Tag: Real Estate

What is “Undivided Share in Land” and why it should be in mentioned your agreement ?

Posted on by Jagoinvestor

You bought your “Dream Home” and you are on top of the world. The joy and pride you have after buying your home is amazing. The property is at great location and the prices are appreciating, and you feel you are the Hero ! . Now you want to sell your flat for some reason and you are more than confident that you will get a buyer and the deal will take just few weeks and you will be bathing in cash from top to down.

undivided share in land india

Prospective buyers have started meeting you and they want to buy the property, but they are all rejecting it. They are “informed investors” who take care of every single detail and they ask you that killer question –

“Everything is fine, but where is your undivided share of land (UDS) in agreement?”

You are wondering whats going on, quite amazed only to realize later that you were only sold the building which is depreciating each moment, but “LAND” , which is the real thing is not owned by you.

You are SCAMED or FOOLED ! or both ! . Let me introduce to the term “Undivided Share of Land” or UDS as its called generally in real estate world and why you cant ignore this at any cost while purchasing properties.

What is Undivided Share of Land (UDS) ?

I will keep it short and simple. Undivided Share of Land is the share of land owned by you when you purchase the property. Basically when you buy a flat or apartment, you are buying two things

1. The constructed building – where you actually reside
2. The proportionate share on the land, where the whole property is built

The Price Appreciation in real estate actually is the appreciation in land prices, because technically the building will depreciate overtime. Its not that cement and concrete structure which is the prime thing, but the land. Have you ever thought what will happen if there is an Earthquake and the building collapses ? What is in future, the govt wants to acquire the land for some national project and wants to give compensation to you ?

Leave all that, imagine in future your building after many years needs to be redeveloped and a new construction has to happen. At that time, the amount of land you own will matter. Note that incase of co-operative societies, the Undivided Share of Land might be on the name of society and not on the home owner name, because they are share holder in the society, which is fine.

The sum of all the flat owners UDS has to be equal to the property land size. You should also know that the undivided share of land will be proportionate to your property area.

Example 1 – If there is land measuring 1,000 sq and there are 10 flats or equal size is constructed on that land, then each owner will have 10% of the land as his/her share.

Example 2 – Lets say there is a big township where 100 units of 2 BHK flats of 1,000 sqft and 50 units of 3 BHK measuring 1,500 sqft . Then the total constructed area is (100 units * 1000 sqft) + (50 * 2000 sqft) = 2,00,000 sqft . Anyone who owns a 1,000 sqft flat will have 0.5% share in the total land (Because 1000 is 0.5% of 2,00,000) and anyone who owns a 2,000 sqft flat (3 bhk) will have 1% UDS .

There has been cases where the builder has allocated less undivided share to flat owners and kept some part of himself and the original land owner (a lot of times, builder buy the land from someone else). Here is one such example

Current apartment which I am staying is 10 years old apartment. Building having total 24 flats. Whereas builder made total 26 undivided share. Other than 24 flat owners one share for builder and one share for Land owner. In the share of builder and Land owner they constructed few shops in building cellar. SOURCE

Important Point – The above example is for apartment system . If its a co-operative society, then the land share is equal for each member, irrespective of their property size.

What to check in Agreement ?

When you buy the property, your builder will give you a date when you have to come to registration office and all the agreement work will be done. Most of the times, builders are reluctant to show you the agreement copy. But they will be ready to share someone else agreement copy at their office or at the main site.

Just have a look at that agreement which is like a specimen or the format, on some of the page, you will see “Details of Undivided Share of Land” and it will be mentioned in percentage terms like “0.45%” or exact area in sqft terms. Just read the whole thing carefully.

Then when the actual agreement has to take place, you can then read the agreement in detail and make sure you look after this point in your agreement copy. A small tip here is that when builder calls you for registration, tell him you would like to come before 1 hour from the scheduled time and have a detailed look at the agreement, if possible also get a lawyer with you and have him look at the agreement.

So did you check your agreement copy and see how much Undivided share of land you own ?

The Scam called “Sample Flat” – Learn how builders trap property buyers

Posted on by Jagoinvestor

One of the biggest traps for real estate buyers are “Sample Flats”. When you visit properties sites to inquire about any under construction properties or ready for possession flats, the builder or the sales person there shows you a “Sample Flat”. The moment you look at a sample flat, something happens to you. The sample flat is so beautiful and mesmerizing that, you feel like you are in love again, some kind of beautiful music starts playing in your head and for a moment, you visualize the future with your family living within that same sample flat and how you and your loved one’s are enjoying the ambiance and premiumness the sample flat offers.

You are delighted !

But – This is trap, set by Builder

Sample Flat Example

Why you get trapped ? 

Because you are human, you have emotions and you have lots of dreams for your family and yourself. Because in this competitive society, you have to grab your share of status and show to the world, that your time has come finally! .

Builders know how to exploit the human psyche and how to manipulate your aspirations. Every person wants to give himself and his family the best housing and the most spacious and premium living conditions – a fact, well known to the builder. When they create sample flat, all these things are kept in mind and the sample flat is constructed in a manner that makes you fall in love with it at the first sight. The builder’s goal is to ensure that your emotional mind is activated and prevents your rational mind from questioning things or think hard. You should be hypnotized! . Check out this guy sharing how his builder did not fulfill his promise

Lets look at 2 important points you know should be aware about the so called sample flats, which can save you from potential disappointment some time in future when you hunt for your dream home.

Trick #1 – Sample Flats are created to look more “Spacious”

Everyone wants a big house at a lower cost. Given there are 4-6 people in family on an average and lots of belongings in home, a bigger house is always preferred than a smaller one. You should have space for all the things you have at home, without making your home look cluttered. So few tricks are used to make sure that the sample flat looks more spacious artificially! . Here are they

  • There are no doors in toilets and bathrooms, and some of the walls are merely glass partitions, which creates a visual illusion of more space.
  • There are no doors between rooms in a sample flat, which makes the flat appear more spacious than it really is.
  • The ceiling is much higher than the real flat and is just increases the volume of sample flat, thus giving a feel of space.
  • The lighting using in sample flat is suggested by interior designers, who are experts in creating optical illusions.
  • The furniture used in sample flat is kept smaller, so that in comparison the rooms and kitchen looks bigger.
  • Even the other things like bed, almira’s and dining table in kitchen are placed in such a way and are of smaller size, to give a feeling of more space.
  • The walls are much thinner in sample flat, compared to the real flat, which again gives more spacing. They are known to use gypsum boards and not the real cemented wall.

What you should do ?

Once you visit a sample flat, the first thing you should do is slow down and stop yourself from getting biased by the spacious feel of it. For a moment, consciously tell yourself that you know its not reality and a kind of trap (remember 3 idiots – “All is well, All is well”) . Visualize the furniture, bed, kitchen belongings, all the almira’s you own at home. Your Sofa, your TV, your Waching machine and Refridgerator and every thing you own and ask where will you keep it ? Also consider those new things you might buy before moving to new property ?

