Overview of Property Verification

Property verification is an important factor to be considered while buying or selling a property in India. It is also called Due Diligence of Property or title verification. Under this process, the title and ownership of a person over a property are verified for various purposes.

The system of recording property details was not digitalized in the old times in India. The system was not proper and the information was not easily accessible. This led to a lot of legal disputes related to ownership of the property, certain claims over it, etc. Property verification is essential as it ensures that the person claiming to be the owner of the property is the legal owner of the property. It also ensures that the property is free from any encumbrances or legal disputes.

The process includes verifying the title documents, valid proof of seller’s identity, ensuring that there exists no legal dispute, claims or encumbrances on the property, checking tax records, the purpose for which the land was given for use and other required permissions from the government authorities at the state and local level. It helps in reducing the occurrence of any legal disputes related to the property in the future.

Importance of title verification

Verification of property is important for several mentioned purposes. These have been stated below:

1. A title document proves ownership of a person with respect to a certain property. The owner’s name is mentioned in the official government records. For parties to enter into a transaction involving the transfer of a property, one party must have ownership or authority to transfer the property.
2. The owner of a property has the authority to keep a copy of his property documents. The registrar needs to maintain a note of the people to whom they have given a copy of the property ownership documents. In the case of a company, a legally competent and authorized person has the authority to keep a copy of property documents owned by a company.
3. A title search is important as it helps the owner to find any unnoticed issues which might create problems in the future. It also saves potential buyers from paying off the previous liabilities.
4. The property documents help in providing information about the contracts, taxes, etc related to the property.

Benefits of Property Document Verification

• Property verification assures that the property involved in the transfer is free from any pending litigation against the same.
• A report made after verification of the property makes the loan application process easy when the property has to be kept as a security.
• It ensures that the owner has complete authority and right to enter into an agreement for sale or refuse to enter into such a deal if invalid or false documents have been submitted.
• Verification of property through online services protects the sellers from fraudulent buyers and it stops the buyer from re-selling the already sold property to some other potential buyer.

Documents required to be verified

The prevailing regulations and laws related to the real estate property business in India have made it an easy and less complex process. There is a simple checklist which should be followed by the parties before entering into a real estate agreement. It helps in ascertaining whether the investment is worth making or not. The checklist contains several documents which are required to be verified along with the procedure of its verification. It has been defined below:

Check for title documents

These are the documents which prove ownership of a person over a property. It is a document which states the name of the owner who has the present title to the property. These documents are used when the property is being transferred from one person to another by way of sale, lease, etc. The potential buyer should ask the seller to provide the title documents and get such documents verified through the office of the sub-registrar. The title should be clear with no encumbrances or pending cases. The buyer has all the right to ask for previous transaction details of the property in order to get them verified. A title document defines a real owner of the property. A person willing to buy a certain property can put an ad in the newspaper publishing his interest in purchasing the property and ask people to raise objections if any against the said property This document designates the rightful owner of the property.

Ask for bank approvals

If a person is willing to apply for a home loan, the bank verifies his property documents before granting the loan. Bank needs assurance as to property kept as security for a loan. The officials of the bank also make a visit to where the property is located to check the condition of the property and to ensure that all the permissions have been taken by the owner already or not. If the bank gives a positive response stating that the person seeking a loan and keeping a property as security has a clear title on the property. Once the documents have been verified, the loan application process gets easy. Also, it is important for the person to read all the terms and conditions of the loan agreement.

Encumbrance Certificate

A potential buyer must ask the buyer for an encumbrance certificate of the property from the seller to know that the property which the buyer is willing to purchase is free from any legal or financial liability. It is a certificate stating that the property is free from any sort of liability or charge. If the buyer finds out that there is an already existing liability on the property, the buyer should ask the seller to clear such liability before selling the same. It also helps the potential buyer to know whether any existing owners can make a claim for a share of the property or not.

Compare the approved plan with the actual site

It is important to have a diagrammatic plan of the property. A plot plan is required in cases of a new development or when a person proposes certain improvements in the property. Another name for a plot plan is a site plan. It is necessary to have a site plan to get information about the landscape features of the property. Once a site plan is approved by the local authorities, such plan is considered as a layout map to add a room, storage place, garage, etc to the property. A person can ask for an approved map from the builder which has been passed by the local authority if he is willing to invest in an apartment type project. An approved map gives an idea to the buyer about the area of the property on which anything can be developed and the area where developing anything is illegal.

Ask for property tax receipts

If a person is willing to buy a resale property, then he can ask for receipts of payment of property tax to find out whether the area where the property is located is regularized or not. Also, the property tax receipts give an idea about the registration of the property. The potential buyer must ensure that there are no pending dues related to the property with the municipal corporation of the city before buying such property.

Check Sales deed

It is very important to verify the authenticity of a sale deed. It is a contract entered between a seller and buyer stating a transfer of ownership and title of the property from one person to another. A sale deed is considered evidence to prove the act of transfer of property. It is one of the important documents mentioning the sale of property by one person to another. A sale deed should mention the complete name, current address and age of both buyer and the seller; details of the property including the area, address, and other necessary details and the agreed consideration amount to be paid against the property purchased. A sale deed should be checked thoroughly as people try to defraud by presenting fake sale deeds.

Power of attorney

A Power of attorney (POA) is a document providing authority to a person in whose favour a POA is made to sell the property belonging to some other person in cases when the seller is unable to do the same on his own or purchase a property on behalf of the buyer.  In the real estate sector, a Power of attorney is usually made by people who are willing to sell their property but live overseas or at a faraway place from where the property is located. If it makes it difficult for the seller to be present at the time of the sale of the property, then he can give POA to a person authorizing such person to sell the property on the owner’s behalf. A buyer can ask for a POA during the property verification process from the person authorized to verify that the person is authorized even to sell the property or not on behalf of the real property owners.

Check out whether a property is under a registered society

It is important to check whether the property is part of a registered society or not. Such societies are governed through Acts and work together for a common purpose.

Other documents

There might be other important documents to be verified which differ from case to case. Some property verification documents might include the transfer of property by means of relinquishment deed, succession, freehold, property mutation details, etc.