By Accommodation Times News Service
By Sahil Shah, Regional Manager – RE/MAX Mumbai Gujarat Maharashtra
Some terms and terminologies are very relevant in the real estate industry but a lot of investors actually have no knowledge about what they mean. These details may seem small but fine print matters in the long run. Not only will you have a good grasp over these real estate terms but also be able to convey to the builder that you are well updated about the industry.
Carpet Area: When you buy a property you do not get to know the carpet area unless you ask for it as the builders advertise the apartment based on other parameters that are often not what you get and include various other things. Remember the carpet area is the actual area of your flat and specifies the area that you can lay a carpet on.
Built up area: This is the carpet area together with the area of the walls and the doors. This measure is about 20% more than the carpet area and the rate quoted by your builder is based on this.
Super built up area: This measure includes the common space of your society that all residents can use, like the parking areas, lobby, landing, staircases, etc. Quite a few builders use this figure to market their projects and give out a wrong idea to customers about the actual size of the flats.
Sub-registrar Office: This is the place where you need to go to get all your properties registered. All legal documents are also available here. Please be warned that in this office a few unscrupulous officers may ask you for bribe.
Capital Gains: This represents the amount of profit made by you if you sell any property after 3 years of buying it. This is entitled to tax after the application of indexation. A seller can avoid paying this tax if he or she diverts this amount in to buying another property.
Encumbrance Certificate: This is a certificate that entitles you to ownership of your property. All legal or monitory dues on the property is also evident from this document. Usually, the bank needs this certificate for any home loans that you may be applying for to ensure that the property doesn’t have any other loan tide to it. This certificate can be obtained from the Sub-registrar’s Office for 30 years. The process takes 15-20 days after application.
Title Deed: This document proves the ownership of the property and is very important when you are buying a property. Check the title deed to ensure that you are buying it from the right owner. In case you need one for your property, you can get one from the Registry Office. Always ask for an original of the document.
Stamp Duty: This is the tax that you need to pay to the government for purchasing your property. The stamp duty differs from state to state and can be 3-8%. This tax is payable on the Agreement Value. Many a time’s both buyers and sellers show a lesser value as property agreement and use black money in the transaction process. Do include stamp duty while deciding the budget for your home loan as it can be quite high.
Franking Charges: This is a small charge that you need to pay to the Bank when you take a home loan. This is actually a stamping in which an official seal is put on the document of purchase that needs to be done at the sub-registrar’s office for a very small fee. The bank does the franking and collects the charge from the buyer.
Registration Charges: This is a charge that is similar to the Stamp Duty and is based on the agreement amount of the purchase. This is to be paid when you register your property in your name. This charge differs from state to state and may be 1% of the property or a lower amount that is fixed.
Gift Deed: This is when instead of buying a property, you are gifting an existing property in your name to someone, in most cases a family member, without taking any money in exchange. In this case a gift deed is required to make the process legal. In this case a stamp duty needs to be paid too.
Power of Attorney: This is a legal process in which you transfer your rights as property holder to someone else. In case of real estate the right to sell or buy property using power of attorney has been banned by the Supreme Court.
Sale Deed: This is easily the most important deed when you buy or sell a property. The sale is considered to be legal only when this document has been signed by both the buyer and the seller. This document contains all particulars, including the details of the property.
Service Tax and VAT: The Service Tax needs to be paid only in case of properties that are under construction. For completed properties no such tax is applicable. VAT is similar to this and is applicable only to properties that are not completed. But not all state governments charge a separate VAT.
Conveyance Deed: This deed is a document that the builder needs to have to legally transfer the title of the land to the housing society that has been formed. When all the flats have been sold, this document is required. This is compulsory or the title will remain with the builder and may cause legal hassles later.
Completion Certificate: This is a certificate that is awarded by the local authorities when a project is complete is all respects except a few minor details.
Possession Certificate: This is a letter that the builder issues to all buyers that is a proclamation that the flats are ready to be occupied. This is applicable only in the case of new properties that were under construction at the time of purchase.
Ready Reckoner Rates or Guideline Value: This is a rate that has been specified by the government and is the base price on which the registration charges, the stamp duty and other legal matters are based on.
Now that you have a ready reckoner for real estate terms, you can be more aware of what you are buying and the expenses and documents that you need and what they signify.