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March 7, 2000

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Crucial real estate documents

Larissa Fernand

Real estate is an aspect of personal finance that touches virtually each individual's life. At some point in your life, you may decide to buy a house or sell the one you have. Incomplete documentation can mean big trouble.

Agreement of sale:
All important information regarding the sale is recorded here, such as the area, apartment number, cost of the apartment, mode of payment, tenure of payment and date of possession.

Title deed:
A title deed in your name indicates that the property is indeed yours. And if you ever decide to mortage your property for a loan, you will need to give the original title. Should you sell the property, retain a copy of the sale deed. In fact, every original document concerning the legal title of the property has to be handed over to the new owner. But don't do so unless you make photocopies of each and every single one of them. This will help you in calculating your long-term capital gains.

If the property is sold in parts then do not submit the original sale deed. Since you bought the entire property in one lot and are disposing it in parts, you need not surrender this document. It will suffice if you just hand over certified and true photocopies of the original purchase deed to the new buyers.

Letter attesting ownership of property:
There have been innumerable instances where property has been mortgaged by the seller. And the seller has not informed the buyer that he has taken a loan against the property. To make sure that you are not conned, ask for two documents to set your doubts at rest.

The first is the original title deed. If the property is mortgaged, he will not have this in his possession. The second is the letter attesting to ownership of property. This one is usually given when buying land or when the amount being transacted is large. In other cases, the buyer's lawyer will need to check up on his own. He can do this by either asking the society or going to the registrar of assurance's office (the registrar will know if the property is mortgaged). Later on, if you ever decide to mortgage the property, you will need the original title and this document.

Certificate attesting payment of income tax dues:
If the seller is an income tax defaulter, he can be legally prevented from selling his property. The tax officials can debar him from selling the property until all dues are settled. The seller needs to obtain a document from the IT Department stating that he does not it any dues. Obtaining it should not take more than a week to 10 days.

Memorandum of understanding:
If you are unable to make the entire payment upfront, you will need to format a memorandum of understanding which will state all the conditions as to when the payments are to be made. Make sure that the period as well as the amount owed is recorded correctly since this will be the one document that can prove how much you owe the selling party.

Form 37I:
In case the value of the property is more than Rs 75,00,000 (Mumbai), Rs 50,00,000 (Delhi), Rs 25,00,000 (Calcutta, Chennai, Bangalore, Ahmedabad, Pune) and Rs 20,00,000 (Chandigarh, Jaipur, Cochin, Trivandrum, Nagpur, Faridabad, Gurgaon, Gaziabad, Noida, Kanpur, Patna, Lucknow, Bhubhaneshwar, Cuttack, Coimbatore, Madurai, Hyderabad, Surat, Indore, Baroda, Bhopal), government permission is needed to transact a sale. This document has to be filed by both the buyer and seller, and the entire procedure will take around three months excluding the month in which it is filed.

Stamp duty:
Since stamp duty is levied by state governments on all real estate agreements, it varies from state to state. The amount is dependent on the purchase price that is shown in the agreement of sale. For example, in Maharashtra, a purchase valued at Rs 10,00,000 would invoke a stamp duty of Rs 38,750. For amounts exceeding Rs 10,00,000, the duty is 8 per cent of the amount plus Rs 38,750. Stamp duty is to be paid at the time of registration.

Registration refers to the recording of the contents of a document with a Registering Officer appointed by the state government. The registration of the agreement has to be done after a fixed period of time from the due date of execution. The date and amount to be paid for registration varies between states. The deadline in Maharashtra is four months from the date of execution and the fees are 1 per cent of the amount with a maximum of Rs 20,000.

Where a purchase of agricultural land is concerned, all details regarding ownership, quantity of land, mortgage of land, if any, and details on who is cultivating the land is mentioned in a document called Fard. Obtain the latest copy of Fard from the seller. Once the sale deed has been executed in your favour, apply for a new Fard in your name after meeting the concerned Patwari of the area. Make sure that the new Fard contains your name as the owner and cultivator.

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