All You Need to Know About Legal Terms & Approvals

By Jay Dee Infra In Home Buying Tips, Real Estate Info No comments

All You Need to Know About Legal Terms & Approvals

Regarded as a painful procedure, the whole process of legal documentation while buying a house, including the finalization of your deed, can be made much simpler if the proper documents are ready and up to date!

Access to correct information and a good lawyer can save time and money when it comes to real estate. For example, if the power of attorney isn’t in the name of the seller, or the legal procedures of the government are not met by the builder, then there can be consequences. One could lose money, or worse, even lose home just as the Campa Cola residents did. Here is a complete Legal 101 that will tell you everything you’d need to know about legal terms and approvals related to real estate.

I) Types of Approvals

1. Commencement Certificate

A commencement certificate is a document you need to look for if you are planning on investing in an under-construction project. A commencement certificate is like a permission letter provided by the concerned authority allowing the builder to begin construction. Generally, commencement certificates are issued by local authorities like the municipality after they have inspected and taken into consideration the plans and engineering of the project. A builder is not supposed to start construction before receiving the commencement certificate.

2. Completion Certificate

A completion certificate is a document given by the local authorities to the builder. A completion certificate is proof that the construction of the building has been completed keeping in mind all the legal guidelines and safety norms such as enough space in the compound for an ambulance to turn around and a fire brigade to enter, earthquake resistant technology, etc. Absence of the completion certificate may lead to not only safety hazards but also legal matters.

3. Occupancy Certificate

OC, which is the acronym for certificate of occupancy, is another similar document issued by the local authority, indicating that the construction of the project is completed keeping terms with the legal laws and safety norms and that is now suitable for occupancy. The main purpose of the occupancy certificate is to say that the building is now in a legally habitable condition according to the law. Once the builder obtains the occupancy certificate you are good to go. In case of the Campa Cola mess, the builder did not get the occupancy certificate and accommodated the residents without it. This led to several families losing their home and their life savings.

document-necessary

II) Common Legal and Transaction Terms

1. Clear Land Title

Clear Land Title is the phrase used to state that the owner of the respective property owns it free and clear of any creditors. A clear land title is a title without any kind of levy from creditors or other parties and poses no question as to legal ownership. For example, if a house is on mortgage, this means nobody has a clear title to it; however, the mortgage can be released if the mortgage holder is paid a certain amount. So, while selling the house, the seller will demand an amount that satisfies him and the mortgager.

2. Allotment Letter and Agreement

An agreement is a contract or deal signed by the buyer and seller putting on record the purchase and sale of the house or property. It is a legal proof of the transaction that takes place between the two parties. The builder needs to give the Allotment letter to the buyer in case of an under-construction building. The allotment letter includes the details about the flat, all kinds of fees and charges you’ll need to pay and the payment options. Allotment letter is very important if you need to apply for a loan from the bank. The bank provides you with finance only after you have received the allotment letter.

Whether you go for an under-construction building or a resale flat, meeting legal formalities is critical. Create a checklist before any meeting or making a deal and be sure to mention all the points. Since legal matters involve government bodies and local authorities, it’s better to be safe than sorry. If there’s more you wish to read about, do let us know in the comments!

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