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Buying a house is one of the biggest achievements in a person’s life. But, like all important decisions, you need to give it a lot of thought before finalising the deal. There are a lot of aspects that need to be considered – budget, location, and ROI, to name a few. Equally or even more crucial are the documents associated with home buying. Checking their authenticity is essential to make sure there’s nothing illegal about the property you are about to make your own. In case you don’t know what many of these real estate terms mean, worry not. We have brought a checklist to help you with what these documents signify. Read on:
- What is a Sale Deed?
A Sale Deed is a kind of Title Deed (a legal document that certifies the ownership of a property). It certifies transfer of ownership – from the previous owner to you, once the monetary formalities are completed. A Sale Deed is to be registered at the local Sub-Registrar’s office for it to be deemed legal. Sale Deeds include all information about the property – how much it is worth, who the owner is, the rights and privileges enjoyed by the owner, etc.
- What’s The Importance Of Mother Deed?
The Mother Deed certifies the legitimacy of the current owner of a property. You see, more often than not, a property undergoes multiple transactions, with many people buying, selling, gifting, or inheriting it. Every such transaction is recorded through a transfer document. This ownership history is called the Mother Deed, and it should be in chronological order. When buying a property, go through the transaction records to make sure that the person you are buying it from is its sole current owner. Since these documents can be confusing to the layman, you can get help from a legal expert.
- What is a Sale and Purchase Agreement (SPA)?
Yet another important document, is a binding legal contract. It mentions in detail all the terms and conditions agreed upon by both the parties – the buyer and the seller. For example, this could be about the price of the property, the advance payment, the lock-in period, etc. The SPA can also mention the conditions that are to be met before the sale and the redressal measures if the property meets with any kind of damage before the transaction.
- What A Building Approval Plan Means?
This is the sanction every developer should obtain before starting construction. The approvals, given under the provisions of the Master Plan, the Building Bylaws, and local body (Panchayat, Municipality, etc) Acts, include two documents: The Building Plan and the Layout Approval. Every home buyer should ask for copies of both before finalising the deal. The developer is legally bound to fulfil the terms and conditions mentioned in them. The Layout Approval shows a detailed plan of the entire property, including gardens, open spaces, landscaping, entry/exit, parking, etc. The Building Plan reveals the final look of a building after its construction is completed.
- What is Possession Certificate?
As the term suggests, this document signifies the possession/ownership of a particular property. It includes many relevant details like the owner’s name, description of the property, etc. It is important as it helps the owner establish his legal right over the property, and protects him from false claimants. This is a crucial document when buying and selling any property.
- What is a Completion Certificate (CC)?
This is yet another commonly used real estate terminology. This document certifies that the construction of a building has been completed in accordance with all the rules and regulations, and there are no safety, structural or regulatory non-compliances. It’s important to check if your developer has obtained CC. The absence of this document could invite penalties or legal action against the developer. In some rare cases, the building could even be ordered to be vacated by the authorities. Most insurance companies also insist on CCs.
- What’s The Importance of a Khata Certificate?
This document, issued by the local government, is necessary to pay property tax. It includes all details of a property, including its size, area, location, etc. Khata Certificate is an important document, as one has to submit it while applying for a home loan. It is also necessary while applying for electricity connection and water supply. While concepts similar to the Khata Certificate exist, it’s known by different names in different states across India: Patta (Tamil Nadu), Record of Rights (Maharashtra), Khatauni/Khasra/Khata-Khatauni (Uttar Pradesh and Bihar), Pahani (Andhra Pradesh and Telangana), and Adangal: (parts of Telangana, Andhra Pradesh, and Tamil Nadu).
- What is an Allotment Letter?
An Allotment Letter certifies the sale and purchase of a home. It mentions all the terms and conditions like the amount for which the property has been sold and the extra payment needed for additional facilities. Make sure to ask for this document as it is required while applying for a bank loan.
- Understanding The No Objection Certificate (NOC)
This is issued by the local authority concerned. It states that all the approvals and permissions have been obtained and the construction plan conforms to the rules and guidelines. Simply put, it’s an expression of ‘No Objection’ towards construction being started.
- What is an Occupancy Certificate (OC)?
This again is issued by the local authority concerned. An important document, it confirms that the property is fit for occupancy. Every builder must obtain the OC before allowing people to stay in the property. OC signifies that the constructed property has legal compliance, adheres to the building code, provides all basic amenities, and has obtained clearances from various government agencies like power, water, and fire departments, among others.
Build Your RE Vocabulary
It’s important to have a clear understanding of the terminology for real estate as they will help you make safe choices. The absence of even one of the above-mentioned documents could hamper your happiness and peace of mind by rendering the property an illegal one. Always make informed choices and choose a developer who is synonymous with trustworthiness. At Provident Housing, we don’t build houses, we build homes – a sanctuary built over the foundation of trust, respect, love and joy!
- Is an Occupancy Certificate (OC) necessary while applying for a home loan?
Yes, it is, indeed. It is mandatory to submit the OC when applying for a home loan – be it from a bank or a housing finance company. So, you must ask your developer for it. Understanding the basic real estate terms will help you ask the right questions at the right time.
- What are the documents required when buying a house?
There are quite a few documents you will need when buying a house. These are: Sale Deed, Mother Deed, Sale and purchase Agreement, Building Approval Plan, Possession Certificate, Completion Certificate, Khata Certificate, Allotment Letter, Occupancy Certificate, and No Objection Certificate.
- What does the absence of a Completion Certificate (CC) and Occupancy Certificate (OC) signify?
The absence of OC or CC could invite penalties or legal action against the developer. In some rare cases, the building could even be ordered to be vacated by the authorities. Most insurance companies also insist on these documents. Properties without OCs and CCs may not get buyers; it will have a negative impact on the resale value. The absence of OC and CC also signifies legal non-compliance (to building regulations and laws), and structural and safety hazards.
- Talking about real estate terms, what are the different kinds of Title Deeds?
There are many kinds of Title Deeds – Sale Deed, Gift Deed, Mortgage Deed and Warranty Deed.A Sale Deed is the most common type of Title Deed. It signifies the transfer of ownership to you, once the monetary formalities are completed. A Sale Deed is considered legal only after it is registered at the local Sub-Registrar’s office. Sale Deeds include all information about the property. A Gift Deed is prepared when a property owner hands it over to someone as a token of love and affection. It involves no money exchange. A Gift Deed must also be registered at the Sub-Registrar’s Office. A Mortgage Deed becomes necessary when someone takes a loan and keeps a property in his/her name as security with the lender. If the borrower defaults, the lender recovers the debt from the said property. Now comes the Warranty Deed. It gives a guarantee to a buyer that the owner has the right to sell the property concerned. This gives the buyer a sense of security, as he/she will be compensated by the property owner even if any issue arises before the sale.