Legal Documents You Need To Buy And Sell Property: Essential Guide

Buying a home or even property is a huge investment. When you’re putting so much into it, be sure that you have all the documents that are required. The list of documents that you need is pretty large, but let’s try and stick to the documents that are completely essential. A few of the legal documents that you require for the purchase or sale of property are given below.

Essential Documents for Property Transactions

Documents for Purchasing Property

• Sale Agreement: Details the terms, property description, and agreed price between buyer and seller.
• Transfer of Ownership Documents: Registers the change of property ownership with the local authority, confirming the sale.
• Property Title Review: Essential for home loan applications, providing a history of ownership and property details.
• Local Authority Registration Certificate: Proof of the property’s record in municipal documents.
• Property Tax Payment Evidence: Confirms all due taxes by the previous owner have been settled.
• Loan Clearance Certificate: Verifies no pending loans on the property, crucial for financing applications.
• Habitation Certificate: Issued post-construction, certifying the building’s compliance with plans and readiness for occupancy.
• Bank Loan Statement (if applicable): Shows any outstanding loans, ensuring transparency in financial obligations.
• No-Objection Certificates: Required from various departments, confirming no legal impediments to construction.
• Approved Construction Plan: Guarantees adherence to sanctioned construction plans by the developer.
• Authorised Representative Document: Confirms the legal authority of any representative acting on the owner’s behalf.

Proving Ownership of Land

• Land Sale Deed: Validates the seller’s right to transfer the property.
• Government Revenue Records: Official records showing property details and ownership.
• Land Entitlement Certificate: Official document proving ownership and the right to sell.
• Lease Documentation: For government-leased properties, confirming the lease terms.
• Utility Bill Receipts: Serve as additional proof of ownership and property responsibility.
• Inheritance or Gift Documentation: Legal papers confirming property transfer through inheritance or as a gift.

Proving Ownership of a Flat

Similar to land ownership, documents include the Sale Deed, lease agreements if applicable, utility bills, and legal papers for inherited or gifted properties.

Documents Required for Selling Property

• Sale Deed: The primary document for transferring property ownership to the buyer.
• Mutation Record: Important for updating government records with the new owner’s details.
• Power of Attorney: Necessary for sellers not physically present, allowing representatives to act on their behalf.
• Building Plan and Occupation Certificate: Confirms the legality of the construction and its compliance with approved plans.
• Clearance Certificates: From the builder or society, depending on the property’s registration status.
• Allotment Letter: Issued by the housing society or authority, confirming the property’s allocation to the seller.
• Sale Agreement: Outlines the terms and conditions of the sale, forming the basis for the Sale Deed.
• Possession Letter: Marks the transfer of property ownership from the seller to the buyer.
• Up-to-Date Tax Receipts: Evidence of settled property taxes, essential for legal and loan processes.
• Encumbrance Certificate: Shows the property’s free title, indicating no outstanding legal issues or debts.
• Completion Certificate: Verifies the property’s construction as per the sanctioned plan, necessary for legal occupancy.
• Occupancy Certificate: Proof that the property is ready and legal for habitation.

Local Registration Certificate: Specific to certain regions, like Karnataka’s Khata certificate, confirming property tax details.

Title Deed or Sales Deed

As the name suggests the deed talks about the sale and transfer of ownership of a property from the seller to the buyer. This document has to be registered in the Sub Registrar’s office. This sale deed is also needed to apply for a home loan and if you’re looking to sell.

Encumbrance Certificate

This is like the background story of your property. It will tell you if there are any dues or claims against your property. Buyers are more likely to trust you if your encumbrance certificate is all clear.

Katha

Katha means the account and is literally the account of a seller or the owner of the property. You’ll need Katha to register new property and transfer any property. This certificate is essential for you if you need to apply for a water or electricity connection. The Katha is of two types the Katha Certificate (explained above) and the Katha Extract. The extract is the only way to get key details of the property and it’s available from the assessment register.

