FAQs

Under the Real Estate (Regulation and Development) Act 2016, Government of Maharashtra established Maharashtra Real Estate Regulatory Authority (MahaRERA), vide Notification No. 23 dated 8 March 2017, for regulation and promotion of real estate sector in the State of Maharashtra, with its headquarters at Mumbai.The Act has been implemented with effect from July 1, 2017.

All Real Estate Agents should register under this Act. No real estate agent shall facilitate the sale or purchase of or act on behalf of any person to facilitate the sale or purchase of any plot, apartment or building, as the case may be, in a real estate project or part of it, without obtaining registration under this section.

What are the peculiarities of lease hold land?

Lease hold land properties come under the purview of public land-owning agencies such as the Land and Development Office (L&DO) and Delhi Development Authority (DDA) in Delhi; New Okhla Industrial Development Authority (NOIDA) in Noida and Greater Noida Authority in Greater Noida. These land-owning authorities generally execute a perpetual lease deed for 99 years in favour of the allottee where the land-owning authority is the lessor and the person allotted the land is the lessee. The lease usually includes a range of terms and conditions, specifying the lessee’s responsibilities towards the lessor.

By and large, leasehold properties are not freely transferable. Transferring them requires prior permission of the land-owning authority, which is generally granted upon payment of the prescribed charges. The seller should be willing to apply for a No Objection Certificate/ approval granting permission to transfer the leasehold property to the buyer, from the land-owning authority.

What is Title Investigation?

The importance of thorough title investigation for obtaining a clear title of the property cannot be stressed enough. Verifying a property’s chain of title at the appropriate office (sub-registrar, development authority, municipal corporation) serves as a safeguard against fraud, misrepresentation or defects in the title. Title deeds of ownership: To protect oneself from litigation arising from possible defects in the title of the property, the first document a buyer should check is the seller’s title to the property and legal validity of title deeds previously executed with respect to the property. A buyer should check all registered documents by which the seller acquired the property.

Documents which buyers should scrutinize as part of title investigation are given below:

	Sale deed
	Lease deed
	Agreement to sell (ATS)
	Power of attorney (POA)
	Will document

Which are the documents which prospective buyers should scrutinize as part of title investigation?

Given below are some ownership documents that prospective buyers should scrutinize before taking the final call on purchasing residential property. Such residential property could be an independent house, a floor in an independent house or a house located in a group housing society/residential complex.
These documents may include:


	Sale deed: Document by virtue of which the property has been sold by its previous owner/s to the seller, thereby conferring absolute ownership and title of such property onto the seller. Such a transfer of a property is absolute, provided the property is clearly demarcated and there is no undivided share/interest of any other person in the property. The buyer should make sure that the seller possesses a registered sale deed (in case he acquired ownership through purchase) for the property executed in his favour by the previous owner. This will clarify whether the seller actually holds clear and marketable title to the property. It is equally essential to check the property’s history of change in ownership by scrutinizing the title chain and deeds executed in the past between its previous owners and subsequent purchasers.

	Lease deed: Document by virtue of which a leasehold property has been allotted to the seller by a land-owning authority. Though perpetual lease deeds do confer ownership of the property on to its allottee, such ownership comes with restrictions imposed by the lessor. Buyers should note the remaining duration of the property’s perpetual lease and clarify whether the lease rent payable by the seller to the land-owning authority is and annual payment or if onetime payment has been made.

	Agreement to sell (ATS): In some cases, a seller may have bought his property through an ATS in his favour instead of a sale deed. In case of an ATS, the entire payment for a property is made at the time of execution of such ATS. Since an ATS does not confer absolute ownership of a property upon the person buying it, due care must be exercised before purchasing property from a seller who acquired it via an ATS.

	Power of attorney (POA): Document with which the seller is granted certain powers of dealing with the property on the actual owner’s behalf to a representative appointed by him/her (attorney). Sometimes a property is transferred by an attorney to the prospective buyer by virtue of such POA on behalf of the owner. In event of the property being previously transferred with a power of attorney, the buyer should ensure that such POA was not revoked and property was transferred by the attorney during the lifetime of the executor of the power of attorney.

	Will document: A legal instrument by which a person specifies the method to be applied in the management and distribution of this estate after his death. The seller might have been bequeathed the property through a will that named him as beneficiary. If yes, the will through which the property has legally devolved onto the seller should be valid testamentary document – i.e. probate (wherever required) with respect to such will should have been obtained by the seller. Where the seller has inherited the property as sole legal heir, in case of intestate death (a case where a person dies without executing a valid last will) of the previous owner of the property, the seller can validly sell such property. However, if the seller has inherited property following intestate death of previous owner and other heirs have released their share, in such a case, to prevent other legal heirs from staking their claim to the property in future, obtain a registered relinquishment deed from all such legal heirs prior to executing the sale deed. Due care must be exercised to ensure that all legal heirs (including female heirs) of the seller have relinquished their share in the seller’s property.

