Festive Home Buying: 7 Warning Signs That Could Save You From Property Fraud

The festive season is considered an auspicious time to buy a home. Developers roll out special offers, brokers promise attractive deals, and prospective buyers are often keen to complete a purchase before the celebrations end. For many families, it is also a time to make one of their biggest financial commitments.

But it is also easy to get carried away. A flat that fits the budget, a developer promising early possession or a seller willing to negotiate may seem like an opportunity worth grabbing. The trouble is that not every property being offered for sale is free of legal or ownership problems.

Some buyers discover this only after paying the booking amount. Others find themselves dealing with disputes over ownership, missing approvals or loans taken against the property. Getting their money back can then become a long and frustrating process.

Before putting your hard-earned money into a property, here are seven things you should check carefully.

1. The Seller Is Avoiding Questions About Ownership

A seller may show you a sale deed and a few other papers, but that does not necessarily establish that the property has a clear title.

Ask the seller how the property came into his or her possession. If it was bought from someone else, ask for the earlier sale papers too. Don't just look at the latest sale deed and assume everything is in order.

“Be extra careful when buying a property that has come through inheritance. There could be other family members who have a claim to it. Similarly, if the property is jointly owned, make sure everyone who has a legal interest in it is on board with the sale,” says Shankey Agrawal, partner, BMR Legal.

If the seller keeps delaying the production of original documents, do not ignore it.

2. There Is A Dispute Or Loan Against The Property

A house may look perfectly fine, and the seller may be living in it, but that does not tell you whether the ownership is free of problems. There could be a dispute among family members, someone else claiming a share in the property or an outstanding bank loan.

“Do not take the seller's word for it. Get a lawyer to trace the ownership history and check the land and registration records. It is also worth obtaining an encumbrance certificate to see whether any registered sale or mortgage is recorded against the property,” says Agrawal.

If there is an existing home loan, find out how it will be settled and obtain the necessary lender documents before completing the purchase.

It is better to spend money on a legal examination now than discover later that someone else has a claim over the house.

3. The Builder Cannot Show A Valid RERA Registration

If you are buying a flat that is still being built, look up the project on your state RERA website. Ask the developer for the registration certificate and other approvals before paying the booking amount. A brochure or a well-furnished sample flat is no substitute for checking the paperwork.

Under RERA, projects that fall within the ambit of the law must be registered before they are advertised or offered for sale, unless they qualify for an exemption. Check the registration number on the state RERA website. Make sure it relates to the same project, tower and phase that you are planning to buy.

Also look at the declared completion date, construction progress and complaints against the developer, where available.

Do not rely only on the broker's assurance that the paperwork is in order.

4. The Price Looks Too Good To Be True

A seller offering a flat considerably below the prevailing market rate may have a genuine reason for doing so. Perhaps there is an urgent need to sell. But buyers should find out why the property is being offered so cheaply.

Check the prices of similar flats in the same locality. Ask about pending maintenance charges, property tax and other dues. Also find out whether there are any disputes or restrictions affecting the property.

Festive discounts are one thing; a deal that comes with unanswered questions is quite another.

5. The Seller Wants Money Before Completing The Paperwork

This is a situation where buyers need to be firm. A broker may say that another customer is interested or that the festive offer will disappear if the booking is delayed.

There is no need to rush into a payment simply because someone is creating urgency.

For projects covered by RERA, Section 13 restricts a promoter from accepting more than 10 per cent of the property cost as an advance or application fee without first entering into a written agreement for sale and registering it.

“Check the account into which the money is being transferred. Make payments through banking channels and insist on an official receipt. Avoid handing over cash or transferring money to a broker's personal account without proper authorisation,” says Agrawal.

6. The Property Does Not Match The Approved Plan

A site visit can tell you a lot about a property, but it cannot establish whether the construction is legally approved.

“Buyers should ask for the sanctioned building plan and check whether the actual construction matches it. This is particularly important in independent houses and buildings where additional floors may have been constructed without approval,” says Agrawal.

For ready-to-move-in flats, ask for the completion and occupancy certificates, wherever applicable.

An unauthorised floor or deviation from the approved plan may not seem like a problem when you are buying the property. It could become one when you try to sell it, renovate it or obtain certain utility connections.

7. Important Promises Are Only Verbal

During negotiations, buyers are often told that parking is included, certain facilities will be provided or possession will happen by a particular date.

The problem starts when these promises do not find a place in the agreement.

“Read the document carefully before signing. The final price, carpet area, payment schedule, possession date, parking arrangements and additional charges should be clearly mentioned,” says Agrawal.

In a resale transaction, check that the seller's details and description of the property are correct. If something important has been promised, ask for it to be recorded in writing.

Do not sign documents with blank spaces or missing details simply because the seller says the formalities can be completed later.

Don't Allow A Festive Offer To Decide For You

There are a few other checks worth making before completing the transaction. Verify the seller's identity, check outstanding property tax and maintenance dues, and find out whether the property has any restrictions on transfer. If someone is selling through a power of attorney, have the document examined by a lawyer.

Keep copies of the agreement, receipts, payment records and communication with the seller or developer. These can be useful if a dispute arises.

If buyers suspect fraud, they can approach the police, consumer commission or the relevant RERA authority, depending on the nature of the complaint and the applicable law.

A home is usually bought with years of savings and, in many cases, a large home loan. There is little sense in risking that money to save a few days or take advantage of an offer that may not last.

“A genuine property deal will stand up to scrutiny. If a seller is uncomfortable with basic questions about ownership, approvals or payment terms, buyers should be prepared to walk away,” suggests Agrawal.