Documents To Check To Avoid Property Fraud

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With our lifetime savings, we all plan to buy our dream home. While the cost of the property and the means to fund it are important, it is equally critical that you don’t end up becoming the victim of a fraud. Hence, it is essential to know which documents need to be checked when you buy a property.

Sale deed

This is the core legal document, a proof of sale as well as the transfer of ownership from the seller to you. A sale deed should be registered, apart from ensuring that the property has a clear title.

Mother deed

This is the parent legal document which helps trace the antecedent ownership of the property. You will need this document to sell your property in future. One has to ensure that the mother deed has recorded the references to previous ownerships in a continuing sequence until the current owner.

Approval plan of your building

A property owner must obtain an approval plan either from the jurisdictional commissioner or any other officer authorised by the commissioner. To obtain a building approval plan, one has to submit the following documents. These include:

Title deed

City/panchayat survey sketch

Latest tax receipts

Foundation certificate

Land-use certificate

Property assessment extract

Property PID number

Earlier sanctioned plans

Drawings of the property

Conversion certificate

As a large part of the land in India is still farmland. This is why revenue authorities issue a conversion certificate, stating the change in land use from agricultural to housing. A no-objection certificate should be obtained from the tehsildar’s office for this conversion.

Encumbrance certificate

This means a change in the ownership on property that has been held against a home loan. In other words, this document will give you proof of mortgages, title transfers or any legally registered transaction against your property.

Power of attorney

A power of attorney is a document that legally given an authority to an individual to rent, sell or mortgage the property on his behalf. But, this document, too, should be registered.

Tax receipts

Take a detailed look at all the receipts to ensure that taxes have been paid until the date of sale. Ask for the latest original receipts in order to establish the credentials of the owner. If your seller does not have the tax receipts, you can contact the municipal body by using survey number of the property in order to confirm the ownership. Other regular bills such as water and electricity bills should also be checked.

Completion certificate

A completion certificate by municipal authorities states that a building is in compliance with the rules and is built according to approved plans.

Occupancy certificate

To ensure that the building is meeting all the required norms, an inspection will be performed by the authorities when the developer applies for this certificate. In a nutshell, the certificate certifies that the project is ready for occupancy.

It is important to hire a lawyer who will vet all these documents and guide you through the process.

Can Resident Indian Buy Property Abroad

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Can Resident Indian Buy Property Abroad

The provisions related to owning of an immovable property outside India by a resident Indian, are governed by the Foreign Exchange Management Act (FEMA).

Owning an immovable property

The FEMA restricts Indian residents from owning any immovable property outside India, without a specific or special permission from the Reserve Bank of India (RBI). However, this restriction is not applicable to two types of resident Indians, who are allowed to own an immovable property. The first category consists of people, who are not Indian citizens but reside in India and own an immovable property outside India. The second category includes residents of India, who acquired the property on or before 8th July 1947.

Fresh acquisition of immovable property by an Indian resident

The RBI has given permission to certain categories of people to acquire immovable property outside India. The immovable property can be acquired either through gift or inheritance, or it may be purchased for a consideration. All residents of India are allowed to receive the immovable property, either through gift or by way of inheritance, from a person who has purchased it on or before 8th July 1947. Similarly, a resident is also allowed to receive an immovable property from a person, who had either acquired such property while he was resident outside India, or had inherited the same from a person who was resident outside India at that time.

Indian residents are also allowed to purchase immovable property outside India, subject to certain conditions on the payment of the consideration. The consideration for the purchase can be paid by the Indian resident, from the balance held in his Resident Foreign Currency (RFC) account. A resident Indian is also allowed to buy an immovable property of any value outside India and remit the consideration, within the limits laid down under the Liberalised Remittance Scheme (LRS). The quantum of remittance under the LRS should not exceed USD 2.5 lakhs, every year. This limit is applicable to all the transactions taken together, like overseas education, travel, maintenance of relatives outside India, expenses on medical treatment outside India, etc., and includes the purchase of immovable property.

See also: Dos and don’ts for NRIs Investing in Indian Realty

Lease and other avenues

A resident of India is also allowed to acquire an immovable property outside India under a lease, for a period that does not exceed five years at a stretch. The property so acquired by a person who is resident in India, can be gifted to any of his relatives, including spouse, brother, sister and any lineal ascendant or descendant of the person. If your case does not fall in any of the above categories, you can still buy an immovable property outside India by taking a special permission from the RBI.

Who is a resident of India?

The definition of a ‘resident’ under the FEMA is different from that in the Income Tax Act, 1961, where the period of actual stay determines your residential status. In the FEMA, the intention to stay is the determining factor. A person becomes a non-resident on the day he leaves India, if he leaves for the purpose of employment, business, or for any other reason with an intention to stay outside India for an uncertain period. Likewise, a person coming to India will become a resident, irrespective of his citizenship, if he comes for the purpose of employment, business or for any other reason with an intention to stay for an uncertain period.