If you are seriously considering buying a house, then actually mark places where you will keep what and check the space it will take (mentally atleast) . Seek help from ladies at home, because they have a better understanding of minor details and can tell you, if the flat will be able to accommodate everything with higher accuracy (and in most of the cases, women are anyways more bothered for those things compared to men).

Note that rather than blaming builder on using these tactics and fooling you, I would suggest being self-reliant, as there is nothing illegal in what the builder has done. Yes, its kind of unethical and the tricks employed here, are just a way of exploiting human psychology and aspirations. But then, there is no law on all these points and anyways, the agreement will mention that the sample flat was just for demonstration purposes and the look and feel of the actual flat may be a little different. I want you to be prepared for this, rather than complaining about things.

Here is one real life experience I found on the net, which talks about the same thing we are discussing here

At the time of booking Builder shown a central park as well as a very huge green area (80% of the project), the same is also shown/mentioned in the Brochure given to me during the time of booking. He also showed a sample flat and did a sale agreement with me.

Now builder is constructing three new towers on the park area and also cutting down the green area as he is coming up with another project on the same green land – Source here

Trick #2 – Sample Flats gives the feeling of PREMIUM

Who does not want a premium and beautiful home? Everyone does!

We want our house to be better than others, we want to make sure we get the best. We aspire to live in premium homes (majority of them, if you dont). Builders do their homework properly and put all their efforts in making sure that the sample flat looks the way most of the people cant actually afford!.

I mean to say that every bit of work, furniture, finishing and material used are expensive and of very high quality and high standards. In many cases, the cost incurred in making the sample flat look premium is more than the cost of the flat itself (Imagine 50 lacs flat having 50 lacs of premium things inside it, just to make it look premium).

  • The fixtures and furnishing used are of world class quality and brand and is so premium that instantly a prospective buyer imagines him selves owning it.
  • The floor tiles used are of high quality and more beautiful than what you get in reality.
  • The view you get from Balcony and Windows is really great (lake view, greenery, beautiful mountains), but in reality your flat might be on the other side of the project, which has all the old buildings and has a crowded road (may be after some years) and you will not get the same view which you saw in sample flat. This is because the sample flat is created first and the location chosen for it is well planned and for the purpose 🙂
  • The furniture used in the sample flat is very expensive and promises high lifestyle. Imagine 5-6 lacs worth of Sofa set, whereas you will buy only 50k worth of sofa in your case.
  • The walls will have beautiful paintings which most of people want, but cant afford .

Tip – This startup called ArtSquare sells ART and Paintings at affordable price to common man. Boy! , they also have the feature which shows you, how it looks on the wall. check out this example.

Difference between Sample flat and real flat

What to do ?

Incase of under-construction property, you cant do much, you can only rely on the builder words and do some research on how truthful they are by talking to their old project buyers (actually go there, and talk to some flat owners about their experience). Before booking the flat, you need to get all information from builder on the materials going to be used, which brand they will be, what kind of wall paint , which fittings ? which wires ? what kind of tiles ? everything in detail ! .

Note that, you are going to get unfurnished flat, and then you have to put everything from fan, AC, bed, sofa and everything else you have at home. So its important to check out the unfurnished flat apart from sample flat, but its possible only when you are buying a ready to move in property. Check out this debate on Under construction property VS Ready for Possession Property if you are considering which is better than other.

Conclusion

As buying home is one time decision, its always better to be more present (physically and mentally) to reality and not take the decision in hurry. Sample flats are not reality and you have to get that. You also should control yourself and your family members emotions (a lot of real estate buyers complain that ladies fall for the beautiful looking flats and get excited by beautiful wall colors, premium kitchen and the wall texture giving wow-experience and then do not comeback to reality from the unreal world they reached after looking at sample flat. Slow down and take the right decision.

I want to hear your views now ! . Have you seen sample flats in past or recently ?

Crisil Real Estate Star Ratings (Crest) – Something which can help Real estate Investors

Posted on by Jagoinvestor

Today I am going to share with you information about the CRISIL Real Estate Star Rating (CREST). It’s a product by CRISIL that rates a real estate project based on numerous parameters relevant to different entities such as investors and lenders. You can visit the CRISIL Rating page on its website

crisil-real estate rating and scale

Parameters checked by CRISIL for rating a Real estate Project ?

There are various things that determine the final quality of a project and how good or bad it is. The CRISIL Real Estate Star Rating looks into the parameters listed below and then assigns a rating to the real estate project.

  • Construction and legal track record
  • Organisation strength, systems & processes
  • Financial strength of developers (s)
  • Structural quality
  • Clarity of Title
  • Infrastructure & Integrated Facilities
  • Restrictive Covenants
  • Finishes
  • Encumbrances
  • After-Sales Services
  • Sale Agreement
  • Likelihood of Time and Cost Overruns
  • Development Agreement
  • Accounting Quality
  • Project Economics or Viability
  • Financial Flexibility
  • Innovation in Construction technology
  • Innovation in Building design
  • Innovation in Project funding

Rating Scale

CRISIL has an 8-point rating scale for the properties, beginning from “1 Star” and going up to “7 Stars”. The lowest rating is “Non Deliverable”. On CRISIL’s website, you can see the list of different cities and their associated CREST ratings. So if you want to buy a property in Bangalore (learn 20 terms in real estate here), you can check the CRISIL website to see if the property/ project you are interested in is mentioned. The project might have already gone through the rating process by CRISIL, and obtained a rating.

However, if a project has not been rated by CRISIL, it does not mean that the project is bad or is not worth investing in. It just means the builder has not applied for the CREST rating or CRISIL has not picked up that project yet. Given the number of projects coming up in different cities, and the total time it takes to scrutinize a project (close to 4-5 weeks), it is really not possible to rate all the projects in one go.

Different Projects in Cities

If I look at the CRISIL website, I can see many cities listed and numerous projects listed under each city. All you need to do, is to click on a city name and you will see the list. Here are some snapshots, which will give you a clearer idea

Different cities in CRISIL Real estate Rating

Mumbai CRISIL Rating

bangalore crisil rating

Pune crisil rating

How to use CRISIL Rating?

If you are lucky, the real estate project you selected is already rated by CRISIL, in which case you can see how many stars it has got. “7 stars” is the highest. So if the rating is either 7 star, 6 star or 5 star, I would say it’s a good rating overall. But you should re-look at projects with lower rating; especially a project rated as “2 Stars” or “3 Stars”.

However, CRISIL might not have rated the project yet, in which case you will be have to check the project and evaluate it on different parameters on your own – we have already discussed some of the parameters on this article.

Let us know if you were aware about CRISIL real estate star ratings (CREST) or not ?

