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Are you buying a site or property from open market Part A

 

Buying property from the reputed builders and developers or from the Government authorities such as Bangalore Development Authority (BDA) or Karnataka Housing Board (KHB) is usually less painful! You will have some degree of comfort that the legal title of the property has been scrutinized by reputed advocates.

 

The headache lies when you decide to acquire a property from an individual who would have bought it from the builders of less repute.

 

When you venture to buy such properties you have to get the title deeds of the property scrutinized by reputed advocates. Only after getting a written legal opinion from the advocate you can consider investing your hard earned money

 

In this article, we won’t be discussing about the legal scrutiny of documents. We would like to narrate the process of registration of the property

 

Step 1: Identifying the property:

The starting point is making up your mind to buy a property and once it is done, look out for suitable properties. The best source of locating the properties is property portals such as magicbricks, sulekha or commonfloor.

 

You can leave your details such as contact number, the type of property, location, etc in the enquiry. For sure, someone will approach you, mostly the property agents/brokers!

 

Dealing with Brokers:

  • Speak to the broker
  • Visit their office if it is nearby, just to get a sense of his credibility
  • While visiting the site of the property, try to go by yourself rather than taking the agent in your vehicle or you going in his vehicle.
  • If the location of the property is in a remote place, it is advisable to go with one or two known people.
  • Don’t give any advance money to the agent.
  • Fix the role and responsibility of the agent; also his fees or commission

 

Agent’s role and commission

 

Role:

  • Fixing a meeting with the seller of the property either at the office of the agent or in any common meeting point
  • Collecting a photocopy of the title deeds of the property
  • Accompanying you to the sub-registrar’s office at the time of registration. It is good if he signs as witness for sale deed

 

Commission:

  • Commission, normally the buyer has to pay 1% of the sale consideration (and seller to pay 2% or lump sum amount; suggest you negotiate the amount before striking the deal)
  • If you are giving the commission through cheque, you have to inform the agent well in advance. Normally, they will grumble later if it is not paid by cash
  • If you can confirm the terms through email, it is all the more good.

 

Terms of Transaction

 

After fixing the terms of contract with the broker, you will choose one of the properties shown by him. Once you like a property, your agent will set up a meeting with the seller. During the discussion with the seller, you have to fix the terms of the transaction such as –

 

  1. Sale Price
  1. Token advance payable
  1. Preparation of Sale agreement and amount payable as part of sale agreement
  1. The period (say, 60 days from the date of agreement) by which you conclude the registration
  1. The value for which the property will be registered

 

Once you agree on the above terms, pay a token advance, say Rs.10,000/- (payable by Cash/Cheque) and collect one set of entire documents of the property and obtain a receipt on a white paper. [Tips: it is suggested to carry a receipt and if you happen to pay token advance, you can get it signed by the seller]

 

Step 2: legal scrutiny of documents and preparation of Sale Agreement

 

  • Get legal scrutiny of documents through your advocate. Choose a good advocate who can read the documents thoroughly.
  • I have observed that the buyers suddenly become very cost conscious when it comes to paying the advocates! According to me, the quality of the scrutiny is important.
  • Preparation of Sale agreement and getting it approved by the Seller
  • Enter into a Sale Agreement and pay around 20% of the sale consideration

 

Continue Reading : Steps to be followed for registration of the property in Bangalore

 

Thought for the day

Stop buying things you don’t need, to impress people you don’t even like. 

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About CA Prasad Chartered Accountant

CA Prasad Chartered Accountant
CA Prasad is a practicing Chartered Accountant and partner in Bangalore -based CA Firm. For further information or query, please email it to [email protected]