Property investments are highly capital intensive, and any mistakes made during the process can cause a great deal of trouble to the buyer. This makes it imperative for a buyer to exercise due caution while examining the property documents. With proper legal advice, scrutiny of documents and verification of relevant information pertaining to the property, the buyer can ensure that the investment brings peace of mind and a sense of security. In this article, we talk at length about the documents a buyer has to seek and examine before he is ready to sign a deal.

1. Verification of title and ownership of the seller

It is a settled legal principle that a person cannot convey a better title, than what he himself has. As a first step, the buyer should undertake due diligence, to ascertain the existence of the title with the seller, the nature of the title and its marketability and the ability of the seller to convey clear and marketable title, free from encumbrance. Documents, for a period of 30 years, if not more (and where documents are not available, for minimum period of 12 years), must be examined and the seller may be called upon to provide the following documents / information:

1. Title documents of the property:  Government order for grant, succession certificate, sale deed, gift deed, will, partition deed, etc., evidencing the transfer of title over the years, culminating in the vesting of property with the seller.
2. Nature of title: Leasehold, freehold, or development right.
3. In case of the seller claiming development rights to the property, the development agreement and power of attorney, executed by the owners in favour of the seller.
4. All title documents being duly stamped and registered at the office of the jurisdictional sub-registrar of assurances.
5. Khata registered in the name of the seller.
6. Information on pending or past litigation.
7. Availability of original title documents with the seller.

2. Verify identity of the seller

Similar to verifying the title to the property, the buyer should also ascertain the identity of the seller and any specific conditions, governing the ability of the seller to convey the property. The following instances may be noted for illustration:

1. Residence status and nationality of the seller, in case of an individual and whether consents from government authorities are required for the sale.
2. Identification of all owners, in case of properties held jointly.
3. Where the seller is a company, trust, partnership firm, society, etc. The constitution documents of the entity are necessary to confirm its ability to own and transfer the property, besides ascertaining that the person executing and registering the sale deed is duly authorised.
4. Orders from the competent court, permitting sale of the property and appointing a guardian, where the property is held by a minor or person of unsound mind.

3. Conversion and land-use permissions

With increasing urbanisation and merging of revenue lands with urban conglomerates, conversion of property for non-agricultural use assumes crucial significance, since several state laws restrict purchase of agricultural property by non-agriculturists. Secondly, the buyer must examine the Master Plan and satisfy that the property is developed in accordance with the zoning plan – such as residential, commercial, industrial, public/semi-public, parks and open spaces, etc. Where actual use is different from the notified zoning, obtaining orders from the Town Planning Authority permitting change of land use, is mandatory.

4. Construction approvals

For purchase of apartment or land with constructed building, the buyer should also scrutinise the building plan / layout plan sanctioned by the local municipal authorities, along with approvals issued by government, statutory and regulatory authorities, for providing infrastructure facilities, water, sewage, electricity, environmental clearance, fire safety approval, etc.