Buying Home/Land - Legal documents Owning a house is an important thing in ones life.

However, one needs to be careful while buying land/house to avoid falling into legal hassles. A lot of care is needed from the beginning- right from site seeing till the registration of the land. The legal status of the land is one of the first issues that you should address before confirming a property. Don't give any advance before getting confirmation about the legal status of the property. Before buying a land, a number of checks needs to be done to confirm that the land has a clear and marketable title. The first thing is to find out the tenure, legal right of the holder of the land in government records. The tenure or possession right could be freehold, leasehold or may be held under a government grant or 'sanad'. Freehold land is always most preferable. The seller should provide all the necessary documents to the buyer. Title deeds The first step is to see the title deed of the land which you are going to buy. Confirm whether the land is in the name of the seller and that the full right to sell the land lies with only him and no other person. Don't be satisfied with the Xerox copy of the title deed. Insist on seeing the Original Deed. Sometimes the seller may have taken a loan by pledging the original deed. It also needs checking whether the seller has permitted any entry/access to others through this land and whether any other fact has been suppressed/left undisclosed by the owner of the land. It is better to get the original deed examined by a lawyer. Along with the title deed, the buyer can also demand to see the previous deeds of the land available with the seller. Tax receipt and bills Property taxes which are due to the government or municipality are a first charge on the property and, therefore, enquiries must next be made in government and municipal offices to ascertain whether all taxes have been paid up to date. The owner should also possess the latest tax paid receipts, which you may inspect. Enquiries should also be made in various departments of the municipality to ascertain whether any notices or requisitions relating to the property have been issued and are outstanding and not yet complied with. While inspecting the property tax receipt, it can be noted that there are two columns in the tax receipt. Make sure that the name entered in the owner's column is correct. The second column will be for the name of the one who paid the tax. Sometime the owner may not have the tax receipt with him, in such cases, contact the village office with the survey no. of the land and confirm the original owner of the land. If you are buying a house along with the property, then the house tax receipt should also be checked. Also ensure that the electricity and water bills are up-to-date and if there any is balance payment to be made, ensure that it is made by the seller. Encumbrance Certificate Before buying any land or house, it is important to confirm that the land does not have any legal dues. It is available as a certificate called encumbrance from the sub registrar office where the deed has been registered, stating that the said land does not have any legal dues and complaints. The encumbrance certificate for the past thirteen years should be taken or for more clarification, you could demand 30 years encumbrance certificate to be checked. If you still have anymore doubts, you can take a Possession Certificate of the ownership of the particular land, which is available from the village office. Pledged land Some people may have taken loan from the bank by pledging their land. Ensure that the seller has paid back all the amounts due. Don't get satisfied with the receipt of the payment made. A release certificate from the bank is necessary to release all the debts over the land legally. You could buy a land without the release certificate. But if you want to take a loan in future, the release certificate is a must. Measuring the land It is advisable to measure the land before registering the land in your name. Ensure that the measurements of the plot and its borders are accurate. You can do this with the help of a recognized surveyor. This will avoid a lots of problems in the future. You could also take the Survey Sketch of the land from the Survey Department and compare for accuracy. More than one owner In some cases, the land will be owned by more than one people. So before registering, check if there is more than one owner, and if there is, get release certificate from the other people involved. Buying land from NRI land owners A person staying abroad can also sell his land in India by giving a Power of Attorney to a third person authorising him the right to sell the land on his behalf. But in such cases, the power of attorney should be witnessed and duly signed by an officer in the Indian embassy in his province. There is no legal support for Power of attorney signed by a notary public.

