Before buying any property, first determine whether the property is residential or commercial as buying property is a dream for all, but it doesn’t take much to devolve into a nightmare. If it’s a commercial property, make sure you have all necessary statutory approvals, and the site or plot must be in a commercially recognized zone. If not, the land must be converted to a commercial use. There is a Legal Checklist Before Buying Properties.
Let’s have a look on the documents:
1. Sale Deed
A Sale Deed is a key legal document that serves as confirmation of the property’s sale and transfer of ownership from the seller to the buyer. A Sale Deed must be registered in order to be valid. It is critical to complete the selling agreement and check for compliance with the different terms and conditions agreed upon by the buyer and seller before signing the Sale Deed. The buyer should check whether the property has a legal title before signing the Sale Deed. He or she should also check to see if the property has any encumbrances.
All statutory payments, such as property tax, water taxes, society charges, electricity charges, maintenance charges, and so on, should be settled by the seller (subject to the agreement).
2. Building Approval Plan
Before buying the commercial property, make sure that Corporation or Municipal Authority must approve the building plan. The jurisdictional Commissioner or an authorised officer must approve the building’s owner design. The authorities, on the other hand, approve a building approval plan based on the zone classification, road width, FAR, and plot depth. The owner is required to submit a collection of documents in order to acquire a building approval plan.
The various documents require to get a building approval plan are: Title Deed, property assessment extract, city survey sketch (from the Department of Survey and Settlement and Land Records), property PID number, earlier sanctioned plans (if any), up-to-date tax paid receipt, property drawings, foundation certificate (if any) and a land use certificate issued by the competent authority (viz., Dy. Commissioner), and copies of demand drafts. It is mandatory that the building owner hires a registered architect who will draw a plan meeting the applicable bye laws.
3. Khata Certificate
The word ‘khata’ means ‘account.’ It is a record of a person’s ownership of a property. A Khata Certificate and a Khata Extract are usually included in the statutory documents require before buying any commercial property. For the registration of a new property and the transfer of a property, a Khata Certificate is necessary. The term “Khata Extract” refers to the process of acquiring property information from the assessment registrar. It is required when purchasing any property and obtaining a business licence.
There are two Khata types- A Khata and B Khata. ‘A’ Khata has properties listed under Corporation or Municipality authority with legal property construction, whereas ‘B’ Khata has properties listed under local jurisdiction with violated property construction. You should avoid buying a B Khata property. Nevertheless B Khata may be converted to A Khata under by paying penalty to the Government.
4. Mother Deed
Mother Deed, also known as the parent document, is an important legal document require before buying any commercial property. It traces the origin/antecedent ownership of the property from the start (if the property has had various owners). It is a document that helps in the further sale of the property, thereby establishing the new ownership. In case of absence of the original Mother Deed, certified copies should be obtained from the registering authorities.
Mother Deed includes the change in ownership of the property, be it through sale, partition, gift or inheritance. It is very important that the Mother Deed records the previous ownership in a sequence and that’s why should be continuous and unbroken. The sequence should be updated until the current owner.
5. Encumbrance Certificate
Charges on the ownership or liabilities created on a property that is held against a home loan as security are referred to as encumbrances. An EC is made up of all of the property’s registered transactions within the time period for which the EC is requested. It’s a certificate that proves the property purchase/sale, as well as the presence of any transaction or mortgage, for a specific time period. This is also one of the statutory documents require before buying commercial property.
To receive an EC, a copy of the Sale Deed is submitted.
6. Power of Attorney
A power of attorney (POA) is a legal document that allows a property owner to delegate authority to another person on his or her behalf. To transfer one’s property rights, one can use a Special Power of Attorney (SPA) or a General Power of Attorney (GPA). Power of Attorney is an important legal document require before buying commercial property.
7. Stamp Duty
Stamp Duty is a government-collected tax that must be paid in whole and on time. A document is considered proper and legal when its stamp duty has been paid. Unless there is an agreement to the contrary, the buyer is responsible for stamp duty.
8. Tax Receipts
Property tax receipts ensure that the property’s taxes are paid on time to the government/municipality. As a result, it is critical for the buyer to check with the government/municipal authorities to ensure that the seller has paid all outstanding debts or not. The buyer can request the seller’s most recent original tax paid receipts and bills, and inspect them for details such as the owner’s name, the tax payer’s name, and the date of payment. Tax receipts are also considered as legal documents require before buying commercial property.
The statutory documents require before buying commercial property depends on where the property is located, as legal formalities get differ from state to state.
Under the Registration Rules, each state has its own set of forms that must be filled out and filed simultaneously with and at the time of registration of a sale deed/transfer deed.