Chennai is among the nation's fastest-growing metropolitan cities, and it has become a prime market for real estate investment. Whether you're looking to buy a home for personal use or as an investment, purchasing property involves several crucial steps. Failing to conduct proper due diligence can lead to legal disputes, financial losses, and unnecessary complications. From verifying ownership to checking legal approvals and calculating additional costs, every detail matters when making such a significant financial commitment.
To help make the process manageable, keep these 6 considerations in mind before buying a property in Chennai.
1️⃣ Title Verification
The most essential action to purchasing a piece of property is verifying the title deed to confirm clear ownership of the property, and a title deed is the legal document that formally grants ownership rights to the named owner over that property. Properties with an unclear title are subject to ownership disputes and potentially complicated legal matters. When verifying a title, buyers should seek a copy of the original title deed and analyze its historical record for the last 30 years, and pay particular attention to the property's record with the government land office to identify the status of transfer and ensure there are no illegal transfers or disputes regarding ownership.
If the title is unclear, the possibility exists for ownership disputes that will require the intervention of judicial authority, which is a risk for purchase or investment. Legal assistance is important to help guarantee that the property has a clean title and avoid the possibility of future conflicts regarding ownership.
2️⃣ Legal Approvals
All real estate projects in Chennai must be approved by authorities such as the CMDA (Chennai Metropolitan Development Authority) or the DTCP (Directorate of Town and Country Planning). This verifies that the property complies with regulations, i.e., Zoning regulations, construction regulations, and environmental laws.
Ensure the following has been obtained for any property you would like to buy:
✔️ Building Plan
✔️ Completion Certificate (CC) for ready-to-move-in (completed) properties
✔️ Occupancy Certificate (OC) stating the building is fit for habitation
✔️ RERA Registration for newly constructed properties
Purchasing property that has not legally received the required approvals can lead to a demolition notice, fines, or cancellation of the purchase agreement. Always ask for these documents before making your final decision.
An Encumbrance Certificate (EC) is an important document that indicates if there are any financial burdens on the property, such as unpaid loans or claims. It provides a history of the property's transaction history to ensure it is free of encumbrances.
An EC can be obtained by buyers from the Tamil Nadu Registration Department online or offline. It is important to check the EC for unpaid mortgages, litigations, or any claims of ownership. If there is an encumbrance, the property is likely under loan, or the seller might not be the full owner of the property.
Purchasing a property without verifying the encumbrance status can lead to legal battles and loss of money. It is a good practice to obtain and review the EC for at least 15 years before moving forward with the purchase.
4️⃣ Property Valuation
The value of any property can be influenced by many factors - location, facilities, transport and infrastructure, and other market factors. Understanding the real market value is key to ensuring you pay a fair price.
As a buyer, it is important to compare the price of your property with similar properties in the local area to ensure you do not overpay. It can be useful to consult with a property expert or valuer to assist in determining whether the asking price is fair. It would also be prudent to take into account other factors such as future development potential, the area's accessibility, and rental income potential, and then consider how these factors influence the true value of the property.
Buying a property without a valuation can result in thousands or even millions lost on the investment. Therefore, you should take the time to fairly ascertain the value of the property about its longer-term capital appreciation before deciding to buy.
5️⃣ Stamp Duty & Registration Fees
In addition to the purchase price of the property, buyers need to operate with additional costs like stamp duty and registration fees. These are compulsory costs as they require official approval for the transfer of ownership in the buyer's name.
As per the current guidelines from Tamil Nadu:
✔️ Stamp duty is 7% of the market value of the property
✔️ Registration fee is 4% of the market value of the property
These fees greatly increase the overall budget, and missing them from your list of costs could cause you additional unnecessary financial stress. Buyers should note that they secure a sufficient amount of funds to cover the costs and complete the registration of property, as the legal procedure is required.
6️⃣ Builder/Owner Reputation
It is very important to ensure the credibility of the builder or the seller when you're buying a property. Most buyers can fall victim to a fraudulent property transaction due to the false promises of unscrupulous builders or property agents.
To ensure their credibility, buyers should:
✔️ Ensure the builder has a good track record and a good history of completed projects
✔️ Check whether the new construction project has an RERA registration
✔️ Check online reviews or customer testimonials
✔️ Check whether any legal cases are pending against the builder in the legal courts
Choosing a builder and/or an owner who has a history of good reputation helps ensure the project is completed on time, meets legal requirements, and is built well. The chance of fraud and misunderstandings can also be limited when there is a good reputation.
Making a Safe Investment
Real estate investment is an important decision that has financial implications, and buying real estate in Chennai needs caution. Verifying ownership, legal approvals, encumbrances, property valuation, hidden costs, and seller credibility will protect the buyer from financial exposure and possible legal issues.
To ensure a safe and hassle-free investment, it is generally a good idea to consult with real estate professionals and legal experts before deciding on any transaction. By observing these six vital factors, buyers can have confidence and navigate the Chennai real estate market and feel comfortable with their investment decisions.
Comments
0 comment