By Cushman & Wakefield Research
Buying property anywhere in the world can be a long and
drawn out experience. However in India, buying property is
a particularly demanding task with several possible hurdles
along the way such as inexperienced brokers, title defects,
complicated tenancy laws, the condition of the property itself,
and financing, to name just a few. It is therefore important that
the entire procedure be dealt with systematically to reduce the
hassles that accompany it.
Note: NRIs, PIOs and Foreign Nationals may refer to the article,
“Guidelines for NRIs/PIOs/Foreign Nationals” available online at
Identifying a Realtor
A realtor can assist in locating and evaluating the right
property, providing useful market information and resources,
and eventually guiding the buyer through the whole process
until the purchase is complete.
However real estate broking firms in India are often not
institutionalized, and therefore it is essential that the buyer
proceeds cautiously and chooses a broker who is experienced
and knowledgeable about the market, transparent and
informative through the entire process, and objective while
providing information. Cushman & Wakefield will be providing
potential buyers with this service for our sale properties.
While determining the budget for the purchase of property,
there are several expenses besides the purchase price that
must also be accounted for, such as:
- Stamp duty
Society transfer charges (in buildings with societies)
Cost of renovation/improving the property
Cost of furnishing the property
Future house tax/property tax payments
Maintenance fees, whether at actual or in the form of monthly payments to a society
For newly constructed properties, it is also possible that the
builder/developer may not be fully transparent at the time of
booking with regards to the gross pricing of the property. The
gross price should typically be a sum of the base price, external
development charges (EDC), infrastructure development
charges (IDC), preferential location charges (PLC), car parking
charges, club membership if applicable, electricity and water
connection charges, maintenance charges service and any
other applicable taxes, etc.
While external development charges are levied by the
developer on the buyer for developing infrastructure within
the complex, infrastructure development charges are levied by
the government on the developer and, in turn, passed by the
developer on to the buyer. This charge includes development
charges for water supply, sewerage, storm water drainage,
roads, street lighting, community buildings, horticulture, public
health, road maintenance, and street lighting maintenance.
Electricity and water connection charges are levied by the
developer on the buyer for availing of electricity and water
connection on behalf of the buyer.
Identifying a Property
There are numerous factors a buyer might consider while
purchasing property, each with its own benefits and
Independent House vs. Apartment in a Co-operative Housing
Society: Setting aside advantages related to independence
and privacy, some of the most important factors to consider
while making this decision in India are maintenance costs and
responsibilities, amenities that may be provided by housing
societies such as swimming pools, health clubs, and gardens,
and arrangements for parking, security, power backup, etc.
Old vs. New construction: Sale price is generally determined
on the basis of built-up area i.e. the measurement of the
residential unit at floor measurement, including projections
and balconies, and is measured from the external perimeter
of the walls, whereas the carpet area i.e. the total area of a
premises measured from the internal walls, is the area that is
actually usable. In new constructions, the difference between
the two might be substantial, and a buyer can end up paying a
hefty sum for a smaller apartment, whereas in old constructions
this difference is far lower.
Further, property and municipal taxes on new constructions are
assessed at a higher rate and therefore the monthly outgoings
would be higher. However, maintenance standards of new buildings are generally better than those of old buildings,
and new buildings often provide amenities such as swimming
pools, health club, garden, earthquake resistant designs, etc.
which an old building might not possess.
Location, Location, Location: This is an oft-repeated mantra,
which in India is taking on new meaning with the construction
of new infrastructure such as highways, bridges and metros
–which has generally resulted in appreciation of values in
neighbourhoods being served.
