bangalore property buying checklist

7/31/2019 Bangalore Property Buying Checklist

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Even though this post is specific to Bangalore, the general principles should applyeverywhere. I have not included everything related to buying an apartment here likelocation, security etc. Just those things which are not so obvious to new house-hunters.

Size: Do not buy a smaller unit thinking that you can always buy a bigger one later.Banish the thought forever. If you cant afford a bigger house now, you wont be able todo so after 5 years either. Property rates are doubling every two years whereas thesalary is not. And once you get settled in a house, it is almost impossible to shift.

Looking ahead 10 years, youd have kids who would need a room of their own. Yourparents might come to stay with you. You might acquire a ton of household stuff whichyoud have to put somewhere. So buy the biggest house you can afford. Look for onewith atleast 3 bedrooms with a total area of about 2000 sqft. It might pinch a little nowbut will sure come in handy later.

Built-up area: The area of the apartment quoted by the builder is called super built-up

area. This is the area for which you are paying the money. This super built-up area

includes the area reserved for corridors, playgrounds, gardens and lift etc. The area in

which you actually get to live in is called built-up area which is typically 80% of super

built-up area. So if you are buying a 2000 sqft apartment, you get only 1600 sqft out of

that. Some builders claim to give 85% but that is the limit.

Loan: This is the one thing that causes most anxiety to new homebuyers. There are

many things to be taken care of while taking a loan.

1. Pre-EMI: In a typical payment schedule, the bank releases a part of loan, say

10%, at each stage of construction. By the time you take possession, the bank

would have paid the entire loan amount to the builder. If the construction takes

18 months, you have to pay the interest for 18 months on the money the bank

has released. As and when the bank releases money, the amount on which you

have to pay interest goes up. This interest amount is called Pre-EMI.

The alternative to Pre-EMI is to ask the bank to release the full loan to the builder

in the beginning itself. Then you can start paying full EMIs to the bank instead of

paying Pre-EMIs. Even though paying full EMIs sounds bad when you can get

away with paying much less Pre-EMIs, it is actually better and will save you as

much as 5 lakhs!

When you pay full money to the builder up-front, you get a discount of 4-5%.

This works out to be 1.5-2 lakhs, depending upon the cost of the apartment.

The Pre-EMIs that you pay do not count towards your loan. I.e. they do not bring

your loan down. You are just paying a convenience fee to the bank. Most people

go for this option cause they cant pay full EMI and the rent at the same time.


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2. Interest rate: You can go for either fixed or floating rate of interest. Floating rates

generally change every quarter but it is up to the bank. Fixed rates are of two

types fixed for a term and fixed for full tenure. The fixed term is typically 3

years after which there is a revision to the rate, depending on the market

condition at that time. There are very few banks which offer fixed rate for full

tenure. ICICI is one such bank. Some banks like Kotak offer loan with interest

rate linked to the Fixed Deposit rate.

You can change your loan from fixed to floating rate later and vice-versa but

banks typically charge 0.5% of outstanding principle amount for this. There is one

hidden cost though here. Your interest and principle components for EMI would

be calculated again and you might end up paying more.

As of Feb 2006, the floating rate is 7.75%, three year fixed is 8.25%, and fixed

for full tenure is 8.75%.

3. Pre-closure: Most loans last for about 6-7 years even though they were originally

taken for 15-20 years. If you get some extra money and want to close off your

loan, banks typically charge you 2% of the remaining loan amount. Some banks

do not allow you to do this at all. In ICICI, you dont have to pay any penalty for

this if you leave 12 EMIs.

Also check if you can pay more than your EMI once in a while. Banks typically

allow you to make excess payments once in a quarter or once in 6 months.

4. Insurance: Banks typically fund up to 85% of the apartment cost. Some banks

fund up to 90% if you take loan insurance but 90% is the upper limit. The loan

insurance premium is typically 8-10k per year. It covers things like disability,

unemployment, death, or loss of property due to fire and theft etc. Unlike life

insurance, you wont get anything back at the end of coverage term. You might

be better off taking simple life insurance if you are not concerned about job

security etc.

5. Tax exemption: You get tax benefits on pre-EMI and EMI only in the year in which

you are taking possession. See moredetails here.

6. Loan disbursement: All the builders have home loan tie-ups with various banks

and they also have loan agents who deal with those particular banks. After your

loan has been sanctioned, it takes a lot of co-ordination between the builder and

the bank to disburse the money. All this becomes much easier if you take the

loan through these builder appointed agents.
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Cost: Like there is an ex-showroom price for cars, apartments have an ex-builder price

(I just made up that term). A typical price of, say, 2000/- per sqft quoted by the builder

does not include charges for Water supply, Electricity, Car parking, Service tax, VAT,

Registration, and legal expenses etc. You wont get any wardrobes or kitchen shelves

either. Add 30% of the base cost for these things (total cost now = 2600/-). The builder

should be able to tell you exactly how much would these things cost. Your loan eligibility

is calculated on the sum total of all the above costs.

Premiums: Some builders, or rather all of them, ask for a premium for corner units or

upper floors. In other cities, lower level floors cost more than the higher ones but in

Bangalore its the other way around. This premium rate is typically 20/- to 50/- per sqft

per floor. There is no problem in paying it except that it is not shown in any of the

documents. Your house would still be registered at a rate of 2000/- only. See if your

builder can waive it off or reduce it; most do.

Amenities: All the apartment complexes are advertised to have a club house, swimming

pool, gym, garden, and playground etc. It would be a shame to call that pit a swimming

pool but the point here is that you are made to pay for these things. If you are going to

buy a house in one of these projects, there is nothing you can do to avoid paying for

them. But what youcan do is to buy a house in a much smaller apartment complex.

These complexes typically have only 12-20 units and dont have any of the above

luxuries. You can see these kind of complexes everywhere in residential areas like

Koramangala. The prices are about same as big complexes but then you get to live in

the city and in a much better locality.

Salespeople: Do NOT trust the marketing executives who take you to the site and give

you a tour. They would promise anything just to sell you the damn apartment. Always

call up the customer care department and verify it with them. Better still, go to their

office and have a look at the papers yourself.

When to buy: This one is simple. Buy it as soon as possible. Buy it now. Dont worry

about leaving Bangalore and going back to your hometown. you can always sell it later.

And at a profit too. The best time to buy an apartment is during the pre-launch offer.

These offers run for about 2 months and the rates are up to 200/- per sqft lower. As

soon as the builder gets the plans approved from the govt authorities (and the project is

officially launched), the rates shoot up (and keep on shooting up). The number of units


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on offer during pre-launch is very less though.

Another thing to note is that builders do not release (put up for sale) all the units once

they launch the project. They keep some units for selling them later at a higher price.

Links:

I have taken a 3BHK of TSBA of 1850 Sq ft in Koramangala 3rd block. Now this was a

huge investment for me, but keeping my mind long term goals and budgets, I went

ahead to take this up in a good locality.

Coming to the point of Loans which I do want to share as below:

1) category-1 Banks Mostly private banks- Loans with not many features, hidden costs

in pre-closure, monthly-reducing balance, no flexible EMI options and regular interest

rate fluctuations with no prior notice. Now this is not the banks you should mess with.

2) category-2 Banks Private & Public Good features and Felixble options like pre-

closure, flexible EMI, daily-reducing balance etc. but keep an eye on the hidden costs. A

good option, but dont miss out approaching the category-3 banks.

3) category-3 Banks Public + few private Transparent transactions, good features

like pre-closure, flexible EMI, daily-reducing balance and something very unique like the

Loan that acts as a OverDraft account which allows you to deposit surplus amounts to

this loan account that reduces the Principle Outstanding thereby reducing the Interest

paid on a long run. Now this account allows you to withdraw the surplus at a later stage

in cases of emergency as well. Now I find this very useful as one can deposit any

amount any times a year. For example, for a loan of 50 lacks, one would normally pay

back to the bank an interest of 50 lacks over 20 years. By using this feature, a excess

deposit of say 1 lack a year will reduce the interest paid to the bank to 25 lacks and time

to 14 years.

I would strongly recommend to go to the Category-3 banks I went with SBI, which

gave me a good home loan covering registration costs, cost for interiors, etc with

Insurance covered.

HSBC, SCB also has this feature called Home Saver, keep an eye on the hidden costs.

good luck,

sridhar


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Asking the builder % VAT and Service TAX is like asking Barber if you need a hiarcut.