Agreement Once all the matters, financial/otherwise are settled between the parties, it is better to give an advance and write an agreement. This ensures that the owner does not change his word regarding the cost as well as make a sale to someone else who offers more money. The agreement should be written in 50 Rs stamp paper. The agreement should state the actual cost, the advance amount, the time span within which the actual sale should take place and how to proceed in case of any default from either parties, to cover the loss. The agreement can be prepared by a lawyer and should be signed by both the parties and two witnesses. After signing the agreement if one of the parties make a default, the other party can take legal action against him. Registration The land can be registered in a sub registrar office, after preparing the title deed including all the relevant information. You could get the title deed written by a government licensed Document writer. Even lawyers can prepare the deed, but the document can only be computer printed or typed, not handwritten. Handwritten documents can be prepared by only those who hold the scribe license. A draft should be prepared before actually writing the document in stamp paper. Make sure all the details mentioned are accurate. If there is incorrectness in the document after registering, a secondary document with the correct details has to be registered and depending on the incorrectness, the registration expenses will be repeated. Make sure that the deed is registered within the time limit mentioned in the agreement. Original title deed, Previous deeds, Property/House Tax receipts, Torence Plan (optional) etc plus two witnesses are needed for registering the property. Torence plan is a detailed plan of the property prepared by a licensed Surveyor which will have accurate details of the measurements including width, length, borders etc. This plan is needed only in some specific areas. For land costing more than five lakhs, the seller should submit either his Pan card or Form Number 16 during registration. The expenses involved during registration include Stamp Duty, registration fees, Document writers/ lawyers fees etc. The stamp duty will depend on the cost of the property and varies from Municipality to Corporation to Panchayat. In Panchayat the stamp duty will be 4% of the cost of the land whereas in Municipality it is 5% and in Corporation 6%. Two percentage will be charged as the registration fees. Document writers fees also depend on the cost of the property and varies with individuals. There is a percentage prescribed by the government as Document writers fee and they cannot charge more than the prescribed limit. After registration, the registered document will be received after 2-3 weeks, from the registrar office. General Q1. Who is an NRI? Ans.: Under the Foreign Exchange Regulation Act of 1973, Non-Resident Indians are: Indian citizens who stay abroad for employment or carrying on business or vocation outside India or for any other purpose in circumstances indicating an indefinite period of stay abroad; OR Government servants who are posted abroad on duty with the Indian missions and similar other agencies set up abroad by the Government of India where the officials draw their salaries out of Government resources; OR Government servants deputed abroad on assignments with foreign Governments or regional/international agencies like the World Bank, International Monetary Fund (IMF), World Health Organisation (WHO), Economic and Social Commission for Asia and the Pacific (ESCAP) OR Officials of the State Government and Public Sector Undertakings deputed abroad on temporary assignments or posted to their branches or offices abroad. Q2. Who is a foreign citizen of Indian Origin? Ans.: A foreign citizen is deemed to be of Indian Origin if : i) he held an Indian Passport at any time or ii) he or his father or paternal grand father was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955. However this does not apply to citizens of Pakistan, Bangladesh, Afghanistan, Bhutan, Sri Lanka or Nepal.

Buy Q3. What should a consumer keep in mind while purchasing a housing flat? Ans.: Some of the factors to consider while purchasing a flat are: a. Locality i.e. transport, schools, hospitals, market, business district, entertainment centers, hotels, restaurants, pollution levels b. Quoted area of the flat i.e. Carpet, Built Up Area and super Built Up Area c. Car parking space d. Quality of construction e. Reputation of the builder or seller f. Sufficient water and electric supply, other utilities g. Cost components: price, stamp duty, registration charges, transfer fees, monthly outgoings and society charges, costs of utilities h. Potential for resale or renting out of the property i. Any other distinguishing features or advantages of the property

Q4. Checklist for buying a residential property? Ans.: a. Market Trends about prevalent rates of property in the vicinity and last known transactions b. Ask for photocopies of the all deeds of title related to the property to be purchased. Examine the deeds to establish the ownership of the property by seller, preferably through an advocate. Ascertain the survey number, village and registration district of the property, as these details are required for registration of the sale. Previous encumbrances and loans, if any on the property must be cleared before completion of purchase of the property. The title of the Vendor to the property must be clear and marketable. c. Check for approved layout plan and approved building plan with number of floors d. Clearance from Municipality, Electricity, Water, Pollution, Lift authorities e. Check the building bye-laws in that area to verify any issue with setback, side setback, height, etc f. Confirm transfer fees, stamp duty and registration charges to be paid on purchase of the property as well as outgoings to be paid for the property i.e. property tax, water and electricity charges, society charges, maintenance charges

