Properties, Homes & more

A real-life version of “Khosla Ka Ghosla” is being played out with an increasing number of non-resident Indians (NRIs). The Ministry of Overseas Indian Affairs (MOIA) is being flooded with increasing complaints of illegal / fraudulent real estate deals and encroachments. In fact, with the recent Satyam scam casting its shadow on Maytas Properties, apprehensions amongst overseas investors has deepened.

It should be noted that property dispute is one of the most frequent complaints by NRIs. They are unable to protect their property due to long absences or lack of awareness of laws. The largest number of complaints are from major real estate markets like Delhi, Mumbai, Bangalore, Andhra Pradesh, Kerala and Punjab.

The nature of the complaints are mainly protection of property that has been forcibly occupied or encroached, dispute relating to division of property or inheritance and cases where investors have been cheated by real estate developers.

What actions are being taken by Government?

A minister from MOIA has mentioned that, following this flood of complaints, he had written to state governments asking them to appoint nodal officers for civil, judicial and police matters. These nodal officers are independent from NRI cells that are dedicated for issues related to financial or welfare interests of overseas Indians. The ministry has also planned a session on property disputes at the Pravasi Bharatiya Diwas in January 2010. The purpose of the interactive session is three-fold: allowing NRIs to invest safely in realty, putting in place an institutional mechanism at the state-level for property related disputes and providing a channel for credible information relating to property and inheritance laws.

One of the recents developments happening in Thane’s real estate market is: builders are duping customers through sale of “stilt parking”. One of my close friends was a recent victim of this “possible scam”.

The builder in question is a reputed builder of Thane and has multitude of projecs running in and around Thane. this case happened in one of the projects which was, for some reasons, stuck in litigation in past. the builder have kept buyers in dark about it. now, somehow, the project is cleared and the project is almost on completion, he is trying to dupe customers by selling parking slots at exorbitant rates. he is also saying that STILT PARKING CAN’T BE SOLD LEGALLY (hence hehas & is selling them illegally) & HE IS NOT ALLOWING PARKING REGISTRATIONS ALSO.

I want to ask the legal experts if this is true.
1. Can “stilt parking” be sold at all?
2. Can “stilt parking” be registered? or, regularized?
3. What are legal options available to the customers?

Please share your opinions & save others.

A few days back, a leading newspaper carried an advertisement on their front page from a builder claiming that they are going to shed a light on the truth and are digging out the fact how the projects from another leading builder are charging Rs 5800/sqft for Plinth Area using hidden costs like Common Areas etc while they charge only Rs 2370/Sq ft for Plinth Area exclusively.

Now, the focus of a property seeker shifts towards the fact that how must he save himself from these smart games from the builder where he tries to buck extra? The smooth talking salesmen on the site of the builder chooses to skip on this fact too. So what should we do? The only way to save your skin from this hook is to have the right knowledge on the Carpet Area , Super Area and Plinth Area.

Here is a quick run-through the exact definitions you should know before diving in to scoop the best deal on property.

• “Carpet Area” refers to the total usable area within the four walls of an apartment or a commercial space, as the case may be. In other words, it refers to the area for which a carpet can be laid if required by the owners.
• “Plinth Area” refers to the entire carpet area along with the thickness of the external walls of the apartment. It obviously includes the thickness of the internal walls and the columns, if any, lying within the four walls of an apartment. The commercial space is not taken into account in calculating the plinth area.
• “Super Built-up Area” refers to the plinth area of an apartment or a commercial unit as added by the balconies and other common areas like corridors, staircase, lift room, motor room, security room, meeting hall, gymnasium and an area reserved for indoor games.

The builders, while advertising or quoting the rates for there properties, tag the carpet area and print the rates of the same in there commercials and public issues. But what they usually sell you is the Plinth Area. There has been a huge lot of roaring on this matter in past and yet the strength of the definition of Builder Area’s is enigmatic.

How many of us really get into the carpet area? We seem to simply go by what the builders say in terms of the saleable/chargeable area.

DO NOT GET FOOLED BY THE BUILDERS. I am intentionally posting this on April Fool’s Day, so as to warn all the readers and prospective proerty-buyers from being called “April Fooled by the builder”!!! Pass on this warning to all those you care about.

