What is meant by valuation of property?
The valuation process evaluates the market value of the property. Demand and supply forces operating in the market, as well as other factors like type of property, quality of construction, its location, the local infrastructure available, maintenance, are all taken into consideration before the market value is decided.
How does property valuation help?
Typically, if a real estate agent is asked to judge the value of a piece of property, he would do so based on information of recent sales or purchases of similar properties in that area.
Though this may give a fair idea of the property’s market value, an official property valuation would carry more weight. E.g. if you need to use this piece of property as a security against a loan, the bank’s loan approval process would be faster and smoother if the property is certified by an official valuer. Many banks now insist on valuation certificates before issuing loans using properties as security. The value thus certified may also have chances of getting a higher amount of loan sanctioned.
Another benefit of official valuation is that it is a useful negotiating tool when selling the property.
Such certification also becomes essential in situations where the correct value of the property has a legal bearing—such as, a will statement, insurance papers, business balance sheets etc.
What does the term ‘Leasehold Property’ mean?
When a piece of property is given or ‘leased’ to an individual (known as the ‘Lessee’) for a stipulated period of time, by the owner of the property (known as the ‘Lessor’), the property is referred to as Leasehold Property. A certain amount is fixed by the Lessor to be paid as lease premium and annual lease. The land ownership rights remain with the Lessor. Transfer of property requires prior permission.
What does the term ‘Freehold Property’ mean?
When ownership rights for a piece of property are given to the purchaser for a price, that property is referred to as Freehold Property. Unlike in the case of leasehold property, no annual lease charges need to be paid and the freehold property can be registered and / or transferred in part(s).
Are there any benefits in converting a leasehold property to a freehold one?
There are several benefits: if you convert the property to a freehold property, you become a full-fledged owner by getting the sale deed and having it registered. A freehold property has better marketability and can be sold, mortgaged or kept for standing security, which cannot be done with leasehold property.
What constitutes conclusion of sale of a property?
An agreement of sale, coupled with actual possession of the property would be considered as a conclusion of the sale. Usually, the entire amount is paid at the time of handing over possession.
Residential
What is the difference between carpet area, built-up and super built-up area?
The area of an apartment or building, not inclusive of the area of the walls is known as carpet area. This is the area that is actually used and in which a carpet can be laid. When the area of the walls including the balcony is calculated along with the carpet area, it is known as built-up area. The built-up area along with the area under common spaces like lobby, lifts, stairs, garden and swimming pool is called super built-up area.
Why do Co-operative Housing Societies collect a Sinking Fund?
Co-operative Housing Societies have a statutory obligation to collect a Sinking Fund. This is done so that in case the building needs to be repaired or reconstructed in the future, the society has sufficient funds to carry out the work. The amount to be contributed is decided by the General Body of the society; it should be at least ¼ percent per annum of the cost of each apartment, excluding the cost of the land. This fund may be used after a resolution is passed at the General Body meeting with the prior permission of the Registering Authority. This could be to carry out reconstruction, repairs, structural additions or alterations to the building as the architect thinks is required and certifies.
In cases where the lease contract is from year-to-year / exceeding one year’s rent / reserving yearly rent, then a registered instrument can be created, which both the lessor and the lessee must execute.
In cases other than the above, an oral agreement followed by delivery of possession is considered enough.
What are the charges to be paid while gifting property?
When a gift of property is made, a gift deed needs to be made by a lawyer. Stamp duty on the market value of the property also needs to be paid, as well as the necessary registration charges.
Should I inspect a property before buying it?
It is definitely important to inspect the property before purchase as probably it is one of the largest single investment made by most buyers. It is crucial to know all the details of the property and need for any major repairs / modifications before it is purchased. It is easy to crosscheck the commitment made by builder and actual implementation if a pre-purchase inspection has been carried out. A close inspection points out the positive and negative aspects of the property, as well as the maintenance that will be necessary to keep it in good shape.
Few important points to check while inspecting are:
Plumbing systems, drainage, water faucets and sanitary fittings.
Electrical systems, circuit breakers, wires, capacity of the electric meter and functioning of light fittings.
Crosschecking current market rates of properties in the vicinity and last known transactions and current market trends
Formulation of commercial terms
Distinguishing between negotiable and fixed terms and conditions of the contract, like price, payment schedule, time of completion etc
Availing services of Propmart for legal opinion, valuation or property related matters
Verifying clear titles of the property and acquiring photocopies of the all deeds of title related to the property to be purchased. Examination of the deeds to establish the ownership of the property by seller, preferably through an advocate
Ascertaining the survey number, village and registration district of the property as these details are required for registration of the sale. Previous encumbrances and loans, if any on the property must be cleared before completion of purchase of the property
Finalizing commercial terms of purchase of the property. Ascertain transfer fees, stamp duty and registration charges to be paid on purchase of the property
Ascertain outgoings to be paid for the property i.e. property tax, water and electricity charges, society charges, maintenance charges
Request vendor to obtain, if applicable, a consent, permission, sanction and a No Objection Certificate (NOC) of various authorities like society, income tax authority, Municipal Corporation, the competent authority under the Urban Land Ceiling and Regulation Act and any other authority
If a loan is required for property purchase, financial institutions must be contacted for a pre approval letter. As many options are available for loans, Propmart can also assist in loan requirement procedures and options
Permanent Account Number (PAN) of vendor and purchaser under Income Tax laws must be ascertained
Payment of stamp duty on the formal agreement or document for transfer of the property, signing by both the Vendor and Purchaser and registration
After payment of the entire sale price, the buyer can take over legal possession of the property and s/he must check the receipt of original documents from the Vendor of the property
Ensure that property holder's name is changed in all related records like society, electric company, Municipal Corporation, index II etc.
Corporate
Can corporate bodies use residential properties as office space?
It is illegal to put residential properties to commercial use. However service-based industries are allowed to operate from residential areas, on the condition that they will vacate the property if any complaint is received from other residential owners.
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