Comprehensive Checklist Before Buying an Under-Construction Property in India
Buying an under-construction property in India can be a rewarding investment, offering opportunities for price appreciation and customization. However, it also comes with risks such as project delays, hidden charges, and legal complications. To protect your investment and ensure a smooth buying experience, it’s crucial to follow a structured approach. Here’s a complete checklist to guide you before purchasing an under-construction property.
1. Verify RERA Registration
The Real Estate (Regulation and Development) Act, 2016, mandates registration of all residential projects with the Real Estate Regulatory Authority (RERA). This ensures transparency and accountability in real estate transactions.
Action Steps:
Check the project’s RERA registration number and verify it on the state RERA portal.
Confirm project details such as approvals, land ownership, and construction progress.
Why It Matters:
Investing in an unregistered project can be risky, with potential legal issues and project delays.
2. Scrutinize the Builder-Buyer Agreement
The Builder-Buyer Agreement is a legal contract that specifies the rights and responsibilities of both parties.
Key Clauses to Review:
Project Specifications: Ensure they match the promotional material.
Possession Date: Confirm the expected delivery date and penalties for delays.
Payment Schedule: Understand the payment milestones and amounts.
Delay Penalties: Ensure clauses exist to protect buyers in case of delays.
Tip: Always have a legal expert review the agreement to protect your interests.
3. Assess Developer's Credibility
The developer’s reputation is critical for timely delivery and construction quality.
Action Steps:
Research the developer’s past projects and completion history.
Check for any past legal disputes or complaints.
Ensure the developer is registered with RERA.
Why It Matters:
A reliable and established developer is more likely to deliver the project on time and maintain quality standards.
4. Verify Legal Approvals and Clearances
It’s essential to ensure the project has all required approvals from authorities before purchase.
Documents to Check:
Title Deed: Confirms land ownership.
Commencement Certificate: Authorizes construction.
Building Plan Approval: Sanctioned by municipal authorities.
No Objection Certificates (NOCs): From fire, sewage, and pollution authorities.
Encumbrance Certificate: Confirms the property is free from legal disputes.
Why It Matters:
Projects without proper approvals can lead to delays or legal complications.
5. Confirm Bank Loan Approvals
If planning to finance the property through a home loan, ensure that banks approve the project.
Action Steps:
Confirm which banks have approved loans for the project.
Understand eligibility criteria and documentation requirements.
Compare interest rates and loan terms across banks.
Why It Matters:
Bank-approved projects have usually passed strict due diligence checks, indicating reliability.
6. Understand the Payment Plan
Payment structures differ by project, and choosing the right one is critical.
Common Payment Plans:
Construction-Linked Plan: Payments align with construction milestones.
Time-Linked Plan: Payments are due at fixed intervals.
Possession-Linked Plan: Payments are made upon possession.
Tip: Construction-linked plans help ensure you pay only as the project progresses.
7. Evaluate Total Cost and Hidden Charges
The listed price may not include all expenses.
Additional Charges to Consider:
Registration fees and stamp duty
Maintenance charges for common areas
Parking fees and preferential location charges
Why It Matters:
Being aware of hidden costs helps you budget effectively and avoid surprises.
8. Assess Future Infrastructure Developments
Future development in the area can impact your property’s value.
Action Steps:
Research upcoming roads, metro lines, and commercial hubs.
Review the local master plan for zoning and development details.
Consider the long-term impact of nearby infrastructure projects on property value.
Why It Matters:
Properties near developing infrastructure usually appreciate faster and offer better long-term returns.
9. Check Resale Value
Even if buying for personal use, consider the property’s resale potential.
Factors Affecting Resale Value:
Location and connectivity to schools, hospitals, and business centers
Developer reputation and track record
Amenities like gyms, pools, and security systems
Why It Matters:
A property with good resale value ensures returns if you decide to sell later.
10. Verify Possession Date and Timely Delivery
Delays in possession can disrupt plans and increase costs.
Action Steps:
Confirm the expected possession date with the builder.
Check the builder’s track record for timely delivery.
Ensure delay penalties are included in the agreement.
Why It Matters:
Timely possession ensures a smooth transition to your new home and prevents financial stress.
11. Inspect All Necessary Documents
Before making the final payment, verify all legal documents are complete.
Documents to Verify:
Sale deed
Khata certificate from municipal authorities
Approved building plan
Occupancy certificate
Why It Matters:
Proper documentation ensures legal ownership and protects you from future disputes.
12. Be Cautious of Attractive Financing Schemes
Some developers offer EMI or possession-linked schemes that seem attractive but may carry risks if projects are delayed.
Precautions:
Avoid schemes that promise unusually low upfront payments.
Ensure the agreement protects you in case of project delays.
Check the developer’s financial stability.
Why It Matters:
Such schemes can lead to financial strain if the project is delayed or mismanaged.
Conclusion
Buying an under-construction property in India requires careful planning and due diligence. Following this checklist will help you mitigate risks, make informed decisions, and protect your investment. Remember, purchasing a property is not just a financial decision—it’s about securing your future and peace of mind.