Q5. Do NRI's require consent of Reserve Bank to buy immovable property in India? Ans.: No. NRI's do not require any permission to buy any immovable property in India other than agricultural / plantation property or a farmhouse. Refer to the table below for a comprehensive list of transactions possible. {PIO Person of Indian Origin} NRI Buy Property From Sell Property To Receive Gift From Give Gift To Yes Yes Yes Yes PIO Yes Yes Yes Yes Resident Yes Yes Yes Yes Note For NRI

Agricultural Property Purchase Property From Sell Property To Receive Gift From Give Gift To Buy Property From Sell Property To Receive Gift From Give Gift To Agricultural Property Purchase Property From Sell Property To Receive Gift From Give Gift To No No No No No No No No No Yes No Yes No No No No Yes No Yes Yes No No No No Yes No Yes Yes No Yes No Yes Yes Yes Yes Yes For PIO

Q6. In what way the purchase consideration for the immovable property should be paid under the general permission? Ans.: The purchase consideration should be met either out of inward remittances in foreign exchange through normal banking channels or out of funds from any non resident accounts maintained with banks in India. Q7. Is there any limit on the number of housing properties that may be purchased by an NRI? Ans.: There are no limits on the number of residential properties that may be bought by an NRI. However, repatriation (the process of converting a foreign currency into the currency of ones own country) is allowed only in respect of two such properties. Q8. What are the guiding principle for getting hold of agricultural land / plantation property / farmhouse by NRIs and foreign citizens of Indian origin? Ans.: All requests for purchase of agricultural land / plantation property / farm house by any person resident outside India may be made to The Chief General Manager, Reserve Bank of India, Central Office, Exchange Control Department, Foreign Investment Division (III), Mumbai 400 001.

Sell Q9. Can a home/land be sold without the permission of Reserve Bank? Ans.: Yes. Reserve Bank has granted general permission for sale of property. However, where another foreign citizen of Indian origin purchases the property, funds towards the purchase consideration should either be remitted to India or paid out of balances in non-resident accounts maintained with banks in India. Q10. Can sale proceeds of such property if and when sold be remitted out of India? Ans.: In the event of sale of immovable property other than agricultural land/farm house/plantation property in India by a NRI or PIO, the authorized dealer may allow repatriation of the sale proceeds outside India, provided all the following conditions are satisfied: The immovable property was acquired by the seller in accordance with the provisions of the Exchange Control Rules/Regulations/Law in force at the time of acquisition, or the provisions of the Regulations framed under the Foreign Exchange Management Act, 1999; NRIs/PIOs can effect remittance of sale proceeds of immovable property in India irrespective of the period for which the property was held. The sale proceeds allowed to be repatriated should, however, not exceed the

foreign exchange brought in to acquire the said property. In case of residential property, the repatriation of sale proceeds is restricted to not more than two such properties, if the property was purchased from funds held in NRE Account. The amount sought to be repatriated abroad should not exceed the amount paid for acquisition of the immovable property in the foreign exchange received through normal banking channels or out of funds held in FCNR or NRE Account. In case of investment out of NRE Account the amount to be calculated as foreign currency is equivalent value as on the date of payment for acquisition of the said property.

Rent Out Q11. Can NRI's/PIO's rent out the properties (residential/commercial) if not required for immediate use? Ans.: NRI/PIOs can without restraint rent out their immovable property, whether purchase through application of forex or otherwise, without seeking any consent from the RBI. The rental income being a current account transaction is repatriable outside India, only if proper tax is paid or provided for.

