3 Things You Must Check Before Buying Plot in India

3 Things You Must Check Before Buying Plot in India 

“Buy land, they’re not making it anymore,” these golden words by Mark Twain still holds true with property values inching to a new high every year.

Since time immemorial, the land is an integral part of the investment portfolio of a typical Indian investor. After all, it is an appreciating asset that also gives one a sense of ownership.

Before the Real Estate (Regulation and Development) Act, 2016 came into existence, rampant plot dealings were very common in Indian cities. With stringent norms in place, the things have now changed for good. Having said that, it is always advisable to be cautious while buying a plot of land in India.

For your investment to be sound, we have created a step-by-step guide for you.

Step 1: The documentation

The tedious paperwork might sound like a nightmare but is it a necessity. Here’s a list of documents that you must ask the seller.

Title deed: This document ensures that the seller has undisputed legal ownership of the land. Do not accept a photocopy of the deed. Once you receive the original title deed, scrutinise it. The land must be in the name of the seller. Next, check whether the seller has full rights to sell the land and that he is the sole owner of it. You can check these by running a ‘title search’ on the registration website of the state government. You can always consult your lawyer to be sure.

As a smart buyer, you should also ask for previous title deeds of the land, if any.

Encumbrance certificate: The next document on our list is Encumbrance Certificate or EC. 

This document is essential to figure out if the plot is free from legal dispute. You can get it from the sub-registrar’s office where the Sale Deed of the land has been registered. You can take EC for the last 13 or 30 years.

If you are buying a plot of land in Karnataka, you can check the EC online on https://kaverionline.karnataka.gov.in/

Release certificate: Another one to add to your roster is the Release Certificate. This is only valid while buying a resale property. This is to ensure that the seller has cleared all the loans (if any) on the property. The bank issues release certificate, which also comes in handy in case of pledged land.

Original land deed: Also known as the 7/12 document (7/12 extract in Maharashtra and Gujarat and 7/12 Uttara in Karnataka), you must ask for the original land deed of the present owner and all the previous owners. 

Tax receipts and bills: Unless you want to be on the wrong side of the tax man, make sure to collect the original bills and tax receipts from the seller. 

NA order: Did you know that all the land in India is agriculture land unless designated for some other purpose by the government? Interesting, right? Thus, for carrying out any real estate activity, one has to first convert the land to non-agricultural land (NA). Now, there are various types of NA that you must know of. These include:

•    NA – Residential

•    NA – Commercial

•    NA – Warehouses

•    NA – Resort

•    NA – IT/ITeS

Thus, ask for a copy of NA – Residential order from the seller.

Local approvals: Lastly, ensure that the plot of land has all the requisite approvals in place.

If the owner is an NRI: If the owner of the land is an NRI, then also ask for a Power of Attorney (POA) from the seller.

Step 2: The ground-work

After the paperwork, it’s the time to check the ground realities.

Measure the land: Yes. The first step is to check the dimensions of the plot. You can also get a surveyor to do this.

Check the FSI: The Floor Space Index (FSI) of the land determines the extent of construction on a piece of land. For instance, if you have a plot sized 2,000 sq. ft. with an FSI of 100%, then you can build a house on 2,000 sq. ft. If the FSI for the same plot is 50%, then you can only construct on 1,000 sq. ft. of land.

Appreciation potential: Do your research and invest in a plot that will offer good returns in the times to come. If you are confident, you can also go with the stock market approach of picking an undervalued stock (plot) and waiting for it to appreciate. 

Step 3: The actual process

After Step 1 and Step 2, you need to arrange documents that you, as a buyer, should have for registration. These include:

Sale Agreement: As in the case of any property, the first step is to draft an sale agreement between both the parties involved. Your agreement should cover the following:

•    Particulars of the land

•    Agreed cost of the land between seller and buyer

•    The advance amount given by the buyer

•    The period in which the actual sale should take place

•    Cancellation claus

Title Deed: The next step is to get the Title Deed written by government licensed document writer.

Receipt from payment of stamp duty.

With the documents mentioned above, you can register the land in the sub-registrar’s office. During registration, for land priced over Rs 5 Lakh, the seller must submit either his Pan Card or Form Number 16 during registration. You will also need two witnesses for the registration of the land. 

Once your land is registered, the next step is to get the approval for your house plan. This is only valid if you wish to construct immediately. You will need the help of architect here for designing the building plan.

The registration charges

During registration, you need to pay stamp duty charges, registration fees, and document writer’s fees.

Keeping the above factors in mind will ensure that your investment will turn out to be a logical income-earning decision. If you still have doubts, you can always tell us in the comments!

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