Guys can some one formulate the exactly how VAT and service TAX has been

calculated.?

The formual i was give as

C = Cost of the flat

P = Parking

A = Animites

VAT = (C+P+A)*(0.7 * 12.5) = X

Service TAX = ((C+P+A)+ X) *(0.33 *10.2) = X1

X+ X1 is total tax

Excellent forum to comment and ask doubts. This is what I was looking for

Here is my doubt. Any sort of advice is really appritiated. I have brought an apartment

on ORR and now its the time to register it. I have two options

1) At market rate Rs.1000/sq.ft

2) Actual rate Rs. 2000/ sq ft.

It seems to avoid any future notices abt under valuation from carporation and paying

penatiesm one should register it on actuals. So in that case if

Basic cost of the flat + car park = X

and Y are the other charges for water , electricity + VAT + service tax + aminities.

Should registration be 8.4% of X or (X+Y) ? Please let me know as I am totally

confused.

thanks in advance.

Sachin.

I am pasting somebodys query on Registration and VAT calculation and corresponding

answer, which can be helpful for some people:-


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Question : I booked a flat in Bangalore for which the construction is going on and it will

take another 4-5 months for the construction to get over. The calculation for registration

goes like this:

Registration filtered = (Total area of the flat in sq. ft. multiplied by Government guidance

value + cost of car parking area) multiplied by 9.5.

Service Tax = (Total square feet of the flat multiplied by market value of the flat + car

parking areas cost + amenities) multiplied by 4.04.

VAT = (Total sq. ft. of the flat multiplied by market value of the flat + car parking areas

cost + amenities cost) + Service Tax multiplied by 4.

The cost used for registration is the government guidance value in the particular location

whereas the cost used for service tax and VAT is the actual market value of the flat per

sq. ft i.e. the cost I am paying for each sq. ft.

My question is

1) If the guidance value is used for registration then is it not the same guidance value

used for calculating service tax and VAT? When this is done, I would end up paying more

money if the actual cost is based on the market value.

2) I heard from a different builder that VAT for construction is 12.5 per cent on the 70

per cent of the construction cost (calculated based on guidance value) + car parking cost

+ amenities cost and the 10.5 per cent of it is the service tax. Why is there a difference

in percentage and method of calculation between different builders?

What is the actual procedure for these calculations?

Answer:

It is evident from your question that the total amount payable by you for the apartment

includes the price payable for the undivided share of land pertaining to your apartment

and the price payable for construction cost including car parking and amenities.

We wish to state as follows:


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1. The guideline value used for registration of properties has no relevance for the

calculation of VAT or service tax, as the charge of service tax or VAT is based on the

amount charged by the builder for construction of the flat (excluding land cost).

2. Under the VAT law, a dealer (builder) can opt for the composition scheme where the

VAT rate is four per cent and in such a case the dealer is not allowed to collect any VAT

separately from his customers. Alternatively, the dealer may opt for the regular VAT

scheme where the VAT rate is 12.5 per cent of 70 per cent of the total construction cost

(which works out to effectively 8.75 per cent of the total construction cost), which can

be collected from you.

3. Under the Service Tax law, the service provider (i.e. the builder in your case) has tocharge 12.24 per cent of the construction cost of your apartment after reducing the cost

of materials incurred for construction of your apartment, in case your builder proposes to

avail the benefit for exemption on cost of materials under Notification No.12/2003-ST

dated 20-06-2003.

However, in case your builder is not able to identify and distinguish between the cost of

material and cost of labour incurred on your apartment, then he can avail the exemption

to the extent of 67 per cent of the total construction cost of your apartment and pay

12.24 per cent towards service tax on 33 per cent of the total construction cost of your

apartment.

Whats Floor Space Index (FSI) in Bangalore. I ask this

as I find most apartments in bangalore (even 30L ones)

occupy whole land, theres absolutely no space btween

flats for air & sun light. Its fine for 3040 2 storey

building but not when you are building a 4 storey

building. Staying on ground floor in such a building

is like staying in a Cave.

For those who dont know FSI is the ratio of total floor area of a building to the total plot area.

Also called Floor Area Ratio (FAR).

Dilip,

The FSI in Bangalore varies from 0.75 to 2.5, in a very weird way. It is lower in the center of the

city and higher in the suburbs! This is totally contrary to the rest of the world. Eg. in New York, the

FSI for city center is 15 while that for suburbs is 0.5, a ration of 30. Now you know why we have

such massive jams on Hosur road.


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Your point about flats being close to each other applies for those buildings which fall within the city

limits. There are plenty of them in Koramangala where I live.

Hi,

I am planning to purchase a house at BSK 3rd stage. Can anybody answer my below questions?

1. Is it neccessary to convert a land before purchasing?

2. what is exactly means acuqiring of land by govt?

Yogesh,

You cant generally buy a piece of (agricultural) land before conversion. The only situations in

which you can buy it before conversion are:

1. You already own agricultural land

2. You intend to become a farmer, in which case youd have to take special permission from the

tehsildar and do a lot of paperwork.

Suppose you buy a piece of agricultural land and you intend to build a house on it. Since govt

gives lots of subsidies to farmers on land registration fee, stamp duty, VAT etc, you are not

supposed to get all those benefits. DC conversion is the mechanism which ensures that the taxes

and duties you pay to the govt are in line with the land utilization purpose (among other things

like building by-laws etc).

I am purchasing an apartment and I got a very good insight about calculating VAT, Service Tax

,Registraion and Stamp Duty from this dicussion. Now I want to know that how Sales Tax will becalculated?

My Breakup cost is:

Land Value: 1249500

Construction Value: 1632500

Car Parking : 175000

Other Charges(BWSSB, BESCOM, KHATA, Legal): 150000

Total : 3207000

hi, i am planning to buy a flat in bsk 3rd stg,

in the carparking+g+3 floor, he do not have plan sanctioned for our apartment. but he

has separate katha, electricity, water connection separatly for each flat, ECS builder is

telling all documents is enough no need for plan sanctioned, moreover is telling there

wont be any thret of demolition for residential properties, and there ois govt order

allowing upto 50 % deviation

please tell is it safe to buy this flat, what is risk i am taking in buying this flat

Hi kumar,


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Dont go for payment until he produces the approved plan for each floor. Deviation is secondary

depending on whether it is vertical or horizontal deviation. If its vertical deviation, please dont

take that risk. I think horizontal deviation of upto 50% or even more is OK unless your apartment

is in totally residential area, away from main roads and green belt area. You can take risk.

But without the sanctioned plan for each floor better not to go for it.

regards,

Prasad

hi,

have been readign cpl queries on this site and thought id post my own. we are on the verge of

finalising a second sale of an apt in rmv extn. blore. my query is that since our said apt wil be on

the topmost floor does anybody have an idea as to what are teh building byelaws in case of a

seepage from the terrace? are there any set rules for this??

also any site /info we can refer fr property evalutaion to ensure we are paying the right price fr

the apt??

i understand that vat is charged even fr a second sale.. however the seller is asking fr a lumpsum

price inclusive of vat. is this ok do we need to clarify with him as to additonal charges later??

any inputs as to best banks fr housing loans- floating??nationalised or private??

appreciate a prompt response

rashmi

Hi Manish,

I booked a flat in purva venezia, yelanka. 3 Bed room flat only. Purva is Ok ?

Would it be good in terms of investment ? What is your suggestion ?

Am totally confused with banks and their offers. Am afraid of floating interest rates also. Could you

guide me some good banks where I can go for floating or fixed ? Fixed of 11% is good option ? or

9% of floating rate good option ? and which banks are good ? Nationalized banks are asking like

salary should be credited into their bank or undertaking from my company But My working

company would not agree this. Private banks offering 9% floating but am not so comfortable.

What could I do ?

Waiting for your valuable suggestions.

Thanks,

Selva Mani.

Hi,


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I have 2 issues that I need advice on

- I have purchased a flat a year back fro 16L, now the value is around 30L. What is the service

tax/sales tax I will need to pay when I sell the flat

- I took a loan from a bank at a fixed interest rate for the tenure of the loan. Part payment has

been made at the interest rate agreed to. Now for the 3rd part payment to the builder the bank is

revising the interest rate to a higher rate based on a weighted average. I feel like accusing the

bank for fraud. Can I go to consumer court and newspapers for this ?

can some one guide on how bwssb and kpct(keb) deposits are calculated for newapartment? are the builders allowed to charge exorbitanatly or is there a fixed rate ?

