Why Property Document Verification Is Essential Before Buying Land or a House

 

Acquisition of property or purchasing a piece of land is one of the largest decisions that can be made regarding finances. In addition to the considerations of location, cost, facilities, and further development, property documentation verification is a necessity in order to ensure that everything goes well. Verification will allow people to know who the owner of the property is, its existing obligations, and whether there are approvals on it, and avoid any conflicts in the future.

The property might look promising and even have an acceptable cost, but incorrect and incomplete documentation may cause numerous complications after purchasing.

What is Property Document Verification?

Property Document Verification refers to the evaluation and validation of the legal and government papers related to the property before its purchase. It helps in finding out whether the seller has any legal right to sell the property and if the property has any significant legal issues.

Property document verification includes checking of title papers, earlier sale papers, encumbrance certificates, taxation papers, plan approval papers, government papers, and many others.

This can be done by a property lawyer who will find out any discrepancies or inconsistencies in the papers.

Why is Property Document Verification Important Before Buying Property?

Verification of property documents is used by the buyer to verify if the property has a marketable title. The buyer may be unable to know if the property he is about to buy will be involved in some litigation issues, loans, inheritance, and other legal problems without verification.

Property document verification is significant because:

• It verifies the seller's ownership right
• Verifies mortgages or other encumbrances of the property
• Examines the transaction history of the property
• Checks if there may be any ownership disputes of the property
• Checks the permission from the government
• Verifies the property tax and property registration
• Minimizes chances of fraud

The verification is less costly than facing property disputes after purchasing.

What Property Documents Should Buyers Verify Before Purchase?

Depending upon the nature of the property and location of the property, the documents needed might differ. Nevertheless, generally, some of the documents that the buyer needs to see are:

• Present sale deed/title deed
• Previous sale deeds and chain of title deeds
• Mother deed/parent deeds
• Encumbrance Certificate (EC)
• Property tax bills
• Land/revenue deed
• Building plans approved, wherever applicable
• Approval of layout, wherever applicable
• Conversion/deed related to change of land use, wherever applicable
• Possession/occupancy documents
• Documents related to RERA, wherever applicable

Identity documents of the seller and ownership documents of the seller
Additional documents in case of inherited property.

How Does Property Document Verification Protect Buyers From Legal Risks?

Proper verification can assist in identifying any legal issues even before the payment of funds and completion of the deal. The seller may not be the only owner of the property; there may be an existing loan on the property, or there could be a previous deal resulting in a competing claim.

Document verification of the property will assist in identifying: 

• Disputes related to ownership of property
• Competing claims on the property
• Undisclosed mortgages
• Incompletely documented titles
• Faked documents
• Non-payment of property taxes
• Unauthorized construction
• Lack of approvals
• Issues related to inheritance

Identifying these problems in the early stages will give the buyer a chance to clarify the matter or walk away from the deal.

How to Verify the Ownership and Title of a Property

Ownership and titling is the key part of due diligence that buyers need to undertake. The buyer needs to review the existing title deed, tracing ownership of the property through past transactions.

The chain of title should usually reflect the transfer of property from previous sellers to the current seller. It should have consistency in the name, description of the property, survey number, dimensions, and other relevant information.

When necessary, the records of the government for the land registry must be reviewed as well for comparison purposes with the information given by the seller.

A legal practitioner specializing in property law can conduct an intensive title search and render an opinion based on the documents and records at hand.

Why is an Encumbrance Certificate Important in Property Verification?

Encumbrance Certificate (EC) is a vital document that is considered as part of the process of verifying properties. The EC may give information regarding certain registered transactions or encumbrances registered against a particular property for a definite period.

Buyers tend to check the EC to verify if there were any registered transactions like sales or mortgages.

However, the EC must never be considered as the sole document to be used in property verification. This has to be checked together with the title deeds, past documents, government documents, taxation documents, among others.

The particular information available would depend on the place and period that would be checked.

How to Check Sale Deeds, Mother Deeds, and Previous Title Documents

Sale deeds and past titles provide evidence of the ownership record of the property. The purchaser must compare the records provided in such documents with care.

Important points to examine in the documents are:Names of owners and vendors

• Description of the property
• Survey and plot number
• Boundaries of the property
• Measurements and extent
• Registration particulars
• Date of the transaction
• Details of consideration and transfer

A mother deed or parent document will prove beneficial in identifying the property’s ownership and origins.

Unexplained hiatus in the title chain must be resolved prior to the purchase.

How to Verify Property Approvals and Government Records

Apart from property documentation, property verification must include whether there are requisite permissions/approvals for that property depending on its nature.

In the case of residential projects and construction, it is important for the buyer to know about the necessary approvals, sanctioned drawings/plan/layout, occupancy certificates, and any other pertinent RERA data, if any.

Where there is an issue of purchase of land, it is pertinent that the relevant revenue/land use data be verified to confirm that the land can be put to the intended use.

Documentation of government database, if any, should be considered besides the documentation from the seller’s side.

What Are the Common Risks of Skipping Property Document Verification?

Skipping the process of verifying property documents exposes buyers to great risk financially and legally. Examples of risks may include:

Purchase of property in dispute

Loan not disclosed

Claims of ownership

Construction and development not having necessary approval

Other risks include: 

• Forgeries
• Ambiguous ownership of property
• Property sold several times
• Issues of inheritance
• Measurement and boundary disputes
• Taxes and liabilities
• Unapproved construction
• Restrictions on use of property
• Selling the property in the future

All these risks prove the importance of verifying property documents prior to executing the final deed of sale.

Property Document Verification Checklist for Buyers

For those buying property or a land piece, one can make use of the below-mentioned simple checklist:

• Confirming the identity and ownership of the seller.
• Confirming the current sale deed or title deed.
• Verifying all previous title deeds.
• Verifying the mother deed or parent deeds.
• Taking a look at the Encumbrance Certificate.
• Verifying all property tax documents.
• Confirming survey numbers and all other details.
• Checking out the relevant documents from the government and revenue departments.
• Confirming the relevant approvals and permits.
• RERA details for relevant projects.
• Checking out for any mortgages, claims, and disputes, if any.
• Taking a legal opinion before finalizing the purchase.

The specific requirements and checklists may differ based on the type of property as well as state law.

How Professional Legal Due Diligence Makes Property Buying Safer

The service of professional due diligence can further be used to create an extra safety net for buyers of property. This would involve the use of an experienced property lawyer who can scrutinize the documents available, check the title, point out inconsistencies, and evaluate any legal risks involved.

Legal experts can also assist buyers in comprehending difficult documents and establish whether other necessary documents need to be looked into before proceeding.

It is recommended that property document validation be done prior to entering into legally binding agreements and large payments.

Conclusion

However, buying a home or piece of land goes way beyond analyzing their cost and location alone. Property title verification is one of the crucial steps in establishing property ownership, including its history, encumbrances, and relevant approvals.

Whether it is a residential plot, an independent home, a flat, or another property you wish to buy, proper title verification and legal due diligence can help you avoid unnecessary risks. Whenever there are too many documents, or when the property's past is not clear, it is better to consult a professional property lawyer.