Check List before you buy Under Construction Project

While looking out for our dream home or a dream workspace, most of us lean towards an under-construction property. This decision can be guided or checked by various factors.

Price is the most important reason of all that anyone would lookout, as under construction properties can be purchased at almost 30% lesser than a ready to occupy the property. Usually, most of the investors invest in an under-construction property so that they can resell it when the prices go up during handover. But, this is not any different from a huge gamble in reality.

An under-construction property poses a high risk of delayed possession or even extreme frauds where there is no handover. To prevent this kind of mishaps, you should double-check and then also crosscheck all the necessary documents and everything which can tell you the credibility of the builder and the property.

Credible builders are rare to find but once you find them, then your investment becomes less risk and more fruitful. If we are talking about credible and trustworthy builders, then how can we not mention SV- Housing here?

SV- housing or SVH, has become the most trustworthy builders in the business of real estate for around 4 decades ago. It was born with a mission to revolutionize the future of the construction industry.

SV Housing is a renowned name in the industry, as one of the most credible builder's groups. It has successfully delivered state of the art mega housing projects like high-rise residential apartments and commercial developments among others entrusted within the promised time while adhering to outstanding quality and design. As we have discussed before, if you are looking for investing and searching for a good builder or project then your search ends on SV-housing.

Now coming back to the checklist we were discussing.

We have prepared a whole checklist that you should consider before investing in any kind of under-construction project.

• Intimation of Disapproval and Commencement Certificate:

These two documents are very important before you invest in the under-construction project. Intimation of Disapproval or IOD basically consists of conditions that are to be complied with during different phases of under-construction projects. Intimation of Disapproval is also known as “Building Permit”. These conditions are normally categorized into 3 parts

a)            Immediately or right before the commencement of construction work

b)            During the period of construction

c)            After the construction is completed or Post Construction

Commencement Certificate is the permission to start construction from local development authority.

Note: The builder cannot lay the “Foundation Stone” & “Build Boundaries” in the absence of these 2 critical documents.

The basic check can also be done by the buyer himself, and that is not so difficult, he can easily pull out the Encumbrance Certificate of land from the local sub-registrar office to check the ownership status of land. So, you better check these documents and be ascertained about their reliability

• Approved Layout Plan:
You can see Layout Plan here for reference: 83 Metro Street SitePlan

To check the trustworthiness of the project, you should demand the approved layout plan from the builder. It is solely provided by the local development or town planning authority of your city. Approved Layout Plan is as per approved FAR (Floor Area Ratio) of the town.

Let’s take an example, suppose in Noida Floor Area Ratio is 2.5 and the plot area is 80,000 Square feet then the builder cannot construct a covered area of more than 2,00,000 square feet on this plot.

• Approval from Government Departments:

You can see approvals list here: 83 Metro Street Approvals
Places like in Karnataka, every builder needs approval from a minimum of 17 government departments for an under-construction project.

This can be counted as one of the key reasons for the delay in the under-construction project. This delay can be both intentional and unintentional. Builders normally keep 4-5 insignificant approvals pending so that they need not pay the penalty to buyers for this much delay in the project. You may check with your lawyer, the list of approvals that are required. Some of the approvals are very critical and few can be just ignored if not in place. Let’s take another example, you can surely ignore the approval from BSNL / MTNL because it is not that necessary. On the other hand, the approval from the pollution control board is must that it cannot be ignored as BSNL. 

-      On the other hand, some approvals are location specific. Let’s take a situation, if the property is near Airport then approval from AAI (Airport Authority of India) is just because it is mandatory in all the ways.

-      Some approvals are state-specific. Example: If the land is acquired by the builder from the specific community then under local state laws, approval from State Government is a must. To tackle all this, you should hire a good local property lawyer who can help with a list of approvals required for under-construction projects.

•   Project or Land is mortgaged:

This is another grey area and for sure, most difficult to find out. Most often, mall time builders mortgage the property and then sell it to the buyers. It is not the case that if the land is mortgaged then the builder cannot sell the flat. The only condition is that he should provide NOC from the bank or lender that the bank does not have any objection in this regard. Any lien on land can be easily found out as mentioned in the second point, but if flats are in the under-construction project and are mortgaged then you should specifically check with the builder.

• Tri-Party Agreement / Confirming Party:

This is one of the most common problems. If the flat is of land owner’s quota under JDA then Land Owners insist on a bi-party agreement or assignment deed and vice versa. It is a subjective thing. Whatever be the situation, any agreement signed by the buyer for the under-construction project wherein the builder is not the owner of the land should be tri-party agreement. Either the builder or landowner should be the confirming party in the agreement. Seldom, landowners give marketing rights to the builder and also sell it independently. This is pure financial fraud and in case of bi-party agreement between landowner and buyer, the builder is not aware of this transaction.

So, these were the basic things in the checklist you should go through before you buy any under-construction to prevent any kind of mishaps and the most preferable thing to avoid these mishaps is, choose the right builder.

To be successfull in commercial real estate you really need to find a good investment opportunity. There are many good quality investment opportunities in Gurugram, good location for investors and especially its localities makes Gurgaon, a popular and profitable investment hub. If you are looking for investment in Gurgaon, then 83 metro street is the best tip for a good qualityinvestment.