note of all the
promises you’ve been made, and make sure the money you are paying is accounted
for. If there’s more you need to know, just ask us below and we’ll be glad to help!
Tips to verify your flat purchase
documents without a lawyer
You can ascertain the authenticity of your purchase documents without professional help.
However, here are the points you need to keep in mind before signing on the dotted line
Due diligence and awareness of your rights can certainly protect you against
unscrupulous practices by developers. In an industry that still lacks transparency, it
is best to physically inspects all documents before buying any property. First and
foremost, drafting a sale agreement should be done with the utmost care. A property

13. buyer should fully understand its contents; if necessary recruit a lawyer, and make a
clear note of all the deliverables the developer has agreed to.
Anuj Puri, chairman and country head of JLL India, cautions that “Developer’s sales
teams will usually present a buyer with a readymade agreement, and a buyer must
ensure that this captures every relevant detail.” He continues, “If it does not, the
buyer is fully entitled to ask for missing details to be included and potential grey
areas to be clarified. A copy of the final agreement must be retained under any
circumstances, as this will serve as the primary evidence in a legal action filed for
agreement violations.”
Here is what you need to watch out for when checking purchase
documents:
1. Personal details
The agreement must capture the seller’s complete details. This includes father’s
name, address, PAN number and bank account information. It must also provide
exact details of the property’s location and municipal, tehsil (administrative division)
or collector’s land record number. The agreement ought to be witnessed by two
people, each from the buyer’s and seller’s side.
2. Title documents
“The seller must confirm the authenticity of the title documents and ownership
transfer in the agreement,” explains Puri. “He must also state clearly that the transfer
and handing over of possession, is happening in a legal and fully-attested manner.
The agreement must reflect the fact that all dues related to the property, have been
cleared up to the date of transfer.” Further, the agreement must fully indemnify the
buyer from any disputes related to title and possession of the property.
3. Date of possession
“The date of possession of a flat is important to the purchaser, for the purpose of
transfer of the flat from the builder. It is the date on which the purchaser is to get
possession of the premises and binds the developer to hand over possession by the

14. date set out in the agreement. If possession is not given by such date, the purchaser
has a right to sue,” informs Anirudh Hariani, solicitor of Hariani and Company.
The ‘time of essence’ clause in an agreement lays down the contractual deadlines
for the parties to perform their due obligations.
4. Payment schedule
“The clause which sets out the payment schedule, lays down the total amount to be
paid and the time frame within which it is to be paid,” details Hariani. “In cases where
the payment is made in instalments, the payment schedule specifies details of each
instalment. This helps avoids any ambiguities which may arise in the future,” points
out Hariani. The agreement must provide complete payment details by the buyer,
including that of the mortgage, if any.
See also: Before paying, ensure seller isn’t lying about existing loans on
property
5. Termination
The termination clause defines the consequences imposed on the parties in case of
deviation from the code of conduct expected to be adhered by them. The agreement
may contain either a ‘termination by convenience’ clause where either party can end
the agreement.
6. Dispute resolution
The dispute resolution clause sets out the mechanism by which the parties can
resolve their disputes. This is alternative to settling the matter through litigation.
Besides this, other processes used to settle commercial contracts include
adjudication and mediation.
7. Amenities
The amenities clause helps the purchaser know the additional benefits he will be
entitled to and mentions the supplementary amount towards maintenance charges.
In case of any default on the amenities sought to be provided, the purchaser may
consider it as a breach of contract.
8. Penalty

