Hi

I am new to real estate investment and have been reading various posts in IREF. I have zeroed on an under-construction property for which the existing owner has paid 3 installments out of the 10 construction linked installments. The seller is ready to take the amount already paid plus premium through Cheque as I want to get it financed primarily through home loan. I wanted to know how should I go through the process related steps like giving token amount, agreements, home loan financing, getting transfer from builder etc. I have already read through all the posts in the IREF about resale process but I'm still not 100% clear about the process. Whatever limited understanding I got, I am reproducing below. I hope with the help from members, the buying process will become clear and will serve as buying guide for newbies like me. Please feel free to add/delete/modify step(s) for making it Do-It-Youself guide.

Step 1: I will meet with seller, agree on price, give token amount, get photocopies of Allotment letter, payment receipts etc. and take 30-45 days time for concluding the deal. (My question is, will it be possible to get an "Agreement to Sell" executed by paying the token money?)
Step 2: Take photocopies of the Allotment letter and payment receipts to the bank and get the loan sanctioned. (Am I missing any other document which the bank will require, I read Buidler NOC in one of the posts, what exactly will that contain?)
Step 3: Get the bank draft made in favor of seller after loan sanction, go to the Builder office with the transfer papers, submit the transfer papers to the builder after getting it signed from the seller, give the bank draft to the seller, take originals from the seller, get it transferred/endorsed those in my name from the builder (am I missing any step? Also, Can we undertake all these steps within the same day? Also, when should i pay brokerage to the broker? Moreover, who will pay the transfer charges if levied by the builder).

Please review the above and let me know if my understanding is correct?
Also Can you suggest few reputed local/MNC brokers (through PM) who can do this?
Moreover, is "Agreement to Sell" the only document required for resale process as someone told me that actual registration and stamp duty payment will happen when the Builder will give possession? Is that correct? Also, whether we need to register Agreement to sell by paying stamp duty and if so, how much?
Also, what can go wrong and what safeguards to take to avoid those?
I know its a long list of questions, will really appreciate help/views from forum members.

Thanks in advance.
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  • Originally Posted by nidhi_mumbai
    Hi

    I am new to real estate investment and have been reading various posts in IREF. I have zeroed on an under-construction property for which the existing owner has paid 3 installments out of the 10 construction linked installments. The seller is ready to take the amount already paid plus premium through Cheque as I want to get it financed primarily through home loan. I wanted to know how should I go through the process related steps like giving token amount, agreements, home loan financing, getting transfer from builder etc. I have already read through all the posts in the IREF about resale process but I'm still not 100% clear about the process. Whatever limited understanding I got, I am reproducing below. I hope with the help from members, the buying process will become clear and will serve as buying guide for newbies like me. Please feel free to add/delete/modify step(s) for making it Do-It-Youself guide.

    Step 1: I will meet with seller, agree on price, give token amount, get photocopies of Allotment letter, payment receipts etc. and take 30-45 days time for concluding the deal. (My question is, will it be possible to get an "Agreement to Sell" executed by paying the token money?)

    You pay the token money and ask the owner to apply for the NOC.

    Once the NOC is ready you need to sign the agreement to sell with seller to approach the bank for loan. I do not think bank will pay the loan for the premium amount.

    Generally owner will ask for the full prermium and 10-25% of the amount he has already paid to the builder to sign the NOC.

    bank will sanction the loan as per the BSP and other charges in the BBA.

    Step 2: Take photocopies of the Allotment letter and payment receipts to the bank and get the loan sanctioned. (Am I missing any other document which the bank will require, I read Buidler NOC in one of the posts, what exactly will that contain?)

    Along will NOC seller need to get the account statement from the builder.

    Step 3: Get the bank draft made in favor of seller after loan sanction, go to the Builder office with the transfer papers, submit the transfer papers to the builder after getting it signed from the seller, give the bank draft to the seller, take originals from the seller, get it transferred/endorsed those in my name from the builder (am I missing any step? Also, Can we undertake all these steps within the same day? Also, when should i pay brokerage to the broker? Moreover, who will pay the transfer charges if levied by the builder).

