Real estate is one of the largest sectors in India, and while it offers lucrative opportunities, it is also prone to scams. With the rise in property transactions, fraudsters often target unsuspecting buyers and investors. To safeguard your interests, it’s crucial to be aware of the common real estate scams and the steps you can take to avoid falling victim to them. Here’s a comprehensive guide on how to avoid real estate scams in India:
1. Verify the Developer and Builder’s Credentials
- Check RERA Registration: Ensure that the developer or builder is registered under the Real Estate (Regulation and Development) Act, 2016 (RERA). Every real estate project in India must have a RERA registration number, which guarantees the project is legitimate and meets certain quality and safety standards. You can check the registration details of the builder and the project on the RERA website of the respective state.
- Reputation of the Developer: Research the developer’s track record. If possible, visit their past projects to check quality and completion timelines. Online reviews, forums, and social media can also give insight into the builder’s reputation.
- Legal Documents: Always ensure the builder has all required legal documents, such as the Title Deed, approved building plans, and land use conversion papers if the land was agricultural.
2. Conduct a Title Verification
- Ownership Documents: One of the most common scams involves sellers who don’t own the property or have legal rights to sell it. Always verify the ownership documents (title deed) of the property and ensure that it is in the name of the seller.
- Encumbrance Certificate (EC): Obtain an Encumbrance Certificate from the local sub-registrar’s office. The EC provides a transaction history of the property and shows if the property is mortgaged or has any legal dues.
- Power of Attorney (PoA): If the seller is acting on behalf of the property’s true owner (in cases of inheritance or joint ownership), ensure that the Power of Attorney is valid and notarized.
3. Verify Land Use and Zoning Approvals
- Land Title and Zoning: Ensure that the property is zoned for residential or commercial use. Check the land use certificate and make sure the property is not an agricultural land that has not been legally converted for non-agricultural purposes.
- Local Authority Approvals: Verify that the property has received approvals from the local municipal authorities. Check whether the building plan and occupancy certificate are in place.
- RERA Compliance: If it’s a new project, ensure that the builder has received RERA approval for the project and the plans are compliant with the local laws.
4. Be Cautious of Unrealistic Offers
- Too Good to Be True: If the price of the property is significantly lower than the market rate or the offer seems too good to be true, it could be a scam. Such offers are often a way to lure buyers into fraudulent deals.
- Delayed Possession or Over-Commitment: If the developer is making promises of possession before a reasonable timeframe or if they are offering an unreasonably low price, it might be a red flag for a scam. Delayed projects or undelivered promises are common issues in scams.
5. Don’t Make Advance Payments Without Documentation
- Avoid Paying Cash: Always insist on making payments through bank transfers to ensure there is a proper record of transactions. Avoid paying in cash or through untraceable means.
- Sales Agreement: Never make advance payments without signing a legal agreement. The agreement should clearly state all terms, including the price, payment schedule, possession date, and project details. Both the buyer and seller must sign the agreement, and it should be witnessed by a neutral party.
- Stamp Duty and Registration: Ensure that the sale deed is executed on non-judicial stamp paper of the appropriate value and registered with the sub-registrar’s office. Registration of the sale deed is the final proof of ownership transfer.
6. Check for Hidden Charges
- Additional Costs: Be cautious of hidden charges such as maintenance fees, parking charges, development charges, and extra charges for amenities. Get a clear breakdown of all costs before committing to any purchase.
- GST and Taxation: If purchasing an under-construction property, make sure you understand the Goods and Services Tax (GST) implications, as well as any other applicable taxes.
7. Inspect the Property Thoroughly
- Physical Verification: Before finalizing the deal, conduct a physical inspection of the property. Check the condition of the construction, amenities, and surrounding infrastructure.
- Survey the Area: Visit the locality to check the area’s condition, availability of water and electricity, and connectivity to main roads and public transport. Ensure that the locality’s development plans align with your expectations.
8. Avoid Non-Registered Agents
- Licensed Real Estate Agents: Always use registered real estate agents or brokers who are members of recognized real estate bodies like NAR India (National Association of Realtors). They are typically more reliable and adhere to professional standards.
- Verify the Agent’s Details: Check the credentials of the real estate agent you’re working with. Be cautious if the agent is pushing a specific property or pressuring you to make a quick decision.
9. Beware of Fake Documents
- Falsified Documents: Scammers may forge documents, especially in the case of older properties. It’s essential to verify that documents such as the Title Deed, Sale Agreement, and Encumbrance Certificates are original and not photocopies or forged.
- Notary and Registration: For any document related to the sale, check if it has been notarized and properly registered with the concerned authorities.
10. Use a Lawyer for Due Diligence
- Legal Consultation: Always consult a real estate lawyer before entering into any property transaction. A lawyer can help you verify documents, check land titles, and ensure the deal complies with all legal regulations.
- Due Diligence: A lawyer will also conduct due diligence on the property’s ownership, legal status, and any potential issues with the title. They can also help you with drafting the sale agreement and ensuring the process is legally binding.
11. Keep Track of Property Registration
- Document Tracking: After the purchase, track the property registration process and ensure that the property is officially transferred into your name. Always keep a copy of the registered sale deed as proof of ownership.
- Government Websites: Use government portals like the e-District Portal or sub-registrar’s office websites to track the registration status of the property and verify ownership.
12. Understand the Risks in the Secondary Market
- Clearance of Dues: In resale properties, ensure that the previous owner has cleared all dues, including property tax, maintenance fees, and any outstanding loans on the property.
- Transfer of Title: Ensure that the title transfer process is handled properly and that the seller is legally entitled to sell the property.
Conclusion
Real estate scams are a serious concern in India, but by conducting thorough due diligence, verifying documents, and working with trusted professionals, you can significantly reduce the risk of falling victim to fraud. Always prioritize legal verification and professional advice to ensure that your investment is safe and secure. Stay vigilant and make informed decisions to protect your hard-earned money and avoid scams in the real estate market.
