FAQ’s while buying A Property

There are always so many things one ponders on while buying a property. So many questions hover in mind and if these questions are not properly answered, one is always confused to make an informed decision. It doesn’t matter if the buyer is purchasing the property for the first time in their life or fifth time; there are always emotions and feelings attached to it. The buyer should be well-informed and properly prepared for the purchasing process. If the buyer is well-informed, the buying process also becomes relatively smooth. While buying a property, the most important rule is that “no question is a dumb question”. Anything can be asked for which one is unsure. Buyers ask various questions while going through the buying process, some questions while searching for the right property, some questions while writing a contract, some questions after completing the contract. Below are few questions which are frequently asked by buyers:

·       General Questions:

·           What does the property’s market value means?

        The price that a property is evaluated in an open market is called its market value. 

 

·         When converting a leasehold property to a freehold property are there any benefits?

When you convert the leasehold property to a freehold property, you become a full-fledged owner by getting the sale deed and getting it registered. A freehold property has a good marketability and can be mortgaged, sold or kept as security which is not possible if the property is leasehold. 

·     What are the income tax considerations made while transferring newly acquired property?

Income tax exemption under section 54F of the Income Tax Act does not hold valid, if the transfer takes place within three years of purchase.
 

·         What is exactly valuation of property means?

Valuation means to evaluate the market value of the particular property. For any property’s market valuation, its location, the local infrastructure available, its maintenance, quality of construction are taken into consideration
 

·         What is a “leasehold property”

When the property or a part of property is given on “lease” to an individual known as “lessee” for a pre-defined period of time by the owner of the property known as “lessor”, that property is a leasehold property. The amount for lease premium and annual lease is fixed by lessor. 
 

·         What is a “freehold property”?

·       When purchaser is given the ownership rights for a piece of property are by paying some price that property is called as Freehold Property. Freehold property can be registered and / or transferred in part or parts without giving any annual charges.

·         What makes the conclusion of sale of a property?

A sale agreement and an actual possession of the property is considered as sale of a property. Entire payment of amount is made while handing over the possession. 
 

·         How is the stamp duty decided?

Stamp duty is based on agreement value of the property or market value of the property, whichever are highs. 
 

·         How is property valuation helpful?

It’s beneficial for both buyer and seller as it helps to assess the actual market value of a property. The competitive real estate market is dominated by dynamism of various factors and valuation helps to understand the actual value of the property.  
 

·       Corporate:

·         Can residential properties be used by corporate bodies as their office space?

It is not legal to use residential properties for commercial use. Many service-based industries can operate from home but they have to stop the operation if any complaint is received against them from their neighbours.  
 

·         What factors should be considered when purchasing a property owned by any company?

Before going into deal with such property, one needs to conform from the Registrar of companies that the property is not on mortgagee and is not being used as a security against loan. If any of such condition prevails, it’s not a freehold property.
 

·       Residential:

·         What is the difference between carpet-area, built-up area and super-area?

In the simplest words, the area where the carpet can be laid is called carpet area. The area which is not inclusive of the walls is known as carpet area. When carpet area along with the area of the walls including the balcony is calculated, it is known as built-up area. The built-up area including the area under common spaces like lobby, lifts, stairs, garden and swimming pool is called super built-up area.

·         How one calculates maintenance charge?

Only the actual area owned by an individual is the basis for calculation of maintenance charge. 
 

·         Why Sinking Fund is collected by Co-operative Societies?

Its a statutory obligation to collect a Sinking fund. This amount is used for reconstruction, repairs, structural alteration to the property. The amount is fixed by the General body of the society. This fund can be used only after a resolution gets passed at the General Body meeting.  
 

·       NRIs

·         What are various facilities for NRIs?

They can maintain a bank account in India, invest in shares or securities with Indian companies and can invest in immovable properties in India. 
 

·         By way of gift, can NRIs acquire or dispose residential property?

Yes, they can do this by a way of gift from or to a relative who may be an Indian citizen or person of Indian origin whether residing in India or not. 
 

·         Can commercial properties in India to be sold to NRIs?

As per general permission granted by RBI, NRIs can purchase commercial as well as residential properties in India except for any farm house, agricultural land or plantation property. 
 

·       Miscellaneous

·         While gifting a property, what are the charges involved?

A gift deed prepared by lawyer, payment of stamp duty on market value and necessary registration charges are mandatory while gifting a property. 
 

·         Who pays the realtor fee while buying a property?

In most cases the seller pays the realtor fees but not always.