10 things to check before buying a home or Property in India

Posted on by Jagoinvestor

Buying a property is a one time decision for many. Its a moment when you are excited, stressed and many a times in hurry!. You look at some properties and one of those properties give you that feeling of “that’s my dream home”. You get attached to something special about the property and every other aspect looks fine to you. On top of it, you feel you want to block the property as soon as you can and get into the process of arranging for booking money, down-payment and finalizing home loan.

parameters to investigate before buying property in india

But, its not the time to rush, but slow down. You should step back for some time and calm down yourself because its a decision which will impact your overall family, life and finances. And you should not be regretting it later.

Just like a detective investigates a case and goes deep down analyzing a situation and then comes up with a conclusion, you should also do some important investigations before you finally take decision of buying a property. So we have come up with 10 things you should look at and think hard about them. These 10 points can also become a comparison tool for you to compare two or more properties, which we will look at in the end, but before that lets see what are those 10 parameters you should investigate before buying a property

10 things to check before buying a home or Property in India

1. Goodwill of the Builder and overall Brand
Before you buy a Property, its important to have a look at the builder profile and his overall history. How many projects he has already delivered, How much delay was there, Go to te website of builder company and check old projects and ongoing projects. Search on internet with the previous project name and you should be able to find some important information about it. See what people are talking about the builder and property.

2. Connectivity to your Work Place

An important parameter to look at before buying a property is the distance between your workplace and the property. Its something you have to deal with everyday. A property which is 3 km away from your workplace is very different from the property which is 12 km from your workplace. Long Distance might mean inflated fuel cost, time lost in travelling and getting frustrated and burning out each and every day for many years to come.

3. Connectivity to Schools, Hospitals, Transport, Markets etc

You should check how far are schools, colleges, hospitals, markets , shopping places and bus/train stations from the property. It should not happen that to save the money on property, but then spent on travelling your kids every day to school. The access to other important places is also very important.

4. Resale Potential in Future

When we buy a property, we are attached to it thinking that we are going to live there for next few decades, but no one known when you would be packing your bags again to move to some different location because of various reasons. At that time, if you realize that the property was suitable for you, but not to someone else, its going to be very bad situation. So you also have to think about the “resale” potential of property you buy. Will the property appeal to someone else ? Think about it again. For example, you might be looking at the property which has common parking, but what about future at the time of selling , every one you talk to wants a dedicated covered parking ?

Also, Most of the people who are buying under-construction properties are very far from core city. So its an important point to check about the future development around the area. Find out whats the future development plan for Roads ,Flyover, proposed malls, and other things which might come up in next 4-6 yrs. If the place is not yet properly connected to main city, there might be future plans for it.

5. Rental Potential

A lot of times, people give their property on rent and move to some other location. At that time, if you realise that the property is not that attractive from rental point of view, you will regret your decision. I am not saying this is going to be a deciding factor in your decision, but still just keep it in mind and have a look at property from this view point only. If property is near colleges or centrally located, or close to commercial places, you will never find issues finding people to rent your property.

6. Air & Lighting

Air and Lighting is something which will determine your living experience on daily basis. The flat you live in should have good enough lighting (natural light) and proper air. Also you should check how the air flows from various angles. In my current flat, the way wind flows is amazing. So when you look at property, check if some other buildings are blocking the air and lighting or not. Which side the terrace or balcony faces and the view outside.

7. Amenities Offered

You should also check what kind of amenities are offered along with property. Things like club house, parking, lift, power backup, swimming pool, gym are some of the amenities. Now you might be a simple person who wants minimal things, but if you want to make sure the property has very good resale potential, you might want to look at these things. After all, all these things will matter to you or people connected to you and if not anyone, may be the next buyer from you will look at all this.

8. Construction Quality

When you go to look at properties, check the construction quality. What we mean by it is check the walls, their overall look and feel, how is the finishing done, Does it look premium or the paints look like as if it will come out very soon. Check the wiring, fitting, tiles quality etc etc. If its a under-construction project, the only option you have is to search on internet about the builder and its past project experiences and what previus buyers are saying about it . Just put builder name or any previous project name along with “+ construction quality” words on google and you will be able to get some ideas – like this project in chennai

9. Road Conditions Around Property

I saw one property which was a little inside the main road. The road was not straight , but was in zigzag fashion and was not that wide. It was a inside road and not the main road, so there was no future potential of getting better road. Travelling each day with same road will frustrate you in long run, but might not be on daily basis. Also its not that safe in night. So when you look at any property, check the overall roads conditions atleast upto 500 meters from the project.

10. Locality and Kind of people living around

You should also check the overall locality and who all are living around. Are you comfortable there, will your family be ok ? Will it be safe in night ? will you wife/mother be able to go on a walk for an hour in-case they wish to ? These are some questions you need to answer before buying the property.

Compare two or more properties based on these 10 parameters

If you look at these parameters, it can be a great benchmark points to compare two or more properties and come at the conclusion of which one to prefer over another. So I have created a simple excel based tool, which has these 10 parameters and you can choose up-to 4 properties and compare them on these parameters. It will give you a ranking based on your comparison and tell you which property scores over another. the tool will also point out which is the best option to explore as you keep running the tool. Below is a simple demo of the tool, you can download it for FREE.

DOWNLOAD THE EXCEL – CLICK HERE

Let me know if you loved this article and will it help you for finalizing your property search and also help you compare two or more real estate properties.

20 terms which will Super Charge your Real Estate knowledge !

Posted on by Jagoinvestor

The biggest tool an investor has is knowledge on his side. But when it comes to real estate, we can see a lot of investors do not pay a lot of attention to smaller details which can create big problems for them. Today I want to hand over to you a real estate terminologies toolkit, which will explain various things to you in most simple and shortest way. When you go out to buy your home next, you will not need anyone on your side to have conversation with the builder and you will give him the feeling that you know more than him. It should help in someway.

Real Estate Terms and Termninologies

18 terms which will super charge your Real Estate knowledge

Here are those 18 terms and terminologies.

1. Carpet Area – When you buy a flat, you actually area on which you can lay carpet is called as “carpet area”. Note that builders advertise the property based on other parameters, but as a buyer this is what you are going to actually use for next many decades. Higher the Carpet area, better space you get.

2. Built up area – Built up area is the area which covers Carpet Area and the Walls and doors . A good 15-20% of space goes into walls and doors and your super built up area is generally 20% higher than carpet area. Ideally the rate quoted by builders is based on “built up area”.

3. Super Built up Area – A lot of times you will come across a term “Super Build Up area” , which is nothing but built up area along with all the space common to all the residents of society like Corridors, staircases, parking area etc . So Super Built up area is higher than Built up area. A lot of builders also use “super built up area” to advertise the projects which gives an artificial picture of property. Never rely on that

4. Sub-Registrar Office – For Registrations of Properties, there is an official department called “sub registrar office” , you can visit it to get your properties registered and also obtain any legal documents related to properties and land. If any officer tells you to “pay for Chai Pani” there, tell him you are filing a RTI and putting his name in the application for the “request” he made to you and ideally he behave properly with you. Note that you can get sub registrar office address online. Example – for Delhi its here

5. Capital Gains – When you sell a property after 3 yrs, the amount of profit you make is called “Capital Gains” . Tax will be applied on this Capital gains after applying Indexation. Also you can avoid paying this tax if divert the profits part in another property or another way of saving tax on that amount is investing in NHAI or REC bonds.

