Investing hard earned funds requires caution and lots of background research. It’s often said that when investing in overseas property, the real ordeal only begins after you identify your property of choice. It might seem that viewing trips, hours of surfing the net and days of reading up on the area under consideration is a hard slog but in actual fact, the road to possession is a much more arduous journey. The route is paved with difficulties, tedious legalities and endless paperwork.

As a buyer, the more aware you are aware of the legalities and paperwork involved, the more likely it is that you won’t end up as yet another casualty of the courts. So, familiarise yourself with terms such as leasehold, freehold, title deeds and completion/occupation/possession certificates. As long as you make sure that all the documentation is in place before you strike the deal, you’ll be home free!


1. The Title Report

Colloquially known as the ‘property card’ or in some places ‘saat-bara’, this is an investigation into the title of the land over a period of 30 years. It ensures the marketability of the land in the hands of the original owner. Ask for the detailed report, not merely an abbreviated certificate. This should be prepared for the seller by his lawyer and should be checked by your lawyer. If the title is not clear, you can be evicted from the property at a later date.


2. Property Under Construction

If you are buying a new property, ask for an Allotment Letter or Development Agreement detailing the agreed price, payment and construction schedule, house plans, delivery date and builder’s liability in case of late completion or problems after possession. Make sure that the developer has a clear title to the land, and that the relevant local authorities have approved the building plans. Once the construction is over, ask for the completion and occupation certificates, which indicate that the building adheres to municipal requirements.

Some other costs you will incur at this stage are society formation charge, deposit for electricity meter, stamp duty and registration charges.


3. Constructed property

It’s vital to check and then double check that the seller has both the title and possession of the property as well as the right to transfer the property. Check that the relevant approvals, if any, have been obtained from the land development/planning authority. Ensure that there are no tenants and get a declaration that the property was purchased from the seller’s funds and is not mortgaged.

You will also need to request a ‘No Objection Certificate’ from the builder or society. Check whether dues such as property tax, society, water and electricity bills, etc. have been paid in full. Decide who will pay society transfer charges. Take possession of all relevant documents and also the original allotment letter, completion certificate, occupation certificate and all other documents given by the original builder.


4. Leasehold vs. Freehold

Most of the property in India is freehold, which means that ownership is transferable. In some specific areas such as Delhi, the government owns most of the land, some of which is leased out. This lease is transferable, provided permission is sought directly from the central government. In this case, you have to pay stamp duty and execute a memorandum of transfer. In the case of leasehold property, make sure that the ground rent has been settled up to date.

Most transactions are done through Power of Attorney (POA), which does not confer a clear title to the buyer and it also ceases on the death of the seller. If you are entering into such a transaction, ensure that you have a general as well as special, irrevocable POA, which will allow you to transfer the property. However, buying properties involved in multiple POAs is fraught with difficulties.


5. Stamp Duty & Sale Deed

Stamp duty is a percentage of the transaction payable to the state government. It varies from state to state. The sale agreement should state who pays the stamp duty. If it is not included in the agreement, the buyer should make sure he/she pays the full amount and registers his/her name as the owner in the land revenue records. The final Sale Deed should be stamped and registered at the appropriate local area office.