Investigate before executing sale deed:
- Title is free from defects
- There are no encumbrances on the property
- Property is not locked in litigation
- Inherited property has a probated will
- Property Tax
- No Objection Certificate (NOCs)
Assessment of Value
Another factor while choosing a property is whether the price
is commensurate with existing market values. Information
on previous transactions can be obtained from the market
(brokers, residents of the neighbourhood/complex, registrars
office, etc.), but the best option would be to consult a good
realtor for advice on the last transacted sale price, comparable
sale transactions etc. However it is pertinent to state that
brokers may be motivated to inflate prices, and it is therefore
not always easy to accurately determine the value of a property
Legal Aspects of Purchasing Property
When a buyer has found the property that is the right fit for
his needs and budget, there are several legal intricacies that
must be dealt with to complete the purchase. It is highly
recommended that the buyer instruct a good lawyer while
purchasing property. Once the buyer has agreed upon a price
with the seller, the rest of the process should be handled by his
lawyers. Buying property in India involves lots of paperwork and
diligence, and the lawyers should be well equipped to handle
the entire process. To that end, the lawyers should ideally be
those who are proficient in transactions in the region of India
in which the property is located as rules, regulations and
procedures can vary between states and also between districts.
Buying from a Developer
There are several factors to consider when buying property
that is still under construction. Reliability of the developer is
paramount, and the buyer should enquire as to his reputation
and record before committing to buying any property still in
development. Financial institutions and banks funding the
developer can help the buyer with his enquiries and to gain
a better understanding of the developer’s financial status. It
is important that the buyer look into aspects such as timely
possession, quality of construction, compliance with the
buyer’s agreement (especially penalty clauses), providing the
amenities mentioned, etc. It is also important for the buyer to
gain first-hand knowledge and the perspective of a previous
buyer who has dealt with the developer.
If the buyer is convinced that the developer is reputable, a
lawyer should be instructed to commence a search of necessary
documentation, such as:
An approved plan of the building along with the
number of floors, and that the floor on which the
apartment intended to be purchased is approved or
not, as sometimes developers exceed the permissions
granted to them.
Whether the developer owns the land on which the
building is located, or whether he has undertaken
an agreement with a landlord. If so, the title of the
land ownership, development agreement with the
landowner, and power of attorney executed by the
landowner in favour of the developer must be checked.
That the land is not designated as agricultural land, else
the construction will be illegal.
- The building byelaws as applicable in that area and
whether the builder is not in violation of front setback,
side setbacks, height, etc.
- Whether the specifications given in the “agreement to
sell” or the sale brochure correspond with the plans of
- Whether urban land ceiling NOC (Non Objection
Certificate), if applicable, has been obtained, and
whether NOC from water, electricity and lift authorities
has been obtained.
Once the buyer’s agreement is executed, the buyer would
typically pay about 10% total sale price as a deposit. As the
property being purchased is as yet incomplete, there are
several options a buyer can choose from as far as the remaining
payment is concerned.
Down Payment Plan: In a down payment plan, the buyer would
be required to make a payment of 10% of the purchase price
upfront with another 85% within 30 days of the booking date.
The remaining 5% has to be paid at the time of possession,
which could take several years. The advantage to this plan is
that the buyer would almost certainly avail a discount of 10
to 12% on the Basic Sale Price. However, a down payment
plan is not generally recommended as construction – and
consequently possession – might be delayed, but the buyer
would have already parted with the bulk of the purchase price.
Construction Linked Payment Plan: In this plan, payments are
made to the developer in instalments over a period of time
spanning the time taken for construction of the building. The
buyer pays 10% at the time of booking and another 10% after
30 days from the booking date, and thereafter instalments
of 8 to 10% at each stage of construction. This is the most
practical payment plan as the instalments are linked to stages
of construction, and therefore the buyer’s capital is not blocked
if the developer delays construction.
Time Linked Payment Plan: This plan is also based on payment in
instalments, usually with payments being made approximately
every 2 months over a period of 20 to 24 months. However, the
payment schedule is decided by the builder and is structured
based on time and not the stages of construction, and the buyer
would have to pay the instalments on schedule irrespective of
whether the construction is proceeding on schedule or not. This
option is not as viable as opting to pay under a construction
linked payment plan and should ideally be avoided.
