Home buyers, pay attention to paperwork!

Owning a house of his own is on everyone's wishlist. And while purchasing a house/flat, most people opt for home loans. But obtaining home finance is not child's play and involves several steps, which need to be completed in tandem.

One such step is gathering all the necessary documents without which a bank or lender may not sanction a loan.

This article attempts to provide a detailed account of the different documents that need to be in place before you can avail a loan.

Common requirements for all applicants:

Application form duly filled in.

Documents for identity proof like driving license, passport, PAN card, ration card, letter from a recognised public authority or public servant verifying your photograph, confirmation letter from your employer or another bank verifying your photograph etc.

Address proof:  Driving license, Voters ID, Passport, Ration card, Bank assbook or Bank , Utility Bill telephone, electricity, water, gas (less than 2 months old) etc.

Age proof:  the above documents or school/ college leaving certificates can be provided for age proof.

Income proof

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Self employed/entrepreneurs 

• A brief introduction of business/profession
• Balance sheet, profit and loss account statement of income, proof of income tax returns for the last 3 years certified by a chartered accountant
• Photographs
• Receipts of advance tax payments if any madeA photocopy of Registration Certificate of establishment under Shops and Establishments Act/Factories Act
• Registration Certificate for deduction of Profession Tax
• Certificate of practice
• Receipts of bank loans
• Proof of investments (FD certificates, shares, any other fixed asset)

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Salaried individuals

• Income Proof i.e. latest pay slip or Form 16
• Appointment letter
• Pay slip (Last 2 months) with salary account bank statement
• Certified letter from employer
• IT returns (for three years)
• Investment proof (FD certificates, shares, any fixed asset etc.)
• Documents supporting the financial background of the borrower (his liability and assets if any)
• Photographs

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Documents required when buying the flat from the builder

Original copy of the agreement between the buyer and the builder: the agreement must contain the liability of the builder to construct the building according to the plans and specifications approved by the local authority.

It should also mention the possession date, price to be paid by the purchaser and the intervals at which the installments towards the full payment are to be made. This document is of utmost importance.

If the buyer has the original copy of the agreement, then the builder cannot sell the same property with another party unless the deal is cancelled.

This is a breach. In cases, when the builder tries to dupe the buyers by selling one property twice, the agreement copy plays an important role.

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It also fixes the liability with regard to financing, defaults, settlement costs, actual possession, risk of loss and all of the terms and conditions that are expected of the parties must be included in the contract

Development agreement between the owner of land and the builder: It contains the details regarding the terms and conditions on which the landowner has permitted development of his property. This document acquires great importance during a transaction for a property under construct.

Property titles. These show who the true owner of the property is. It shows whether the title is clear or the property is under litigation, and whether the land is freehold or leasehold.

If it's leasehold, the terms of the lease are important. It also helps you to know whether the seller has the authority to develop and sell the property and if it is free of encumbrances.

Mr A bought a house and found that the seller's title to the property was burdened with mortgages and unpaid taxes.

In this case, it causes trouble to him as either he has to pay the unpaid amount or has to file legal cases on the seller to recover the money.

Hence it is better if the title of the property is clear and marketable, that is the seller should be the genuine and actual owner of the property. Also, the property should not be under any dispute or litigation. 

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• Copy of order under the urban land Ceiling Act.
• 7/12 extract or property register card of the land under construction - This is a document issued by the concerned land authorities giving details such as the survey numbers,area,date from which current owner is registered as owner.
• Index II extract of your agreement with the builder -  is issued by the office of the sub-registrar of assurances. It mainly mentions the names of the sellers & purchasers of a property for which the document is registered.
• 7/12 and index II extracts would clearly specify the new owner, which in case of fraud or legal cases would specify the owner.
• Copy of N.A. permission for the land from the collector - If the land under consideration is agricultural and if one intends to develop the said land for residential/commercial/industrial use, then such agricultural land has to be converted to non-agricultural land and an Non Agriculture Order has to be obtained from the Collector of the District where the property is located.
  Conversion of agricultural use into non-agricultural use without permission is bad in law. The offender has to pay penalty and also may have to demolish the unauthorised construction.
• Search and title report (with the details of documents) for the last 30 years - It is mandatory for the developer to annex a copy of these reports in the "Agreement for Sale" with the intended purchaser of the flat.
  These documents would state whether the title to the property is clear, marketable and free from encumbrance. It states whether or not there is any existing mortgage litigation, condition or claim, which is likely to affect the title of the buyer adversely.
• Copy of building plans sanctioned by the competent authority.
• Commencement certificate granted by Corporation / Nagar Palika.
• Building completion certificate - This certificate is issued by Municipal Authorities showing whether the building complies with the rules of building height, distance from road, and whether it is built according to approved plans and is ready for habitation.
• The owner has to construct the building as per approved plan without any deviations and violations. Issuing of Completion Certificate will ensure that the owner has constructed the building as per approved plan.
• The latest receipts of taxes paid.
• Partnership deed or memorandum of association of the builders firm.
• Personal Guarantees, if applicable.
• In case of alternate or additional security, documents for the same depending upon the security details.
• Post dated cheques for the EMIs.

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When buying from co-operative society

Apart from the earlier documents (except development agreement and property titles) required in case of buying from builder, while buying from co-operative society, the following documents are also needed.

• Original share certificate of the society - It has been issued by the society to the current owner and will be transferred to your name when all the documents have been cleared. But you should also get a copy of this to ensure that the owner is indeed a member of the society.
• Allotment letter from the society in your name.
• Copy of the lease deed, if executed.
• Certificate of the registration of the society.
• Copy of the byelaws of the society.
• No objection certificate from the society -- If the flat is part of a registered society, it is important to obtain a no-objection certificate from the society members. This helps to identify if the member has any pending dues or disputes with the society and protects you from paying his past liabilities.

If constructing on own land

• Original sale deed of land and extract of Index II.
• 7/12 extract or property register card in your name.
• Copy of N.A. permission for land from the collector.
• Search and title report (with the details of documents) for the last 30 years.
• Copy of order under Urban Land Ceiling Act.
• Copy of the building plans sanctioned by the competent authority.
• Building permission granted by Corporation / Nagar Palika.
• The latest receipts of taxes paid.
• Estimate of cost of construction certified by the architect.

While the paper work may seem cumbersome, it is of utmost importance. This in times of litigation and disputes will help the buyers protect themselves and not just keep the dream house a dream but a reality.