Real Estate sector is evolving at a tremendous pace after the introduction of the Real Estate Act, 2016 and the Goods and Services Tax, Act. Adding steam to this is the new add on to the platter, the Benami Transactions (Prohibition) Amendment Act, 2016 (“Benami Amendment Act, 2016”). The first question that strikes our mind is why there is so much buzz about the Benami Amendment Act, 2016, when we already had the Benami Transactions (Prohibition) Act, 1988 (Benami Act, 1988) in force?
The Benami Act, 1988 was framed with the objective of banning transfer of benami properties and recovery of such properties. However, the act failed to achieve its purpose due to the absence of a clear definition for benami property and the lack of defined procedures for the strict implementation of the Act. This gave immense discretionary powers to the authorities and consequently, it was bluntly violated. Hence the need was felt to bring about a more stringent law to help bring an end to tax evasion and laundering of black money.
Whether anyone denies it out rightly or accepts it boldly, hard reality is, whenever we talk about property transactions, context of black money and white money come into picture.
The Prime Minister’s announcement on the demonetization of Rs. 500/- and Rs. 1000/- has impacted all spheres of life tremendously. As far as realty is concerned, the historic announcement on November 8th, 2016, changes the holistic view of the real estate market. It is an open secret that a lot of black money has been invested in realty. One may wonder how it can escape being traced. Let us look at a simple illustration. “A” wants to buy a property “X” from “B”. The price agreed between the parties is one crore, while it’s market value [value of the property as evaluated by the Government] is 75 Lacs. This makes it possible for “A” to show the price in the sale deed as 75 Lacs and pay applicable stamp duty and registration fee on that amount. “A” now pays “B” the balance amount of 25 Lacs, in cash. So the sale is concluded for one crore although the documents reveal the sale price as 75 lacs.
Real estate is widely recognized as a booming sector that helps economic growth. The sector offers good opportunities for investment and possibilities for earning profits. The demand is good both in commercial as well as residential sectors. In order to meet this demand and attract customers, builders often come up with different types of lucrative offers.
Before blindly going by these offers, it is good to be vigilant and evaluate a property based on various aspects. In this article we have covered the sanctions and approvals required for three types of properties, i.e. Apartments, Villas and Independent Houses in their pre construction and post construction phases.
As is obvious from the title, our attempt here is to make our readers aware of the things they should look into before buying a property, and equally important, what they should remember after they buy the property. Let us jump straight to the first part of the subject, “Points To Remember Before Buying A Property”.
Whether you are buying a property for investment purpose or for own stay, it needs to go through certain evaluations and checks to mitigate any possible risk before one takes the final call.
We hope the points discussed in this article, would benefit you in making your next purchase.
Identifying a property to buy, is indeed an all-consuming endeavour. After crossing this hurdle, the next herculean task is to make sure that your investment goes through in a systematic and diligent manner. This not only safeguards your investment but also secures your future interests arising out of this property.
Always remember, when you pay the advances towards purchase of a property, the first thing you are required to do is to execute an “agreement to sell” with the seller. This agreement to sell document should record the total consideration or price, and advances agreed to be paid for the property. If it is an ‘under construction property’, the builder may ask you to sign two documents i.e. Agreement to Sell and Construction Agreement. By signing these documents, you agree with the terms and conditions set out there. However, most of us don’t read these documents carefully, or rather, we don’t know which are those essential clauses which need to be specifically looked into.