Flexi Plan: The flexi plan includes features from both the down
payment and the construction linked payment plan. U nder
this plan, the buyer would, as in a down payment plan, have
to pay 10% at the time of booking and another 30-40% within
30 days. Thereafter the payments are structured as with the
construction linked payment plan. A flexi plan can earn a buyer
a discount of 5 to 6% of the purchase price.
Once the property has been identified, and a price agreed with
the seller, the buyer’s lawyer will conduct a ‘due diligence’ or a
search of all the documents related to the property to ensure
that there are no deficiencies with the property that will hinder
the proposed sale. Prior to due diligence the buyer and seller
may sign a letter of intent or memorandum of understanding,
accompanied by ‘earnest money’ or deposit.
Title: Probably the first – and most important thing – the lawyer
will check is the title of the seller with respect to the property. It
is essential to know that if the seller does not have perfect title,
he cannot transfer the same to the buyer.
For example, if the seller is not listed as the owner of the
property, he cannot sell it. Similarly, if the property is jointly
owned by more than one person, each joint owner would be
required to sign the agreement to sell and sale deed, unless any
one of them is authorized to act on behalf of the others by way
of power of attorney.
A title search is taken at the office of the local sub-registrar.
The buyer should ask for all title documents (and copies of
the same) right from the first owner of the property or, in the
case of property that is extremely old, title documents thirty
years prior to the search. This process can take between 8 and
10 days. The lawyer should also ascertain the survey number,
village and registration district of the property as these details
will be required for registration.
Encumbrances: The office of the local sub-registrar would also
have to be searched to see if there are any encumbrances on
the property, such as a mortgage, lien, or claim from a third
party. Although mortgaging properties is not an exceptional
practice, one needs to consider the implications of purchasing
a mortgaged property very carefully.
In case the seller defaults in paying his debt, the mortgagee –
usually a bank – can attach the property and sell it to recover
the debt, despite the fact that the mortgagor/seller no longer
owns the property. Also, the mortgage deed might contain
a stipulation that the property cannot be sold unless the
mortgagee gives a no objection certificate and in the case of
mortgaged property the buyer must insist that the seller clears
the mortgage or obtains a NOC from the bank. Alternatively,
the buyer may contract with the seller to make payment
directly to the bank and remove the encumbrance.
Property Tax: The lawyer must also check tax receipts for the
past three years to determine whether the seller has paid the
requisite property tax to the housing society or, in the case of
independent houses, to the municipal authority.
Litigation: It is also essential to ensure that the property is not
the subject-matter of any litigation, as cases pending before
the courts can take several years, if not decades, to be finally
Probated Will: In case of property that the seller has inherited,
the lawyer must check the will by way of which the property
was acquired. Although Indian law does not require a will to be
probated (i.e, authenticated by a court), this is preferable as a
probate ensures legitimacy of the will and is valid against any
claims thereafter made against the seller’s right to inheritance
of the property. Although challenging a probated will is
not unheard of, it is extremely difficult for someone to do so
successfully if the will is not fraudulent.
A buyer must also release an advertisement in a newspaper
stating his intention to buy the property from the seller, and
for our sale properties Cushman and Wakefield will assist with
this. This is done so that any objections to the proposed sale are raised in advance and may be dealt with accordingly. The
objections may bring to light certain hidden facts, such as an
encumbrance, or title defect which might significantly impact
a buyer’s decision to purchase the property. In case there is a
defect in the title, the entire sale can fall through if not rectified.
Buyer may back out of the final sale for the following reasons:
- Defect in title
- Non-payment of property tax (if not remedied)
- Material structural defects in the property
- Zoning/ land use related issues:
- Constructing unsanctioned floors
- Unsanctioned construction on agricultural/coastal land
- Unsanctioned construction plan
- Previously undisclosed encumbrances on property such
as mortgages, liens, or claims
- Absence of probated will (if previously undisclosed)
Note that the seller has the right to back out of the final sale if
the buyer delays the process unnecessarily.
