Why Verifying Property Documents is Crucial
Whether it's a residential home or a commercial property, the stakes are incredibly high. Not only a significant amount of money is involved, but the security of the investment solely depends on the authenticity of the legally required property documents. The increasing fraudulent activities in the real estate sector make the property document verification more important than before. Neglecting the importance of verifying property documents may eat out all your savings, crushing your financial growth for a long period. Wouldn’t you like to be confident of buying a legally genuine property? This blog is aimed at helping you understand the importance and benefits of verifying property documents through a competent professional.
Importance of Verifying Property Documents
“Government data reveals more than 50,000 real estate cases are pending in consumer courts”- Economic Times, Aug 07, 2024. Key challenges for property buyers include a lack of title transparency coupled with complex issues such as diversion of funds, delayed possession, and discrepancies in project approvals. The majority of homebuyers have limited legal recourse in case of disputes, it encourages fraudsters to take advantage. The common types of property disputes in India include builder-buyer disputes, property boundary disputes, disputes over inherited or willed properties, adverse possession disputes, disputes between co-owners, landlord-tenant disputes, title disputes, etc. “The RERA (Real Estate Regulatory Authority) has noted that legal complications are a significant hurdle for 55% of home buyers”- Medium.
What May Happen If You Avoid Verifying a Property Document
If the property documents are not verified from a legal perspective, you, as a buyer, may face complex consequences in the future. Some of the consequences you may face by neglecting the importance of legally verifying property documents are-
Legal Disputes: Buying a property under litigation becomes a nightmare for the buyers. It takes years and massive funds to resolve the issues.
Financial Loss: As a property buyer, you may get trapped in fraudulent transactions, leading to major financial losses, dragging your financial growth with a deep impact.
More Issues in Arranging Finance: Because of unreliability of property documents due to incomplete verification, getting a loan becomes a challenge because lenders don’t feel their loan money is secure. Since the risk associated with the unverified property is high, the proposed interest rate is also high. Therefore, you pay a higher price for the property, eating up all your estimated profit on investment.
Eviction Risks: In some cases, buyers get an eviction notice despite completing all the legal formalities like registry and payment. This situation arises if someone sells a property without the legitimate ownership rights, or the property is sold without the consent of the co-owner.
Tax and Liability Issues: Checking previous year tax reports is an essential task in property verification. If there are any dues not paid by the seller, these are passed on to the buyer. In addition, you may have to pay the penalties.
Delayed Ownership Transfer: In case of any issue developed because of improper verification of property documents, ownership transfer is delayed despite the 100% payment.
Ok, you may avoid the above-mentioned consequences by verifying property documents. But do you know the benefits of hiring an experienced professional for verifying property documents prior to initiating the process?
Benefits of Verifying Property Documents
1. Ensures Legal Validity: Properly verified documents ensure the legal validity of the transactions in line with the latest rules and regulations.
2. Mitigates Property Fraud: Verifying property documents avoids any type of property fraud. Through proper verification, you eliminate the chances of falling for property scams.
3. Authentic Proof of Ownership: Verified property documents certify ownership. The verified documents always remain in the records; therefore, in case any of the original documents get lost or destroyed, you can get a certified copy of that document from the concerned department.
4. No Chance of Facing Legal Disputes: Proper verification of property documents eliminates the exhausting process of false claims or legal disputes. The document verification ensures that the property title is free of any encumbrances.
5. Promotes Transparency in Transactions: Being transparent throughout the process enhances trust between the buyer and the seller. So, your investment money is safe.
6. Secure Transfer of Property: Professional verification of property documents simplifies the property transfer seamlessly with a verified property title.
7. Increases Credibility: You make each transaction with confidence through a guided and authentic channel. Verified transactions made through proper channels create a layer of protection, leaving no scope for anyone to challenge the property ownership.
Scope of Property Document Verification: Advocate Verification v/s Bank’s Verification
When buying a property, there are two main methods of property document verification: 1. Through an advocate. 2. Bank's property documents verification. Each has different purposes.
Advocate Verification: An independent real estate specialist performs document verification to check the correctness of the title, the property’s entire history, the ownership chain, compliance with legal norms, government approvals, conversion orders, and other documents to protect the buyer against future legal disputes and possible litigations.
Bank’s Verification: It is a limited verification process aimed at ensuring that the property has enough market value to serve as collateral for the loan. The bank reviews the property documents, but this process is less detailed. It is primarily aimed at mitigating the bank's financial risk rather than safeguarding the buyer against any potential legal complications.
To avoid any type of risk in the future, it is good to hire an advocate who has proven specialization in verifying property documents.
Advocate Verification Process
In the modern real estate landscape, the need for legal document verification for property buying can’t be underestimated. The importance of property documents verification by an advocate is increasing day by day, with increasing incidents of fraud and disputes in the real estate sector. With potential financial risks looming, hiring a professional to make your property buying experience seamless is no longer optional but an essential task. Legal associate provides expertise, thoroughness, and efficiency, acting as a trustworthy partner in legal document verification. What does your legal associate do to ensure your property buying is risk-free?
Real estate advocate gathers all the necessary property documents from the seller like sale deeds, Khata, mother deeds, EC (Encumbrance Certificate), government approvals, tax receipts, etc.
Real estate advocates audits the documents to check title ownership, legal authenticity, and compliance with land-use regulations.
Real estate property documents legal expert searches in the sub-registrar’s office to verify any encumbrances or pending litigation.
Real estate specialist advocates issue a legal opinion/report confirming that the property is legally Ok for purchase.