Tips For Starting a Small Business From Home

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Tips For Starting a Small Business From Home

For many start-ups and small businesses, other than the operational cost, the real estate cost proves to be a major impediment in the intended growth. Thus, a number of small businesses are often run from residential areas. Consultants, advocates, doctors, etc., run their work from their homes. While converting a house premise into an office can help one to save on real estate cost, there are other permissions and expenses that one incurs while doing so.

What does ‘commercial’ mean?

Legally, consultants, advocates and doctors can run their business from their house.

In a case filed under the Karnataka Shops and Commercial Establishments Act, 1961, the court had clarified that home offices run by chartered accountants, lawyers and doctors, will not be considered as a commercial activity as the work involves intellectual exercise and not physical labour. Running yoga classes or tuition classes from home, will also not be counted as a commercial activity, because the services rendered by the said professionals will not be categorised under sale and purchase of goods.

However, there is a difference between running an office from your residential premise and running a commercial business from your home. “The said practice of running an office from a residential apartment is widely accepted in different parts of the country. In Mumbai, an area of 220 sq ft in a residential apartment can be used for commercial activities. This set-up has also become popular in Delhi, owing to the increase in practice of ‘intellectual’ professions – for example, doctors, lawyers, tuition centres, etc.,” explains Ekank Mehra, a New Delhi-based lawyer practicing in the Supreme Court.

See also: 

If you are in any profession, other than the ones mentioned above, you can still run your office, adds Mehra. “However, when there is a movement of goods from the residential premise, or if the premise is being used as a godown, the activity turns into a commercial one. This would require approvals/ licences from local municipal offices and other related authorities, such as the fire department and the local police station,” he elaborates.

How can you convert your home into an office?

You need to first inform your residents’ welfare association (RWA). This is a must if the business involves movement of goods and storage. In case you are put up in a rented accommodation, you will need to seek permission from your landlord in addition to the RWA.

While working from your own office is more cost-effective, the work may happen at a relaxed pace. On the flipside, a house address may not be very convenient for a client meeting. Other disadvantages of having an office in a residential premises, may include the absence of outlets that serve food, sitting area, and other basic infrastructure. “Issues with vehicular movement and parking may also pose hurdles,” points out Manisha Singh, an independent Delhi-based company secretary, who started a small consulting business around three years ago. Singh took written permissions from the RWA, to open her office at home and for an extra designated parking.

Any change of address at a later stage, may also involve documentary and regulatory procedures.

Moreover, in case the activity is deemed commercial, your house will incur a property tax applicable on commercial properties. Even the water and electricity charges will be levied on the basis of a commercial property.

There may also be associated renovation costs that you will incur, to give your house an office environment.

Real estate Basics – What is a Commencement Certificate?

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A commencement certificate is a document from the local municipal authority that permits the developer to begin construction of the project. The commencement certificate (or CC) is usually granted, only after the developer has met the legal requirements and obtained the relevant sanctions for the building’s plan.

How can a developer obtain a commencement certificate?

Before beginning the construction of a new building or project, the developer must obtain a commencement certificate from the local authorities. Once the developer submits his plan for the project, the municipal authority will begin conducting several preliminary checks, before authorising that the project is fit for commencement. During this time, the developer must be able to provide all the necessary no-objection certificates (NOCs) that are needed to beginning a new construction. He will also need to show proof of having obtained clearances from all the relevant departments, namely, the water department, fire department, sewage department, electricity department, etc.

The commencement certificate is usually issued in two stages – first up to the plinth area and then, for the superstructure. The developer receives the commencement certificate, based on the findings of the inspection by authorities of the town planning and engineering departments. After having obtained all the required licences and sanctions for the project, the developer lays the foundation of the superstructure and builds the boundaries of the project. Under the new RERA guidelines, a valid commencement certificate is a mandatory document, for a project to be considered RERA-approved.

What is the importance of a commencement certificate for a home buyer?

Until a developer receives the commencement certificate for his project, he is not authorised to begin construction on it. Therefore, a home buyer must not invest in a project, if the developer is unable to furnish a valid commencement certificate for it. One must also check whether the commencement certificate obtained by the developer, includes the floor on which he/she wishes to buy a property.

If you were to purchase a property in a project that does not have a valid commencement certificate, you run the risk of being the owner of an illegal property. This not only affects your legal title to the property, but you may also have to pay the necessary fines, for buying a property in an illegal project.

A commencement certificate is as important as an occupancy certificate. It ensures that you are purchasing a property in a project that has fulfilled all requirements. It cements your title over the property and saves you from possible legal troubles in the future.

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