Every owner of a property has three basic rights in his property which are, firstly, the right of ownership which means that he has the title to the property, secondly, that he has the exclusive right to possess and enjoy the property in any lawful manner he wishes and thirdly, he has the exclusive right to alienate the property, i.e. he can part with the property whenever he wishes in any manner that he likes. Thus, with all these rights, a person becomes the “absolute owner” of the property.
Selling a flat has become an uphill task for many sellers and owners. The very first thing to consider, while selling a property in the real estate market, is to make a proper valuation of the flat to be sold. A seller can either self-assess his property or resort to an external source for determining its worth. The prevailing market rate in the locality where the flat is located can be informally enquired about in the vicinity.The important step, while selling a flat is to find a prospective buyer. It is important at this stage to check the credentials of the buyer in terms of his background, financial capabilities and reliability.
Another important step is to obtain, the consent and /or permission, i.e. the No Objection Certificate (NOC) 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.[i]
After these steps comes a vital stage which is that of documentation of the various necessary legal documents. It is extremely important these days, given the fact that many disputes with regard to fraudulent transactions that have started to arise, that both the sellers and the buyers have the necessary legal documents before they complete their dealing.
The following documents are necessary to be there in order to sell a flat/property:
Letter of allotment–It confers the allotment of the property to the seller who had originally purchased the property from the relevant society or authority.
Previous Sale Deeds– The original sale deed from the previous owners of the property is needed. This traces the ownership of the property that is being sold/ bought. A property with clear documentation and title commands a higher price in the market. The chain of previous agreements with past owners in original with original receipts of registration or the original letter of allotment issued to the first owner by the development authority is important. Flat seller should have an original sale deed while selling the property. The seller needs to register the original deed from the registrar (i.e. the original deed that had been registered by the registrar) and give out a copy of the sale and the receipt from the sub-registrar.Giving a copy of this will trace the ownership of the property and in case there are few documents missing, the property seller can be alerted instantly. It is mandatory under law that the current owner should have the previous agreements with him as well.
Sanctioned plan– A copy of the approved building plan and occupation certificate issued by the competent authority, which is essentially the local body/ municipal authority of the particular state or city [for e.g. In Delhi, it would be either the DDA (Delhi Development Authority) or NDMC (New Delhi Municipal Council), depending on the area where the flat is located] is another relevant document.
Encumbrance[ii] certificate–The encumbrance certificate is used in property transactions as an evidence of free title. A seller must ensure that the property he intends to sell has a clear and marketable title, so that it can fetch him a higher market price.
Sale Deed/ Agreement–
Once the documentation is cleared, the parties can then enter into an agreement to sell and confirm the terms and conditions. After this, they can start preparing the sale deed. Agreement to sell precedes execution of a sale deed. The subsequent sale deed is based on the agreement to sell. This agreement is also signed and executed between the seller and buyer on a non-judicial stamp paper.[iii] After the complete documentation clearance, the buyer and the seller should sign an agreement stating the sale and confirmation of the property along with terms and conditions. This document also mentions the terms and conditions and the sellers intentions of selling away his property.[iv]
[ii]The word “encumbrance” essentially means and sort of burden or impediment that flows with the flat/property. For example, it could either be a mortgage on the flat or any legal dispute that is going on with regard to the flat/property. An encumbrance certificate thus ensures that the property/ flat is free from any sort of monetary or legal liabilities and the title and ownership can be passed to the buyer.
[iii]Documents you need to have in order while selling property, available at: http://articles.economictimes.indiatimes.com/2012-04-07/news/31304922_1_sale-deed-encumbrance-certificate-sale-agreement, last accessed on 7th January, 2015.
[iv]What are the main documents to sell a property, available at: http://www.commonfloor.com/guide/apartment-society-what-are-the-main-documents-required-to-sell-a-property-17413.html, last accessed on 7th January, 2015.