Ajay Kumar, 29, and Neha Arora,
25, Chandigarh-based IT professionals had been looking for buy a new two
bed-room ready-to-move- in house. They can either purchase from the primary
market such as developers and housing development boards or from the resale or
secondary market. After several rounds of search, they were able to locate a
house that suited their requirements. However, there could be minor tweaked in
the process depending upon where one has bought the property. Yet, in the
present scenario, if you want to buy a ready-move-in house, it does make sense
to take a look at secondary market. Even
though the process is fairly straight forward, getting it right can be a hard task,
not the least because of the arduous journey of purchasing a house starts from
negotiation and ends with huge amount of paper work involved.
While negotiating, one must
insist on checking the paperwork even before committing to make the
purchase. Do not show your eagerness to
buy a house, even if it matches all your priorities. Keeping in mind all the
details of property and expected renovation cost, ask for a price that is 10
percent lower than what is quoted by your valuer. Do not increase the price you
have quoted, let the seller drop down his price. Along with the price
negotiation, discuss the terms and conditions, such as payment schedule,
transfer of property papers and others. You should also find out who will bear
the costs of remaining dues such as utility bills, taxes and cost of
procurement of papers from the concerned departments.
Draft
a sale deed
Before going for drafting a
sale deed, ensure that you have collected all the necessary documents related
to property, such as the original title, agreement of sale, no-objection
certificate, occupation certificate and the possession letter. Carefully check
the name of seller. In case the person from whom you are buying the property is
mentioned as a buyer in the registry papers, then you would know that he has
bought it from another person. This way you can locate the entire chain of
people who owned the property.
As soon as you get all these
documents, draft a sale deed. It should have the details of the property such
as its location, house number, if any, the area covered, date of construction,
and so on. It should also carry details of the seller and the buyer, such as
their names and addresses, date of birth, father’s name, among others. The
value at which the property is being sold by the seller should also be clearly
mentioned.
Calculation
of Stamp Duty
After drafting the sale deed,
calculate how much stamp duty you would need to pay for the registration of the
documents. The stamp duty and registration fee are levied on the circle rate or
the purchase price of the property, whichever is higher.
Suppose the couple as mentioned
above, buy a property valuing at Rs50 lakh (Rs30 lakh through cheque and draft
and the remaining Rs20 lakh in cash). In the agreement, they disclose the
property value to be Rs30 lakh. But say, according to the circle rate, the
value of the property is Rs35 lakh . The stamp duty and registration fees in
this case would be calculated on Rs35 lakh and not on the disclosed value of
Rs30 lakh. For that, you would need to pay the stamp duty that varies from 3
percent to 11 percent of property value according to the prevalent rate of
respective State in which the property is situated. Remember, if adequate stamp
duty is not paid on the documents that have to be mandatorily registered, it
would attract a penalty, which could go up to 10 times the value of the stamp
duty originally required to be paid.
Registration
of Property
It’s now time to execute the
final sale deed on the stamp paper. This means recording of document stating
the changes in ownership and transactions of an immovable property. Whatever
the source, even after you pay the sale price of the property, you do not
become a legal owner until you get it registered. Ideally, you should get the
property registered as soon as you get its possession.
After submitting the documents,
you need to pay the registration fee to the tune of 1% of the value of property
based on the respective circle rate. Hence, the registered document becomes a
legal evidence of the transaction having taken place between the seller and the
buyer.
Mutation
of the Property
Once you get registered title
deed, the final step is to apply to the municipal authority seeking mutation of
the title of the property in your name. For this, you need to submit an
application along with the copy of registered title deed and other necessary
documents. After receiving your request for mutation, the concerned area
officer will conduct an inspection of the property and decide the value for
levying the tax on the property and, then issue a letter of mutation in the
favour of the new owner.
However, there may be cases
where that may not be possible as the registration process may have been closed
by the state government. Such a situation occurred in Haryana a few years ago
when registration of independent floor was closed for a considerable period of
time. In such cases, you need to wait for the process to reopen. Also Read: Your Home Loan and Tax Planning!
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