Riffs, Rants and Raves
As a consumer, when you decide to buy a product or service, if you check around at three or more places, you begin to get wiser. And that’s precisely what happened with me, when I recently embarked on a quest to buy a piece of land. Here is my attempt to promote some awareness on land purchase in and around Bangalore — actually, I think a lot of it is applicable in other places in India too.
1. Many of them claim DC-converted, A-khata, e-khata, etc. (There are many websites that explain the differences between these.) But unless that particular pocket of land is converted (for change of land use from ‘agricultural’ to ‘residential’), the khata is not really granted. A cunning developer has likely got some portion of it converted, but not the entire portion — and the survey number (where your plot lies) is not converted! The lawyer is able to tell this quite easily.
2. Similarly, many will try to sell you from the 60% quota when they are not yet authorized to do so. (For most layouts, there is a rule that the developer can sell only 40% of the plots initially; then get clearance and only then release the next 60% for sale.) Note that the authorities deliberately release plots in a haphazard manner — say, plots 1 and 7 from row 1, plots 3 and 8 from row 2, and so on — the reason is to ensure that each street is developed, rather than just a pocket of 2-3 streets. A lawyer can identify the released plots because the authorities mark them in the sanction letter.
3. I checked out several of these so-called “telecom layouts” (or similar cooperatives). Most of them are reasonable and they publish a payment schedule, but nobody commits to a completion date, and I find several layouts sitting undeveloped for over 5 years! Take your chances on this one.
4. Misleading ads: (What’s new about that?!!) Often, you will get educated only when you go see the plot. I saw an ad on olx.in for a property. It had photos, location and price, and it also said it was “fully converted”. When I spoke with the guy, he too said the same thing. When I went there, however, I found that this developer had 4 developments with the same name, each with a different phase number, e.g., “My Meadows 1″, My Meadows 2”, and so on. In the ad, he had cleverly posted a picture and the “fully converted” status of the completed one (phase 1), the location of the phase closest to the city (phase 2), and the price of the cheapest one (phase 4). He was not even planning to apply for conversion for phases 3 and 4 — and those were the only ones available for purchase!
5. Many of them will lure you with a “bank loan available” banner screaming on the brochure. Ask them specifically which banks or organizations give loans. At this stage, you will call their bluff. I had such an experience recently; the developer claimed that LIC had backed out because the plot value (900/sqft) was too low! Now, LIC is the common man’s lender, so I was surprised. Anyway, because the plot was really nice, I decided to ask a lawyer to peruse the papers. My mom found a really good and reasonable lawyer through some websites and forums — a guy named D. Srinivasa. [No, I have no nexus with him; just that I found him good.]
6. Srinivasa looked at the papers and pointed out that the so-called “seller” (the guy coming to the sub-registrar’s office to sign the papers on behalf of the owner/ seller) is a relative of the owner’s, but he has only a general power of attorney (GPA) to liaise with the municipal authorities for approvals, electricity supply, etc.; he should hold a special power of attorney (SPA) to sell property on behalf of the owner. When we asked for the SPA, the developer never called us again!
7. Ask the developer for the draft of the sale agreement (if any is made prior to the actual sale) and the draft of the sale deed. Run this by the lawyer if possible. (The draft may not contain any clause that if any lien is found until the date of registration, the seller will be responsible for making good this liability. See if you can get this incorporated.)
8. After the papers are cleared (or even on the first visit itself), measure the site — the marker stones should already be in place — to ensure that the plot is indeed the stated size.
9. Apply for an “EC” (a no-encumbrance certificate) — anyone can apply for this — on this property. Once you are sure there is no encumbrance or lien on the property, go ahead with making your payment and registering the property.
Ultimately, I bought a plot in a development in Tamil Nadu, just across the Karnataka border. I took it because I knew was approved by HDFC. (You can call HDFC with the project number, and they confirm if it is approved by them or not.) Apart from the original title scrutiny, each time someone applies for an HDFC loan, HDFC repeats the entire title due diligence process. Therefore, I felt comfortable with this. I also felt comfortable that the owner himself — not some representative — came to the sub-registrar’s office to sign.
Note: There are many people who are happy to buy a Panchayat/ Gramathana site. This is not illegal, but please bear in mind that sometime in the future, when the developer applies for conversion (to “residential land” status), a conversion and betterment fee — whatever is prevailing at that point of time — will be levied.
Hope this helps. Please let me know if you have any tips to add.
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