6. Encumbrance Certificate –  Encumbrance Certificate is an evidence of free title or ownership of property. This document clearly tells you if there is any legal or monitory dues on property. So if you are going to take a home loan against a flat, bank will need Encumbrance Certificate to be sure that there is no other loan going on for the same property. You can get the Encumbrance Certificate from the Sub-Registrar Office (where registration of properties take place). You can ask for upto 30 yrs of data (if available) . It takes around 15-20 days at times to get it after you have put a request to get encumbrance certificate . Read more about Emcumbrance certificate here

7. Title Deed – A title deed is a legal document used to prove ownership of a piece of property. So if you are buying property from Mr. Manish Chauhan, make sure you check the title deed. Title deed is something which you can get from Registry office of the concerned jurisdiction. Title deed is something which one must always obtain and check if you are buying an old property, because at times land and property is owned by some one old and children claim that its in their name just to speed up the process, but at times it gets ugly later. Important Tip – Never rely on Xerox Copies of the Title Deed, get it examined in original because sometimes the seller might have taken a loan and given in the original deed to lender (and does not tell you about this) .

8. Stamp Duty – Real Estate Stamp Duty is the tax collected by Govt . The stamp duty payable differs from one state to another. In some states its 3-4% and some has it at 8% also. The Stamp duty is payable on Agreement Value. So a lot of times buyers and sellers do the property agreement at lesser value and involve black money in the transaction. Its important to factor in stamp duty cost as per of your home purchase plan, because its quite a huge amount . For a Rs 50 lacs property, it can be in range of Rs 2-3 lacs. Important point is that women in many states have to pay lesser stamp duty compared to men.  For instance, in Delhi, a women need to pay a stamp duty of 4% compared with 6% for men. Thats 2% saving and for a 50 lacs house, its a saving of Rs 1 lacs” .

9. Franking Charges – When you go for home loan, there is a small charge called as “franking charges” paid you buyer to Bank . Franking (incase of real estate transaction) is actually the activity to stamping a document which proves that the Stamp duty has been paid to govt. Its an official seal kind of thing which is to be done in sub-registrar office for a small fees (Few Hundreds), this is done by the bank and they collect those charges from buyer.

10. Registration Charges – Just like you pay Stamp Duty, you also pay Registration Charges when you register the property in your name and the charges again depends from state to state . In Maharashtra, the registration charges are 1% of property or Rs 30,000
whichever is lower.

11. Gift Deed  – Generally you “sell” the property in exchange of money. But when you have to transfer the property rights to some one without taking the money like what happens in families, then you should to pass it on as GIFT and a Gift Deed should be prepared to document the process. Note that Stamp duty is to be paid even if the property is transferred through Gift Deed. Learn more about income tax on gifts here

12. Power of Attorney – A lot of times you will find that someone is trying to sell you land or a flat, based on power of attorney, which is a legal way of transferring your rights to someone else. But Supreme court has now banned all the real estate transactions based on power of attorney. So next time someone tells you that the owner of land is outside India and hence assigned him power to sell the flat, do not get fooled, only deal with someone with clear title deed.

13. Sale Deed – A sale deed is one of the most important legal documents in a purchase or sale of a property. Once its signed by the seller and buyer only then the sale is assumed to happen legally. The registration of property and stamp duty payable is based on sale deed only. A sale deed will also contain property details , measurements and other important details.

14. Service Tax and VAT – Service tax needs to be paid only for under construction properties untill complition certificate has been obtained by builder. Because till the flat is under construction, its regarded as “service”, so service tax is applicable (3.09% at the moment). But once the construction is over and complition certificate has been obtained by Builder, then the property like “goods” , where the service tax is not applicable. In the To be Paid for Under Construction Flats. VAT again is applicable for under construction properties, but only in those states where state govt has asked for VAT. Not all states have VAT applicable.

15. Conveyance Deed – Conveyence Deed is a legal document which a builder executes in order to transfer the land title to Housing socities formed. This is generally done once all the flats are sold in a project. This step is extremelly important because if this is not done, the title of land still remains with Builder and incase in future something happens, there is unnecessary legal battles. So make sure that once the society is formed, the conveyance deed is executed.

16. Completion Certificate – Once the project is completed, the local authority visits the site and inspects the construction and various things and awards completion certificate to Builder. so Completion Certificate is kind of certificate from local authority, that now the work is complete. This is the moment a builder can officially declare about the project completion. There still can be few last minute things which might need to be addressed.
17. Possession certificate – Possession letter is issued by the Builder which is actually the official permission to take possession of property. Generally its given to those who booked property during under construction. If its a ready to move in flat, the sale deed is enough and will work just like possession certificate. Note that a builder can give possession certificate only after he has obtained completion certificate.

18. Ready Reckoner Rates or Guidelines Value – For each area, there is a official govt defined rates for property which acts like the  base price. The minimum registration and stamp duty charges has to be on those guidelines value. Builders generally charge premium over these guideline values . Read more here

19. FSI (Floor Space Index) – It is the ratio specified by local authority (generally municipal corporation or urban development authority) which governs how much area one can build over a specific plot of land. i. e. if FSI for an area is 2 and you have a 1000 sq ft plot, you can build (2 X 1000) 2000 sq ft building over it. Generally, common areas like staircase, lift, passage leading to the flat door, service ducts outside toilets and kitchens, etc. are not considered in this 2000 sq ft FSI area, which means, you can construct these areas over and above the permitted FSI area. At macro level, this magic ratio called FSI determines how much construction will come up in a city.

20 – OC (Occupancy Certificate) – Well, generally CCs (Completion Certificates) are issued by municipal corporation in stages. i. e. a 25 floors high building may be issued CC for every 5 floors depending on its design. However, building is considered to be ready-for-occupation after builder has not only completed the construction but has also made it habitable by bringing in all services like electricity, water supply, drainage connection and fire fighting facilities. The corporation, after receiving NOCs from all concerned dept. will issue OC. Ideally, builder should / can issue Possession Letter only after receiving the OC. In reality though, several (not few) buildings have OC even after years of completion and being occupied. Buildings not having OC have higher outgo towards water bill, electricity charges and property tax.

Thanks Mehul for adding last 2 points as contribution

Please add more terms

If you are aware about some other thing which you have come across or feel can be added here, please add it in comments section.

Also let us know if you feel like a “pro” now in real estate terminologies or not ?

How Ready Reckoner rates by Govt affect real estate Prices ?