    Bank lawyer will come with the cheque to the builder office and will take care of the formalities to be completed.

    They will collect the original document to keep that as colltral
    Please review the above and let me know if my understanding is correct?
    Also Can you suggest few reputed local/MNC brokers (through PM) who can do this?
    Moreover, is "Agreement to Sell" the only document required for resale process as someone told me that actual registration and stamp duty payment will happen when the Builder will give possession? Is that correct? Also, whether we need to register Agreement to sell by paying stamp duty and if so, how much?
    Also, what can go wrong and what safeguards to take to avoid those?
    I know its a long list of questions, will really appreciate help/views from forum members.

    Thanks in advance.


    You need to complete the above formalities. It is better to approach some agent to complete the deal.
    CommentQuote
  • would appreciate it if someone can throw some light on the "agreement to sell" which has been mentioned above? Do we need to take the help of a lawyer to get this drafted ?

    (I know they have said in the above post that the "bank lawyer will take care of the legalities.." .. but what if someone is not taking loan ? then do we need to take the help of a lawyer for the agreement creation ? )
    CommentQuote
  • Originally Posted by trialsurvey
    would appreciate it if someone can throw some light on the "agreement to sell" which has been mentioned above? Do we need to take the help of a lawyer to get this drafted ?

    (I know they have said in the above post that the "bank lawyer will take care of the legalities.." .. but what if someone is not taking loan ? then do we need to take the help of a lawyer for the agreement creation ? )

    You dont need a lawyer. Your broker could give you the Agreement to Sell format or you can make it yourself (A format was posted in IREF sometime back, hunt for it). Its usually a simple to understand 3-4 page document.
    CommentQuote
  • Originally Posted by nidhi_mumbai
    Hi

    I am new to real estate investment and have been reading various posts in IREF. I have zeroed on an under-construction property for which the existing owner has paid 3 installments out of the 10 construction linked installments. The seller is ready to take the amount already paid plus premium through Cheque as I want to get it financed primarily through home loan. I wanted to know how should I go through the process related steps like giving token amount, agreements, home loan financing, getting transfer from builder etc. I have already read through all the posts in the IREF about resale process but I'm still not 100% clear about the process. Whatever limited understanding I got, I am reproducing below. I hope with the help from members, the buying process will become clear and will serve as buying guide for newbies like me. Please feel free to add/delete/modify step(s) for making it Do-It-Youself guide.

    Step 1: I will meet with seller, agree on price, give token amount, get photocopies of Allotment letter, payment receipts etc. and take 30-45 days time for concluding the deal. (My question is, will it be possible to get an "Agreement to Sell" executed by paying the token money?)

    Nikhil - Agreement to Sell (ATS) cant be executed on token money, you need to pay atleast 10% of the cheque component and the premium (either in cheque or coloured money, as agreed upon between the 2 parties) to get ATS executed, bank needs to have the original copy of the ATS for loan sanctioning process. Once ATS is done then you can get the property documents photocopied for loan sanctioning process.

    Step 2: Take photocopies of the Allotment letter and payment receipts to the bank and get the loan sanctioned. (Am I missing any other document which the bank will require, I read Buidler NOC in one of the posts, what exactly will that contain?)

    Nikhil - Builder NOC is not required in general cases, it is required when builder has a lock in period clause for a specific time frame or %age of payment made, also it needs to be checked that whether the original allotee has got any loan for the property, if yes then it has to be cleared by the original allotee and a NOC from the bank has to be collected and submitted to builder while getting the unit transferred. Now, you need following documents for loan process - Allotment letter, BBA, ATS (original), receipts of payment made by original allotee, receipts of payment made by you to original allotee (remember in this case you will not furnish the details of colored component if any to bank, only transactions through cheque needs to be furnished, check in ATS also that the cheque amount matches the payments made) and your documents.