Once the buyer’s lawyer is satisfied that the seller’s title is free
from defects, he will issue a title certificate, which is a document
stating that the seller has the necessary title to sell the buyer
- To examine all documents of title that the
seller possesses or can produce
- To be informed of any material defect in the
property of which the seller is aware
- To the execution of a proper conveyance
upon payment of purchase price
- To possession of the property as per the agreement of sale
Stamp Duty Payable:
Delhi: 4 % (Females); 5 % (Joint); 6 % (Males)
Noida: 6% (Females); 7 % (Joint); 8 % (Males)
Gurgaon: 5 % (Females); 6 % (Joint); 7 % (Males)
Pune: 5 %
Kolkata: Municipal area – Price <25 lacs then 6.1%,
Price >25 lacs then 7.1%; Panchayat area 6.1%
Once the buyer’s lawyer is satisfied that the seller’s title is free from defects, he will issue a title certificate, which is a document stating that the seller has the necessary title to sell the buyer his property.
Agreement to Sell
After the buyer’s lawyer has issued the title certificate, the seller’s
lawyers will draw up a document known as an ‘agreement to
sell’ (in certain geographies like Mumbai, a deposit may be
required from the buyer prior to the title search and agreement
to sell; the buyer’s lawyers will furnish the exact details). The
agreement to sell will contain the terms and conditions of the
sale, and while there is no standard format for the same, it
usually contains the following vital information:
Description/location of the property
The purchase price for the property
The amount of deposit payable by the buyer – usually it would be in the range of 10% to 20% of the purchase price to be paid in advance
Date of closing – the date on which the purchase price is to be fully paid to the seller and the sale deed executed and registered by him
Date on which the buyer will be given possession of the property
The agreement to sell might also contain
provisions to deal with breach by either
party – e.g. forfeiture of deposit in case
of buyer’s default, or return of deposit
along with interest in case of seller’s default – an arbitration clause or a clause specifying the
court which would have jurisdiction in case of a dispute, and
provisions for inspection or investigation of title, such as the
time in which this is to be completed.
The agreement to sell must be attested by the signatures of
at least two witnesses and must be registered by the seller’s
It is imperative that a buyer not sign any documents unless
both he and his lawyer are satisfied with its contents.
When the agreement to sell is duly registered and the purchase
price (or a portion thereof, if so agreed upon), the seller’s
lawyer will draw up a document known as a sale deed. This is
the document by which the buyer will acquire ownership of
and title to the property.
There are certain fees that are required to be paid with respect
to the sale deed. Stamp duty, a levy imposed by the government
on certain instruments, is payable on the property under the
Stamp Act of the state in which the property is located (see box
for the applicable stamp duty in various states). The stamp duty
is payable either by printing the sale deed on stamp paper of
the appropriate value or by franking of the sale deed for the
value. In case the buyer has paid the stamp duty and the sale
falls through, he would need to apply for a refund, which could
take 4 to 6 months.
Like the agreement to sell, the sale deed too is required to be
attested by two witnesses and registered, and the PAN cards
of the buyer and the seller will be required. Registration of
the sale deed is carried out by lodging the original stamped
agreement with the relevant registration office. Registering
the sale deed is crucial as the title to
the property does not pass to the buyer
unless it is duly registered in accordance
with the Registration Act.
Please bear in mind that stamp duty
and registration fees are two entirely
separate costs, both of which are to be
borne by the buyer unless otherwise
agreed between the buyer and the seller
If the property purchased is in a housing
society, the buyer would need to
complete certain forms of the society
once the property is registered in his
name. Once the forms are submitted
the society president will raise the issue
in the next AGM and admit the buyer as
a member. In certain cases, a NOC (no
objection certificate) from the society
may be required.
For additional information on any of these properties or to arrange a viewing, call us at the numbers listed here or email email@example.com. You may also fill out this online form.