15. A penalty clause should be incorporated in the purchase agreement, clearly
specifying milestones and the penalties in case of failure from both, seller and buyer.
Finally, registering a legal purchase agreement, is of benefit to the buyer, since it
offers protection from legal complications at any stage of ownership or eventual
resale. No change can be made once the purchase agreement is drafted and
registered. If any change needs to be made, the consent of the buyer must be
obtained and an addendum will be made in the agreement.
Invest in a project only if the
builder has all these approvals in
place
Ensure that the developer has all the major approvals before you invest your hard-earned
money in his project
It is extremely important to ensure that your developer has all the necessary
permissions and documents in place. Experts say that delay in getting approvals is
among the major causes of project delays.
Then there’s the fact that you may spend a lot of time and energy on deciding on a
suitable home. When you apply for a loan, your application could get rejected
because the developer does not have all the necessary permissions, a fact that gets
highlighted when the bank carries out its own due diligence.
Let us look at the various permissions that the developer must obtain at various
stages of the project:
Pre-launch stage
This is the stage when the developer has just bought the land. He then starts selling
apartments within the project to select investors, at a much-discounted rate. Ordinary
end-users should not invest in a project at this stage at all. Investors with deep

16. pockets may undertake this risky venture. However, they must ensure that the
developer has the conversion order. This is an approval that allows the developer to
make non-agricultural use of agricultural land.
Those investing at the pre-launch stage must also ensure that the developer is
indeed the owner of the land on which he is developing the property. This means
that he should be able to show you the title deed, which should be in his name. This
needs to be on stamp paper and duly registered. “If you are not an expert, you may
not be able to judge if the title document shown to you is a valid one. Hence, it is
prudent to take a lawyer along,” suggests Rajeev Mehrotra, head of Sunshine
Consultants, a Noida-based real estate consultancy.
Construction phase
This is the stage when most end-users and small investors come in. At this point, the
developer must have an approved building plan from the civic authorities indicating
that the building plan meets the local building bye-laws.
The developer must also have the approved floor plan, which shows where the
different parts of the building will be situated. This includes details of the apartments,
staircase, lifts, common areas, etc. An approved floor plan indicates that the building
meets the specified safety criteria.
See also: 7 checks you should do on your builder
The developer must also have no-objection-certificates (NOCs) from the water and
sewage board, the electricity board, and the pollution control board. Once the
developer has all these above-mentioned approvals, he must get a commencement
certificate (CC) from the civic authorities.
Completion stage
If you are buying into a project that is in the ready-to-move-in stage, make sure that
the developer has the occupation certificate (OC). Without this document, you may
find it difficult to get electricity and water connections. You, or a lawyer you have

17. engaged, will have to ask the developer to present all these approvals. Should there
be any hesitancy or excuse on the developer’s part, be warned that something is
amiss.
One sign that the developer has obtained most of the approvals is if a few reputed
banks are disbursing loans either to the developer or to buyers in the project. “If you
find that three or four large and reputed banks or housing finance companies are
disbursing loans to a project, it usually implies that they have done their due
diligence and found that the developers’ papers and approvals are all in place,”
states Sanjay Sharma, managing director, Qubrex Realty, a Gurgaon-based real
estate firm. At a time when project delays are rampant, it is best to bet on a
developer who has all the permissions.
7 checks you should do on your
builder
Here’s what you need to find out about your developer before you invest your hard-earned
money in a project
The right builder will certainly ensure a hassle-free process of buying an apartment.
Here’s how you can go about making the right decision.
Banks’ pre-approved list
Choose a developer who is on the pre-approved list of at least three to four major
banks. Banks conduct a fair degree of due diligence before they lend to a builder or
to the buyers in his projects. If several major banks endorse the same builder, you
have less to worry about.
Track record of delivery

