Buying a house in India
Owning a house in India is not only monetarily beneficial, it is also an emotional investment. You are likely to grow up in that house, start a family there, take care of your parents, entertain guests, and watch your kids grow old there.
When making such an important investment, it’s very important to start off on the right foot. We’re compiling this article to create awareness about the documents needed when buying a house anywhere in India: Bangalore, Kolkata, Pune, Mumbai, Chennai, Delhi, wherever!
Documents needed when buying a house in India
Sale Agreement/Mother Deed
The first document you will need is a legal agreement to buy the property (stating the seller is actually selling the property). This document should identify the property owner, the terms for property transfer, the price agreed upon, etc. The sale deed is executed only after the sale agreement.
A title deed specifies who owns the property. It mentions the ‘Title’, or the owner, and this document proves ownership. These are paper documents and show the chain of ownership for that particular property. There are different ways a title deed holder could have owned the property: Buying it, inheriting it, receiving it as a gift, during a property partition, by way of settlement, etc. The name of the deed will denote the method of acquisition: Sale or Purchase Deed, Gift Deed, Deed of Partition, Settlement Deed, Release deed etc.
Some examples to help you understand better:
If you’re buying property from a person who built and owns the house, you will receive a purchase or sale deed from them.
Suppose the seller inherited the property and is then selling it to you, they will provide you with have to cross verify the ‘entries in Revenue records’ (local civic body offices like municipality, panchayat or corporation) and also receive the predecessor’s title.
If the property was passed on by multiple people, You should receive all the title deeds and also the mother document which acts as the main document for proving ownership. The mother document is created when a house is built.
‘Encumbrance’ is defined as a burden, or a hindrance. In simple words, it means the property cannot be sold because it is being held as collateral, for a loan, or being withheld from being sold because of legal issues.
An Encumbrance Certificate indicates that THERE ARE NO ENCUMBRANCES against the property. It clearly states that the property can be sold by the seller, and therefore makes you the owner after all legal and monetary obligations are fulfilled. This certificate is also extremely important when applying for a home a loan.
Don’t be confused by the multiple names, this is just known differently in different states. The Khatha certificate entitles a person to the property and indicates this information has been updated in the revenue records maintained by civic bodies. The government can then charge the new owner property tax.
A khatha or mutation certificate is received after purchase of the property. In case of an agricultural land, a khatha certificate is a must. In case of non-agricultural lands, you can hold a title without a khatha certificate, but you cannot receive government benefits like power, water etc.
Once you own the property and obtain a khatha certificate (indicating you have registered the purchase with the government), you are eligible to pay property tax. You need to ensure property tax been paid properly by the previous owner for the previous years. You can ask for tax receipts from the previous owner as proof.
Layout of the Land
It is very important to own the exact map or layout of the land you have purchased. You can ask for a copy of the approved layout plan of the construction project.
If the property or house you are buying is in an sub-urban area, you need to ensure that the builder or seller has the right to build a house on that property in the first place. Converting agricultural land to commercial/residential property requires special government approvals and certificates. Ask for these in case the house you are purchasing lies on what used to be agricultural land.
Sanctioned Building Plan
If you’re buying a house or flat that is still under construction, you need to obtain a building sanction plan from the builder, and make sure it is sealed by a local sanctioning authority. This document indicates whether the building is being constructed according to the plans sanctioned by the developer. For example, there are situations when the sanctions allow for 2 floors and builders go ahead and build 3, or the distance of the building from the road does not match what was sanctioned, etc. You can avoid legal hassles by knowing what is sanctioned
Once the building is completed, the builder must apply for a completion certificate (CC). If the building is constructed as per the sanctions, they will receive a sealed CC. Also ensure the builder has received all the required NoCs.
Once the CC is received, the builder must apply for an OC. An occupancy certificate is an indication that the building is constructed property, is safe, and legally open for occupancy. It is a no objection provided by a legal municipal authority.
A person can legally own a flat only with the Occupancy Certificate.
There you have it, all the important documents you need to have when purchasing a house in India.
As a property management company in India we pride ourselves in knowing the ins and outs of the real estate industry. However, if there are documents we have missed or mistakes have been made, feel free to fill in the form on this page and notify us.