Loan Documents for Flats

Buying a flat directly from a builder

The original allotment letter

The original cash paid receipt

A legal opinion with respect to the property certifying that the land owner; builder and developer has a clear marketable unencumbered title to the property and no equitable mortgage or any other subsisting mortgage

The original deed of conveyance of land conveying the undivided interest in land, common areas and facilities along with the original agreement for construction entered into with the builder

A certificate stating nil encumbrances for the last 13 years

7X12 extract

A copy of the U L C order issued by the additional collector and a competent authority

A copy of the latest tax paid receipt

A completion certificate

The sanctioned building plan/ license

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Buying a flat on resale

The original absolute sale deed executed between the vendor and the original owner

The original absolute sale deed executed between the vendor and yourself

An NOC from the co-operative society

The original possession certificate

The original 7X12 extract

A copy of the latest tax paid receipt

Copies of parent deeds pertaining to the property in question

The sanctioned building plan

An encumbrance certificate that covers the last 13 years

A copy of the U L C order issued by the additional collector and a competent authority

A legal opinion with respect to the property certifying that the land owner; builder and developer has a clear marketable unencumbered title to the property and no equitable mortgage or any other subsisting mortgage

Note: These may be got verified from legal experts or financial institution. Evasai.com will not be responsible for any inaccuracies and deficiencies in these.

WHAT is stamp duty? Why should it be paid and by when?

STAMP DUTY

WHAT is stamp duty? Why should it be paid and by when?
It is a tax and must be paid in full and on time. A delay attracts penalty at 2% per month, subject to maximum penalty of 200% of the deficit amount of stamp duty. Documents lodged with the sub-registrar/superintendent of stamps prior to any amnesty scheme attract a lump sum reduced penalty. Documents not properly stamped are not admitted in court as evidence. It is payable before execution of the document or on the day of execution of document or on the next working day. Execution of a document means putting signatures on the instrument by persons party to the document.

Who pays?
In the absence of an agreement to the contrary, the purchaser/transferee has to pay or in case of property exchange, both parties have to bear it equally.

On what instruments does stamp duty have to be paid?
Instruments include every document by which any right or liability is or purports to be created, transferred, limited, extended, extinguished or recorded but does not include a bill of exchange, cheque, promissory note, bill of lading, letter of credit, policy of insurance, transfer of shares, debentures proxy and receipt (which is charged under Indian Stamp Act, 1899). Except transfer by will (or by original nomination in a co-operative society) all transfer documents including agreements to sell, conveyance deed, gift deed, mortgage deed, exchange deed, deed of partition, power of attorneys, leave and licence agreement, agreement of tenancy, lease deeds, power of attorney to sell for consideration etc. have to be properly stamped. When a nominee transfers the flat subsequently in the name of legal heir, such transfer also requires stamp duty.

If you have purchased a flat in a co-operative society on or after December 10 1985, you have to pay stamp duty on market value as per the Ready Reckoner, issued every year in January.

1.This is a public document, available in any law bookshop. Market value is the value as worked out as per the Stamp Duty Ready Reckoner or the consideration stated in the instrument, whichever is higher. As per a new amendment in the Income Tax act, market value for the purpose of capital gain tax is the same as the market value for stamp duty payment.

How is a flat defined?
A flat means a separate and self-contained set of premises used or intended to be used for residence, or office, or showroom, or shop or godown or for carrying on any industry or business (and includes a garage), the premises forming part of a building and includes an apartment.

In whose name is the stamp paper required to be purchased?
Stamp papers are to be purchased in the name of one of the parties to the document, otherwise such agreement will be treated as if no stamp paper was used. However, it will not make the agreement invalid and can be enforced in Law if proper duty is paid subsequently. Stamp paper is valid for six months from the date of purchase.

What is a revenue stamp?
It is a tax of Re.1 in the form of revenue stamp, which should be affixed on receipt for any money or other property, the amount or value of which exceeds Rs. 5,000.

Is stamp duty payable on the instrument or transaction?
It is payable on instruments. If any information essential for working out stamp duty is missing, the valuation officer can call for it. Information such as the Carpet or Built-up area, number of floors in the building, year of construction, name of Division/Village and C.S./C.T.S. number of plot of land, must be recorded in the agreement for quicker response.

What is the rate of stamp duty?
Stamp duty on non-residential properties whether in a co- operative society or not is at a flat rate of 5% of the market value. Stamp duty on residential flats in a housing society and buildings covered under Article 25(d) of Schedule I of Bombay Stamp Act. 1958, attracts concessional rates depending upon its market value as follows: Upto Rs. 1,00,000 stamp duty is nil Between Rs. 1,00,001 to Rs.2,50,000, it is 0.5% of the value. Between Rs. 2,50,001 to Rs.5,00,000 Stamp duty is Rs. 1,250 + 3% of the value above Rs.2,50,000. Above Rs.5,00,000 stamp duty is Rs.8,750 + 5% of the value above Rs.5,00,000.

