The Hindu Business Line : Haste makes for heartache

After years of waiting to realise the dream of owning a flat, Mr N. Ramgopal, a senior manager with a public sector bank, zeroed in on an upcoming apartment project and booked a flat, paying a token amount. He went on to pay Rs 2 lakh more in two instalments, before applying for a housing loan from the same bank he was working for.

After a week or so, his bank sent him a letter saying that it couldn’t extend the loan as the land the apartment was coming up on was in litigation.

The information hit Mr Ramgopal hard as he had already paid more than Rs 2 lakh to the builder. (That a court order helped him in securing his flat and, of course, the loan, is a different matter.)

Mr Ramgopal is not a lone victim. A number of home or plot buyers fall into the hands of dishonest fly-by-night operators, believing in the colourful dreams they sell.

Countries such as Singapore have a dos-and-don’ts list for agents, buyers and sellers, comprising the various factors they should follow before processing a transaction.

In the absence of such guidelines, thousands of prospective buyers fall into the trap, ending up in long-drawn legal battles and mental trauma.

Mr Aditya Verma, Vice-President and Business Head of the Gurgaon-based People Interactive India that runs the online property marketplace Makaan.com, feels one should be aware of what is included and, what is not, in the blueprint, before entering into a deal.

In case one is going to buy an independent home or flat, one should make sure that it has got no outstanding loans for which one may be liable after the purchase. “One must check all the bills and tax clearance certificates before the buy,” he observes.

Choosing the right developer is yet another important factor.

“A responsible builder understands that he or she has a reputation to protect and build on. Buyers should go for a project taken up by a known builder as they are reliable in terms of project completion timelines,” he says.

Mr G Yoganand, Managing Director of Manjeera Constructions, echoes this view. “They are ready to spend Rs 25-35 lakh on buying a plot or flat. If they spend a few thousands more on a competent lawyer to vet the documents, they can insulate themselves from fraudsters,” he points out.

“But they don’t think it a worthwhile investment, leading them to a trap. The fundamental thing they should do is ask for the approvals. They should ask for a copy of the sanction plan and get the titles verified,” he observes.

“One should also make sure whether the project is approved by reputed housing financing companies. Also, one should check whether the plan is allowing for deviations more than 10-15 per cent,” he says.

According to Mr Vineet Singh, Business Head of 99acres.com, an online property deals facilitator, one should pay a visit to the site and talk to the residents.

Also, it is important to visit the places in different times of the day as it would give an idea on the density of population and traffic.

“If you are buying in re-sale from the secondary market, you should do a thorough homework on the area for rates, availability, local brokers. Talk to some residents of the area and get a feel on water, electricity, safety and other basic issues,” he says.

Mr Vineet Singh feels that one should also visit the local registrar offices to check the property records. Besides providing comfort levels, this would also help us cross-check whether there were multiple registrations of the same property.

Nuts and bolts

As it is a lifetime investment, buyers are also advised to a little bit of homework by talking to the society (or residential association) representatives (if it is an existing apartment, colony) to know about the status of the property. It would also help them cross-check the property rates and the location-specific problems.

One should also have a look at things such as proximity to wine shops and bars, which could prove to be life-long irritants, in the vicinity. This would help the buyers to call the bluff of the brokers or the sellers on their high-sounding, exaggerated attributes of the properties they put on sale.

Besides, the buyers should also plan and set apart some money for interiors, electrical works (if it is not part of the deal), tiles (you can opt out of the tile pattern suggested by the builder) and painting.

It is always good to talk to friends or kin who have recently bought flats/homes, to find out the missing links. This could save you time, effort and money in sprucing up your home.

Enquire

“In case, you are taking the help of a broker, better ask him references of his earlier clients. Also, make sure what terms he is putting forth,” Mr Vineet Singh advises.

Mr Yoganand wants the buyers to be careful on the conditions before signing the deal. “If they are paying the instalments as per the schedule, they should also expect the builder to achieve the milestones. They should insist on compensation (in the form of rent) clause, if the builder fails to complete the project within the stipulated time,” he advises.

He says that the Government (Andhra Pradesh) has already begun enforcing some safeguards by insisting on licensing of the builders and taking part of the project as mortgage. The Centre too is contemplating legislation, mandating the builders not to sell the properties until they get all the statutory permissions. This would put a clamp on pre-sale advertisements without getting the permissions.

Other issues

While ensuring the legal part of the deal, one should also look at other issues such as planning of the flat, whether it allows for good ventilation.

“It is good to opt for flats in higher floors since that helps to keep away from dust. You also get to enjoy all climatic conditions in India, be it winter, rain or spring,” Mr Vineet Singh feels.

Issues such as proximity to railway station, airport, hospitals, bus-stops, markets should also be factored before making the final deal. Remember, this is a buyer’s market now. You need not jump the gun as if it is the end of the world and there would be nothing left. A bit of due diligence to realise your lifelong dream would give you and your family peace of mind. Don’t you agree?