Documents to check before buying an under construction property

In earlier articles we have always emphasized on the importance of property documents and why should you avoid soft launch projects. Today we have listed down some of the most important documents that must be validated for a peaceful purchase. Only documents can tell the genuineness of the land/project and the builder. Never go by word of mouth or broker’s assurances.

Under Construction Property

Land Record

This is the most important document that must be verified before getting into the further details. Land record gives you an idea of ownership, title, obligations, rights, mortgage etc. Do not buy a property or apartments whose title is not clear. There have been case where builder or individuals sold flats/apartments without having the ownership of the land. At the end it’s the buyer who suffer. So, it is better to check land records with builder. To cross-check, copy of land records can be obtained from online portals of most of the state governments/ authorities. You can also use RTI to get such information. While a lot of people may think that this is too much of a hassle, it is always helpful to get the first step correct.

Land use type

It is illegal to have residential properties in a commercial or industrial zone. Write to the development authority and check the land use certificate to ensure that the property you plan to purchase is in the residential zone. Sometimes the land will be in what is called a ‘converted zone’. It has been observed in past that builders without obtaining necessary land use certificate go on launching residential projects. Many of the projects have been stuck or delayed because of such malpractices.

Construction Clearances

A ‘certificate of commencement‘ is mandatory to commence any construction of a property. The certificate is issued by the town planning department or development authority in some cities. Construction certificate shall only be given by respective authorities only after inspection of some of the important documents like title, layout plans etc. This also means that the builder would have obtained the required licenses, sanctions and permissions for the map that are required before you can even start excavating.

Building / Layout Plan Approvals

We have always advised not to purchase soft launch projects.  Builders have a habit of launching projects without necessary approvals such as layout plans. They may show you draft layout /building plans and assure you that approved layout plans shall come shortly. These draft layout plans goes under scrutiny and change many times. You may not want to end up booking an apartment in a tower whose location/height/orientation/density etc changes before final launch. You should never invest in a project whose layout plans are not approved. We advise that you simply walk away if these approvals are not in place. While the potential of a project may appear to be quite attractive to you, often such layout changes may prove your purchase decision to be a bad one.

Master Plan of the Area

Builders in collusion with authorities and newspapers keep propagating false future development news. They would later advertise these announcements and articles in their sales brochures. You should never believe such news and announcements and always look at the area’s master plan to verify. These plans are easily available with the town planning department or authority.

No Objection Certificates and other Clearances

NOC’s are required from various departments to construct residential complexes. Depending upon size and height of the buildings these NOC retirements may differ. However, these are some of the important documents that must be in place.

  • Clearance from the Fire Department
  • NOC from the State pollution control broad
  • Environment clearance and NOC from Wildlife boards
  • NOC from the Airport Authority etc.

Never undermine these clearances. Recently, In Noida region of NCR, home buyers had to wait for 2 years for their ready to move apartments because builders had failed to obtain clearances from National Wildlife Board. Read more about it here: NGT order on Okhla Bird Sanctuary

Booking Form, Allotment Letter and Builder Buyer Agreement

When you have verified all the documents mentioned above, ask the developer to provide you a copy of booking form, allotment letter and BBA. Usually allotment letter and BBA are provided to you few months after making payment of 2-3 installments that would account for almost 20-30% of your flat consideration. At this stage you do not have an option to object to any clause. Objection means cancellation and cancellation means forfeiture of earnest money. You should force the builder to provide a sample copy of BBA and go through each and every clause carefully. You can take help of a lawyer or expert to analyze the agreements. The builder will always want to avoid presenting you with a BBA at the initial stage since most of them are one-sided, and are presented to the buyers at a stage when you just cannot afford to say no to it. After having a look at the BBA, you have a choice to walk away if builder’s agreement is too aggressive. Chances are that you shall be left helpless and BBA would be slapped on your face when you have any problem after making the payments.

Documents to Check once construction is finished

Completion Certificate

Completion certificate (CC) is a documents issued by public authorities that certifies that the project is constructed as per layout plans and the other guidelines mandated by the authority. CC can be issued in phases for a few towers. A certain percentage of towers must be completed to get CC.

Occupancy Certificate

Occupancy certificate (OC) is the next step after CC. OC means that building is complete from all aspects and basic amenities like water, power supply, sewage connection are in place and are as per the approved layout plans.

Before Taking the Possession

Sale or Sub-lease Deed registration

Once the CC and OC are in place, it is mandatory for you to register the property with the government’s revenue department. Builder will transfer the property in your name at registrar’ office. Sale Deed defines your ownership for the said apartment. In case you have taken bank loan, original copy of sale deed shall be kept with bank.

Possession Certificate

Once the apartment is registered in your name, you should collect the possession certificate from developer. This document shall help you in tax deduction etc. Read the fine print very carefully. Builders usually include clauses to wash off their hands from this here onward. Do not accept this if you are not fully satisfied with the final product. Ask for an inspection of apartment and ensure things are as expected.

Maintenance Service Agreement (MSA)

At the time of possession, builder shall ask you to sign the MSA. Ensure that it is not entirely one sided. It contains clauses related to maintenance charges, electricity and water charges. This document also contains terms of use for club and common area. Check if these meet your requirements or not.

We are doing a separate story for documents to check for ready to move in apartments/properties.

Happy Staying!

8 thoughts on “Documents to check before buying an under construction property

  • September 18, 2015 at 2:25 am
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    You are mentioning that , builder in collusion with authorities and newspapers will attract you to go for it and your money is gone, and you should go through lawyer etc, but my point is that when builder can hire these agencies then also lawyer and other agencies are also involved, which government department is free from corruption. Why not at the sight it self all legal papers are kept available, for buyer to get pure deal, and one window system as pre approval of intentional deal, to avoid malpractice.

  • September 18, 2015 at 7:45 am
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    Mr. Bolakani,

    You are mixing two points here. We suggest lawyers for due diligence of documents in case one is not in position of verifying the same or do not understand the technicalities.

    Authorities and builders are colluded everywhere and our reference was for project announcement like metro, airports, tram, safari etc they keep making with any actual plan.

    As far as single window system is concerned, babus would never want that to happen in India. Let’s hope the govt does something about it.

  • March 8, 2016 at 12:04 am
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    Good article

  • August 5, 2016 at 11:52 am
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    Do Builder really give us a chance to go through these approvals?
    Does so happens in practise. Do they really have all Fire/Wild life/Enviromental clearances at hand during under construction properies, some of these they are deliberately keep pending so as to have a waiver of penalty due to delay

  • August 5, 2016 at 7:57 pm
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    The day you start asking for it, builder will start providing.

    Yes, we have come across few developers who were happy to share the details.

  • September 15, 2016 at 8:27 pm
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    Hello sir, I have done agreement with developer for flat purchase of under construction property, I have collected almost all documents for SBI bank loan from developer but Environment clearance certificate not given by developer saying that it will be received after 6 month, Now sbi denying for loan due to legality issue, I discussed with developer on phone that bank is disagreed, but he tried to convince me to shift other pvt. bank, he offered me loan transfer charges to sbi again,
    pls guide.

  • September 19, 2016 at 1:00 pm
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    Dear Sir,

    If the developer is offering o bear the charges, it would be wise to transfer the loan. Later on, you can take it from SBI.

    However, no environment clearance can be an indication of bigger problems, do get in depth of problems here.

  • September 27, 2016 at 4:23 pm
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    Thanks for this blog post’ it’s really nice for those person who going to buy first time flats in Pune India.

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