Hi Manish,

i have learnt a lot from all the discusions in your page. I have booked a flat at whitefield.

The builder (a reputed one as far as i know) says that he has submitted his plans to the

bda and is expecting approval. this he is saying for the past two months. How long does

the bda approval process take for an gated township project of 500 homes?

Secondly, can i get a detailed plan (showing lighting points, AC points, switch points)soon after the bda approval?

thanks in advance.

saravana

This is truly an informative blog. I have recently bought a 3 BHK in Banashankari II stage behind

Big Bazaar. I have registered the flat and have the sale deed. When and from where will I get the

possession certificate and Khatha? And when should I start paying the property taxes for the

same?

If a second car park is bought from the builder, does it have to be shown in the registration? The

sale agreement has mention of only 1 car park by default. The builder says that buying a second

car park is independent of this and doesnt have to be shown in the registration. And also that he

would be giving me a seperate receipt/agreement for it.

Have any of you got a second car park? If so, was there a mention of it in the registration papers?

How do we verify the sanction plan. where is the relevent office for apartment beingconstucted in kodihalli.

Do we get authoritave sanction plan?, I mean , for my case builder gave a sanction planand I want to verify it.


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I purchased a flat which is just in the initial stages of construction. Its in ulsoor area. Since

registration costs are going up upto 100%, we approached the builder to ask if the flat could be

registered. The builder initially hesitated but later agreed. The flat is just in the foundation level so

the actual structure is still to exist. Is this ok to be registered this way? The undivided share and

the flat together are mentioned in the sale deed.

I purchased a flat from Ittina mahavir and did registration. They constructed 2 more floors withoutapproval and now BDA is not approving the new plan. There is a court case going on and if the

verdict is not to appove the project, they will demolish it. What i wanted to know is in cases like

this, the whole flat will be demolished or only the 2 floors for which they dont have approval will

be demolished?

I have few queries reg Housing Loan

- Currently its better to go for Floating option, since Interest rates are pretty high now, isnt it?

- One should be more worried about per lac EMI & not just interest rates, no?

- Which all main Banks/Housing Finance Cos. provide a Step-up EMI option?

- Is there any interest rate diff. between Step-up & normal Floating option?

- Whats the max loan tenure for ICICI / HDFC /Nationalised Banks / LIC Housing / BHW 20

years or 25 years?

(my YoB is 73 & the co-applicants DoB is 78)

- Whats the per Lac EMI at current floating rate for 20 years & for 25 years (if its available)?

- At Current rates, per Lac EMI & Loan Tenure, which Bank/Housing Finance Co. will be a better

option?

- Could you pls clarify as to what are the components that come under Property Value?

[ie like Tot Value for Super Built-up area, Amenities, KEB & BWSSB charges, Registration etc]

- Will the applicable Taxes (ST, VAT, Prop. Tax etc) be considered in calculating Property

Value/Loan Calculation?

- Is there any thumbrule used by Banks in calculating max loan amount eligible

[ Apart from the Take Home for the Co-applicants, do they incld. Incentives, TA, DA, Perf.

Bonuses, LTA, Med Allowances etc? ]

Hope to get these clarified soon


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Here are some tips that I want to share with PropertyPlus readers who are purchasing sites in City

Municipal Council areas of Bangalore. I had to face some problems and I want to caution others.

The following is the checklist one has to go through before purchasing a site in CMC areas:

One should verify the land records carefully with the help of an advocate.

One should know whether the layout plan is approved by the CMC and endorsed by the Bangalore

Development Authority (BDA). Check the CMC records and investigate all possible angles. Lots of bogus

khatas with fictitious seals of the CMC concerned are in circulation. Kindly refer to the recent news

where the Supreme Court has directed the Delhi Government that the State shall not regularise

unauthorised colonies which do not have basic amenities. This may apply to Bangalore also. Better take

care now than repent later.

Never purchase a residential site on an agricultural land or a revenue site in the Green Belt area. Many

banks are not giving loans to such sites.

One should know the background of the developer and the landlord. Is the landlord a principled, broad-

minded man? Investigate his earlier property dealings. Had he or his family members ever stopped

construction on a site sold by them earlier on any ground? If so, what were the reasons? Investigate all

this.

Are there sufficient, wide approach roads and bylanes provided in the layout? Roads are very important.

Without wide roads, it is very difficult to provide drainage, sewage and water lines. You can pay more

value per sq. ft., if there are good wide roads and approach roads in the layout.

Never purchase sites or flats in a layout where width of roads is less than 25 ft. Otherwise you will

repent in future. A house can be constructed in any manner depending on your purse. But the location

and the type of your site can hardly be changed. Hence let me repeat: the more the width of the road,

the better.

An approach road means "roads that are connecting the layout to the main road." In a layout there

should be at least two approach roads.

Ram Shanker Rao

Owning a house is an important thing in ones life. However, one needs to be careful while buying

a property to avoid falling into legal hassles. Before buying a land, a number of checks need to be


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done to confirm that the land has a clear and marketable title. The legal status of the land is one

of the first issues that should be addressed before confirming a property.

Title deeds

The first step is to see the title deed of the land, which you are going to buy.

* Confirm whether the land is in the name of the seller and that the full right to sell the land lies

with only him and no other person.

* It is better to get the original deed examined by a lawyer. This is to check details like whether

the seller has permitted any entry/access to others through this land and whether any other fact

has been suppressed/left undisclosed by the owner of the land.

* Along with the title deed, you can also demand to see the previous deeds of the land available

with the seller.

* In some cases, more than one person may own the land. So before registering, check if there is

more than one owner, and if there is, get release certificate from the other people involved.

Conveyance Deed or Sale Deed

A sale agreement is a document by which the title of property is conveyed by the seller to the

purchaser. Here, conveyance is the act of transferring ownership of the property from a seller to

the buyer. This document will help you ascertain whether the property, which you are buying, is

on land belonging to the society/ builder/development authority in which the property is located.

Tax receipt and bills

Property taxes, which are due to the government or municipality, are a first charge on the

property and, therefore, enquiries must next be made in government and municipal offices to

ascertain whether all taxes have been paid up to date.

* Inspect whether the latest tax paid receipts have been paid.

* Enquire with various departments of the municipality to ascertain whether any notices or

requisitions relating to the property are outstanding.

* If you are buying a house along with the property, then the house tax receipt should also be

checked.

* Also ensure that the electricity and water bills are up-to-date and if there any is balance

payment to be made, ensure that it is made by the seller.Encumbrance Certificate

Before buying any land or house, it is important to confirm that the land does not have any legal

dues.

* Obtain a certificate called encumbrance from the sub registrar office where the deed has been

registered, stating that the said land does not have any legal dues and complaints.

* You can check the encumbrance certificate for the past thirteen years or could demand verify the

30 years encumbrance certificate.

Pledged land

Some people may have taken loan from the bank by pledging their land.


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* Ensure that the seller has paid back all the amounts due.

* Ask for a release certificate from the bank, which is necessary to release all the debts over the

land legally.

Measuring the land

It is advisable to measure the land before registering the land in your name. Take the help of a

recognized surveyor to ensure that the measurements of the plot and its borders are accurate. You

could also take the survey sketch of the land from the survey department and compare for

accuracy.

Purchasing land from NRI landowners

A person staying abroad can also sell his land in India by giving a Power of Attorney to a third

person authorizing him the right to sell the land on his behalf. In such cases, the power of attorney

should be witnessed and duly signed by an officer in the Indian embassy in his province.

Power Of Attorney

Power of Attorney is the power given to an agent by the principal to execute several acts and

deeds for and on behalf of the principal. Stamp duty payable depends on the nature of power

given.

When power is given in respect of a number of acts in a number of transactions it is called

General Power of Attorney. It is always advisable to hold a registered GPA while registering an

immovable property in order to give better title to the property.

When power is given in respect of a particular act pertaining to one transaction it is called Special

Power of Attorney.

Agreement

Once all the matters, financial/otherwise are settled between the parties, it is better to give an

advance and write an agreement. This ensures that the owner does not change his word regarding

the cost as well as make a sale to someone else who offers more money.

* The agreement should be written in Rs.50 stamp paper.

* The agreement should state the actual cost, the advance amount, the time span within whichthe actual sale should take place and how to proceed in case of any default from either parties, to

cover the loss.

* The agreement can be prepared by a lawyer and should be signed by both the parties and two

witnesses.

* After signing the agreement if one of the parties

makes a default, the other party can take legal action against him.