Read Everything You Need to Know About the Capital Gains Tax in India

Building Plan

Have you read those horror stories in the papers where houses were demolished? This is mostly because of illegal construction that has taken place, without the Building plan, which is one of the crucial documents required to sell a flat. Save yourself from such a situation by asking for a house plan approval or a building plan. This will state that the place where your property is located has been approved. It will also state if your building plan has been approved or not.
Read: Steps to Pay BBMP Property Tax 2024-24: A Comprehensive Guide

Agreement to Sell

The Agreement to Sell is a foundational document in property transactions, encapsulating all pivotal details such as the sale price, property description, and mutually agreed-upon terms and conditions between the buyer and seller. This document serves as a legally binding contract that outlines the obligations and rights of both parties, ensuring clarity and setting the stage for a transparent and secure transaction. It marks the initial agreement before the final sale deed is executed, providing a roadmap for the transaction process.

Title Search and Report

A Title Search and Report is indispensable for prospective homebuyers, especially those applying for a home loan. This comprehensive document traces the history of the property, including previous ownerships, tenant details, and any encumbrances or liens against the property. It serves as a due diligence tool, ensuring that the buyer is fully informed of the property’s legal standing and any potential legal issues that could affect the purchase.

Receipt of Property Tax

The Receipt of Property Tax confirms that all dues on the property up to the date of sale have been fully paid by the previous owner. This document is crucial as it assures the buyer that no outstanding taxes could encumber the property. It plays a significant role in establishing the legal status of the property, offering peace of mind that the property is free of tax liabilities.
Read: Stamp Duty and Property Registration Charges in Delhi

Occupancy Certificate

Issued by the municipal corporation or local government authority, the Occupancy Certificate verifies that the building has been constructed according to the approved plans and complies with all relevant building codes and regulations. It signifies that the building is safe and ready for occupancy, making it a critical document for buyers to ensure the legality and habitability of their new home.

Statement from the Bank if a Loan is Outstanding

For buyers, obtaining a statement from the bank regarding any outstanding loans against the property is a prudent step. This statement provides transparency and confirms whether the property is encumbered by a mortgage or any other financial liabilities. It ensures that the buyer is aware of and can make informed decisions regarding the financial aspects of the property purchase.

Non-objection Certificate (NOC)

Non-objection Certificates (NOCs) are essential in the property transaction process, required from various departments such as Environmental, Traffic and Coordination, Pollution Board, and Sewage Board. These certificates affirm that the property development has met all regulatory and environmental standards, providing clearance for construction and indicating no legal or regulatory impediments to the development of the property.
Read: Importance and How to Apply for a Legal Heir Certificate in Delhi

Sanctioned Building Plan by Statutory Authority

A Sanctioned Building Plan approved by a statutory authority is a guarantee for the buyer that the property development adheres to the approved architectural plans and complies with local zoning and building laws. This document is vital for buyers to verify that there are no unauthorised alterations or deviations from the original plan, safeguarding against potential legal and structural issues in the future.

Power of Attorney (if any)

In some transactions, a Power of Attorney (POA) may be used when an individual acts on behalf of the property owner. This legal document authorises the POA holder to conduct transactions, including selling or buying property, on behalf of the owner. It is crucial in situations where the owner cannot be physically present, ensuring that the transaction can proceed legally and smoothly with the designated representative.

NOC

The NOC or No Objection Certificate is what the builder requires from all key government bodies such as the electricity department, water department, fire safety department and more. Without the NOC you will not be able to avail of these services (imagine living without electricity!).

Read Everything You Need to Know About Income Tax Benefits on Home Loans
Read: Lal Dora Certificate: Understanding the registration process and its Implications

Tax Receipts

If you’re buying a property that’s being re-sold always look for the property tax receipts from the last 3 years. This shows that there are no dues against the property and also that the property’s documents are in order.

Check for Bank Approval

While we’ve outlined the fundamental legal documents you need to buy and sell property, it’s important to note that this is just the starting point. The required documents can vary based on the property type. For any assistance or queries regarding legal documents you need to buy and sell property or other legal services, consider leveraging NoBroker’s legal services. Whether you’re still in search of the perfect home or need expert guidance on the legalities, NoBroker is here to help with a wide array of options and professional support.

Remember, these are just the basic property sale documents you need to check. There is plenty more you need, and the documents change depending on the kind of property you’re purchasing. If you’ve not yet found a house that you’d like to buy, just visit NoBroker. we have plenty of options for you to choose from.

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