Buying a Property? Avoid these Property Types at all costs
Buying a dream home is a significant financial decision in your life. With time, there is always an appreciation of property rates, provided you choose the right property. Investment in the right property requires proper planning and good research. Your valuation of wealth depends upon the property you own. Hence, before making an investment decision, ensure that you avoid specific properties that adversely impact your asset portfolio. Here, we bring you a list of stuff that you must refrain from buying.
What Kind of Properties You Should Avoid?
- Property on Power of Attorney or Notary –
Power of attorney is a legal document that transfers the legal ownership to an individual from the owner. Many properties are transferred on a power of attorney or notary. However, in 2011, the Supreme Court, in a landmark judgment*, made it illegal for properties to be sold on a Power of Attorney to avoid misuse. Generally, banks avoid giving a loan on properties that have been transferred via this document.
- Disputed property –
Under a disputed property, there is no clarity regarding the title of ownership. A property that is under a legal dispute must be avoided. Financial institutions and banks avoid funding against a disputed property.
- Unauthorized Builder Projects –
Avoid buying properties from builders having no license. Generally, unauthorized builders construct on agricultural lands without permission. Hence, it must be avoided. You must check the details of builders before putting your hard-earned money.
- Abadi Property –
Abadi property, also known as Lal Dora property which refers to rural areas, must be avoided for investment. Banks do not approve such properties for funding. Hence, investment in such stuff is not recommended.
- Construction exceeding the limit –
Given norms by the authorities must be followed for construction. If the builder has violated the standards and constructed beyond the non-compoundable standards, you should not invest in such properties. Banks generally avoid funding in such stuff.
- B-Khata Property –
If you have chosen a B-Khata property for investment, it would not be approved for a home loan by banks unless you have a DC conversion certificate.
- Property less than minimum size –
Many banks do not approve a housing loan when the property’s size is less than a minimum size. Generally, a minimum size is 450 square feet or 50 square yards.
- A regularized colony by the local builder –
Many banks do not give home loans for regularized colonies built by a local builder. In case you have decided to invest in it, you must obtain a copy of the entire property, map plan, and the latest property tax bill. It would be best if you also got it checked by a bank or a lawyer.
- Gram Panchayat Property –
It is recommended to avoid investment in a Gram Panchayat property as banks do not prefer giving housing loans on such properties.
Factors to Check When Buying a Resale Property
Whenever you are buying a resale property, it is imperative to check some critical factors such as:
- Check the title deed and chain– Before investing in resale property, you must thoroughly check the title deed and its chain. The chain starts from the first owner to the current owner. Hence, the chain of the property must be very clear from the documents. If the records do not support the title deed or chain, the banks will not approve a home loan. The ownership details can be collected from the municipal authority of that area, RWA, or the housing society.
- Approved Map plan– When you are planning to invest in a resale property, make sure you check that the property is constructed on an approved plan. Before construction, a builder or a landowner should get the map approved by the civic authority. Many banks do not give home loans to borrowers when the concerned authorities do not approve the map.
- Latest tax bills and utility payments– As it is a resale property, the past owners’ actions must be checked. You must ensure that the past owner has no obligation regarding tax bills and utility payments.
- Property approval by authority– Avoid investing in properties that aren’t approved by authorities such as State Housing Boards, City Development Authority, Municipal Corporations, or State Industrial Corporations, etc. Such authorities support different kinds of land such as farmhouses, commercial property, residential property, developed colony, regularized colony, agricultural land, etc.
Factors to be Considered Before Buying a New Property
- Builder Reputation – Investment in a property is a lifetime decision that involves a huge amount of money. Therefore, as a good investor, you must ensure to meticulously check the property and the builder’s details. There are many well-known builders in the real estate industry that have become a brand with time. A builder’s reputation is based on their past projects and customer satisfaction rate. Reputed builders are ISO certified and rated under Crisil Real Estate Star Ratings+ (CREST).
- Project approved under RERA – The Real Estate Regulatory Authority is an act formulated to protect the home buyers. If the project is not supported under RERA, do not buy the property to avoid all risks. When a project is approved under RERA, the builder must disclose every detail regarding funding, possession, construction phases, etc. It is done to ensure the timely delivery of projects.