Buying a house is an important event in one’s life and if it’s the first one then it is attached with an emotional achievement and satisfaction. Though buying a house causes an enormous dent in one’s savings and exposes homebuyers to financial risks.
Typically, a sale agreement is entered into between the buyer and the seller to effect the purchase. This sale agreement becomes a valid instrument of transfer after it is registered. A registered sale agreement is also called a sale deed. It is important that one knows the legal requirements involved in a Sale Deed or the contract which will legally make you the homeowner. We bring to you a list of legal requirements which you should go through before you finalize the purchase of your house.
There are certain components that you should check before you are ready to sign the Sale Deed. These are:
Capacity to enter into the contract: Only those persons who have attained the age of 18 years and above, who are mentally sound and are not disqualified under any other law from entering into contracts, can sign the sale deed. For instance, your son or daughter who is not yet 18 years of age cannot sign the contract.
Who owns the House?/Legal Ownership: The Seller from whom you are buying the house, should have legal ownership over the property. This means that he should be the absolute owner of the property and not merely have an interest in the property. For example, a tenant cannot sell the house as he is not the absolute owner of the property. Ask for documents of legal ownership from the seller and preferably show them to a lawyer to check if the seller actually has title over the property.
Is the Seller genuine?/Identity of the seller: You should also verify the identity of the seller prior to buying a house. You can ask him to furnish any government-mandated identity proof documents, in order to check if you are buying the house from a genuine seller. This is generally relevant in resale transactions.
Disputed Property: You should check whether the property you are buying is subject to any dispute or not, before signing the sale deed. A title search report which is typically prepared by a lawyer will help you know, if the property is subject to any court dispute or not.
Defects in the Property: You should check the property for any possible defects. The law mandates the seller to inform the buyer of any material defect in the property which the buyer cannot find out by ordinary care and diligence.
Regulatory requirements: If you are buying your house from a builder, check if he has the occupancy certificate (this certificate deems the property fit for occupancy), if the property is registered under RERA and that the property is not mortgaged or has any other liability attached to it. This can be done by conducting legal due diligence over the property with the help of a lawyer.
Tax Verification: A house is typically subject to the payment of property tax. You should ideally ask the seller to furnish you with past tax receipts to assess whether there is no outstanding tax liability. If there is unpaid tax, then you should insist that the seller pays them before the title is transferred to you.
Registration: You should get the sale agreement signed by you and the seller registered at the Office of the Local Registrar. Proper stamp duty must be paid, otherwise the sale deed will be termed defective.
An agreement is a consensus of mutually agreed terms and conditions. However, the first step towards drafting an effective agreement is to ensure that it is placed within the correct legal framework. Competence of parties, checking if the seller has legal ownership over the property, registering the sale deed, etc. are some important things one needs to know before signing the sale agreement for a House.
RERA (Real Estate Regulation Act) was passed in 2016 in order to bring in transparency in the real estate sector. The RERA Act has created a kind of uniformity in the real estate sector. As per the Act, the builders must provide the flats to the buyers on a fixed date; they must provide the owners with information about the progress of construction, and follow the rules as laid down by the Act. The RERA Act, when passed, was made buyer-friendly rather than builder friendly.
Possession date is an important clause in the agreement made between a builder and a home buyer. Possession date is a date when the builder promises to complete the construction work of the building, obtain permissions from the local authorities, and hands over the keys of the flat to the rightful owner. It is a date by which the builder must give the possession of the flat to the owner. The possession date is normally a few months or years from the date of signing the agreement. The builder must provide the possession on time or else face the penalty as prescribed in the Real Estate Regulation Act.
The Real Estate Regulation Act is an act that was passed to protect the rights and savings of homebuyers from the builders. Section 18 of the Real Estate Regulation Act states that, if a builder fails to hand over possession of the flat as per the date mentioned in the Agreement of Sale, the homebuyer has two options-:
He can terminate the agreement and seek a refund from the builder, wherein the builder is liable to pay the entire amount paid by the homebuyer with the rate of interest. The percent of the rate of interest differs from state to state
The person can agree to continue with the project. However, the concerned person must be paid interest for every month of delay.
If the builder has delayed in giving the possession of flats to the flat owner and also refuses to pay the interest, then the aggrieved person can approach the court and initiate legal proceedings against the person under Section 31 of the Real Estate Regulation Act.
The format of filing complaints is different for different states. Although the basic structure remains the same, the aggrieved person must provide the RERA registration number, basic details of the project, description as to how the RERA act has been violated by the builder, compensation if any, and other relevant documents such as Agreement for Sale, payment proofs to the RERA. One copy must also be provided to the builder. Thereafter the RERA will provide a date for the hearing.
While hearing, the Adjudicating officer must follow the Principles of Natural Justice, i.e., he must hear both the sides and ask questions, if any, to the parties and thereafter decide the matter. The good part of RERA is that there is no Adjournment culture as Section 71 of the Act prescribes a time limit of 60 days within which the matter must be decided.
The party against whom the decision is not in favor of an appeal against the judgment before the Real Estate Appellate Tribunal within 60 days from the date when the order was passed by the Adjudicating Officer.
The RERA Act is regarded as Buyer friendly, it is a major step towards the protection of the homebuyer’s rights. Previously the aggrieved buyers would file complaints against the builder, but it would take years to come to a decision. With the enactment of the RERA Act, the aggrieved person can receive justice speedily on account of delay in receiving the possession of the flat.