Due Diligence: Your Pre-Purchase Checklist for Property Buying (By CA Lalit Pawar)
Buying a property is a significant financial decision, and it’s crucial to approach it with caution and meticulous planning. Before investing your hard-earned money, it’s imperative to conduct thorough due diligence and verify all relevant documents and information. Failing to do so can expose you to legal complications, financial losses, and endless headaches. As a Chartered Accountant and RERA consultant, I, CA Lalit Pawar, always advise prospective homebuyers to prioritize due diligence. Let’s explore the essential documents and information you should check before buying a property.
⚠️ Why Due Diligence is Non-Negotiable:
Skipping due diligence is like navigating uncharted waters without a map. It can lead to:
- Legal Disputes ⚖️
- Financial Losses 💰
- Delayed Possession ⏳
- Property Defects 🛠️
- Fraudulent Activities 🚨
📝 Essential Documents and Information to Verify:
Here’s a comprehensive checklist of documents and information you should verify before buying a property:
- Title Deed: This is the most crucial document as it establishes the ownership of the property. Verify that the seller has a clear and marketable title, free from any encumbrances or disputes. Conduct a title search at the sub-registrar’s office to trace the history of ownership and identify any potential issues.
- Encumbrance Certificate: This certificate confirms whether the property has any existing loans, mortgages, or legal dues. Obtain an encumbrance certificate from the sub-registrar’s office for the past 13 to 30 years to ensure that the property is free from any liabilities.
- Building Approval Plan: Verify that the building has been constructed according to the approved plan. Check for any deviations from the approved plan, as this can lead to legal complications in the future.
- Completion Certificate: This certificate is issued by the local authorities after the building has been completed and complies with all building regulations.
- Occupancy Certificate: This certificate is issued by the local authorities after the building is deemed fit for occupation. It is essential for obtaining water and electricity connections.
- Property Tax Receipts: Verify that the seller has paid all property taxes up to date. Unpaid property taxes can become a liability for the buyer.
- RERA Registration (If Applicable): For properties covered under RERA, verify that the project is registered with the RERA authority. Check the RERA website for details of the project, including the approved plan, completion date, and any complaints filed against the promoter.
- Agreement for Sale: Review the Agreement for Sale carefully to understand the terms and conditions of the sale, including the payment schedule, possession date, and any clauses related to cancellation or dispute resolution.
Additional Checks and Considerations:
- Physical Verification: Visit the property to assess its physical condition, location, and surroundings.
- Legal Opinion: Consult with a real estate lawyer to obtain a legal opinion on the property’s title and other legal aspects.
- Valuation Report: Obtain a valuation report from a qualified valuer to assess the property’s market value.
The Role of RERA in Facilitating Due Diligence:
RERA has significantly improved transparency in the real estate sector, making it easier for homebuyers to conduct due diligence. RERA mandates promoters to disclose detailed information about their projects on the RERA website, including the approved plan, completion date, and any complaints filed against them.
Conclusion: Knowledge is Power
Buying a property is a significant investment, and thorough due diligence is essential to protect your interests. By verifying all relevant documents and information, you can minimize the risk of legal complications, financial losses, and other unpleasant surprises.
For More information, please refer original order @ MahaRERA Website:
Blog by CA Lalit Pawar
Before buying property check all documents and information
Disclaimer: This blog provides general information about due diligence before buying property. For specific legal advice and guidance related to your situation, please consult with a RERA expert or consult a real estate lawyer. Also refer to the official MAHARERA website (maharera.maharashtra.gov.in).
Note: As per ICAI guidelines, please remember that this content is for informational purposes only and does not constitute professional advice. Consult a qualified professional for specific guidance related to your situation.