    Step 3: Get the bank draft made in favor of seller after loan sanction, go to the Builder office with the transfer papers, submit the transfer papers to the builder after getting it signed from the seller, give the bank draft to the seller, take originals from the seller, get it transferred/endorsed those in my name from the builder (am I missing any step? Also, Can we undertake all these steps within the same day? Also, when should i pay brokerage to the broker? Moreover, who will pay the transfer charges if levied by the builder).

    Nikhil - On the day of transfer, bank lawyer will pay the remaining amount to the seller by demand draft, submit transfer papers to builder along with the transfer fees (transfer fees is paid by the seller, most sellers generally include it in the price). Once transfer papers are submitted in the office it takes around 1 week to get it transferred in your name, you will receive them through courier and the original you have to deposit in bank as collateral. Brokerage is paid on the day of transfer, as this is the last process, now the broker will have no role, only thing left is the papers which you ill receive from builder.

    Please review the above and let me know if my understanding is correct?
    Also Can you suggest few reputed local/MNC brokers (through PM) who can do this?
    Moreover, is "Agreement to Sell" the only document required for resale process as someone told me that actual registration and stamp duty payment will happen when the Builder will give possession? Is that correct? Also, whether we need to register Agreement to sell by paying stamp duty and if so, how much?

    Nikhil - Yes Agreement to Sell is the only document required for resale in case of under construction properties, actual registration will happen only after builder gives possession.

    Also, what can go wrong and what safeguards to take to avoid those?
    I know its a long list of questions, will really appreciate help/views from forum members.

    Thanks in advance.


    Hi,

    Fellow member psambher, made it very clear for the process, you can find some comments as per my POV in red in between your points..
    Also, check with the seller if he is entitled for any payback from the builder like penalty for delayed construction, timely payment rebate etc etc as these payments are adjusted by builder in the last installment, and you have to check that if any of these are applicable then it will pass on to you also. You have to get it in written from the builder that these payments will be adjusted in the last payment, I have seen cases where builder refuses to adjust these payments as they say that only original allotee is entitled for this one, so you need to safeguard yourself in such a case..

    Cheers...
    CommentQuote
  • Originally Posted by nikhilyadav
    Hi,

    Fellow member psambher, made it very clear for the process, you can find some comments as per my POV in red in between your points..
    Also, check with the seller if he is entitled for any payback from the builder like penalty for delayed construction, timely payment rebate etc etc as these payments are adjusted by builder in the last installment, and you have to check that if any of these are applicable then it will pass on to you also. You have to get it in written from the builder that these payments will be adjusted in the last payment, I have seen cases where builder refuses to adjust these payments as they say that only original allotee is entitled for this one, so you need to safeguard yourself in such a case..

    Cheers...


    thanks nikhil ... but my question was that what if the new buyer is not taking a loan and is also not going through a broker ? in this case what are the precautions which one shud take ?

    (since in this case there is no help from any bank or broker in getting the transfer done)
    CommentQuote
  • I went through the same procedure , my experience says Builder is not going to give NOC if there is any penality/payment pending, if still NOC is provided then it should contain the record of payment pending / received amount which can be compared with statement of account in case of any doubt

    Originally Posted by nikhilyadav
    Hi,

    Fellow member psambher, made it very clear for the process, you can find some comments as per my POV in red in between your points..
    Also, check with the seller if he is entitled for any payback from the builder like penalty for delayed construction, timely payment rebate etc etc as these payments are adjusted by builder in the last installment, and you have to check that if any of these are applicable then it will pass on to you also. You have to get it in written from the builder that these payments will be adjusted in the last payment, I have seen cases where builder refuses to adjust these payments as they say that only original allotee is entitled for this one, so you need to safeguard yourself in such a case..

    Cheers...
    CommentQuote
  • Thank you Nikhil.

    Appreciate if you or someone can explain little more on the modalities of paying premium during agreement to sell document and before the actual transfer. If it is during the agreement to sell and it is coloured component, I would assume the premium would not be mentioned anywhere in the agreement. Now what happens if the seller backs out and cancels the agreement.

