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Realty Guide - Selling Residential

VALUATION
Once one has decided to sell a property one would require to ascertain the value at which one wishes to sell the property. To ascertain the value of the property there would be two steps involved
  • Self assessment of the property. In this one needs to do some initial spadework and ascertain the prevailing market rate in the locality for similar properties. One would need to find out informally what the prevailing market values of properties in the vicinity. One would also have to take into consideration various factors that would affect the value of the property which have been detailed further down.
  • Assessment of the property through an external source - There are various agencies through which one could assess the value of the property. One method would be to seek the professional services of a Government registered valuer for a fee as prescribed by the valuers association. The other method is to approach real estate agencies to seek information on your property value on a formal/informal basis.
  • Some of these factors that would affect the valuation of a property are mentioned below –
  • Age of the building – As a normal market norm, new buildings would fetch higher capital values in comparison to older properties at a given location.
  • Upkeep & maintenance of building – The upkeep and maintenance of the building would determine the marketability and the prevailing market value of the premises in which the building is situated. Needless to say, better and fairly well maintained buildings would fetch a better value and would enhance the marketability of the premises in comparison to poorer maintained buildings.
  • Upkeep and condition of the premises – The condition and the internal maintenance of the premises would again play an important role in determining the marketability and the prevailing market value of the premises.
  • Layout of premises – The layout of the premises in terms of optimum space utilisation in an efficient manner
  • help the premises score points. The number of attached toilets, availability of servants room and toilet, vehicle parking spaces available with the premises would also play an important role in determining the value of the premises.
  • Ancillary costs of holding the premises – Ancillary recurring costs like society out goings for maintenance of the building, municipal taxes etc. would determine the marketability of the premises.
IDENTIFYING A PROPSPECTIVE PURCHASER


Identifying a prospective purchaser for your property could prove to be an uphill task at times. Sometimes one may find a purchaser overnight while sometimes it may take months before one identifies a purchaser. This process could be initiated through various channels like advertising in the classified of the print media, appointing real estate consultants for the assignment, by word of mouth, etc and some other ways.

If one were to approach a real estate consultant, a great deal of caution needs to be exercised in selecting the consultant. One should ideally check to track record and reputation of that consultant from the market and then only arrive at a decision. The easiest method would be to advertise in the classified as this medium would have a wider reach.

Before finalising the terms of the transaction one should also check the credentials of the purchaser in terms of the purchaser's background, financial capabilities, reliability. Although many of these factors may be relative in a way, one should not overlook the same.

PROCEDURAL OUTLINE


Once the purchaser has been identified all the information pertaining to the transaction should be communicated and decided on, to avoid any complications between the purchaser and seller at a later date, which may result in cancellation of the transaction.

Once the purchaser has been identified, the seller should intimate the society/governing body of the building of one's intention to sell to a specific purchaser and obtaining their No Objection Certificate for the same.

After having satisfied oneself about the credentials and financial capabilities of the prospective purchaser and having intimated the society/governing body of the building, one could proceed with the legal documentation.

After having executed the necessary documentation and only upon having received the entire consideration should one hand over the possession of the premises.

LEGALITIES

 
(Please note that the legal documents mentioned and described below are generally used documents. The description of these documents may not be a legally accurate description as the intention is to merely give an overview of the documents and hence it is suggested that one should approach a solicitor to verify the legalities. HDFCRealty undertakes no responsibility of determining the applicability of these documents in each case)
  • Once the purchaser has been identified, the seller should intimate the society/governing body of the building of one's intention to sell to a specific purchaser and obtaining their No Objection Certificate for the same. The society would take into cognisance issues like outstanding payments if any from the seller to the society, encumbrances on the property if any, etc. The seller will have to submit various documents duly executed by the seller and in some cases by the purchaser, to the society/governing body of the building.
  • Once this NOC is obtained then if the property falls under the purview of Section 269 UL (3) of the Income Tax Act, then the purchaser and seller need to jointly file Form 37 I to the Appropriate Authority and obtain its No-objection-Certificate. At the time of filing Form 37 I one would need to enter into a Memorandum of Understanding which details the transaction on the terms mutually agreed upon which would be duly signed by the interested parties to the transaction. The details of this are as under-
  • 37 (I) clearance [No objection certificate under section 269 UL (3) of the Income Tax Act, 1961] - Any immovable property in certain cities specified by the Appropriate Authority which is transacted above a certain value, needs to obtain a No Objection Certificate from the Appropriate Authority. A transaction would be incomplete and invalid if this clearance is not obtained. A statement in Form no.37 (I) needs to be jointly submitted by the seller and purchaser. The appropriate authority would issue a No objection certificate, if it feels that the property has not been undervalued. If the appropriate authority feels that the property is undervalued, then it would do pre-emptive purchase of this property and sell it subsequently through an auction/tender. Various transaction limits have been set for various cities
  • 37(I) clearance needs to be obtained in the cities mentioned below provided the apparent consideration of the transaction is as specified below -