18. Invest your hard-earned money with a developer who has completed and delivered
several projects in the past. Completing a project requires getting several approvals.
The developer will then possess the project management skills required to ensure
timely construction. Avoid buying from a new developer, even if he is offering lower
prices. Besides experience, he may also lack the financial strength required to
withstand a market downturn.
See also: Invest in a project only if the builder has all these approvals in place
Akhilesh Gupta, a Delhi-based real estate broker said, “A buyer should look at
developer’s previous projects. He should analyse project deliveries and performance
of the developer in the past and go through the level and quality of developments. If
the developer has done only large scale township projects and has delivered them
on time, you should consider buying into his project.”
Visit previous projects
Visit the developer’s old projects and speak to the owners there. They will be able to
tell you about the quality of construction, and whether he delivered on the facilities
and specifications that were promised. A builder who has cut corners once, is likely
to do it again. “The builder may have constructed a clubhouse in the space that was
meant to be a park,” cautions Rajan Ahuja, director, Realty & Verticals, a Gurgaon-
based consultancy.
“He may have built 10 floors in a project that was only meant to have six. People in
older projects will be able to tell you about such transgressions.”
Enquire whether the builder had delivered the project on time. In case of a delay, did
he honour the commitment to pay a penalty? The builder-buyer agreement has a
clause wherein, the developer offers to compensate buyers if the project gets
delayed beyond six months. However, many builders use the ‘reasons beyond
control’ clause, as a loophole. Since this clause is rather open-ended, developers
deny paying the penalty on flimsy grounds such as increase in the price of building
material, labour shortage, adverse weather conditions, etc.

19. Check financial status
With the slowdown in real estate sales, builders are facing financial distress. In case
of listed developers, the task is made easy since their balance sheets are public
domain. With their unlisted counterparts, you may have to dig deeper. Speak to
people who deal with the developer, such as brokers, contractors, vendors, etc. If the
builder’s finances are stressed, it will reflect in his dealings with these people.
Land ownership
Ensure that the developer owns the land which is used for constructing the project. If
needed, hire a lawyer to do the title search. Also, make sure the developer has
purchased all the land that he needs. There could be some parcels that he still
needs to buy. This could lead to a court case which could drag on for years. In the
eventuality, your apartment is located on such a portion of land embroiled in dispute,
you may not get possession even if the rest of the project gets completed. According
to Ahuja, “It is a riskier situation when a developer has entered into a collaboration
with a land-owner instead of owning the land entirely.”
Approvals in place
All the necessary approvals must be in place. Watch out for license to build,
environment clearance and so on.
Go online
Many real estate websites have discussion forums where builders and their projects
are discussed. You will be able dig up information on builders or specific projects.

20. Here’s why you should
thoroughly read your builder-
buyer agreement
Read the builder-buyer agreement carefully instead of signing it blindly. In case you need
legal recourse, it’s the one contract that will help you in court
The builder-buyer agreement is an immensely important document as it is the legal
contract between the builder and the buyer. If the developer does not keep his word
on any count, it is the most important legal document that the buyer will have to fall
back on. Many builder-buyer agreements are heavily tilted in the builder’s favour. We
discuss some of the common provisions and their implications for you.
Construction timeline
The agreement says that the builder will offer possession of the apartment (usually)
within 36-42 months from the ‘start of construction’. Note, that it does not say that
possession will be offered within the specified time from the ‘date of booking’. The
commencement of construction is entirely up to the builder’s discretion. Some
developers take the liberty of considering construction to have started after the
excavation work is completed.
Price escalation clause
Builders include this clause in the agreement which allows them to raise the price of
the apartment. If the project has been delayed, it could be due to the builder’s fault.
They then penalise the buyer by raising the cost, claiming that raw material and
other input costs have increased.

21. Area change
The agreement could include a clause allowing the builder to change the square
footage of the apartment. If it has increased, he charges extra for it. “What changes,
is not the carpet area but the super area,” explains Anuj Sood, head of Noida-based
Sood Properties. “You may end up paying 10-15% extra, while the benefit to you, in
terms of the additional area, may be marginal or nil.”
Payment delay
The agreement says that if the buyer delays in paying an installment, there will be
interest to pay as well. The charge could be hefty – as much as 18-24%
compounded quarterly. The developer may even include a clause stating that if you
delay payment beyond a point, he reserves the right to cancel your allotment and
that you may have to forfeit the earnest money, which could be as high as 20-25% of
the total cost. The balance will be returned to you without any interest.
See also: Tips to verify your flat purchase documents without a lawyer
Payment on ‘actual cost basis’
The agreement may say that you will have to pay for certain items on actual cost
basis at the time of possession. He may then spring an unpleasant surprise by
demanding an unexpectedly high amount. This could be for things like club
membership, electricity connection charge, etc. Similarly, at the time of booking, he
may not specify the PLC (preferential location charges). Later, he could charge you
anywhere from Rs 100 to 500.
Building plan changes
According to norms prevailing in some states, if the developer changes the building
plan, he must take the buyer’s written consent. “Some developers have now begun

