If buyers are not careful about legal procedures, approvals and the small print on sale deeds, they will end up losers, says Sonal Sachdev

In Worli, a tiny residential area of Mumbai, several residents of Campa Cola Compound comprising seven buildings are set to be evicted from their homes. The reason: the developer violated norms and issued faulty documents on sale of these apartments to, more than likely, unsuspecting buyers. Shocking isn’t it?

The Supreme Court has ordered the demolition of 35 apartments constructed in violation of building laws. The municipal corporation had not granted an occupation certificate and the builder had cleverly not transferred the land rights to the housing society. This has left the hapless buyers with no legal recourse. They neither have a valid certificate from the municipal body, nor a claim on the land. What’s even more distressing is that the builder is likely to gain from the demolition directive—as an application for higher floor space can be made and new, municipality approved, apartments constructed in place of the demolished ones.

Lack of awareness and poor diligence in ascertaining legal validity of the sale deed executed by the builder is the cause of the residents’ plight. And being a matter under consideration of the Supreme Court, public officials and politicians sympathetic to the cause of residents are also refraining from getting actively involved. How the legal proceedings will pan out is not clear, but there is a clear lesson for home buyers in this case: vet property documents before you purchase a property.

Property consultants are in the market and are usually aware of good deals and rotten ones. But they also have a vested interest in concluding deals for income. So while genuine consultants may guide you to safety, you cannot trust them blindly. If you know a legal practitioner you can consult, that is best. However, for most home buyers looking to take a loan, a credible financier is a reliable guide on such matters. No credible financier will want to risk lending against a property with dodgy paperwork. In fact, most financiers also internally rate developers and can point you in the direction of the trustworthy builders to buy properties from.

Whether you need a loan or not, taking one from a credible financier for even a part of the value can be a good way to ensure that due diligence is done on your proposed acquisition. It is better to be safe than sorry.

SAFETY CHECKLIST

Ensure that ownership documents show the seller is the rightful owner with the right to sell

The property must have documented approvals from the local authority (municipal corporation)

Check with existing owners/residents/housing societies for any issues

In case of new properties, check the municipal website for project status and clearances/violations; opt for reputed developers

Submit documents to a home financier for verification and/or get them vetted by a real estate lawyer

Formerly Editor, Outlook Business and Executive Editor, NDTV-Profit, the writer is now an entrepreneur and takes keen interest in personal finance. Contact him at hinduhabitat@gmail.com