    City Apparent Consideration of Transaction
  • Greater Bombay Rs. 75 lacs and above
  • Delhi Rs 50 lacs and above
  • Calcutta, Chennai, Bangalore, Ahmedabad & Pune Rs 25 lacs and above
  • Baroda, Bhopal, Bhuvaneshwar, Chandigarh, Coimbatore, Cuttack, Faridabad, Gurgaon, Ghaziabad, Hyderabad, Indore, Jaipur, Kanpur, Kochi, Lucknow, Madurai, Nagpur, Noida, Patna, Surat, Trivandrum Rs 20 lacs and above
  • Also, in the state of Maharashtra, Agreement for sale is treated as deemed conveyance and Stamp duty is required to be paid thereon.

    Stamp Duty & Registration:

    Payments of Stamp duty followed by the registration of the agreement are two important acts when one enters into an agreement with a developer/seller. Both, the developer/seller and the purchaser need to be present at the sub-registrars office for registering the agreement.



    Registration of an agreement : The agreement should be registered with the Sub-registrar of assurances under the provisions of the Indian Registration Act within a period of four months from the date of its execution. Stamp duty should be paid prior to the Registration. In Maharashtra as of date the registration fee is approximately 1% of the true market value subject to a ceiling of Rs 20,000/-.

    Documents pertaining to a resale flat:

    1. For flats being sold in a registered co-operative society:
  • Share certificate of the society bearing the name of the seller
  • Previous chain of conveyance/sale deeds, Sub - Registrar's receipt
  • 37 (I) clearance if applicable
  • 230 A certificate from the Income Tax authorities (to be obtained by seller)
  • Original stamped receipts of payment made to previous sellers
  • No objection certificate from the society for transfer and sale of flat
  • Last receipt for the out goings bill paid to the society and electricity bill
  • Set of society transfer forms for transfer of ownership
  • Certificate of Title from an advocate

    When one sets out to sell a flat in a registered co-operative society the documents that may be required to be provided for the perusal by the purchaser would be as follows -

    a) A Copy of the share certificate issued by that society in favour of the seller.

    b) Previous chain of original conveyance/sale deeds. If the deed has been lodged for registration, then one should provide a copy of such conveyance, sale deeds, etc along with a photocopy of the receipt of the Sub - Registrar where the document has been lodged for registration.

    c) Copies of stamped receipts for payments made to the previous sellers.
  • Once these documents are vetted by the purchaser's advocate and the purchaser decides to go ahead with the transaction then intending purchaser could ask the seller to apply to the society to issue a no objection certificate indicating that the society has no objection to transfer the share certificate in favour of the intended purchaser and admitting the purchaser as a member of that society. The certificate should also mention that the seller has no default/outstanding payments to be made to the society as of date. Once such a certificate is obtained one could proceed the Agreement for sale and filing the 37-I form with the Income Tax (if applicable), preparing the sale/conveyance deed /agreement. Apart from obtaining the 37 - I clearance, the purchaser would ask for the 230 A tax clearance certificate of the seller which requires to be obtained by the seller from the concerned tax authority. The 230 A certificate is issued by the Income Tax authorities. For this the necessary application has to be filed in Form no. 34A by the seller. This certificate would indicate that the seller has no dues/outstanding in terms of the income tax payable him. As per the Income Tax Act, 1961, this certificate is a mandatory requirement for a property transaction where the value of the transaction is in excess of Rs 5.00 lacs.
  • Set of society transfer forms, etc for transfer of ownership needs to be duly filled and signed by the seller and purchaser and should be submitted to the concerned Society.
  • If the flat is a resale where Society has not been registered
  • Originally allotted by Development authority In the above mentioned cases the copies of the following documents may be made available to the purchaser for perusal
  • Previous chain of agreements with past owners in original with original receipt of registration (if any)/ Original letter of allotment issued to the first owner by the development authority. In case the latest agreement is pending registration the original receipt issued by the sub-registrar acknowledging the pending registration needs to be shown along with a certified true copy of that agreement.
  • Original stamped receipts of payments issued to the previous and present seller by the builder/Development authority/society.
  • Transfer permission from the respective authority i.e. Development Authority/Society
  • Copy of Approved Plan & Occupation certificate issued by competent authority (like the Municipal Corporation)
By vayaM CS