Posted on by Jagoinvestor

A lot of investors wonder how the real estate prices go up and down (do they?) over years. A very big role in the movement of real estate prices is played by something called “ready reckoner rates” . Ready reckoner rates for each area in the city are defined by the state govt. Let us understand this thing in detail.

what is ready reckoner rates

Ready Reckoner rates are the prices of land, residential properties, and commercial properties for any given area defined and published by govt each year. It’s revised from time to time whenever govt feels that there is a need for prices revision. Stamp duty and registration costs that are paid by a real estate buyer cant be below this ready reckoner price or the actual price of the property.

For example – Let’s say that ready reckoner rates for some location is set at Rs 4,000 per sq ft (as per state govt) and the cost of the property as per that comes at Rs 40 lacs. Now imagine that the builder is quoting the cost of the property to you at Rs 50 lacs. Now the stamp duty will be paid on Rs 50 lacs only because its higher than Rs 40 lacs. However – suppose you decide to pay Rs 20 lacs in black and only Rs 30 lacs in white money, still, your registration & stamp duty will be paid on Rs 40 lacs costs because that’s the minimum pricing set by govt itself.

Ready Reckoner rates are linked to Built-up Area

Note that the ready reckoner rates are linked to the Built-up area of the property, not carpet area or super built-up area. So if ready reckoner rate is Rs 4,000 sq/ft and builder tells you that he will also sell the property to you at Rs 4,000 sq/ft, don’t get fooled!, because builder tells you the pricing linked with super built up area and not built up area, which in most of the cases is higher, so eventually the rate charged by builder is always higher, if you convert it for the built-up area. Just for example if super built up area is 1,000 sq/ft and built up area is 800 sq/ft, then Rs 4,000 per sq/ft area quoted for super built-up area (Rs 40 lacs cost), is same as Rs 5,000 sq/ft quoted for built up area (same Rs 40 lacs) .

Just to make sure you understand the terminologies –

  • Carpet area – A Net usable area of the property (imagine you put carpet, what all part of flat, it will cover)
  • Built-up area – Carpet area + walls and doors area (imagine you remove the thick walls and all doors, then what you will be left with)
  • Super built-up area – Built-up area (which you get) + everything from the staircase, garden, gym, swimming pool and everything you use (your proportion)

How ready reckoner rates affect the prices of real estate

Now – It’s very clear, that ready reckoner price is the FAIR PRICE (which is fair value) set by govt itself. Now builders can charge the premium on that fair price depending on market condition, demand, quality and their goodwill and their exploitation power :). So the market price (the actual prices prevailing in the market), will definitely be always higher than ready reckoner prices (benchmark). Now if the benchmark itself is higher at any given point of time and also keeps increasing over years, the market price quoted by builders will also be high.

Example – Just to give you an example, in one of the areas called “Kondhwa” in Pune, the ready reckoner price set by govt is around Rs 3,700 per sq/ft, however, the builders are charging anywhere from Rs 4,500 to 6,500 per sq/ft at the moment. Imagine if this year govt increases it to 4,000, then automatically the rates will go up by that much margin because builders get a good reason to escalate the cost.

One of the largest revenue sources of any state govt is the stamp duty from property registrations and it’s always in state govt interest(from a revenue point of view) to keep the ready reckoner rates higher or increase it if there is any justification for it, live development done, roads constructed, etc…

Where to find the Ready reckoner rates for your area?

Now, you cant control the actual price you have to pay to a builder, but it’s a good idea to check out the ready reckoner rates of the area, where you are thinking of buying the property. Now there are few ways you can find out the ready reckoner rates of your area (or any area). Here are a few of them, some easy and some tough.

1. On the website of “Registration and Stamp Duty Department”

Each state govt has its own department of “Registration and Stamp Duty”. You can reach the website by searching the sentence “Registration and Stamp duty department” and adding state name along with it on google. Like if you want to find out the website for Maharashtra search for “Registration and Stamp Duty Maharashtra” (direct link) and the first link you get it “igrmaharashtra.gov.in/‎”. On the website, you need to search for a link – which says something like “market rates” or some equivalent in the local language of the state. If you are lucky, you might reach the final page which helps you find out the ready reckoner rates for all the cities in the state. It will help you find the rates as per city, taluka, location or survey number. I tried this trick and was able to find out the websites links for 3 states

  • Andhra Pradesh (for Hyderabad) – Direct Link

Note – The rates might be displayed in per sq yard, per sq meter etc, so better change them to per sq feet and also make sure you use IE or Firefox to access the websites because they still don’t know chrome exists!

2. Using RTI application

The second way to find out the rates is to use the RTI application against the same Registration and Stamp Duty department (many times called “revenue department” like in Delhi). All you need to do is file an RTI to the respective officer and to your jurisdiction asking for the rates in a particular city and area. You can take help of this article to understand the format and procedure

3. Office of Sub-registrar

One of the best ways would be to go to the sub-registrar office (where the properties are registered) and find out the rates from there itself. If you do not find the support of the staff there, don’t forget to mention words like RTI, CIC and “One of my friend works in Media” and they should accept doing some work for you.

4. From the newspapers

All the newspapers keep on publishing these rates from time to time. Just keep an eye on real estate section from time to time and you should be able to get some info. Below I am attaching some snapshots I got from the Internet for the revised rates in the year 2013 from 2012.

mumbai ready reckoner rates

Pune ready reckoner rates

Pimpri Chinchwad ready reckoner rates

No Ready Reckoner rates for rentals

There are ready reckoner rates for buying the properties, but there are no ready reckoner rates for rentals. It would be amazing if govt comes up with that too, it would then help us to understand which area is doing better then others and how much premium home owners are asking for over govt defined rental rates.

Overall what do you think about ready reckoner rates and does it helps the overall industry or goes against it? Please put your comments!

8 things in Real Estate Regulations Bill which can affect Property Prices

Posted on by Jagoinvestor

It has been 5 yrs when the first draft of the Real Estate Regulatory Bill came and then there were many amendments in it over the years. However on 4th June 2013, it was passed by cabinet and now the next step is to table it in parliament this monsoon season and if our country people are really lucky, it will finally become an ACT of law.

real estate regulation bill

Real Estate Sector is hugely unorganized and against buyers

We all know that the real estate sector is so much unregulated and unorganized. There are no proper guidelines on any thing and builders use this to make maximum out of the situation and take buyers for the ride at every level. Builders and Politician nexus are very known and from last 10-15 yrs, the real estate prices have crossed the level that a common middle-class family would never afford their own house.

In this scenario, the real estate regulations are not just a requirement, but a big need of the industry if our economy and society need to some stability over the long term. In this article, we will discuss all the major points in real estate regulations. There are many good points in the regulation and it will help the industry, however like any other law, this bill also has many loopholes and many rules can be exploited by the builders. This bill whenever becomes the final act, will only be applicable to new real estate projects, not the ongoing and completed projects.