    Logically, he/she should be legally bound to return the amount as mentioned in the agreement only. Whats happens to the component which is above and beyond the stated amount. What kind of guarantee does the buyer have to get the coloured component back.

    Hope I am able to explain the situation and would like to hear from the experts here.
    CommentQuote
  • Originally Posted by virgodfire
    I went through the same procedure , my experience says Builder is not going to give NOC if there is any penality/payment pending, if still NOC is provided then it should contain the record of payment pending / received amount which can be compared with statement of account in case of any doubt



    True builder doesn't provide NOC easily, also the buyer has to confirm that there is no pending demand against the property transacted, if there is any demand/interest pending on the property then it is the duty of the broker to get it cleared by the seller, at the time of transfer there should be nothing pending against the property, which can be cleared by by the latest account statement from the builder.
    CommentQuote
  • Originally Posted by Jughead2016
    Thank you Nikhil.

    Appreciate if you or someone can explain little more on the modalities of paying premium during agreement to sell document and before the actual transfer. If it is during the agreement to sell and it is coloured component, I would assume the premium would not be mentioned anywhere in the agreement. Now what happens if the seller backs out and cancels the agreement.

    Logically, he/she should be legally bound to return the amount as mentioned in the agreement only. Whats happens to the component which is above and beyond the stated amount. What kind of guarantee does the buyer have to get the coloured component back.

    Hope I am able to explain the situation and would like to hear from the experts here.


    If the total premium is paid at the time of ATS - in this case, 2 ATS will be made, one of the cheque component of the deal, and second one of the total sale consideration of the deal (cheque + cash). Now the first ATS with cheque component will be deposited with bank for loan processing, the second ATS with total sale consideration will be with broker in which all things will be mentioned, and if case the deal doesn't go through then the back transaction will take place as per the second agreement, this clause has to be mentioned in the agreement with the correct legal language.
    And if the deal goes through smoothly then the second ATS is destroyed on the day of transfer in front of both the parties.
    CommentQuote
  • Originally Posted by trialsurvey
    thanks nikhil ... but my question was that what if the new buyer is not taking a loan and is also not going through a broker ? in this case what are the precautions which one shud take ?

    (since in this case there is no help from any bank or broker in getting the transfer done)


    In this case you need to check the authenticity of the documents verified from the builder by getting the latest account statement, no pending demand/interest, no loan on property etc measures to be taken, for this you need to go with the seller to the builder office and take the documents as builder will not furnish you with any details until the flat is in your name...
    CommentQuote
  • Originally Posted by trialsurvey
    thanks nikhil ... but my question was that what if the new buyer is not taking a loan and is also not going through a broker ? in this case what are the precautions which one shud take ?

    (since in this case there is no help from any bank or broker in getting the transfer done)

    Its feasible to do this on your own. (I bought a resale underconstruction last year and though I had a broker, he didnt really seem to do much, gave me a very basic ATS format which I corrected myself, I followed up with the NRI seller for final signing date, I followed up with builder for the transfer & got it done, basically I ended up doing almost everything that was needed).
    Some precautions in my experience :
    1. Put clauses for penalty in ATS (e.g incase seller backs out he should pay you double the amount, the seller will then insist on putting a clause like if you back out, the ATS amount is forfeited).
    2. If giving cash at time of ATS signing, have that cash amount also recorded in the ATS. (The ATS is anyway destroyed once final Sale agreement done)
    3. Check beforehand if the builder is allowing a free transfer or not. If any charges, they ideally should be split between both parties.
    4. Do the final payment at the same time when the final sale agreement done and the papers should be handed over to builder on the same day for the transfer. Discuss with the builder in advance, get your ID proof/other documents pre-checked by the builder in advance. The builder should typically take a week or so for transfer to endorse the docs in your name and handover the docs to you.
    CommentQuote
  • Originally Posted by sh-saxena
    Its feasible to do this on your own. (I bought a resale underconstruction last year and though I had a broker, he didnt really seem to do much, gave me a very basic ATS format which I corrected myself, I followed up with the NRI seller for final signing date, I followed up with builder for the transfer & got it done, basically I ended up doing almost everything that was needed).
    Some precautions in my experience :
    1. Put clauses for penalty in ATS (e.g incase seller backs out he should pay you double the amount, the seller will then insist on putting a clause like if you back out, the ATS amount is forfeited).
    2. If giving cash at time of ATS signing, have that cash amount also recorded in the ATS. (The ATS is anyway torn once final Sale agreement done)
    3. Check beforehand if the builder is allowing a free transfer (sometimes builders want to charge for that). If any charges, they ideally should be split between both parties.
    4. Do the final payment handover at the same time when the final sale agreement done and the papers should be handed over to builder at the same day for the transfer by the seller. Discuss with the builder in advance and do this on the day when the builder contact person is available. The builder should typically take a week or so for transfer and then handover the original docs to you.