What are the main points to remember while selecting a house?

Briefly, the main stages in selecting a house are given below

	Decide on the desired location as per budget
	Circulating your requirement to local real estate consultants is helpful
	Meet the sales teams of the builders or inspect second-sale premises
	Do a background check of the builder and title investigation on shortlisted properties
	Compare properties in terms of carpet area, specification, price, amenities, etc.
	Understand the financial and taxation impact
	Arrange for funding and structure mutually agreeable payment terms
	Vet all documentation through legal experts and take professional advice before finalizing the property

What is a pre-launch offer?

Many a time a developer intends to test the interest level in the market about his project by offering limited stock within a closed circle. Such an arrangement is known as the soft launch or a pre-launch. Such properties are usually offered 10 - 15 % cheaper than the market rate.

What is Brokerage?

If the property is selected with the help of a real estate consultant / broker then a brokerage fee has to be paid. The amount generally varies between 1- 2% of the value of the property or it is negotiated for a pre-decided lump sum amount. Generally, part of the brokerage fee is paid at the time of payment of the token money and remaining amount is paid at the time of registration of the property. By and large, the rate and terms of payment could vary with transaction quantum, client profile, services rendered and business relationship with the client.

How does a buyer budget for purchasing a property?

Normally the rates quoted by builder are on the "saleable" or "super built up" area. The value of the property is derived by multiplying the two factors. The rate of the property is often called the "base rate". There could be many other components such as "floor rise", infrastructure development costs, car parking charges, society and club membership fee, electricity and water charges, advance maintenance collections etc. A sum of all the above factors makes the total purchase price of an apartment. The budget of a home purchase should also take into account stamp duty and registration fee which will be a percentage of the total price of the apartment.

What is token money?

Once the property is finalized, token money is to be paid to the builder to confirm booking of a particular apartment. The amount of token money can vary from Rs.50,000 to Rs.5,00,000 depending on the value of the property. The buyer needs to arrange for the remaining funds within a stipulated date.

What is down payment?

Down payment has different connotations for an under-construction and ready-for-possession building. For an under-construction property, it is usually between 10-20 % of the total price less the token money paid. In case of ready-for-possession building, the down payment means the entire sum of money less the token amount.

What is the process for taking a Bank Loan for purchase of property?

The process for application for a bank loan can be made even before property search. The banks scrutinize the income profile of the home buyers and decide the credit limit. The banks issue approval letters to the home buyers. Based on this, the buyer can decide on arrive at a budget as his own contribution (Owners Contribution) should be at least 20% of the total property value.

In case of second-sale transactions, the bank then scrutinizes the property papers and conducts the required checks as per their process. The actual disbursal takes place once the registration of the property is complete.

In case of property under construction, most reputed builders have tie ups / Advance Processing facility (APF) with different banks. The builder provides the property documents for scrutiny and the bank approves the project as a whole. This arrangement leads to speedy disbursal of individual loans to buyers. The bank directly pays to the builder as per his payment schedule and as per the status of construction.

What is the process for registration of property?

Once a buyer makes the down payment and obtains an approval letter from the bank for the remaining money, the developer executes the sale deed and completes the registration formalities. This includes stamp duty payment. The agreement sets the timeline within which a builder needs to complete the construction and give possession of the premises to the buyer. This is a critical stage of the buying process as it legalizes the transaction.

What is the process of getting possession?

Once the construction is complete and the developer receives an "occupancy certificate (O.C.)" from the local body, the physical possession of the premises is handed over to the buyer and a possession certificate issued by the builder. It is important that the buyer check all the specifications and amenities as promised by the developer before taking over from the builder. Any dues relating to the purchase of the property also need to be paid at the time of receiving possession of the premises.

Is the developer responsible for maintenance of the completed project?

Typically, the developer is responsible for the maintenance of the building for a period of 18 months from the date of receiving the O.C. This includes general cleaning, security, payment of electric charges for the common areas, property tax, running costs of DG sets and any repair or maintenance works.

What is the process for formation of housing society?

At the end of the maintenance period, the developer initiates the formation of a housing society under Societies Act. The builder also creates bank accounts in the name of the society and transfers any unspent money from the corpus of the maintenance fund. The society elects its representatives and takes the responsibility of the maintenance of the building and collection of maintenance of the building and collection of maintenance charges. Thereafter, the developer usually conveys the title of the land to the name of the society. This stage culminates the process of a home purchase in any metropolitan city.