Purchasing a plot is completely different from investing in a home. The process looks simpler but it involves complex documentation that requires due diligence from the buyers part. A small misleading or forged document from the seller can break your investment completely. So, to ensure a safe investment here is a complete guide on purchasing a land plot in India.
1. Location Research and Connectivity
Before investing in any land parcel, check its location and connectivity physically. Proper research is necessary because once a deal is finalized, it can’t be taken back. Take a look at it present connectivity that whether it is nearby key areas, transportation system, daily conveniences and important infrastructure like schools, hospitals, expressways, highways, commercial offices, etc. Livability quotient must be checked as it creates a positive impact on the resale value and also helps to generate good returns.
2. Background Check of Seller
So, just like any other property investment, a background check of the seller is necessary while purchasing a land parcel too. A buyer must ask for various certificates like nationality and residence from the seller. In case the property is jointly owned, the legal identity of both the sellers should be verified. And, if the seller is a company or a builder then verify its ability to own and sell a land parcel.
3. Documents Checklist
Once you have finalized a land parcel for investment, check all the below document to make your investment secured. These documents include:
- Title Deed :
A title deed is a necessary document that verifies the legal ownership of the property. So, to enjoy an undisputed transfer of land, title deed must be checked carefully by the buyer. Make sure that the seller must present the original title deed duly stamped and registered at the sub-registrar of assurances while the transferring of land parcel.
- NA order :
In India, all the land parcels are classified as agricultural land, so in case, you want to use it for non-agricultural purpose, apply for ‘NA- Residential’ order.
- Encumbrance certificate :
This certifies that the land you want to purchase is free from all the legal dues. It plays an important role during land purchase and transfer
- Release certificate :
In case you are purchasing a resale land parcel, then ask for release certificate from the seller. It means that the property is free from any type of loan and all the dues and EMIs are already paid.
- Property Tax Receipt :
It is another important document that is needed from the seller’s end. It keeps you away from all the tax-related issue. Ask for past months property tax receipts from the landowner beforehand.
4. Check Approvals
Conversion and land use: Before investing in a plot, check with the authority, whether the land has all the mandatory conversion and land use approvals. For instance, approval for using ‘agricultural’ land for ‘non-agricultural use’ must be checked earlier. Also, the buyer must ensure that the plot is developed as per the master plan and zoning plans.
Construction: Another approval which is mandatory to be checked by the buyer is related to construction. The building and layout plan must be approved by the municipal authorities. Besides this, approvals related to amenities like water, electricity, sewage treatment, and parks must also be checked.
5. Ask for Maintenance Charges
Just like a home buyer has to pay maintenance charges for the owned property, a plot buyer also has to pay specific charges annually against the use of basic amenities. Check it with the seller beforehand.