    Does anyone have a sample ATS template doc ? Would be great if someone can put that up on IREF (with names and amounts blanked out obviously! ) :)
    CommentQuote
  • Originally Posted by trialsurvey
    Does anyone have a sample ATS template doc ? Would be great if someone can put that up on IREF (with names and amounts blanked out obviously! ) :)


    OK, Ive tried to cutpaste the doc here, formatting may have gone for a toss !!

    ----------------------------------------------------------------------------
    THIS AGREEMENT TO SELL is made on this ________ Day of between, , Hereinafter called the “FIRST PARTY” or the “PARTY OF THE FIRST PART”, (which expression shall mean and include his successors, legal heirs, liquidators, executors, legal representatives, administrators, assignees and nominees etc.) of the one part.
    AND
    , hereinafter collectively or the “PARTY OF THE SECOND PART”, (which expression shall mean and include their successors, legal heirs, liquidators, executors, legal representatives, administrators, assignees and nominees etc.) of the second part.
    WHEREAS the FIRST PARTY is the allottee of the , having a Super Area of ___ sq. ft. in ______ , Gurgaon (hereinafter called “THE SAID PROPERTY”). Whereas the FIRST PARTY has been allotted the said flat vide Apartment Buyer’s Agreement dated ____________ and Allotment Offer Letter dated _______.
    And WHEREAS the FIRST PARTY has now agreed to transfer / sell the Said Property to the SECOND PARTY for a total sale consideration of Rs.____ /- (Rupees _____ only) on the following terms and conditions:-
    AND WHEREAS the FIRST PARTY has agreed to Sell/Transfer the Said Property to the SECOND PARTY as per details below:

    Basic Sale Price Rs. ____ X ___ sq ft Rs. /-
    Price of the 1 Car Parking Space Rs. /-
    Preference location charges Rs sq ft Rs./-
    External Development Charges (EDC) Rs. /-
    Infrastructure Development Charges (IDC) Rs. /-
    RFMS /- Rs. /-
    Service Tax As applicable
    Total Sale Consideration Rs. /-


    NOW THIS AGREEMENT WITNESSETH AND IT IS HEREBY AGREED AND DECLARED BY AND BETWEEN THE PARTIES HERETO AS FOLLOWS: -

    1. That the FIRST PARTY has paid to M/s ______ installments of total amount of Rs ____ /- (Rupees ____) Excluding Service Tax. That the balance installments of Rs.___ /- (Rupees ____), Service tax will be continued by Second Party after the transfer of this property in the name of Second party as per company schedule.


