Registration of property is a big step in any real estate transaction, as this is the process that confers you the right of title to the property. In addition, registered value of the property is an determinant of the capital gains that you go on to make if you sell the property anytime in future. This document is also required for other transactions like raising a loan against the property or future sale of the property.
Given the importance of registering a property and it being a legal process, you cannot afford to be ill-informed about the process and the types of registration that you can go in for.
In our earlier posts, we have written about the process of registration and the important tips to ensure that the registration of your property is done in a smooth way. Today we bring in more on the common types of registration that you should be aware of.
Valuation of your property as per the registration records holds a great deal of importance, thereby you should be aware of the different registration values that are possible. It is also important because this value is the guidance on which the stamp duty and the registration charges are based.
This is by far the easiest and least complicated value that can be used for registration of property. The full value that you have paid for a particular property is the value at which you register it.
The only clause here being, the registered value cannot be lesser than the circle rate of the property. By doing this, the buyer may be required to spend an extra amount on stamp duty and registration charges.
A transaction on a value that is lesser than the circle rate is possible in real life which can also be registered at this value, however, the stamp duty and registration will have to be paid at the circle rate which is higher than the actual valuation. In addition, the difference between the circle rate and the actual sale value of the property is considered as your income and taxed at rates appropriate to your income slab.
In few cases, where the buyer has to go in for a home loan, the bank may set a valuation rate at which the property has to be registered. This is done as, in many cases, the builders show an exaggerated figure in Sale Agreement just to ensure that the buyers are eligible for a higher loan.
Though this may ensure a higher loan amount, the buyer is vulnerable in this case if the seller raises demand for the higher exaggerated value. To avoid such instances, banks insist on the valuation of the property at a high value. At times, the bank may decide to do a valuation of the property, which is then the value at which the property needs to be registered.
All apartment/housing society owners have a right to Undivided Share of Land in proportion to the area of house/apartment owned. For an under-construction property, builders go in for two agreements, one for the Undivided Share and other for the Construction of the property.
The registration is done at UDS value, which ends up saving a huge cost for the buyer. But be careful of while doing this kind of registration, as often the registration cost quoted is at the total value but the actual value considered while registering is just the UDS.
It is ideal that the registration value is a combination of both the agreements, ie., the undivided share + Construction cost.
A full-fledged registration of an under construction property is at times done in order to obtain a loan. But doing so loads the entire risk on to the buyer. In event of any default or non -performance of the contract from the builders’ end, the buyer remains stuck with a loan as well an incomplete property.
Registration of the right value is extremely important. Therefore, it may be good to obtain a copy of the sale deed and verify it at leisure and if needed, take assistance of an advocate to ascertain that the document is not against the best interests of the buyer.