Stamp Duty

It is tax, similar to sales tax and income tax collected by the Government, and must be paid in full

and on time.

* A stamp duty paid is considered a legal document

and such gets evidentiary value and is admitted as evidence


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in courts.

* Stamp duty is a State subject and hence would vary from state to state.

* When an agreement is to be stamped, it needs to be unsigned and undated one may execute the

agreement only after the Stamp Office affixes stamps on the agreement.

Registration

Registration is the process of recording a copy of a document, transferring the title in immovable

property to the office of the Registrar. It acts as proof that a transaction has taken place.

* A draft should be prepared before actually writing the document in stamp paper. Registration is

done after the parties execute the document.

* The agreement should be registered with the Sub-Registrar of Assurance under the provisions of

the Indian Registration Act, 1908 within four months from the date of execution of the document.

* Make sure all the details mentioned are accurate.

* Original title deed, Previous deeds, Property/House Tax receipts, etc plus two witnesses are

needed for registering the property.

* The expenses involved during registration include Stamp Duty, registration fees, Document

writers/ lawyers fees etc.

* Make sure that the deed is registered within the time limit mentioned in the agreement.

* Stamp duty should be paid prior to the Registration.

Changing the title in Village office

The whole legal procedure of buying the property will be complete only if the new owners name is

added in the village office records. An application can be made along with the copy of the

registered deed to the Village office to get this done. Purchase of property is a lifetime investment.A lot of care is needed from the beginning- right from site seeing till the registration of the land.

Ensure that the documents of title are scrutinised for marketability with due care by an

experienced advocate.

It is a dream of many to own a piece of land in this city. However, one

needs to be careful while buying land to avoid falling into legal hassles.

Says S Selva Kumar, advocate and consultant with banks, "I reject around

15 to 20 applications for loans out of 30 every day simply because the titles

of properties referred to me cannot be traced at all".

Today, buying a property in Bangalore, that too in the peripheral areas has

become a cumbersome exercise. To begin with, the planning authority in

Bangalore works on a three-circle approach. The innermost circle falls

under the jurisdiction of the Bangalore City Corporation (BCC) where the

Corporation is the relevant authority to permit construction of buildings

except high-rise buildings for which the BDA is the sanctioning authority.

Then there are the seven City Municipal Councils (CMCs) and a Town

Municipal Council (TMC) that control the intermediate circle. However, it is


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overseen by the BDA. The outermost circle comprising Bangalore Rural

Districts is controlled by the Bangalore Metropolitan and Rural

Development Authority (BMRDA).

The different categories of sites fall under the BDA, BCC, housingcooperative societies, CMCs, private layouts, Grama Thana, and revenue

land.

BDA sites

These are sites from land acquired by the BDA through a legal process and

allotted to applicants. Legally, these sites are the best and have all the

relevant documents. For bankers to finance the property they need nottrace the property beyond acquisition by the BDA.

BCC sites

Generally owned by individuals through inheritance, partition, gift etc.,

these are sites in the jurisdiction of the BCC. You will find very few vacant

sites in this category. However, while buying such sites you need to trace

the origin for a period of not less than 43 years. All the documents -

document of transfer, revenue documents such as Khata endorsement,

Khata certificate, tax paid receipt etc should be thoroughly checked.

Housing cooperative society

These sites may be placed on par with BDA sites. Housing societies

acquire land through the government or a development agency like the

BDA. They then form layouts and allot sites to members. Byelaws and

registration details of the society have to be checked. The records need tobe checked for any prohibition of alienation of the property and eligibility

criteria for allotment. It is important to check weather the society is

approved.

City Municipal Council sites

There are eight local bodies falling in the Bangalore district. Seven CMCs

including Bommanahalli, Byatarayanapura, Yelahanka, Dasarahalli,Pattangere, Rajarajeshwari Nagar, K R Puram, and one TMC that is


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Kengeri. Mostly individuals own sites in these limits. Some lands here have

been notified for acquisition by statutory bodies. So insist on a recent

conversion order and verify whether betterment charges are paid.

Presently, CMCs have stopped collecting betterment charges and are notissuing Khatas. Owners of sites are filing SAS for paying property tax but in

the absence of Khata, the building plans cannot be approved. Until the

government regularises these properties and brings in some regulations to

put things in order, it is better to keep off such properties.

Private layouts

Private bodies and developers form these layouts. Many such layouts havecome up around the city. It is necessary to examine whether the layouts

are approved by the BDA or the BMRDA. In case of agricultural lands, they

need to be converted for non-agricultural uses and tracing of property has

to be done for a minimum period of 43 years.

Grama Thana sites

Grama Thana sites are residential sites in village panchayat areas. While

agricultural lands have survey numbers, Grama Thana sites have

Khaneshumari numbers. These sites may be verified with a village map

available at the Survey Department.

Revenue sites

These are sites formed on agricultural land. No activities other than

agriculture is allowed on agricultural land unless it is converted. The Land

Reforms Act prescribes certain qualifications to purchase agricultural lands.A purchaser should be an agriculturist from before July 31, 1974 and his

non-agricultural income should not be more than Rs 2 lakhs per annum.

Read more:Buying a site in the city - The Times of

Indiahttp://timesofindia.indiatimes.com/bangalore/Buying-a-site-in-the-

city/articleshow/877155.cms#ixzz17z9QdcDI
http://timesofindia.indiatimes.com/bangalore/Buying-a-site-in-the-city/articleshow/877155.cms#ixzz17z9QdcDIhttp://timesofindia.indiatimes.com/bangalore/Buying-a-site-in-the-city/articleshow/877155.cms#ixzz17z9QdcDIhttp://timesofindia.indiatimes.com/bangalore/Buying-a-site-in-the-city/articleshow/877155.cms#ixzz17z9QdcDIhttp://timesofindia.indiatimes.com/bangalore/Buying-a-site-in-the-city/articleshow/877155.cms#ixzz17z9QdcDIhttp://timesofindia.indiatimes.com/bangalore/Buying-a-site-in-the-city/articleshow/877155.cms#ixzz17z9QdcDIhttp://timesofindia.indiatimes.com/bangalore/Buying-a-site-in-the-city/articleshow/877155.cms#ixzz17z9QdcDIhttp://timesofindia.indiatimes.com/bangalore/Buying-a-site-in-the-city/articleshow/877155.cms#ixzz17z9QdcDIhttp://timesofindia.indiatimes.com/bangalore/Buying-a-site-in-the-city/articleshow/877155.cms#ixzz17z9QdcDIhttp://timesofindia.indiatimes.com/bangalore/Buying-a-site-in-the-city/articleshow/877155.cms#ixzz17z9QdcDIhttp://timesofindia.indiatimes.com/bangalore/Buying-a-site-in-the-city/articleshow/877155.cms#ixzz17z9QdcDIhttp://timesofindia.indiatimes.com/bangalore/Buying-a-site-in-the-city/articleshow/877155.cms#ixzz17z9QdcDI


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The improving infrastructure, the leading IT hub and the commercial advancements in Bangalorehave made it witness a real boost in the real estate sector. The strategic location and thedeveloping road map have seen a clear rise in the demand of purchase, selling and reselling ofproperties time and again. This adds to the complexity of the matter as you have to doubly ensure

that you are not investing your lifetime savings into a fraudulent property. To prevent yourselffrom getting duped you can always take the help of a professionally qualified solicitor to get allyour legal paperwork verified. For this reason, if you are planning to buy a property in Bangalorethen refer to the below mentioned checklist, which should definitely come handy so that you canacquire a clear title. The paperwork required for authentication of the title varies from property toproperty and the region it falls in. The checklist needs to be verified before purchasing anyproperty. Do not forget that the original documents of title like sale deed, partition deed, gift deed

and will etc., are to be verified on a mandatory basis.

Purchasing a Flat/an Apartment in Bangalore: As the real estate market in Bangalore hasbecome all the more dynamic due to the purchase, sale and resale of flats/apartments, it becomesall the more crucial for the buyer to handle the entire procedure very carefully. If you aspire toown a flat or an apartment in Bangalore and wondering where to start from then have a look atthe following checklist and the information you must possess from the developer/promoter beforeyou seal the purchase.

I. Purchasing a Residential Flat/Apartments:

Mother deed/ Sale deed: This is the most important document for tracing the ownershipof the land. It gives details of the property as to how it was acquired at the initial stageand the subsequent series of transactions it has undergone. You should also check for the

original sale agreement showing the builder/developer duly registered. Khata certificate & up-to-date tax paid receipts: In case of a joint venture, the Khata

should be in the landowners name. If you purchase the property directly from thedeveloper the Khata should be in the name of the developer/promoter.