Loan Q12. Does RBI have any guidelines for loans to NRI's/PIO's? Ans.: There are guidelines issued by the by the Reserve Bank of India for grant of Housing Loans to NRIs. The guidelines are: (a)The loan amount shall not exceed 85% of the cost of the housing unit. (b)Own contribution, which is the cost of housing unit financed less the loan amount, can be met from direct remittances from abroad only through normal banking channels, your Non-Resident (External) [NR (E)] Account and /or Non-Resident (Ordinary) [NR (O)] account and /or Non-Resident Special Rupee account [NRSR] in India (c)Reimbursement of the loan, comprising of the principal and interest including all the charges are to be remitted from abroad only through normal banking channels, your Non-Resident (External) [NR (E)] Account and /or Non-Resident (Ordinary) [NR (O)] account and /or Non-Resident Special Rupee account [NRSR] in India Q13. Can authorized dealer grant loans to NRIs for purchase of a flat/house for residential intention? Ans.: Authorized dealers have been granted permission to grant loans to NRI's for acquisition of house/flat for self-occupation on their return to India subject to certain conditions Repayment of the loan should be made within a period not exceeding 15 years out of inward remittance through banking channels or out of funds held in the investors' NRE/FCNR/NRO accounts. Q14. Can authorized dealer grant housing loan to NRI's where he is a principal borrower with his resident close relative as a co-applicant / guarantor or where the land is owned jointly by such NRI borrower with his resident close relative? Ans.: Yes. Such housing loans availed in rupees can also be repaid by the close relatives in India of the borrower.

Q15. What are the documents I have to submit along with the application?

Ans.: The following documents are normally to be submitted along with the application: (a) Photocopy of the labor contract and English translation duly countersigned by your employer (b) Latest salary certificate (in English) specifying the following: Name (as it appears in the passport) , Date of joining , Passport Number, Designation , Perquisites and salary. (c) Photocopy of labor card/identity card (d) Photocopy of valid resident visa stamped on the passport (e) Photocopy of monthly statement of local bank account for the last 4 months (f) Property related documents Q16. Can an NRI take loan against the security of immovable property in India? Are there any restrictions on the use of loan amount? Ans.: An NRI can borrow against the security of immovable property from Authorized Dealer subject to following conditions: i) The loan should be used for meeting the personal requirements or for borrower's own business purposes; and ii) loan should not be used for forbidden activities, namely; (a) business of chit fund, or (b) agriculture or plantation activities or in real estate business, or construction of farm houses, or (c) trading in Transferable Development Rights (TDRs), iii) the loan amount cannot be remitted outside India, iv) repayment of loan shall be made from out of remittances from overseas or by debit to NRE/FCNR/NRO account or out of the sale profits of shares or securities or immovable property against which such loan was granted. Q17. What kinds of incentive can NRIs, PIOs and foreigners look forward to in the Indian real estate industry that favours investment? Ans.: The relaxation of FDI in the construction development sector announced in March 2006 allows NRIs, PIOs and all foreigners equal opportunity with their Indian counterparts in the Indian real estate sector. The new guidelines states that before selling, the site has to be developed, constructed upon or fulfill the criteria of minimum one year development. i) NRIs, PIOs and foreigners can now invest in land, buy it, construct upon it or develop it, sell constructed buildings/developed plots ii) FDI through automatic route can also flow in not just for the housing sector, but also for townships, housing, commercial area, and infrastructure development iii) Restrictions on minimum area of land, minimum number of units has been removed iv) Minimum constructed area required is 50, designated area is 25 acres Q18. Is there any specific target to actually complete your construction development work? Ans.: The norms are quite liberal. It allows you five years to finish at least 50% of your project from the date of getting all the clearances. In normal circumstances the project can be completed within three years. It helps protect the customer and keeps fly-by-night people at bay. Q19. How does the automatic route work? Ans.: The automatic route has simplified much of the cumbersome investment process. Approval from the Reserve Bank is not required anymore. No need to go to the Foreign Investment Promotion Board either. The easing of paper work and relaxation of formalities has given a boost to overseas investor confidence for investing in India. Q20. What aspects should overseas investors look at in the Indian real estate market to facilitate the suitability of their projects? Ans.: Any NRI before investing in the Indian real estate should also focus on the particular segment that he plans to invest in - like residential, retail or office space. Consulting legal firms and real estate firms providing professional NRI services can be very useful.

