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FAQ's

 Q: What is a residential apartment? 

 A: A residential apartment is an autonomous housing unit that consists of bed rooms, living rooms, kitchen, bath rooms, etc. It occupies only a part of a building. Apartments may be owned by an owner or by rented tenants. In commonwealth countries, the term 'flat' is used to describe apartments.
Q: What do you mean by Carpet Area, Built-Up Area and Super Built-Up Area?
A: Carpet Area is the area enclosed within the walls, actual area to lay the carpet.
 
Carpet Area is the total usable area enclosed within the four walls of an apartment or commercial space. It refers to the actual area over which a carpet can be laid if required by the owners. It does not include the thickness of the inner walls.
 
Built-Up Area is the carpet area plus the thickness of outer walls and the balcony.
 
Super Built - Up Area is the built up area in addition to the proportionate area of common areas such as the lobby, lifts shaft, stairs, etc. The plinth area along with a share of all common areas proportionately divided amongst all unit owners make up the Super Built-Up area. At times it may also include the common areas such, swimming pool, garden, clubhouse, etc. The term is therefore only applicable in the case of multi-dwelling units. 
 
Q: How can knowing the Carpet Area, Built-Up Area and Super Built-Up Area of a flat help in the purchase of an apartment?
A: The break up of areas is extremely essential as builders can place any space from 65% to 85% per cent of the super built area as carpet area. It would then imply that if the area is quoted as 1,000 sq ft super built up area, the carpet area could be anywhere from just 650 sq ft to 850 sq ft. If this break up is not mentioned in the agreement, demand that the vendor/ builder mention it in the sale deed.
 
Q: Should I inspect a property before buying it?
A: It is definitely important to inspect the property before purchase as probably it is one of the largest single investment made by most buyers. It is crucial to know all the details of the property and need for any major repairs / modifications before it is purchased. It is easy to crosscheck the commitment made by builder and actual implementation if a pre-purchase inspection has been carried out. A close inspection points out the positive and negative aspects of the property, as well as the maintenance that will be necessary to keep it in good shape. 
Q: What is a Sale Deed?
A: Sale Deed also known as Conveyance Deed is a document by which the seller transfers his right to the purchaser, who, in turn, acquires an absolute ownership of the property. The document is executed subsequent to the execution of the sale agreement and after compliance of various terms and conditions detailed in the sale agreement. 
 
Q: What is a Draft Sale Deed?
A: A Draft Sale Deed contains full details of the parties, advance amount paid, mode of balance amount payable, receipt of the balance amount by the seller, handing over the original documents of the property, handing over the possession of the property, handing over the authorization letter to transfer power and water meters, signing of the application for transfer of ‘khata’, title of the seller of the property, indemnifying the purchaser in case of defect in the title and easement rights and is prepared by the purchaser's advocate. 
 
Q: What is Khata?
A: A Khata is an account of assessment of a property, recording details about the property such as size, location, built up area and so on, for the purpose of payment of property tax. It is also a kind of identification of the person who is primarily liable for payment of property tax. It is one of the required documents in case the buyer requires a building license, trade license or loan from banks or any other financial institutions.
 
Q: What is the difference between a Khata and Title Deed?
A: A Khata is an account of assessment of a property for the payment of tax. The Khata does not confer ownership. However, the Title Deed is the document through which a person derives a title or ownership of the said property.
 