What precautions should one take to avoid practical difficulties later?
Generally one copy of the exchange agreement is made and registered and then there are various practical problems.

The following precautions should be taken to avoid complications. – Assuming there is one ‘Flat-A’ owned by ‘Person AA’ and he wants to exchange it with ‘Flat-B’ owned by ‘Person BB’. In the Exchange Agreement there should be a clause where it states that original agreement will be considered original agreement for ‘Flat-A’ and will remain with it’s new owner ‘Person BB’ and second copy will be considered original agreement for ‘Flat-B’ and will remain with its new owner ‘Person AA’. – Agreements should be made in duplicate. The original agreement will be charged with full stamp duty and second copy will be charged only with Rs.20. – Both agreements must be registered. The original agreement will be charged full registration fees and second copy will be charged a nominal amount. – Both the persons must keep their respective copies and will be free from each other in all respects.

Note: These may be got verified from legal experts or financial institution. Evasai.com will not be responsible for any inaccuracies and deficiencies in these.

Buying property is a lifetime decision so invest carefully

Buying property is a lifetime decision. Since you are going to invest your precious money in the property, you have to be extra careful. The real ordeal begins after you identify the property of your choice. The road to a possession certificate is paved with difficulties, tedious legalities and endless paperwork.

As a buyer, the more aware you are aware of the legalities and paperwork involved, the more likely it is that you won’t end up as another casualty in the courts. So, familiarise yourself with terms such as leasehold, freehold, title deeds, completion/occupation/possession certificates. As long as you make sure that all the documentation is in place before you strike the deal, you’ll be home free!

The Title Report – colloquially known as the ‘property card’ or in some places ‘saatbara’, this is an investigation into the title of the land over a period of 30 years. It ensures the marketability of the land in the hands of the original owner. Ask for the detailed report, not merely an abbreviated certificate. This should be prepared for the seller by his lawyer and should be checked by your lawyer. If the title is not clear, you can be evicted from the property at a later date.

Property Under Construction – If you are buying a new property, ask for an Allotment Letter or Development Agreement detailing the agreed price, payment and construction schedule, house plans, delivery date and builder’s liability in case of late completion or problems after possession. Make sure that the developer has clear title to the land, and that the relevant local authorities have approved the building plans. Once the construction is over, ask for the completion and occupation certificates, which indicate that the building has adhered to municipal requirements. Some other costs you will incur: Society formation charge, deposit for electricity meter, stamp duty and registration charges.

Constructed property – Make sure that the seller has the title and possession of the property as well as the right to transfer the property. Check that the relevant approvals, if any, have been obtained from the land development/planning authority. Ensure that there are no tenants and get a declaration that the property was purchased from the seller’s funds and is not mortgaged. Get a ‘No Objection Certificate’ from the builder or society. Check whether dues such as property tax, society, water and electricity bills, etc. have been paid in full. Decide who will pay society transfer charges. Take possession of all relevant documents and also the original allotment letter, completion certificate, occupation certificate and all other documents given by the original builder.

Leasehold vs. Freehold – Most of the property in India is freehold, which means that ownership is transferable. In some specific areas such as Delhi, the government owns most of the land, some of which is leased out. This lease is transferable, provided permission is sought directly from the Central Government. In this case, you have to pay stamp duty and execute a memorandum of transfer.

In the case of leasehold property, make sure that the ground rent has been settled up to date. Most transactions are done through Power of Attorney (POA), which does not confer a clear title to the buyer and it also ceases on the death of the seller.

If you are entering into such a transaction, ensure that you have a general as well as special, irrevocable POA, which will allow you to transfer the property. However, buying properties involved in multiple POAs is fraught with difficulties.

Stamp Duty & Sale Deed – Stamp duty is a percentage of the transaction payable to the state government. It varies from state to state.The sale agreement should state who pays the stamp duty. If it is not included in the agreement, the buyer should make sure he/she pays the full amount and registers his/her name as the owner in the land revenue records. The final Sale Deed should be stamped and registered at the appropriate local area office.

State Laws – Certain states have laws relating to property that should be considered before purchase. So, if you are unfamiliar with the state laws, do consult a lawyer.

Himachal Pradesh and Jammu and Kashmir: you can buy property in these states, only if you are a domiciled resident.

Haryana: the Haryana Urban Development Authority might restrict resale for up to a decade.