Property Due Diligence
As a normal buyer, we pay attention to smallest of details when purchasing a smart phone, laptop, car, and many other commodities. For many buyers, buying a home is a lifelong commitment wherein one has to pay EMIs for several years. Therefore, conducting your own due-diligence should be paramount before making a final purchase for your home.
Legalities of the project:
- Intimation of disapproval (IOD): Check if the builder has received the IOD from relevant authorities. IOD lists out the conditions based on which the building should be constructed. It is usually valid for one year and has to be revalidated thereafter.
- Commencement certificate (CC): A CC is issued by the local authorities, which gives the license to the builder to begin construction only after all terms and conditions have been satisfied. Check if the builder has received the CC from relevant authorities.
- Land title verification is crucial in a sense that land should be free of litigation and any kind of associated debt.
- Check for approved drawings for an under construction project, functional water connection, electricity connection, and occupation certificate for a completed project.
- Encumbrances: Check if the property to be bought is mortgaged with the lender (such as bank, or housing finance companies). If that is the case, ask for a NOC (no objection certificate) from the lender or relevant bodies.
Verification for the cost of project:
- Stamp duty verification: Check if the rates quoted by builder are on the super built up area or carpet area.
- Registration Fee: Check if the rates quoted by builder are on super built up area or carpet area.
- Check for following cost with the builder
- Base Selling Price (BSP)
- PLC (Preferential Location Charges)
- Infrastructure development cost (IDC), External development charges (EDC)
- Car parking charges, Society and club membership, Electricity and water connection charges, Power Backup charges, Lease Rent one time, Fire Fighting Charges (FFC)
- Interest Free Maintenance Security (IFMS): IFMS is paid only at the time of possession
- Monthly maintenance charges (applicable only after the project has been delivered)
Note: Include all charges associated with the project in the sale agreement.
Penalties to the builder:
Ask what would be the penalties to the builder in case project is delayed or there are unexpected deviations in the structure of the house:
- Ask for delivery date and what are the penalties if the project is delayed (include them in the sale agreement with the builder).
- What would be the compensation if there are unexpected changes in the project design (include them in the sale agreement with the builder)
- Ratio of carpet area to super area (include them in the sale agreement with the builder)
- Earnest money: If the project is cancelled or the developer backs due to some financial difficulty, find out how much of your earnest money will be refunded. Also check whether you will be entitled to any interest payment on the money that you have paid to the developer.
- Escalation cost: Confirm that the cost of an apartment is escalation free. This ensures that any increase in the cost of raw materials does not impact you and the costs are absorbed by the developer.
- Completion certificate: When would that is offered. It should be included in the agreement. Insist on the inclusion of a clause that you will be given the completion certificate when the flat is handed over to you.
Financing of the project:
- Check which banks have approved the project for financing and talk to them.
- Check for the loan sanctioning process (including the interest rate, tenure, processing fee, prepayment penalties, and type of loan).
Index For Housing Prices
Click on above graph for details
Source: National Housing Bank
Home Affordability in India
Why should you rate and review a project?
- People like to take opinion of others when it comes to big amount purchase, therefore, your opinion counts.
- Earn Respect of fellow community members.
- Be known in the industry. Become Editors.
- Positive impact on marketability of the project.
How to rate and review a project?
- Search for your housing project.
- Rate the project on various parameters and write review including the pros and cons.
- Be as specific and honest as possible in your ratings and review.
- Be balanced in your feedback. Don’t exaggerate or misrepresent your experience.
- Don’t violate copyright. Don’t spam.