Q: What is a leasehold property?
A: A leasehold property is that which is leased to a lessee for a stipulated period. The lessee pays lease premium and annual lease amount as fixed and mutually agreed upon by the lessor and lessee. The land ownership rights remain with the lessor and a prior sale-permission is normally required if you plan to transfer the property.
Q: How well do you need to know the developer? 
A: Most of the apartments are by property developers in India and it is essential to check the background of the developer, the builder, the designer and the architect. It must be investigated if there have been any problems with their other developments in past. The financial position of the developer should be strong so that he could complete the project on time if the project is under construction. Investors must find out if the developer has the essential resource and building consents before paying anything.
Q.  What documents are required while buying commercial or residential property?
Ans. When buying commercial or residential property you would need to check for the following documents: Market Trends about prevalent rates of property in the vicinity and last known transactions. Identify the property you wish to purchase. Formulate commercial terms. Distinguish between terms and conditions of the contract which are negotiable and those which are fixed e.g. price, payment schedule, time of completion etc. Avail the services of Kingdom of Property  List your requirements with a reputed broker. Ask for photocopies of the all deeds of title related to the property to be purchased. Examine the deeds to establish the ownership of the property by seller, preferably through an advocate. Ascertain the survey number, village and registration district of the property as these details are required for registration of the sale. Previous encumbrances and loans, if any, on the property must be cleared before completion of purchase of the property. The title of the Vendor to the property must be clear and marketable. Finalise commercial terms of purchase of the property. Ascertain transfer fees, stamp duty and registration charges to be paid on purchase of the property. Ascertain outgoings to be paid for the property i.e. property tax, water and electricity charges, society charges, maintenance charges. Request Vendor to obtain, if applicable, consent, permission, sanction, no objection certificate of various authorities such as the (a) society (b) the income tax authority (c) Municipal Corporation (d) the competent authority under the Urban Land Ceiling and Regulation Act (e) any other authority. Will you require a loan for making payment of the consideration amount. Ask for a pre-approval letter from the lending institution. Permanent Account Number of Vendor and Purchaser under Income Tax laws Payment of stamp duty on the formal agreement or document for transfer of the property, signing by both the Vendor and Purchaser and registration. After payment of the entire sale price, take over legal possession of the property along with documents of title in original from the Vendor of the property. Change name of the holder of the property to the purchaser in the records of the society, electricity company, municipal corporation, Index II etc.
Q.  What is Stamp Duty and who is liable to pay the Stamp Duty, the buyer or the seller?
Ans. Stamp Duty is a tax, similar to sales tax and income tax collected by the government, and must be paid in full and on time. A stamp duty paid instrument/document is considered a proper and legal instrument/document. The liability of paying stamp duty is that of the buyer unless there is an agreement to the contrary. Section 30 of Bombay Stamp Act, 1958 states the liability for payment of stamp duty.
Q. What is meant by the market value of the property and is Stamp Duty payable on the market value of the property or on consideration as stated in the agreement?
Ans. Market value means the price at which a property could be bought in the open market on the date of execution of such instrument. The Stamp Duty is payable on the agreement value of the property or the market value, whichever is higher.
Q.  Are there any formalities to be completed or forms to be filled on execution of the Sales Deed or document of transfer?
Ans. Yes. The formalities and forms may vary from State to State depending on where the property is situated. Every State has its set forms under the Registration Rules that are required to be filled and filed along with and at the time of Registration of Sale Deed/Transfer Deed. Under the provisions of the Income Tax Act and Rules for a transaction of sale, it is now compulsory for the Purchaser and Seller to give their Permanent Account Number and in the event of either the Seller and/ or the Purchaser would be required to fill Form 60 of the Income-Tax Rules. In case of either the Purchaser or the Seller being a Non-Resident Indian, not assessed to tax in India, such a Party would be required to file Form 60 of the Income-Tax Rules.
Q.  What are the permission and papers that one should check with the builder when buying a flat in a building which is under construction?
Ans. When you are buying a flat from a builder in a building under construction, you have to check the following things: Approved plan of the building along with the number of floors. Whether the floor that you are buying is approved. Whether the land on which the builder is building is his or he has undertaken an agreement with a landlord. If so, check the title of the land ownership with the help of an advocate. The building byelaws as applicable in that area and ensure that the builder is building without any violation of front setback, side setbacks, height, etc. Check if the specifications given in the agreement to sell of the sale brochure match on the ground or not? Whether urban land ceiling NOC (if applicable) has been obtained or not. NOC from water, electricity and lift authorities has been obtained.
Q. Who is the appropriate authority for knowing the market value of the property?
Ans. The Sub-Registrar of the area, in whose jurisdiction the property is located, is the appropriate authority for knowing the market value of the property.
Q.  Within what time period should an agreement/deed have to be registered?
Ans. The property agreement should be registered with the Sub-registrar of assurances under the provisions of the Indian Registration Act within four months of the date of its execution.
Q. What constitutes completion of the sale?
Ans. The transfer of a flat is concluded when you have an sale deed/ agreement for sale coupled with actual possession. Generally, in all cases the entire amount is paid simultaneously with the handing over of physical possession and signing of the transfer documents.
Q.What is meant by leasehold and freehold properties?
Ans. Leasehold properties (plot/built-up) are those in which perpetual leasehold has been granted by the title paramount in favour of the lessee. In such properties, the title paramount, i.e. President of India acts through DDA, L&DO, Leasehold properties are not freely transferable. Depending upon the covenants of the lease deed, prior permission of the lessor (DDA/ L & DO) is required to transfer the property. Freehold properties are those where title paramount has conveyed the property in favour of the purchaser by conveyance/sale deed with no restriction on the right of the holder of the property to further transfer the property. Record of ownership of the freehold property can be ascertained from the office of the sub-registrar. It can be transferred by registration of sale deed.
Q. What formalities need to be completed by foreign citizens of Indian origin for purchasing residential immovable property in India under the general permission?
Ans. They are required to file a declaration in for IPI and with the central office of Reserve Bank at Mumbai within 90 days from the date of purchase of immovable property or final payment of purchase consideration, along with a certified copy of the document evidencing the transaction and the bank certificate regarding the consideration paid.
FAQs for NRIs
 
