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Documents required for buying resale flats

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Documents required for buying resale flats

Last updated: September 14 2009
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  • Documents required for buying resale flats

    Request members to help me with identifying the documents required frm the seller.

    My understanding is tto start with to get the documents and get a legal opinion first.
    Then get a EC from the CMDA or Municipality for the property.

    Is there anything else? I am sorry as i am new to this.

    My concern is how tomake sure that the document is authetnic and / or the owner is authentic.
  • #2

    #2

    Re : Documents required for buying resale flats

    Originally posted by yeskrish View Post
    Request members to help me with identifying the documents required frm the seller.

    My understanding is tto start with to get the documents and get a legal opinion first.
    Then get a EC from the CMDA or Municipality for the property.

    Is there anything else? I am sorry as i am new to this.

    My concern is how tomake sure that the document is authetnic and / or the owner is authentic.
    Value of resale flat depends on the land share.Quoting one of my old post that explains how to calculate price of a resale flat taking into account depreciation.

    Originally posted by nabishek View Post
    Friends,

    I am sharing here my understanding on depreciation of resale flats from the information i have gathered.

    For a resale flat one has to consider value of land, estimated life of building, age of building and facilties available.

    lets take for example a 20 years flat with 1500 sqft builtup 1000 sqft UDS.

    If the flat was to be constructed today assuming the market price of land is 10,000/sqft

    cost of land = (UDS * current market price) = 1,000 * 10,000 = 1,00,00,000

    cost of construction = (built up area * construction cost) = (1500*1200) = 18,00,000

    Total = 1,18,00,000 including all other charges.

    The rate of depreciation is calculated as follows

    The normal age of a building is considered to be 60 years.

    Depreciation is calculated such that at the end of 60 years the value of the building becomes zero.

    Out of the total asset value the residual or scrap or salvage value, is normally taken at 10% and can be ignored.The remaining 90% of the building cost is spread over the 60 years.

    hence, rate of depreciation is 1.5% per year.

    So if a building is 20 years old then rate of depreciation is 30%. i.e. the building is 70% of its initial value.

    The cost of the resale flat would work out as follows if assuming the cost of construction 20 years back was 250/sqft.

    cost of land = 1,00,00,000
    cost of building = (1-(30/100)) * (1500*250) = 2,60,000
    Total cost of resale flat = 1,02,60,000

    Because the flat would have been puchased at lower input cost,at cheaper land rate and due to poor maintainence, the owner may also be willing to offer at 30-40% lesser than the calculation above.

    If a person who holds a old flat (25-30 years+) wants to reap the benefits as per the true valuation above.The most profitable option is to go in for a joint venture along with all the residents of the building by hiring a builder or their own contractor.

    With the relaxation of FSI,they can get substantial amount of money in hand and possibly also retain a flat in the complex by only sharing their space with few more additional neighbours.

    Over the years land value appreciates and building value depreciates.

    Apart from checking the building and land documents, Ensure the following

    1. Buy resale flat of reputed builders and preferrably sparingly used,well maintained,individually owned flats.Check other projects by the builders to know the quality of construction.
    2. Ensure no deviation in plan and UDS registered in proportion.
    3. EB connection on individual owners name.
    4. Corporation water connection available.
    5. All property/water tax paid and no dues.
    6. Car parking registered in owners name, if applicable.
    7. Owners Association formed and registered legally.
    8. If flat allotted by any association or society, transfer share certificate if any or get NOC from respective society.
    9. Flat not mortgaged or lien on the property.
    10. If flat rented out, check if there is any rental/lease agreement.Ensure its vacated before its bought or arrive at an understanding with the lessee.

    Comment

    • #3

      #3

      Re : Documents required for buying resale flats

      Thanks nabhishek.

      that is useful.

      rReg the flat not in mortgage or in lien, i am not clear.

      Most of these 2nd hand owners have their documents with banks and they are on mortgage. I thought that was actually better beacuse original docs are with banks and less tamper proff - relatively.

      when you say point above i am just curious to know what did you have in mind. Thanks.

      Comment

      • #4

        #4

        Re : Documents required for buying resale flats

        Originally posted by yeskrish View Post
        Thanks nabhishek.

        that is useful.

        rReg the flat not in mortgage or in lien, i am not clear.

        Most of these 2nd hand owners have their documents with banks and they are on mortgage. I thought that was actually better beacuse original docs are with banks and less tamper proff - relatively.

        when you say point above i am just curious to know what did you have in mind. Thanks.
        I meant that you have to take extra care and put additional effort to ascertain the obligations towards the motgage and implications of lien if any.

        The seller maybe finding hard to pay the EMI's and may want to sell the flat and repay the loan amount to the bank.Its not simple, before going ahead you have to check with the bank whether its possible.

        Till the entire loan repayment is complete, the real owner of the house is the bank.The seller is just a "benami" of the bank in true sense.

        To give you an idea, If the seller had defaulted for more than 6 months or so, the property becomes a toxic asset and would be classified as NPA.The bank reserves right to confisciate the property and auction it after a stipulated timeframe.

        What if a property was already auctioned and you end up paying the seller hoping that person would repay the bank, get back the property and register on your name.

        So, never pay the seller of a mortgaged property directly.Instead, deal along with the concerned bank to arrive at an understanding on how the loan can be transferred or paid back to gain ownership of the property.

        Also, any payments like foreclosure charges, dues etc should be clarified before hand and ensured its bourne by the seller.

        Its better to move the loan to another bank.The documents will be scrutinized again and any discrepancy if any, will come to light.

        Comment

        • #5

          #5

          Re : Documents required for buying resale flats

          Thanks nabhishek

          Comment

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