Joint Development Agreement: The agreement should be examined thoroughly if its ajoint development. You must clearly understand the ratio at which the build-up area isdivided between the promoter and the landowner.

Encumbrance Certificate: A latest Encumbrance certificate having the details of last 30

years should be checked. It can be obtained from the sub registrar. Approved Plan: Check for a copy of the approved building plan by the respective

government authority and also for the portion of the apartment being purchased.

Sanction Plan: Verify whether the building plan of the apartment is sanctioned and alsocheck the validity of the sanction plan. You must also check the commencement certificateand take a confirmation from the Municipal authorities if the building adheres to the normsof the laws.

NOCs: You should obtain NOCs under the provisions of Income-Tax Act and Urban LandCeiling and Regulation Act if required.

Occupancy certificate: This is issued to the developer by the apartmentcorporation/BDA/CMC. A buyer should insist for this.

Besides the above steps to be followed you should also ensure that the developer has obtained

approvals from the Municipal Corporation, Electricity Boards, Area Development Authorities andWater Supply and Sewage Boards. It is advisable for the apartment owners to file a jointdeclaration under Karnataka Apartment Ownership Act, 1972, get duly registered and attain therights and legal safeguards.

II. Purchasing a Commercial Flat:Purchasing a flat in Bangalore for commercial purpose also includes more or less the same stepsas in the case of a residential flat like deeds for absolute sale and conveyance. These offer a recordfor absolute and exclusive property rights of the commercial flat, confirms the usage rights,amenities and infrastructure.

Karnataka Ownership Flats (Regulations of the Promotion of Construction, Sale, Management andTransfer) Act, 1962 governs all the matters related to both residential and commercial flats.

Purchase of agricultural land in Bangalore:If you intend to purchase any agricultural land in Bangalore for nonagricultural purpose then you


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must have the approval as per the provisions and rules under Karnataka Land Reforms Act (1961)and the Karnataka Land Revenue Act of 1964. The regulating authority for approving any layoutson the outskirts on Bangalore rests with the Bangalore Metropolitan Regional developmentAuthority or BMRDA.

Before investing in any agricultural land you must adhere to the checklist which follows: Mother deed/ Sale deed: This is the most important document for tracing the ownership

of the land. It gives details of the property as to how it was acquired at the initial stageand the subsequent series of transactions it has undergone.

Search Report: It provides details of the original property holder, property history,charges on the property, current property status (all dues paid or still pending) and thenumber of times the property has changed hands before being owned by the presentseller. Your advocate will fetch you all these details and confirm whether it is a legitimateproperty for sale or not.

Agreement: Once the property is decided, make an advance payment and get a writtenagreement on a stamp paper duly signed by both the owner and the buyer in the presenceof two witnesses. An agreement must state: the advance paid, actual price, duration ofactual sale, and legal actions to be taken in case of a default from either party.

Stamp Duty: This should be paid in full and on a timely basis. To get an agreementstamped it should be without any signature or date and the agreement can beimplemented only when the Stamp Office fixes stamps on it.

Registration: Get the deed registration done in a sub registrar office within the timeframementioned in the agreement. For registering a property you need: house tax/propertyreceipts, original title deed, and previous deeds etc., two witnesses are also required atthe time of registration.

Apart from the above measures to be followed you should also get hold of an Akarbandi, an

Encumberance certificate, Saguvali chit, Conversion order, Payment Challan, Up-to-date Tax-paid

receipts, Land Acquisition Status, Mutation Extracts, NIL Tenancy Certificate/ Form No. 7

Endorsement, Podi Extracts, RTC (Record of Rights)/ Phani, Section 79A & B endorsement U/KLR

Act, 1961, Patta Book, and Tippani. You should also have the family tree of the vendor, the

comprehensive development plan or CDP and a Zonal recognition map to aid you. Anotherimportant thing to be remembered is that the property should not be located in the Green Belt

Area.

Purchasing Revenue Land in Bangalore:

Purchase of Converted Revenue Lands requires the following documents- Conversion Order from

the Deputy Commissioner, receipt for the paid conversion amount, RTCs for last 30 years issued

by the village accountant, documents of ownership, Mutation Register Extracts,

Akarbandi/Tippani/Podi Extracts, Tax paid receipts, boundary map, village map, Nil tenancy

certificate, approved layout plan, Khata certificate issued by Revenue authority, Encumbrance

certificate, Zonal regulation map, power of attorney (if any) and an evidence from the respective

authority that no acquisition proceedings exist.

Purchasing BDA (Bangalore Development Authority) Sites: The various documents

necessary for purchasing a BDA property are- allotment letter, receipts of payment for the site,

possession certificate, absolute sale deed, khata certificate from BDA, khata certificate (to be

obtained from Bangalore Mahanagar Palika if the property falls under the corporation revenue

jurisdiction), up-to-date income tax paid receipts, tax paid receipts from Bangalore Mahanagar

Palika, Encumbrance certificate (from allotment till possession date) and a re-allotment letter or

re-conveyance deed in case the property is re-conveyed by the BDA.

It is highly suggested that acquiring a property through Power of Attorney should be avoided to

prevent any litigation in the future. Documentation is the major step in the acquisition of an

immovable property of any kind so utmost care should be taken while carrying out all the

paperwork. All the agreements should be stamped according to Karnataka Stamp Act, 1957


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following all the rules therein.

Frequently Asked Questions: [FAQs]

Answers to all your queries

At LasyaDevelopers we also furnish information and answers to all and any of your Frequently Asked Questions (FAQs)

concerning about Property Registration, Stamp duty, Legal, Tax, Home Loans, Valuation etc. Whenever you would want to buy

Property / Lands in India, everyone will come across many doubts / clarifications pertaining to land purchase, before & after.

We try to give below some answers to most questions any buyer or investor might be having in their minds & would be

searching for answers. Hope this will be a good reference to all such dear friends.

Click here to know about BMICAPA

REGARDING REGISTRATION:

Q: What are the Registration Fees?

A: Registration Fees are charges taken by the Registration Authorities to maintain the documents.

The registration fee in case of the document pertaining to land or site in our property for sale and conveyance is Rs. 100/- per

sq. ft (as per Govt. Guide line value). It comes to approximately 10.40 % (of the total plot cost @ Rs. 100/- per sq. ft as Market

value).

Q: What are the pre-requisite for a document to be registered in time?

A: The following are the pre-requisites for registration of a document:-

For Lands / sites:

Stamp Duty receipt or valuation that the stamp duty has been paid according to the market value of the property

Khata and up to date Tax-paid receipt

Up to date Encumbrance certificate

Conversion orders and NOC certificates from relevant Govt. authorities

Approval from Competent Govt. Authorities

Copy of Parent sale deed / prior sale deeds
http://newwindow%28%27bmicapa.htm%27%2C%27disclaimer%27%2C%27650%27%2C%27500%27%2C%27yes%27%2C%27center%27%29/http://newwindow%28%27bmicapa.htm%27%2C%27disclaimer%27%2C%27650%27%2C%27500%27%2C%27yes%27%2C%27center%27%29/http://newwindow%28%27bmicapa.htm%27%2C%27disclaimer%27%2C%27650%27%2C%27500%27%2C%27yes%27%2C%27center%27%29/


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Paani and RTC copies for the property

Execution by the parties in front of Sub-registrar

Receipt showing proper registration fees paid.

For Flats:

Stamp Duty receipt or valuation that the stamp duty has been paid according to the market value of the property

Income Tax Clearance Certificate u/s 230 is to be attached where required (not necessary after 1.6.2001

N.O.C. of Appropriate Authority in Form 37-I under the Income Tax Act where applicable

N.O.C. under Urban Land Ceiling Act

Execution by the parties in front of Sub-registrar

Receipt showing proper registration fees paid.

Two copies of the on specific ledger paper with specific butter paper in between pages.

Document properly filed.

If the above mentioned documents are not available or procedure not followed at the time of registration then the Registration

Authorities will keep the documents pending.

Q: When should a document be registered?

A: Every document other than a Will should be presented for the registration within four months from the date of its execution.

But there is no period fixed within which the registration must be completed.

Q: What are the advantages of getting a document registered?

A: People tend to avoid getting their sale-deeds registered to save money on Stamp Duty.

