Legal Due Diligence Tips for NRI Property Buyers
When we talk about the real estate market in India, it is categorized into three basic parts which is commercial, residential or the land. They are then further subdivided. When we talk about residential or commercial they would be divided in parts as in, whether it is a new property new properties as indirectly by the developers or it is from the resale market. Resale market as in the secondary market.
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When we talk about the land, land is agricultural land or the plotted development. When we talk about the plotted development offered by a builder that is where investment can be made. However when we talk about agricultural land or plantation land such kind of land cannot be purchased by an NRI or a PIO. So the only restriction which RBI has given is that NRIs and POIs cannot buy agricultural land.
Now, any NRI can buy the property through the NRO or NRE account only. All the moneys which is used to buy these properties has to come through the NRI or NRO account and there is a FCNR account as well. So the real estate wherein the money has been put in be it the commercial, be it the residential, be it plotted development can be acquired by either by direct purchase, by inheritance or by gift or an NRI can buy a property from another NRI also.
If it has brought as per the proper procedure of the RBI guidelines. The law mainly governing the NRI narrow purchases are the guidelines of Reserve Bank of India and the FEMA guidelines. Foreign Exchange Management Act has certain rules which govern the purchases made by the NRIs.
See when we talk about the legal due diligence, it's not just for NRIs it would be for people staying in India as well. However, it becomes more important for the non-resident Indians who are staying very far from the country. Majority of the times these NRIs either depend on the promises which are made by the seller, seller as in it can be a direct seller or can be a developer or a builder or else they depend on their relatives or friends or whosoever back here in India. So in that case the legal due diligence becomes very important.
When we talk about legal due diligence it again have two aspects: the first is when as an NRI is buying a property directly from the developer or NRI is buying a property from the secondary market. So if we are buying a property from the developer. Today real estate regulation act being in place, it is not difficult to find out the authenticity of a project.
So not much of exercise or legal due diligence need to be done when you are buying a property directly from the developer. However if you are buying a property from the secondary market this can be a flat in a RWA this can be an independent house, row houses, it can be an independent shop or whatsoever in such a case the legal due diligence is very important.
Starting from basic as small as the taxes of the property, the electricity bill, water bills, mutation whether the seller is the actual owner. If there is any litigation that is pending for that particular property all these aspects need to be taken into consideration, if you are buying a property from the secondary market.
When we talk about property from the primary market in that case you can definitely do a legal research or legal due diligence through the concerned authority, under which that project falls or you can also have the information from the concerned real estate regulatory authorities website as well.
So again when we talk about the documentation process in case of a new project there is no specific need ofgetting into details of land maps and other things. The first and the foremost important is whether the land is being owned by the developer or not.
For that purpose, you need to contact the authority or you can get it checked through any local advocate ora real estate professional who's dealing in that project that is one. Second whether the approvals has already been taken or not.
Today, it is not the market where you have to invest in a soft launch project. A project which is just on map or a project which is not yet started, do not invest in such a project.
When we talk about the secondary market, as we already said starting from the validation of the sale deed through which the person is selling it to you the validation of the mutation whether he owns phones or not and if there is any pending litigation all these need to be checked.
In real estate secondary market again if you are buying a flat which is in a group housing society you need to check whether the property has been registered or not. Either you're buying it on builder buyer agreement or you are buying it after the registry has been done.
In both the cases the documentation process will change if you are buying it from a builder buyer agreement itself. If the registry has not been done then process would be that, first builder buyer agreement needs to be changed and post that the registry will be done in your favor.
In case of registry already been done the registration will directly be on your name through the seller power of attorney. It can be given to a blood relative or a very close relative or to a legal representative and the legal representative can be a chartered accountant or an advocate.
This power of autonomy needs to be executed in the presence of the oath commissioner of the concerned embassy. So if someone is in US, you need to get the power of attorney drafted and then get it attested in the embassy of India in US.
Send it to the concerned people back in India that need to be stamped in the concerned authorities office. Then it can be put to use for getting the property transferred purchase or Sale.
The law is for for all the home buyers, any home buyer or a property buyer can seek mediation or file a complaint and seek the desired relief through real estate regulation authority.
If you would like to book flats in Birla Niyaara Worli or other residential projects of Birla Estates to avail exclusive offers, do call or WhatsApp at 8825183565.
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Noopur writes the content on real-estate from several years and she is one of the few writers who provide the thought-provoking content on best properties deals.