Q21. What are the steps an NRI should follow for getting all the clearances in a hassle-free manner? Whom should one meet in the process?

Ans.: A lot depends on the segment you want to invest in. It helps to gauge the future state and to know what utilities are available. i) An office market investment, for instance, requires you to: ii) Get in touch with consultants for advice on the city of choice iii) Outline your objectives, the size of your investments iv) Have an approximate of the returns you are expecting. v) The yield that has evolved from distinct parameters ranges between of 8 - 8.5% to 12% for office space and 4% - 6% in residential vi) Whether the land is for investment or for development is also a deciding factor, as is the local demand-supply situation While investing in India, the availability and quality of infrastructure or utilities like power, connectivity, security and long-term future plans need to be scrutinized. Q22. Is a single window clearance possible? Ans.: Single window in a real estate project in India sometimes may be difficult, because of the involvement of several authorities. If its a multi-storied building, you need to get clearance from town planning authorities, clearance on design, elevators, fire fighting agencies, etc. Efforts are on to make the process simpler and transparent, though. Q23. How is the sanctioning authority and monitoring authority different in India? Ans.: (a) In some states, the Municipal authority is the ultimate monitoring authority (b) In smaller states and in non-urban areas, the town and country planning corporation acts as the monitoring authority (c) In urban areas where most of the construction takes place, the municipal authority wields power in giving the final permission and sanctioning drawings and plans. Clearances on electricity, water supply and other utilities come from here The new FDI norms state that the minimum investment has to be USD 5 million for 51% shareholding. Does this include funding of subsidiaries as well? (a) If you have a wholly owned subsidiary by a foreign company then the minimum capitalization norm is USD 10 million (b) If you have a joint venture, the ratio 74:26 or 51:49 is immaterial. For a joint venture, the minimum capitalization is USD 5 million in foreign exchange (c) This minimum amount of foreign exchange is required to arrive within six months from the date of commencement of business. The six months can be used to bring that money into India Q24. Do joint ventures call for better possibilities rather than unfair competition? Ans.: Healthy competition is important and necessary. However, in the case of FDI, joint venture definitely seems the wiser route to take as it has tremendous scope. The Indian partner would always be in a better position to provide inputs in terms of information on land and clearances, where the foreign investors can put their money, use technology judiciously and opportunities where both can complement each other. Q25. Does that signify that, joint ventures best investment option in Indian real estate development? Ans.: Currently, as big foreign investors are foraying into India, their main interests have been in joint ventures. The first couple of transactions or strategies have gone this way and large joint ventures have been struck. Trends show that in the initial years, FDI inflow into real estate in India will come through joint ventures. Efforts to improve infrastructure and speed up reform processes, better tax rules, computerization of land records and more transparency have ensured enhanced investments and developments in the Indian real estate industry

Q26. What two or three major things would catapult development in the next 5 to 10 years?

Ans.: The response received post relaxation of FDI in the construction and development sector has been very optimistic. This can be seen as a catalyst to investment as it would have a multiplier effect on the economy. Other sectors that will receive a boost include: (a) Technology, associated infrastructure that will be built. (b) Growth of associated industries such as steel, cement, building material, designers, etc. (c) Job opportunities for unskilled, semi-skilled workers, artisans, engineers, architects and the like.

Q27. Some information about Investment Property and Rental Income?

Ans.: NRIs can freely rent out property (source of acquisition of property not significant) (a) Freely repatriate rental income without prior permission. (b) Tax deducted at source on rental income, adjust rental income against home loans If loan amount is higher, pay through NRE, NRO and FCNR accounts. (a) Short term Capital Gains - property held for less than 3 years. (b) Long term Capital gains - property held for more than 3 years (c) NRIs/PIOs can take the advantage of indexing the cost of acquisition and improvement, investing of sale proceeds in special Bonds (d) On deciding to sell the rental property the NRI can apply to the Income tax authorities for the certificate to be deducted at source