For years Real Estate transactions in India are like an iceberg - there is much more hidden beneath the surface than is visible

above. In most property transactions that there is a difference between the total price paid while purchasing a property and the

amount mentioned in the agreement in most cases is common knowledge.

The price mentioned in the agreement is termed as the white portion of the transaction, the gap, which can range anywhere

between 20 - 60 per cent of the total amount is popularly known as black component. While this gap has been an integral

aspect of property transactions in India for years, the situation is changing in many cities, albeit gradually.

And the reasons are not difficult to understand and besides moral reasons economically it makes sense to undertake above the

board transactions

Firstly the Black portion decreases the buyers capacity to borrow. This is increasingly becoming important. Today the market

(specially the residential market) is being driven by end users financed by housing finance companies. Thus if a property costs

Rs. 10 Lakhs and if a seller insists on 30% black, the margin money buyer needs to arrange up front is Rs. 3.00 lakhs (Rs 3

lakhs being the black component) + 15% most HFCs demand the buyer put in. This in a complete white transaction it would be

Rs. 3 lakhs + 15% of the property cost.

Secondly the market is increasingly becoming transparent. If a buyer is entering into a black transaction, he is assuming five

years down the line when he decided to sell the property the practice will still be prevalent. If at that point of time the buyer can

only undertake a white transaction he will need to pay a higher capital gain tax. Let us assume a buyer purchases a propert y

for Rs 20 Lakhs (15 lakhs in white + 5 lakhs in black). If he sells the property for Rs 25 lakhs he will need to pay capital gainson Rs 10 lakhs.


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Thirdly it is easier to reverse a white transaction should a problem arise whereby a buyer can't go ahead with the deal. While

dealing in cash there will most likely be little record of the black transaction.

A huge undeclared amount can get the taxmen sniffing at your door. There have been several instances, where the Income

Tax Department detected a discrepancy between the figures mentioned and the market rate prevailing in the area. In some

cases where the gap was too obvious to be missed, they dealt out the worst possible penalty - taking over the property after

paying the agreement price. In this situation, the buyer has the option of either admitting to having deliberately quoted a l ower

price in the agreement, which quite frankly is no option at all.

Q: How can a document be registered after the lapse of four months?

A: A ''Deed of confirmation'' will have to be prepared, signed and attached to the original Conveyance Deed

CHECK LIST:

Q: Legal Checklist for buying property

A: The checklist for buying property:

Finalizing terms and conditions of a particular deed.

Investigation of the title deeds. Abstract of title is to be prepared on the basis of specific information and details of the

property.

Examination and investigation of marketability of the title.

Procuring the required approvals, consents, permission, sanctions, no objection certificates etc. from various competent

authorities like the local Municipality / BDA / BMRDA / BMICPA / BIAPPA etc.

Providing the duration for the compliance of various terms and conditions mentioned in the contract.

Ensuring payment and discharge of encumbrances that are to be cleared before sale

Acquiring possession of the property and title deeds.

Completion of the transaction of sale by execution and registration of the deed

Q: Legal Checklist for selling property

A: The checklist for selling property is as follows:

Finalizing the terms and conditions of the deed

Providing the duration for compliance of various terms and conditions mentioned in the contract;

Procuring the consent, permission, sanction, no objection certificate of:

the society if applicable

the income tax authority if applicable

the Urban Land Ceiling authorities if applicable

the Municipality if applicable

any other authority, if applicable

Getting it stamped by paying applicable stamp duty

Not handing over the title deeds and possession until the payment of consideration.

Engrossing the Deed

Registering the Deed

REGARDING STAMP DUTY


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Q: What is Stamp Duty?

A: It is a type of tax collected by the government. It is payable on instruments and not on transaction. Instruments include

every document by which any right or liability is or purports to be created, transferred, limited, extended, extinguished or

recorded but does not include a bill of exchange, cheque, promissory note, bill of exchange, bill of lading, letter of credit, policy

of insurance, transfer of shares, debentures proxy and receipt.

Q: Who is liable to pay stamp duty?

A: Generally, the purchaser is liable to pay stamp duty. But if there is any contract to the contrary then the stamp duty will be

paid according to the terms of the contract e.g. if there is a contract stating that the stamp duty will be paid by the seller or it will

be divided equally then the stamp duty will be paid as per the terms of his contract.

Q: Why Stamp Duty should be paid?

A: Stamp Duty paid instrument / document is considered proper and legal instrument / document and as such gets evidentiary

value and is admitted as evidence in courts. The instruments / documents not properly stamped are not admitted in evidence

by the court. Instruments include every document by which any right or liability is or purports to be created, transferred, limited,

extended, extinguished or recorded but does not include a bill of exchange, cheque, promissory note, bill of exchange, bill o f

lading, letter of credit, policy of insurance, transfer of shares, debentures proxy and receipt.

Q: On what value is the stamp duty payable?

A: The Stamp duty is ascertained on the market value of the property as ascertained by the stamp duty authorities. The

consideration or price mentioned in the document is not relevant. The parties entering into the document will have to apply for

adjudication of stamp duty. The stamp authority will ascertain the stamp duty on the basis of the market value of the property.

This value is recognized on the basis of a ''Ready Recknor'', which gives the per sq. mtr. value of each zone at the concerned

Sub-Registrar office. But the ready-recknor is not conclusive and it is merely a guideline for the stamp authority. The market

value of the flat will depend on the location / area / locality, the amenities available etc.

Q: What are the consequences of delay in Stamp Duty?

A: If the stamp duty is not paid on time it attracts penalty at the rate of 2% per month of the stamp duty that has to be paid.

But it cannot exceed twice the amount of the stamp duty that has to be paid. Besides the penalty amount the defaulter will have

to pay the amount of the stamp duty.

Q: What are the precautions one should take while purchasing a property

A: A purchaser must take following precautions while purchasing a property:

Examine title of the property by investigating the source from which the seller acquired the property. This search can be

conducted at the sub-registrars office. It is advisable to investigate the title for the past thirteen years or up to the original

owner whichever is later. These are called "link documents".

One must check if the appropriate stamp duty has been paid on all these documents. If the property is situated in a cooperative

society the original share certificate should be examined.

All documents examined, should be original to ensure that the seller has a clear title and that there are no encumbrances onthe property such as lien or mortgage or any other charge. Non-availability of any original document should be taken seriously.


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For flats: If the flat is in a co-operative society, it is advisable to get a No-Objection Certificate even though it is no longer

mandatory. By way of the NOC it will be clear if any dues of the society are pending and the purchaser can avoid future

problems. It is also advisable to see the latest society bill and the latest electricity bill; the Income Tax Certificate under section

230A is not required any more, to ensure that the seller has discharged all Income Tax liabilities; the seller should obtain the

Income Tax Clearance Certificate under section 281 of the Income Tax Act, 1961

Q: What is the Stamp Duty payable in case of exchange of properties?

A: Stamp Duty is payable only on the value of that property, whose value is maximum among the two properties exchanged.

VALUATION & SALE:

Q: What is Valuation?

A: A valuation process is undertaken to ascertain the fair market value of a property. A scientific valuation goes beyond the

parameters of the demand and supply forces that dominate the real estate market. Other factors that form vital inputs for a

scientific valuation would be maintenance, quality of construction, location, the infrastructure of the area, the nature of the

property, - whether freehold (or leasehold, if leasehold then the period of lease etc. in case of flats). A valuator would normally

adopt two or three different techniques separately to determine the property value and then compare the results to arrive at the

correct value.

Q: What constitutes conclusion of the sale?

A: The transfer of a property is coupled when you have an agreement of sale coupled with actual possession. Generally, in

all cases the entire amount is paid simultaneously with handing over of physical possession. If you give possession after having

entered a sale agreement, you would be liable to be taxed even if you have not received the full consideration.

HOME LOANS:

Q: Who can apply for a Home Loan?

A: Normally Housing Finance Companies give home loans for property located in India to any Indian Resident, Non Resident

Indian and a Person of Indian Origin above 21 years of age at loan origination and 65 years or below at loan maturity, who is

employed or self-employed, with a regular source of income.

Q: How Do Housing Finance Companies Calculate eligibility?

A: Housing Finance Companies decides on loan eligibility on the basis of repayment capacity. Repayment capacity takes into

consideration factors such as income, age, qualifications, number of dependants, spouse's income, assets, liabilities, stability

and continuity of occupation and savings history.

Q: Who can be a co - applicant?