From the last few days, there has been a great number of discussions over various news portals and discussion forums on how these regulations will be a great thing and how it is just another failure. So let’s see major highlights of the regulations

1. Mandatory to acquire all clearances before the launch

As per the bill, it would be mandatory to acquire all the required clearances from relevant authorities and govt bodies before formally launching the project. Right now builders launch the project when there is nothing more than plain land on the site and have no permissions for anything. They give rosy pictures to investors, start taking the money from the public and then start the overall process of acquiring the land, getting approvals, and coming up with the structure. This means there will be obvious delays and lots of confusion and frustration for investors.

With this, the concept of “pre-launch” offers will vanish and you can expect the prices of the property to be high on launch. A lot of people are saying that because of this, there might be a slowdown on the supply side because right now a builder keeps launching new projects. Another requirements is that these permissions taken are to be displayed on the website of the developer.

2. Use of Photograph of actual site for advertisements

As per the bill, the builders will have to use the actual sire pictures or the actual construction work pictures for advertisements for the project. Right now builders do not use the actual pictures for promotional purpose.

It’s easy to create an illusion by using graphics and shiny pictures and that is what happens most of the time. Builders use the classic graphics image of the project site which is full of greenery and nature around it and the feeling it gives you is that its an opportunity one cant miss. However, in reality, the project site is quite different. It might happen that there are buildings around it and no trees or any natural habitat. The roads around might be bad and the elevation of the project site might be high or low than the normal.

If a builder is found to be putting up misleading or wrong advertisements, then there can be a jail term of up to three years, if it’s done repeatedly.

3. Sale of property as per prices linked with Carpet Area

The bill says that any sale proceedings should be using the prices which are linked with carpet area and not super built-up area. Generally, builders use “super built-up area” as the parameter and define the per sq ft price as per that. Carpet area is the net usable area which can be used for living purpose (imagine you lay down carpet, then how much area it will cover), however super built-up area (or salable area as called by many builders) is combination of net usable area, area covered by walls, doors, parking area, staircases, temple in side the project, gym, garden and everything you can imagine which is part of your package (divided per buyer). So super built-up area becomes high and the per sq ft price looks small, however, if you divide the whole cost by the carpet area, then you will realize how much you are paying.

You should also know that even in agreement, only the carpet area is mentioned. However, builders quote the pricing only on super built-up area.

4. State Level Regulators and central appellate tribunal to be set up

The bills also say that a central appellate tribunal should be set up as a central body and each individual states should also have state regulators. This means that there would be some central guidelines for the real estate sector and builder and each state will focus on regulating their states real estate builders. There might be few rules different from states to states. I personally feel that there might be some confusion due to this.

5. Real Agents/Dealers need to register themselves

Right now, real estate agents and dealers are not at all registered with any central/state body and hence due to highly unregulated environments, they do not have any code of conduct or service standards defined. Now they will have to register themselves and will have clear responsibilities and functions. Consumers will be able to demand their rights from agents and dealers for the amount of commissions paid to them.

6. Separate bank accounts for every project

As per the bill, A builder will have to maintain separate bank account for each and every project and up to 70% of the funds for that project has to be there in that same bank account. In the previous drafts, this number was 100% (means no money for Project A can be used in Project B) , but looks like the builders and politicians lobby has been successful in diluting the quality of the bill wordings and in new draft now the number is 70% or less. It does not serve the protection of buyers because builders will still be able to divert 30% of the funds from one project to another.

Right now, the way it works is that a builder when faces a severe cash crunch launches a new project and uses the money collected in another project to complete the old project and this cycle goes on. This creates a lot of issues for home buyers because there are huge delays at times. Firstpost did an excellent article on this topic and concluded that real estate is a kind of Ponzi scheme

7. Builders cant take more than 10% advance without a written Agreement

A builder will not be able to take more than 10% advance money from buyers without a written agreement. Right now a lot of dealings happens by paying huge advances and the agreement part is delayed by many. In many cases, agreements happen after many months or years, as lots of transactions happen on a trust basis. This might help in curtailing some part of black money transactions. However only you guys can tell some real-life cases which this clause might not help and fail.

8. Full refund with interest, if property not handed over time

As per the bill, the builder has to refund your money along with the interest, if he fails to deliver the project on time. At this moment, this point gets added in the agreement and almost all the times, builders make sure that this point is omitted in the agreement and if it’s not there, you have to file a consumer court and after a long time, you are rewarded your right. However, the bill will make it a standard rule or clause.

The Bill rules apply to project over 4,000 sq meters in size

The biggest worry about this bill is that it’s applicable only to projects which are of 4,000 sq meters and above size overall and if a project is bigger than 4,000 sq meters, the bills allow to break the whole project into different phases and see each phase as different project. Now this clause itself destroys the protection layer for consumers. Because a builder can always break the whole project into different phases and show them as a separate project. Many builders anyways run various projects under different companies’ names to save on tax. So running two or more sub projects on different names (which are actually just one project side by side).

The old draft of the bill had this number at 1,000 sq meter, but this current recent bill has it at 4,000 sq meter, so again someone has been able to influence the bill.

No Single Window Clearance for Approvals

One of the major challenges and problems builders face is about the govt clearances and various approvals. This takes a lot of time and opens up the gate for bribes and bureaucracy, the bill does not address this problem at all. It would be great if there would be a separate govt department which would have a single-window clearance. This would help in defining the project completion time with more accuracy.

Will all this reduce the property prices or not?

This is the million-dollar question which is in every body-mind, that with this bill, will the prices of real estate come down or not, which is the biggest issue common man is facing right now, compared to any other issue. Delays and consumer exploitation is all fine if prices are normal and affordable, but if prices itself are so high that its out of reach of common man, then every other problem is secondary.

Here is a copy of the Real Estate Bill which I got from Moneylife article

There are many implications of this bill and tons of factors and variables which can affect real estate prices. Some are saying that prices might go up and some are saying pricing might come down. But It would only be clear when the bill becomes a reality.

However, we would like to hear what you think about this real estate bill and how it might impact the real estate prices?

How you become a loser when you pay in black for your real estate property ?

Posted on by Jagoinvestor

Naresh recently visited a new residential project in Pune which was ready for possession. The property cost was in his budget and he was about to finalize the deal. The total cost of property was around Rs 40 lacs. Stamp duty and Registration cost was to be paid separately which would take total cost to around 43 lacs. This was a bit heavy on Naresh pocket, so out of his regular habit, he inquired if there is any trick by which he can save some money on the deal ?

Bought house by paying in black

The builder was quick to give him a great saving advice – “Sir , You have to pay 6% stamp duty and 1% registration cost on the agreement price. Which comes to 7% of 40 lacs, thats 2.8 lacs additional, thats the reason the total cost comes around 43 lacs . Now if you want to save money, what you can do is pay some part of the deal in cash to us (means pay in black) and we will reduce the agreement cost by that much, that way – we will also save our tax on the black money part and you will save 7% on that cash amount. Like if you pay us Rs 10 lacs in Cash, then we will make the agreement for Rs 30 lacs only and you will have to pay stamp duty and registration cost on only 30 lacs which will be 2.1 lacs, and it will save you Rs 70,000 without doing anything extra ! . Cool na ! .”