    Total Sale Consideration including premium : Rs. /-
    (Including BSP, EDC, IDC, PLC, & 1 Car Parking)
    Less :Balance Installments to be paid by second party directly to M/S ______ : Rs. /-
    (Excluding Service Tax)
    Total Amount to be Paid to the First Party by the Second Party : Rs./-
    Less: Earnest money paid at the time of signing of this Agreement : Rs./-
    Balance of Total Sale Consideration Payable on or before ,
    to the First Party by the Second Party : Rs. /-

    2. That in pursuance of this Agreement and the Total Sale Consideration the FIRST PARTY has received advance payment Rs. ___ /- (Rupees ____ only). The details of the payments are mentioned below:

    Cash/Cheque No. Dated Amount Drawn On In Favour Of

    3. That in consideration of the said amount, the FIRST PARTY is ready to hereby sell, convey, transfer/sale deed and assign the “Said Property” with all his rights, titles interest in favour of the SECOND PARTY and benefits, easement, privileges and appurtenances to it unto the SECOND PARTY.
    4. That the said property hereby agreed to be sold is free from all encumbrance, dispute, litigation, notice or notification of acquisition and holds good marketable title and the FIRST PARTY is legally entitled to sell the Said property.
    5. That both parties have agreed on the transfer of the Said property in the name of SECOND PARTY by final sale agreement which shall be executed on or before .
    6. That the First party will provide all the original documents will be handed over to the SECOND PARTY at the time of transfer of the Said Property and submit the desired documents in the office of M/s _____.
    7. That the FIRST PARTY will get the property transferred in favor of SECOND PARTY in the records of M/s _____. at the time of full & final payment by the SECOND PARTY. Transfer charges related to Said property to M/s. _____. will be paid by the FIRST PARTY.
    8. All the dues, levies, penalties, such as interest for delayed payments due till date of execution of the transfer, shall be paid by the FIRST PARTY. The registration of Sale Deed, Stamp Duty Charges, Registration Charges, and Administration Charges, Service Tax, shall be borne by the SECOND PARTY from the date of transfer.
    9. That the FIRST PARTY hereby also assures the SECOND PARTY that the Said Property hereby conveyed is of their absolute ownership and that this agreement to sell is executed in all its entirety and the same will be got freed from all sorts of encumbrances, charges, sale, gifts, mortgages and transfers etc. prior to this and if it is proved otherwise the SECOND PARTY suffering any loss due to aforesaid reasons then the FIRST PARTY shall be liable to make good the losses to keep the SECOND PARTY indemnified against all losses, costs, damages and expenses accruing thereby to the SECOND PARTY in this connection.
    10 That the SECOND PARTY is empowered to get the said flat changed or substituted in their own name or in the name of their nominee in the records of the aforesaid company and get the transfer done in respect thereof in due course from the company in their own name or in the name of any nominee(s) for which the FIRST PARTY shall have no objection.
    11 That the FIRST PARTY assures the SECOND PARTY that if the presence of the FIRST PARTY is required in the office of M/S _____. the FIRST PARTY will appear in the said office and sign all the documents which are required for the transfer of the said property in the name of SECOND PARTY.
    12 That the Second Party will pay an amount of Rs. ___/- (Rupees ____ Only) to the First Party, as a Service Tax, which is already paid to M/S _____.
    13 That this Agreement is irrevocable and if either of the parties to this agreement fails to complete the transaction, the aggrieved party shall get it enforced through Court of Law and the defaulting party shall be liable for all expenses, cost, etc. incurred and damaged suffered.
    14 In case if the Second Party backs out from the deal the earnest/Advance money of Rs…………………../-(Rupees…………………………………………………………) will be forfeited by the First Party.
    15 In case the First Party backs out from the deal the Second Party is entitled to take the double amount of the earnest/Advance money paid to the First Party or the Second Party can approach to the court having jurisdiction in Gurgaon, Haryana.
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  • Is it true that transfer charges are paid equally by the buyer and seller to the developer.
    What if the buyer does not agree for the same?
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  • Originally Posted by vineetm
    Is it true that transfer charges are paid equally by the buyer and seller to the developer.
    What if the buyer does not agree for the same?


    Transfer charges are usually paid by the seller, generally this cost is included in the bsp quoted by the seller.
    And in every deal there is mutual understanding, so these things like transfer charges etc has to be decided on the very first meeting, the whole cost should be broken up in the various components applicable and then one have to recheck that the cost is matching or not...
    CommentQuote