A: Every HFC insists on all co-owners of the property being co-applicants to the loan. In case of acceptable relationships as

stipulated by the HFC, the income of the co-applicant can be included in arriving at loan eligibilities. In case of any other relative

being a co-applicant to the property, the HFC would not include the income of the co-applicant for the calculation of loan

eligibility.

Q: How to select a Housing Finance Company?


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A: With so many banks and home finance companies competing with each other to give you loans with interest rates figures

ranging from 12 to 15% per year being tossed around its easy to get confused while choosing a home Loan. The following are

a few tips on how to select the home loan most suited to your need.

Minimum & Maximum Loan amount - The minimum loan amount offered by a financier is important to find out if the financier

can finance the amount you are looking for. Moreover most HFCs have a upper limit on the amount that they would finance.

Interest Rates: Don't worry if you don't understand the complexities of interest rate calculation, how daily, monthly or yearly rest

work. Other factors remaining the same for a given tenure the loan with the lowest EMI is the best.

Other Costs: Other than EMI, look at the administration fee, processing fee and any other costs. Other things remaining the

same it makes sense to go for Housing Loan where the processing fee (or fees by other name) is lowest.

Does the HFC offer home loans without pre- payment penalty (or a penalty for repaying loan before it is due), So that you can

repay your loans earlier, besides switch loans if the interest regime suits you? This is especially true if you are going for fixed

rate loan as compared to a floating rate loan. A Fixed rate of interest is one where the rate charged by the HFC on the loan is

constant over the tenure of the loan. The interest rate on your Floating Rate Loan is linked to Retail Prime Lending Rate.

Whether the financier is offering a loan product to suit your requirements be it for a salaried person, NRI or for the purchase of

land, etc.

Does the HFC require a guarantor? Some HFCs insist on a Personal Guarantor. You need to check this out if you have any

reservations about providing a guarantor. Tenor Range (Loan Period) - Whether the financier is offering the tenure of loan that

you are looking out for? Normally HFCs offer loans ranging form 5-20 years, with some going up to 30 years. For NRIs the

maximum tenure could be 10 years in some cases.

Requirement of Co-owner & Co-applicant - If you intend to buy your house along with a co - owner, or if you plan to co-apply for

the loan you will have to check whether the HFCS accepts the relationship between you and the co - owner.

Documentation Required - The type of credit documents that HFCs insist before approving your loan would differ from one

HFCS to another. Kindly go through the credit documents comparator before you decide on your HFCS.

Normally the documentation required for a salaried person include the latest salary slip showing statutory deductions, Form 16,

Proof of age, Proof of residence etc. For Self-employed person these might include income proof for the previous two-three

years, certified by a Chartered Accountant, audited Profit & Loss Account and Balance Sheet for the previous two-three years,

besides proof of age and residence.

The above mentioned are some of the parameters that you will need consider before you zero in on the perfect home loan for

your self. Getting a home loan which would offer you the best in all of the above parameters might not be possible. Thus you

would need to identify which of the parameters are most important for you and take a decision accordingly.

LEGAL:

Q: Is Stamp Duty payable on transfer of flat from husband to wife or children and vice-versa?

A: Yes. Stamp Duty will be same as applicable to conveyance. However 10% rebate could be expected while valuation, at the

discretion of valuation officer.

Q: Is there any way where the value of the stamp duty could be reduced for flats?


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A: The deductions which can be requested are:

Up to 50% of market value in case of buildings which are 40 years old. (In practice only 30% of the deduction is given).

One can also ask for such deductions (in proportion) if the building is little less older than 40 years.

Non-road facing

Fourth floor upwards and without lift.

Slum land or Kardi land

Q: Where are documents related to immovable property registered?

A: A document is registered with a sub-registrar of a district in which the whole or some portion of the immovable property is

situated. A document registered with a sub-registrar who does not have jurisdiction is null and void.

Q: What are the documents of which registration is compulsory under the Indian Registration Act, 1908?

A: The following documents are required to be registered compulsorily under the Indian Registration Act, 1908:

Instrument of gift of immovable property;

Other non-testamentary instruments which purport or operate to create, declare, assign, limit or extinguish, whether in

future or in present, any right, title or interest, whether vested or contingent, of the value of one hundred rupees and

upwards to or in immovable property.

Non-testamentary instruments which acknowledge the receipt or payment of any consideration on account of creation,

declaration, assignment, limitation or extinction of any such right, title or interest ;

Lease of immovable property from year to year or for any term exceeding one year or reserving a yearly rent. But the

State Government may publish an order in official gazette exempting any district or a part of a district or a lease that does

not exceed the term of five years and the annual rent of which does no exceed Rs. 50/- .

Non-testamentary instruments transferring or assigning any decree or order of a court or any award when such decree or

order or award purports or operates to create, declare assign, limit or extinguish, whether in future or in present, any right,

title or interest, whether vested or contingent, of the value of one hundred rupees and upwards to or in immovable

property.

Authorities to adopt a son that is not conferred by a will.

The important thing that should be kept in mind is that the Registration Act deals with only the documents and not transactions.

In Abdullah Sahib v. Rahamatullah Sahib, AIR 1960 Mad 274 it was held that the registration is obligatory when the transaction

is reduced to writing. It was held in Rosan Singh v. Zail Singh AIR 1988 SC 881 that a bare agreement to divide properties

amongst the co-sharers would not require registration, but if the writing itself effects the division, it must be registered.

Q: What property can and what property can not be transferred according to the Transfer of Property Act?

A: Section 6 of the Act provides that property of any kind may be transferred, except as otherwise provided by the Act or by

any other law for the time being in force.

Thus section 6 provides that property of any kind may be transferred. However it has two exceptions i.e.

Whenever it is provided otherwise

By this Act itself or

By any other Act for the time being in force


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The section further expressly provides ten kinds of property, which cannot be transferred.

The chance of an heir-apparent succeeding to an estate, the chance of a relation obtaining legacy on the death of the

kinsman, or any other mere possibility of a like nature, can not be transferred.

A mere right of re-entry for breach of a condition subsequent can not be transferred to anyone except the owner of the

property affected thereby.

An easement can not be transferred apart from the dominant heritage.

An interest in the property restricted in its enjoyment to the owner personally cannot be transferred.

A right to future maintenance, in whatsoever manner arising, secured or determined, cannot be transferred.

A mere right to sue cannot be transferred.

A public office cannot be transferred, nor can the salary of the public officer.

The stipends allowed to military, naval, air force and civil pensioners of the government and political pensioners could not

be transferred.

No transfer can be made:

In so far as it is opposed to the nature of the interest affected thereby, or

For an unlawful object or consideration.

To a person legally disqualified to be a transferee.

The words ''Property of any kind'' appearing in the above section, indicate that transferability of the property is the general rule

and the right to property includes the right to transfer the property to another person. The onus of proof is on the person

alleging that any kind of property is not transferable. However there are some exceptions to the above rule.

Q: Would it be correct to say that on the default in payment on the due date, the sale becomes complete / absolute,

mortgage becomes irredeemable because the contract says so?

A: No. It would be a totally wrong legal inference. A mortgage being a security for the debt, the right of redemption continues

although the mortgagor fails to pay the debt by the due date. This right of redemption continues unless it has been extinguished

by the act of parties or by a decree of Court. "Act of parties" refers to some transaction subsequent to the mortgage and

standing apart from the mortgage transaction. In a mortgage by conditional sale the right of redemption is not extinguished at

the expiry of the period. A clause in a mortgage deed that in default of payment by the stipulated date the mortgage should

operate as a sale, is not the "act of parties". This is because in India, right to redeem being a statutory right continues to exist

unless the mortgagee obtains a decree for foreclosure.

Q: Are there any formalities or forms to be filled/filed when either the Sale Deed or transfer documents is to be

executed?

A: Yes. The following are the formalities or forms to be filled / filed:

This depends from State to State in which the Property is situated. Every State has its set forms under the Registration

Rules that are required to be filled and filed along with and at the time of Registration of Sale Deed/Transfer Deed.

Under the provisions of the Income Tax Act and Rules for a transaction of sale, it is now compulsory for the Purchaser and

Seller to give their Permanent Account Number and in the event of either the Seller and/ or the Purchaser would be

required to fill Form 60 of the Income-Tax Rules.

In case of either the Purchaser or the Seller being a Non-Resident Indian, not assessed to tax in India, such a Party would

be required to file Form 60 of the Income-Tax Rules.