The offer was tempting and Naresh fell for it, how cool is saving Rs 70,000 , all you need to do is pay some part in cash and lower the agreement amount in records. But do you understand, what is your loss in long term because of this kind of deal ? Let me break some hearts today, who have already done this mistake while buying their properties.

Stamp duty and Registration Costs

First understand that stamp duty and registration costs vary from one state to other state. For example – In Maharashtra, its 6% + 1% = 7% in total , so whatever is your total agreement cost , you will have to bear additional 7% on that amount as stamp duty + registration costs. Given the huge amount involved and the financial crunch every buyer faces at the last moment of the deal and hunger of builders to save every bit of tax, makes sure that buyers fall for this trick of paying huge amount in CASH (black money) and register the property at lower price just for few thousands (actually sizable if you look at it). This looks like win-win situation to buyers and they are pretty happy about it, however truly speaking, this is a loosing deal for the buyers in a very long run (if you are going to sell the property later) and only benefits the builders and let me now explain you why is it so ?

At the time of selling – The cost of house matters

I hope you are very clear that when you sell your property in future , you pay the tax on the profits made. And the profit is decided by your COST of the house and the sell price. So lower the cost of your house, the higher the profits on paper for you in future. You might be aware of the fact that indexation is applied in case of real estate transactions and 20% tax is paid on the profit.

Now lets take this same example we are discussing and see how much you save at the time of purchase and how much you loose at the time of selling , which can be in distant future. See the working below and try to understand the whole situation

How paying black money in real estate transaction can lead to loss in long term

In the example above you can clearly see that by paying Rs 10 lacs in cash, a person is able to save Rs 70,000 instantly. However they are not able to look beyond the obvious and visualize the kind of loss they will incur in future when they decide to sell the property. The same person will pay 3.4 lacs of additional tax in future because he/she paid Rs 10 lacs in cash years back.

Now there are few points which can be debated here like there can be changes in laws in future, or one can save the tax by investing in another real estate properties (which again depends on future laws) , but the point here is to educate you on the long term implications    of this. Now if you fully understand the message of this post, you can take your decisions with full responsibility.

Whats your take on this ?

Real Estate Cheating by IndiaBulls Greens, Chennai

Posted on by Jagoinvestor

Are you a real estate expert ! ? If yes, please help a fellow reader Yakgna Kumar, who has been suffering due to his mistake by investing in a real estate project in Chennai . He wants a right direction and hence he is asking everybody help to guide him. Below is his story from our questions and answers forum

Yakgna story of Builder Cheating him !

We booked IB Greens apartment in chennai Oct 2010, Initial booking was made with promises that are not being fulfilled by IB now. They dragged the agreement signing for 2 years quoting various reasons and until now they are not clear on number of floors, UDS. Now that, they have come up with new agreement – completely one sided and no clear indication of number of floor, UDS, SBA Increase, change in carpet area/floor plan, shared club house for different phases as against separate club house and many other issues. This is clearly a Cheating case !

We have now applied for cancellation of the booking and asking IB to refund the complete amount paid for booking the apartment, IB is not responding on the details of refund but when we call customer care, they are quoting that we need to pay penalty of 5% of total sale price ! – this is mentioned in the Booking Agreement, the booking agreement also says, that agreement should be made within 1 year of the booking, if the booking is not made within 1 year of the booking IB will have to pay 9% interest … in addition to this, they have added few clauses that cancellation should not be intitiated by buyers. Now IB is asking us to sign a cancellation process which makes us to agree for penalty as per booking agreement.

With our little knowledege on real estate, we understand

1. The booking agreement is not an agreement and and just provisional booking form.

2. its been more than 2 years old and when exceeds 6 months it will become null and void.

3. As per the CCI(competation commission of India) any terms and conditions which is one sided is not acceptable and considered as Void.

4. Our refund request is not our own and because of IB failure to deliver the project intime. Till date they are not clear it will be 7 floor or 19 floor. During booking they informed 7 floors and if 19 floor your UDS is almost nil which is deviation from the booking terms.

Questions

1) what should be our step to get the refund, have you seen customers approaching with this kind of problems and how they have handled it?. we have lost 2 years since then the real estate prices have gone up, IB can cancel our booking and sell with latest price and making profit. we have already went through too much stress because of IB attitude towards us and IB billing department asking to pay the first installment without even signing the agreement and also penalty of 18% for delay in payments . we had multiple meeting with IB staff without any change in IB stand on the agreement and so we are planning to cancel. I am attaching the booking agreement snip related to the cancellation/refund from booking agreement. We are a team of buyers, we got introduced yourself after forming a google group when we had to face the problems from IB. We are stuck now, we need correct plan of action and without any further delay and stress for us. Based on your expertise, i would request you to let us know the next steps for us.

2) Will we be able to get our monies back based on the booking agreement? .. is the booking agreement considered at all after 2 years ?

3) We also think, the IB Higher Management may not be aware of the staff and local management’s attitude to customers, if there a way to escalate our issues?

Appreciate your time on reading this long mail. thanks for your support.

Please share your thoughts and Help

What do you think about this case ? Can you share what do you think about this cheating case and how this guy should move ahead, what should be his next actions ?

Why you should do background check for small real estate builders

Posted on by Jagoinvestor

Should you buy real estate properties from small builders ? While you keep hearing about big real estate projects, there are tons of buildings and buildings and apartments build by small builders also and they are quite high in number. Today I want to share 3 instances of dealing with small builders.

Builders Background check

Case 1 : Real life case of Real Estate Fraud

One of the readers had invested in a property with a small size builder , but now he found out that the builder is arrested for fraud. He is now stuck with the investment and paying the EMI for the property whose future he is not sure about. Here is the full case

In Jan 2011 i have booked,Registered and stamp duty paid property located at Navi Mumbai(CIDCO property)and all the required documents are submitted to HDFC for under construction property.After verification and search report the Loan sanctioned. The payments are made according to Demands and Work completion by developer on time to time basis.Till the 70% of work completion all the payments are made(April 2012),but after that 19th July 2012 the developer has arrested by local police for cheating and fruad registration(Double registration) on his running projects.

