Summary of this article
Unapproved layouts carry serious legal and financial risks
Lower prices often hide long-term ownership complications
Proper approvals ensure safety, resale value, and peace of mind
With real estate prices rising at a constant pace, often outpacing homebuyers’ budget, buyers are constantly looking for cheaper and affordable housing options. However, this can be tricky, even leading to monetary loss, especially when it involves a plot of land.
When a plot with unapproved layouts is being advertised at a price much lower than the market rate, it naturally attracts a lot of traction. Sometimes, it even creates a sense of urgency in the buyer’s mind. While such advertisements may appear to offer significant savings, they can expose buyers to serious legal, financial and practical challenges in the future.
What Are Unapproved Layouts
Unapproved layouts refer to a parcel of land that has been subdivided into plots and sold without obtaining any mandatory permissions from the developmental authorities. In such cases, the landowner or developer bypasses all statutory regulations of governing zones, land use, road dimensions and infrastructure planning to sell this piece of land.
As a result, the layout does not comply with the city’s master plan. Even though individual plots may be sold through registered sale deeds, the overall layout itself lacks legal sanction for the sale agreement.
Says Aarushi Jain, founder and partner, Chambers of Jain and Kumar, a law firm: “An unapproved layout refers to a plotted development where land has been subdivided and sold without obtaining mandatory permissions from the competent planning authority, such as the local development authority, municipal corporation, or the town and country planning department. In such layouts, roads, open spaces, civic amenities, and plot demarcations exist informally and lack statutory sanction.”
Approved, Regularised, and Unapproved Layouts
For homebuyers wanting to having a safe and secure home, it is important for them to distinguish between approved, regularised, and unapproved layouts.
An approved layout has received prior clearance from a competent authority, such as the municipal corporation, real estate regulatory authority (Rera), and urban development authority. Affirmation from these bodies can confirm that the land use is aligned with the purpose mentioned in the documentation. This also confirms that the property holds the same open areas, measurements, and utilities as it was planned. Approved layouts are legally safe and sound and are easier to resell in the future.
A regularised layout is one of the initially developed without any legal approval, but later brought under legal compliance through a regularisation scheme. While regularisation can provide legal comfort, it is accompanied by penalties, additional charges and specific conditions. One important thing to note is that not all unapproved layouts can be considered eligible for regularisation. Any unapproved layout that has neither approval nor regularisation remains illegal. This exposes buyers to the highest degree of risk.
What Should Buyers Look Out For
Before purchasing a plot, buyers must be careful whether or not the property they are interested in requires any necessary approvals, or if it is legally sound. The most critical document is the layout approval by the local planning authority, which confirms if the property is compliant to the plans on paper or not. If the land was originally made for agricultural use, an official land-use conversion approval will be required if the person chooses to convert it into a residential plot.
Equally important is verifying a clear ownership through the title deeds and parent documents that establishes an unbroken chain of ownership from the previous owner to the next. An encumbrance certificate should be checked to confirm that the property is free from any legal disputes.
Why Are Unauthorised Plots Cheaper
These layouts are cheaper due to cost-saving tactics used by developers or prior owners by cutting down on legal fees and expenses. Developers can offer plots at reduced rates as compared to approved projects by avoiding the approval fees and compliance expenses. While this may seem like an advantage to the buyers, the lower price is a bait hiding the legal uncertainty and legal risks. What appears like a good bargain can quickly turn into a financial burden.
Buyers should be particularly cautious when encountering red flags like these. Developers claim that approvals are in process or will be obtained soon. The reality is that approvals are a rarity in such cases. Another red flag that should raise concern in the buyer’s mind is if the seller insists on getting cash payments or does not share complete documentation of the land. These point towards tax or legal irregularities. If banks are not willing to lend loans for these properties, it is also a clear indication that the layout does not meet the regulatory standards.
Physical and Documentation Warning Signs
Physical characteristics of the layout can also reveal the potential issues, such as narrow roads, absence of drainage systems, and lack of designated spaces, which are common in unapproved developments. Documentation inconsistencies should immediately raise concerns for the buyers.
The long-term consequences of buying an unapproved layout can turn out to be taxing in the long term. Actions like reselling, obtaining permits, getting fixations on water, electricity, and sewage can be limiting in the future.
Adds Rajan Yadav, director, Roots Developers: “Buyers should watch out for hidden details, such as checking legal documents to make sure if the property involves any disputed ownership, unclear title deeds, pending lawsuits or missing permits like building approvals and occupancy certificates.”
While affordability is an important consideration when buying a property, it should never come at the cost of the legal security of possession. Cheaper plots are always appealing to the mid-segment buyer or an aspirational buyer, but the future cost can be hefty. Homebuying is not just a checklist for the buyer, it is an investment that signals towards a stable future and growth and, therefore, needs all necessary checks before a purchase.
