Under construction property always attracts home buyers because it calls for payment lesser than the ready to move in properties in the realty market. However, one cannot ignore that investing in an under-construction property is a risky affair. You might face delay in possession and if the project is stuck due to a certain issue, there might be a long legal battle to be fought. Therefore, it is very important to know the factors that one should keep in mind while buying the under construction property.
Here are some tips :
1. “The first step should be to ensure the ownership of the developer/seller by conducting the title diligence over the property,” says Sadhawa N Mishra, partner, SNG & PARTNERS, Advocates & Solicitors from Mumbai.
“Buyers should not hesitate to spend for getting an independent legal report of the project. One should ensure that the work progresses as per the claim of the builders and the payments are made as per the demand letter of developers. The buyer should make visits to the site every week initially and slowly it can be fortnightly or monthly visit,” says P Seshadhri.
2. Next important step is to make the payment of booking amount to the developer and getting payment receipt for the same. For instance, under the Maharashtra Ownership Flats Act, the developer can collect up to twenty percent of the consideration without entering into a registered Agreement for sale.
“While making payment of the same, the buyer need to ensure that he gets the Allotment letter issued by the builder mentioning exact detail of the property to be purchased along with the entire consideration amount payable,” adds Mishra
3. After making twenty percent payment, the buyer needs to enter into a registered Agreement for sale as per MOFA. While entering into MOFA Agreement for sale it is to be ensured that all the approvals including commencement certificate for the property to be purchased is in place.
4. In most of the cases, the flat buyers avail housing loan from various financial institutions. If that be the case then the buyer need to ensure that the project is approved by the bank and all the formalities to be done (as per banks requirement) are complied with.
5. “Since the consideration is linked to construction in under construction projects, the buyer or bank need to pay the balance consideration as and when demanded by the developer as per the terms of the Agreement for sale and obtain a receipt for same,” says Mishra.
6. Once the building is completed, the developer shall handover the flat along with a possession letter.