In this issue he was arrested and the news spread across through all the media news papers that Customers are Cheated for Crores of rupees by Navi Mumbai Developer since May 2012.In this case on his arrest i have also made police complaint that, “The construction work has stopped since last two months and Developer has shut his office and mobile.According to media news i am also feeling that i was cheated and the home loan EMI are still there.”Now the developer and Police is also asking me to take back my complaint otherwise developer will sell that property to others and only give me the money which i have paid till the date. When i asked my bank about this to kinldy hold my EMI till the issue will solved.How do i pay EMI of the loan which i took for my Home and without getting home how do i proceed further for EMI?Bank said,”We have given a Loan to you not developer,even though all the documents are clear from Developer according to procedure.And my registration documents are Mortgage with the bank.So i have pay the EMI for the 70% Loan amount which i took from bank till the 70% work completion by developer.”Now i am paying EMI’s without getting Home. So guys pls think 100 of times before proceeding for Under-construction property.It doesnot matter whether it is a branded or Unbranded(Known/unknown Builder)

Case 2 : Unathorised Floor in the Project

One of the readers shared on our jagoinvestor forum that he has invested in a real estate project by a small builder, but the builder has violated rules and added another floor without approval. Now his money is stuck with the builder and he is not able to take any concrete decision

Recently I have booked a flat in bangalore with a small time builder. The catch is he has got approval (BBMP approval) for G+4 floors but he built an extra floor (My flat is on 4th floor). Does SBI approves the loan for apartment in such project? The builder is saying that there are 20+ loan approved from SBI (total 120 flats in project) and he will get my loan approved as well. He is also saying this is quite common practice now a days in Bangalore and he will keep this floor for renting purpose only.

Even if SBI approves my loan, should I buy this flat? What are the complications, I would face in future if selling off this flat (or will live in that flat). I have given 20% of the money as booking amount.
What are your suggestions in my case?

Case 3 : Builder not replying to many queries

I had a terrifying experience with a small builder, who projects himself as a Mid size builder(He completed one small project, of 20-30 flats and he himself given promotion as midsize builder and compares himself with some reputed mid size builders in Chennai).

I got all the documents from builder in a professional way(he gave all documents in set saying these are the documents required for legal verification) and gone for a lawyer verification(its my mistake not to wait for lawyer opinion) and he gave me enough evidences that he applied for a project approval form SBI( I told him, i will get HL only form SBI, after reading articles in Jagoinvester, Thanks to Jagoinvester for their precious articles) i believed him because he behaved very professionally(He is educated and worked for a consulting firm for more then a decade, making me believing he is professional) and i overshoot-ed the lawyers advice( i didn’t receive it for 15 working days) and made agreement and paid 20% of the property cost and then got a call form lawyer(actually lawyer couriered me the docs, but I didn’t receive them) saying courier was returned and he asked me to make a personal visit to his office.

The facts came into the picture with 10 queries( all of them are so simple like EC patta and couple of explanations) and i sent the same list to my builder and got promised, those silly queries will be answered in 5 days, and i waited for 15 days but no reply to lawyer from builder and after repeated follow-ups’(not with Mr. Professional, but with a staff in builders office) finally she went with answers and from my side i too gave the agreement copy for further evaluation and final advice from lawyer( as he is empanelled with SBI, it can be submitted for loan processing). The horrifying truths came out, he further raised additional queries and a builder cheating was projected. There are multiple problems in the land (it is total of 1.5 Acer).

1. Some part of the land was amortized with a PSU (not SBI) for 50L and he paid the amount in the month of July and obtained NOC (still the documents are under encumbrance) and attached the NOC with the documents and he is giving for customers for property verification. But when my lawyer made a background verification( as he has good networking with many bankers), it came to the limelight that he obtained loan again for 50L in the same bank after a month of time.

2. some part of this land is hereditary(legal heirs are 2 brothers and one sister) , sister didn’t sign the document and her brothers sold(here it is JV) the land to the developer, got her signature as witness.After some time she can go and fight legally for her rights on the property, and lawyer requested for a rectification deed and he objected and told he can provide a NOC(generally NOC is valid for 6 months of time, i really don’t know how NOC is valid in this contest)

3. DTCP approval is not obtained

4. There is difference in land available as per patta and land showing in project documents

5. Parent documents before 2004 are missing and told those can’t be retrieved

After presenting all the above(only critical are mentioned) queries, he tried to convince me and get my loan from some other financiers(of course i have a option to choose form PSU and NON-PSU), and offered some gifts (as he is planning to market his flats in Diwali offer such as free modular kitchen,( he increased the price of the flat by rs.200, but not for my booking, as I have done it earlier. Just to hold my booking he offered me this Diwali gifts)) and some other junk promises. I demanded for immediate cancellation of booking and refund all amount on the same day. However, I am in confusion state. If he clears all the above queries it is a great deal in that area and the price I paid was killer price.
I requested him to put all his words in a piece of paper (of course it is a judicial stamp paper of Rs.20, again Kudus to Jagoinvester for education me how to deal in such cases, especially with builders)Got a concrete promise to fix the queries in 15 working days else the entire amount will be refunded. 15 days passed and I have no communication from builder or from his office.On the final day I gave a call, asked him the status, and got a horrifying answer that he is still fixing the problems and when questioned deeply, got the terror answer that he did not start anything until date. Moreover, requesting me to wait for another 2 weeks.

I rejected his request and told him to arrange for cancellation deed and check, for the amount, and he rejected saying he will deduct rs.25 as per agreement. I initially rejected his check and told him I will collect the amount what ever after presenting the issue in front of consumers forum. Moreover, after short conversation he realized that I would make mess( i searched this property in internet and he also told me 70% of his customers are thru internet) if the total amount were not refunded. So guys please be aware and do a lot of background checking before investing your hard earned money.

Vultures are all around us in the form of builders, relaters and especially mediates or brokers or agents or what ever it is… (via)

Background Check of Builders before you purchase Property

It would not be fair to say that one should avoid small builders, but one has to be more cautious with the small builders compared to bigger ones. Here are the 5 things one should always check before they deal with a builder – small or big. This checklist will make sure that your pain is reduced later and the chances of getting in trouble will be minimised.

1. Enquire about their previously Completed Projects

You should always ask them directly about the previous projects they have completed. Better visit them too, and ask the locals and people living there about delays if any and the issues they faced. You should also search about those projects on internet and watch out for any grievances and complaints.

2. Check if they are part of some builders association

There are few associations and groups for builders community and there are codes of conduct defined for builders. Some of those associations are “Builders’ Association of India” (BAI) and “Confederation of Real Estate Developers Association of India” (CREDAI). Its always a good idea to watch out if the builder you are dealing with is a part of those associations or not. While you can’t say that not being a member is always a wrong thing, but you can always ask him why he is not a member. I would say a builder who is part of those association would be more serious and professional compared to other small time builder.

3. Check the rules incase of Delay or Cancellation of Project

You should always ask for the rules and terms and condition which will apply incase of delay or cancellation of the project. Ask them for an agreement copy even before paying the booking amount. Do not get too impulsive with the project and hurry. Watch “Compensation clause” which talks about the compensation paid to the buyer in case of any issues.

4. Search on internet for his review and past

Always do a thorough research about the builder and his quality of work on internet and different forums. While in general all the builders have some or the other bad reviews from someone, watch out that the internet should not be filled with bad reviews totally! In case you do not find any information or very little information about the builder, then you are mostly dealing with some new guy in town, who might be truly unprofessional. Avoid it.

Do you know someone who had dealt with small builder and was stuck with the situation or faced any issue? This can even happen with big builders. Share your experiences in comments section…