Home Loans - Is the Property Legally Clear?

By Agni Putra
An investment in real estate is always considered to be good as it often yields great returns in the future. Most of the people acquire properties or houses by availing loans from the banks. Builders usually say that their property is approved by the banks, and hence insist the customers to submit the documents to the banks. But, one should carefully verify the legality of the property before availing the loan from the bank.
 

The following are few important tips that help you in verifying the legality of a property. But before knowing them, know about different type of documents about which you should gain good knowledge when acquire a property or house.
 

Different types of documents in the property registration:
Agreement of sale: Documents pertaining to the agreement of sale include details about Vendors or Executants - individuals selling the property, Vendees or Claimants - individuals buying the property, and the details of the property. Here both the parties enter into an agreement in presences of witnesses to carry out the transaction for certain amount in certain period as per the laws of the land.
 

Sale Deed: A document which gives the purchaser the complete power and possession of the property by all means. In this, the vendor is the person who sells the property, and the vendee is the person who purchases the property. The vendor will transfer all the rights and grants over the property to the vendee by receiving the sale consideration amount which they had agreed upon. These documents should be registered in the sub registrar office by paying the stamp duty to the government.
 

General Power of Attorney (GPA): General Power of Attorney is a procedure through which a property owner transfers his powers and rights over a property to another person. GPA document includes the details of such proceedings. Such document has to be registered; only then the person on whom the powers and rights are transferred attains the right to execute all the transactions pertaining to that property in the future.
 

If the document is not registered, then the person on whom the powers and rights are transferred cannot execute the future transactions on his own; the original owner has to sign the document, only then the document gets the validation.
 

Agreement of Sale cum General Power of Attorney (AGPA): It's a document in which the vendor agrees to sell the property to the vendee and transfers all his rights and powers over that property to the vendee. If the document is registered, the vendee gets all the rights to execute all the transactions over the property thereafter; if not he needs the consent of the vendor for future transactions.
 

Legal heir document: It is a document which should be duly attested by the class I magistrate to get complete validation. If the person on whom the property is registered dies without writing any Will, then the document which shows the legal rights holders on that property is "Legal Heirs certificate".
 

All the members whose names are mentioned in the Legal heirs' certificate should express their consent and sign the document; only then the sale of that property becomes valid.
 

Encumbrance Certificate (EC): EC includes all the details about previous registration including date of registrations, names of executants and claimants, document numbers etc. It can be obtained from the sub-registrar office.
 

All the above-mentioned documents must be properly verified and included in a property transaction.
Now let us look into other aspects when verifying the legality of a property:
1. Collect all the legal documents of the property for the last 20 years
2. The first point of the legal verification of the property is "the present vendor should be the previous vendee".
E.g.:-

Document Registered In 2008 Document Registered in 2005

Vendor: P. Chandra Bose Ashok Kulkarni

Vendee: Anil Kumar P. Chandra Bose
 

If you see the above example, the present vendor Anil Kumar has got the document registered from P.chandra Bose in 2008, and P.chadra Bose has got it from Ashok Kulkarni in 2005 like so.
 

3. Please read the sale deed completely to clarify yourself that there are no mortgages created over that property by the vendor.

4. Please cross check all the past registration details with the Encumbrance certificate.

5. If any GPA or AGPA has been executed on the property, then check if they are registered or not.

6. Please check with the constructed area and the sanctioned area of the property by verifying them in the plan.

7. Take Certified copies (CC) from the registration office and check whether all the documents are valid or not.

8. Please cross check the plot number, house number and the boundaries of the property in the document and the existing ones.

9. Please collect property tax paid receipts and check whether they are paid regularly or not.
 

And last but not the least is to get a legal opinion from a advocate before going for a home loan to ensure a smooth loan processing.

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