TAX - RELATED:

Q: Are any concessions available under the income tax laws with regard to profit on sale of residential property?


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A: Concession is available by way of exemption from income tax on capital gains arising on transfer of a residential property.

The exemptions are provided in Sections 54 and 54EC of the Income-tax Act (the Act). The exemption is available on re-

investment of the capital gains in specified assets by the assessee.

Q: Who is entitled to such concessions?

A: The exemption under Section 54 of the Act is available to an assessee who is either an individual or a Hindu Undivided

Family (HUF). The exemption under Section 54EC is available to any assessee.

Q: Is there a minimum holding period for such property before transfer to be eligible for the concessions?

A: The residential property should be a long-term capital asset. To qualify as a long-term capital asset, the residential property

should be held by the assessee for a period of 36 months, prior to the date of the transfer.

Q: What is the nature of assets in which the sale proceeds should be re-invested by the assessee to avail the

exemption?

A: Under the provisions of Section 54 of the Act, the capital gains should be re-invested in the construction or purchase of

another residential property. Under the provisions of Section 54EC of the Act, the capital gains should be re-invested in 'long-

term specified asset'.

For the purpose of this provision, long-term specified asset means any bond redeemable after 3 years, issued on or after 1

April 2000, by National Bank for Agriculture and Rural Development or by National Highways Authority of India.

Q: Is there any time limit for such investments to be made?

A: Under the provisions of Section 54 of the Act, the assessee should, within a period of one year before or 2 years after the

date on which the transfer took place, have purchased or within a period of 3 years, after the date of transfer, constructed a

residential house.

Under the provisions of Section 54EC of the Act, the assessee should invest the capital gains in the specified capital asset,

within a period of 6 months, after the date of such a transfer.

Q: What are the restrictions on transfer of such newly acquired or constructed property or long-term capital asset?

A: Under Section 54 of the Act, there are no restrictions on transfer of such newly acquired or constructed property.

Under Section 54EC of the Act, where the long-term capital asset is transferred or converted into money at any time, within a

period of 3 years, from the date of acquisition, the exemption stands withdrawn.

Q: Are there any concessions in the income tax laws for investment of capital gains on transfer of any other capital

asset if the gains are re-invested in a residential property? Is there any time limit for making such an investment?

A: Under Section 54F of the Act, capital gain arising on transfer of any long-term capital (other than a residential property),

would be exempt from income tax if the capital gain is re-invested in a residential property.

Under the provisions of Section 54F of the Act, the assessee should, within a period of one year before or two years, after the

date on which the transfer took place, purchased, or within a period of 3 years, after the date of transfer, constructed aresidential house.


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The exemption under this provision would however not be available if the assessee:

owns more than one residential house, other than the new asset, on the date of transfer of the original asset; or

purchases any residential house, other than the new asset, within a period of one year after the date of transfer of the

original asset; or

constructs any residential house, other than the new asset, within a period of 3 years after the date of transfer of the

original asset

GIFTING OF PROPERTY:

Q: What is meant by settlement? How does it differ from gift?

A: Settlement is specie of or a type of gift only in certain circumstances. Transfer of Property Act does not define what is

"settlement"? However, the law pertaining to the stamp duty defines it albeit with the object of levy of the stamp duty. For

example, Section 2 (t) of the State Stamp Act defines "settlement", under which the "settlement" means any non-testamentary

(testament means a will) disposition of moveable or immoveable property made:

In consideration of marriage;

For the purpose of distributing property of the settler among his family or those for whom he desires to provide or for the

purpose of providing for some person dependent on him;

For any religious or charitable purpose

Q: Can the gift be made of the property not in existence, i.e. of the future property?

A: No. The subject matter of gift must be certain existing moveable or immoveable property. It could be anything such as,

goods, any right, title or interest in any immovable property which exists or even an actionable claim. It must be transferable

within the meaning of Sec.6 of the Transfer of Property Act. A gift of the right to management is valid. But a gift of the future

revenue of the village is invalid. Release of a debt is not a gift; because it does not involve any transfer of property but merely a

renunciation of a right of action.

Q: What is the meaning of exchange according to the transfer of property Act?

A: Section 118 of the transfer of property Act defines exchange as follows: When two persons mutually transfer the ownership

of one thing for the ownership of another, neither thing or both things being money only, such a transaction is called an

''exchange''.

The definition of exchange is not limited to immovable property. Exchange is therefore not only exchanging of lands but also

barter of goods. If one of the items transferred is money, the transaction is not an exchange but a sale; because the price is

money only. But money in one form may be exchanged for money in another form. So also an exchange of one stamp for

another is not a sale. A sale should always be for a price, but in the case of an exchange, the transfer of ownership of one thing

is not one for price paid or promised, but for transfer of another thing in return. So, a transaction in which the considerations for

the transfer of certain properties are shares in a limited company is an exchange.

The ownership of the one party must be exclusive of the ownership of the other, so that a partition is not an exchange. A

transfer by a husband to a wife in discharge of her claim to maintenance is not an exchange, as the wife transfers no ownership

in anything.

If the lessee surrenders a lease and the landlord grants him the lease of another property, the transaction is not an exchange. Ifboth parties are not the same, there can not be an exchange.


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Illustration:

A transfers to B a house worth RS. 1,500 and B transfers to A a field worth RS. 1,000 and RS. 500 cash. The transaction is an

exchange.

Q: If a gift is made to two or more persons of whom one or more of them does not/do not accept the same, what is

the impact of such non-acceptance on the interest of the donee/s accepting the same?

A: Under Indian Law, the presumption is that the transfer by gift to two or more persons is as the tenants-in-common i.e. each

donee getting a distinct share in the property gifted. The relevant provision is contained in Section 125 of the Transfer of

Property Act. Therefore, while the gift will be void only to the extent of the share of such donee who does not accept it, if the gift

is made to two persons jointly and one of them does not accept it, the another one cannot take the whole.

Q: What is acceptance of gift and why is it one of the essential ingredients of gift? When should the acceptance be

done?

A: Donee is not bound to accept the gift although an express acceptance by the donee is not necessary to complete the gift. It

has long been settled that the acceptance of the gift by the donee is to be presumed until his dissent is signified. The use of the

words "accepted by or on behalf of the donee" shows that the donee might be a person unable to express acceptance when

the gift is to a minor and it may be accepted by the natural guardian on his behalf. However, it is essential that the gift is

accepted during the life time of the donor and while he is still capable of giving; and, also it is essential that acceptance must be

made during the lifetime of the donee, for if the donee dies before acceptance, the gift is void

FLATS:

Q: What Are Carpet Area, Built-Up Area & Super Built-Up Area?

A: Generally speaking Carpet Area is the area of the apartment/building, which does not include the area of the walls. The

actual used area of an apartment/office unit/showroom etc. In simple terms, it is that area within the walls where you can

actually lay a carpet. It is the super built-up area minus the thickness of the walls and the proportionate share of the common

areas. Built up Area includes the area of the walls also. It also includes the carpet area, the wall thickness and the balcony.

Super Built up Area includes the built up area along with the area under common spaces such as the lobby, lifts, stairs, etc.

This term is therefore only applicable in the case of multi-dwelling units. The plinth area along with a share of all common areas

proportionately divided amongst all unit owners makes up the Super Built-up area. Sometimes it may also include the common

areas such, swimming pool, garden, clubhouse, etc.

This break up is extremely essential as builders can place anywhere from 65 per cent to 85 per cent of the super built area as

carpet area. That means, if the quote is on 1,000 sq ft, the carpet area could be anywhere from just 650 sq ft to 850 sq ft. If this

break up is not mentioned in the agreement, demand that the builder mention it in the sale deed.

Q: What is Freehold Property?

A: Freehold property is property for which ownership rights of Land is given to the purchaser for a price and he is not required

to pay annual Lease Charges. Freehold properties can be registered and/or transferred in part/s, which is not possible in the

case of Leasehold properties.

Q: What Is Leasehold Property?


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A: Leasehold Property is property leased to a lessee for a stipulated period. The Lessee pays lease premium and annual

lease amount as fixed by the Lessor. In these cases the Land ownership rights remain with the Lessor and a prior sale-

permission is normally required if you plan to transfer the property.

Q: How do you inspect a property?

A: Before you buy a house--even if it looks perfect--it's wise to make sure everything's all right. You need to complete your

home purchase with your eyes open as to the condition of the property and all its and systems. The purchase of a home is

probably the largest single investment you will ever make.

bangalore property buying checklist

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