A rental agreement is for short tenancies, usually for 30 days which automatically continues once this period is over, unless the agreement is terminated. In a rental agreement, the landlord can choose to amend the mentioned terms as long as he provides written notice to the tenant. However , the tenant has the right to occupy the property for a specified period at fixed terms, usually 11 months, in case of a written lease. However, unlike a rental agreement, a lease has to be renewed.

Please find below a list of important points that need to be thought upon, before taking a property on rent:

1. A tenant should know the prevailing rental rates in the chosen location and be aware that only an airtight rental agreement that transparently outlines his rights is acceptable. For example, it should be clearly mentioned who will pay the tax after mutual agreement between the landlord and the tenant. Also, a tenant should be aware that the landlord’s permission is required before initiating any major changes to the property.
2. The tenant should be wary of a clause allowing for automatic rent increases, arbitrary amendments to the existing terms of the agreement by the landlord, and any provision that permits the landlord to enter the property at any time.
3. The agreement or lease should be filled out by the tenant, or in the presence of the tenant.
4. There is no stipulation on the amount of security deposit to be paid by the tenant. It’s a commercial term determined between the two parties. Hence, the time to safeguard one’s safety deposit is before moving in.
   • Security deposit should ideally be paid in cheque to ensure that the same is reflected in their bank statements. Also, legal assistance should be sought to ensure that a proper clause stating that the security deposit would be refunded at repossession by the owner. There should also be a clause in the leave and license agreement of interest penalty on the outstanding security deposit amount in case the amount is not refunded. In such cases, the agreement should clearly highlight if the advance would be adjusted with the first or last few months of the lease. In case of security deposit, the amount and terms for its return should be mentioned.
5. The name of the landlord should be clearly mentioned in the property documents. The property papers, which include the occupation certificate and title deeds, should be in order.
6. The tenant can seek a copy of these papers if needed. If the landlord has carried out an illegal extension within the house, a tenant has to take a written record or have the landlord mention the same in the agreement . There is no such norm that the tenant should possess these documents. However, it’s in the best interest of the landlord and the tenant to have everything in written.
7. Similarly, if the property has any lien such as loan, then the lender should be involved in the transaction between the landlord and the tenant for the transaction.

Continued from Part 1…

There are many important points to be looked into before signing on the dotted line… In this 2-part series, I will cover 9 important points that must be carefully considered.

1. Look deep in your wallet before deciding the property
2. Look closely at your lifestyle and financial capabilities
3. Evaluate market conditions
4. Higher loan amount increase burden of debts

(Please refer Part 1 for discussion on these 4 points)

5. Increase the down payment When you go for home loan, you have to pay around 10% to 15% of the project cost and around 85% to 90% is funded by the bank or financial institution. If you have more than the required amount for ‘down payment’ then pay more, so that your required debt is reduced significantly.
6. Prepayment is the best way to save on interest Always make an effort not to extend a loan beyond its tenure. As and when you have excess cash, try to prepay (huge loan first). For example, you could prepay from your yearly bonuses or salary hikes. Prepaying can lower the tenure and help you save on interest. However, check with your bank from when you can start prepaying, as banks usually do not allow prepayment during the first year of the loan period. Also check if there is a prepayment penalty. The idea is to make sure that the interest saved does not exceed the prepayment fees.
7. It is not a family bank, unlike family doctor It is not essential to opt for the same bank that your brother took his home loan from. It is advised that you should do your own searching in terms of the deals offered by different banks. Moreover, your brother’s offer for the same loan amount and tenure could be (and mostly, would be) different from what is offered to you, as it varies according to the credit profile of the borrower.
8. Processing fee If you have nothing in writing from the bank, it is possible that you might lose the processing fee that you pay to bank in case the loan does not get approved. So, either you get something in writing from the bank or factor in all this money for these kinds of losses.
9. Read the home loan agreement (fine print) carefully Most of us just close our eyes and sign on the dotted line. What we forget to read are the clauses that are in fine print in the loan agreement. You need to understand the significance and impact of these various clauses before you sign the agreement. Important clauses to watch out for are: the Force Majeure clause and Reset Clause on Fixed Rates.