22. to insert a page in the builder-buyer agreement, wherein, they take the consent
beforehand,” adds Sood.
Transfer charges
This has to be paid to the developer if the apartment is resold before possession.
Often, this charge is not disclosed clearly. Just for changing the name of the owner
of a flat in his records, he could charge Rs 25-500 per sq ft.
Finally, there is the question of what the buyer can do if the builder-buyer agreement
is tilted in the developer’s favour. Ideally, the buyer should be able to get the
document changed. “In reality, developers refuse to change the provisions of the
agreement, arguing that it is a standard document,” points out Bibhash Surya, head
of Sri Sai Dreamlands, a Noida-based real estate consultancy. “The buyer usually
has no option but to walk away from very toxic contracts.”
Before paying, ensure seller isn’t
lying about existing loans on
property
There have been several heart breaking cases where a buyer has given a hefty advance on his
dream home, only to discover that the seller has an existing loan on the property and thus,
can’t sell the house, till the loan has been repaid. Housing News recommends ways in which
you can avoid this scary scenario
Obtain a no-objection and no encumbrance certificate
In case the society has been formed, the share certificate would have been issued to
the owner of the property. While issuing a loan against a property, the lender takes
the original share certificate, as well as full chain of documents starting from the
builder or the housing board, up to the document, through which the present seller
became the owner of the property. So, a request for a no-objection letter from the

23. society, will certainly reveal the existence of any loan on the property because the
society is under an obligation to inform the lender and take prior permission, before it
registers any transfers of the property.
Inspect the documents registered with the office of assurances
Every transaction of immovable property is required to be registered, under the
provisions of the Indian Registration Act, 1908. These documents are available for
public inspection. Based on the CT Survey number or any similar particular of the
property in question, the existence of legal ownership can be ascertained from the
office of registrar.
Generally, loans against house property are taken under what is known as equitable
mortgage, under which only the original documents of the property are deposited
with the lender. Prior to 1st April 2013, such transactions were not required to be
registered in Maharashtra and no records would be available, in case money has
been borrowed prior to this date. However after 1st April 2013, all the transactions of
equitable mortgage are required to be registered and available for inspection. In
case any document for this purpose is executed, the same needs to be registered
with the registrar, within four months. However, in case no document is executed,
the borrower is required to give notice to the registrar within 30 days about the
equitable mortgage created, failing which he will be liable to fine and imprisonment of
1 to 3 years.
See also: Tips to verify your flat purchase documents without a lawyer
Inspect the CERSAI website
The central government, in collaboration with certain public sector banks, formed the
Central Registry of Securitisation Asset Reconstruction and Security Interest of India
(CERSAI) in March 2011. This company was formed, with the aim of creating a
database of properties on which any charge has been created for the purpose of
securing any loan of borrowing.

24. On payment of a nominal fee, you can search the database maintained by this
institution (https://www.cersai.org.in/CERSAI/IBACRPageLoaderServlet) in
order to find out whether the property under question has been
charged/mortgaged, for securing any borrowings.
The search results will show the details of the property, only if the property in
question has been mortgaged with any of the financial institutions. Since all banks
have been asked to file details of all subsisting charges that were also created prior
to the formation of this company, it would serve as a single-point reference, for
verifying the existence of any loan on the property. Please note that in case money
has been borrowed from a non-financial institution, the same would not have been
registered in this database.
Insist on the original documents
If the seller has borrowed from a private lender and not from a financial institution,
none of the above solutions would work, as the same would not have been recorded
and registered. As buying a home involves substantial investment, insist on seeing
the original documents, like chain of agreements, share certificate, etc., before you
part with any money.