Q1. Who is a Non-Resident Indian (NRI)?
A: An Indian citizen who stays abroad for employment or business or a vocation outside India or stays abroad under circumstances indicating an intention for an uncertain duration of stay abroad is a non-resident. Non-resident foreign citizens of Indian Origin are treated at par with Non-resident Indian citizen (NRIs).
Q2. Who is a person of Indian Origin (PIO)?
A: A person of Indian Origin (PIO) is a citizen of any other country but whose ancestors were Indian nationals at least four generations away.
Q3. What is an OCB?
A: Overseas Corporate Bodies (OCBs) are bodies predominantly owned by individuals of Indian nationality or origin resident outside India and include overseas companies, partnership firms, societies and other corporate bodies which are owned, directly or indirectly, to the extent of at least 60% by individuals of Indian nationality or origin resident outside India. In overseas trusts at least 60% of the beneficial interest is irrevocably held by such persons. Such ownership interest should be actually held by them and not in the capacity as nominees. The various facilities granted to NRIs are also available with certain exceptions to OCBs as long as the ownership/beneficial interest held in them by NRIs continues to be at least 60%
Q4. Can NRIs and Overseas Corporate Bodies (OCBs) invest in India? 
A: Investments by NRIs and OCBs are allowed, both, through the RBI route and also through the Government route, i.e., through the Foreign Investment Promotion Board (FIPB). 
NRIs and OCBs are permitted to invest up to 100% equity in real estate development activity and civil aviation sectors. Investment, made by the NRIs and OCBs, are fully repatriable, except in the case of real estate, which has a 3 year lock-in period on original investment and, 16% cap on dividend repatriation. For those proposals that do not qualify under the automatic route, Government approval is granted through FIPB.
Q5. How should purchase considerations for the residential immovable property be paid by foreign citizens of Indian origin under the general permission?
A: The purchase consideration should be met either out of inward remittances in foreign exchange through normal banking channels or out of funds from NRE/FCNR accounts maintained with banks in India.
Q6. Is there a limit to the number of investment in acquiring commercial properties in India?
A: Most of the apartments are developed by developers so it will be handy to check the background of the developer, the builder, the designer, and the architect. You should always check if there have been any problems with their other developments in past. The financial position of the developer should be strong so that he could complete the project on time if the project is under construction, find out that the developer has the essential resource and building consents before paying anything. As far as quantity of NRI investment is concerned in real estate investment in India there is no limit on the number of investments can be made in commercial properties in India.
Q7. Can a person of Indian origin acquire any immovable property in India by way of inheritance?
A: A person of Indian origin, resident outside India, may acquire any immovable property in India by way of inheritance from a person, resident outside India, who had acquired such property in accordance with the provisions of foreign exchange law in force at the time of acquisition by him or the provisions of Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations, 2000. Immovable property, by way of inheritance, can also be acquired by a person of Indian origin resident outside from a person resident in India.
 
Q8. Are NRIs permitted to send remittances outside India out of the assets in India that are inherited by them?
A: Yes. RBI will consider application from NRIs for remittance of assets, inherited by them in India. Such remittance may be permitted up to US$ 100,000 per year.
Q9. What is the approved method of sending remittances into India? 
A: The approved method of sending remittances into India is through normal banking channels.
Q10. At what rates are remittances in foreign currencies made by NRIs converted by banks into rupees?
A: Such remittances will be converted by banks at the market rate of exchange.
Q11. What is Foreign Exchange Management Act (FEMA)?
A: Residential status and nature of transaction i.e. capital account transaction (e.g. purchase/ sale of shares, property) or current account transaction (e.g. remittance of income on shares, property) are the cornerstones of FEMA. Under FEMA, certain types of transactions do not require RBI permission while others either require prior approval of RBI/ Government or it is mandatory to inform RBI of the same.
Q12. Can a person of Indian origin resident outside India gift properties acquired earlier in terms of the provisions of FERA/FEMA?
A: Yes. A person of Indian origin resident outside India may transfer residential or commercial property in India by way of gift to a person resident in India or to a person resident outside India who is a citizen of India or to a person of Indian origin resident outside India. A Person of Indian origin resident outside India may also transfer by way of gift agriculture land/farm house/plantation property in India to a person resident in India who is a citizen of India.