Laws governing land and property ownership are complex. Understanding land ownership rights and processes can help any prospective landowner avoid the risk of an improper sale, scam, or undisclosed property issue.
There’s nothing worse than going through the tedious process of buying your new home and realizing – just as you’re all set to move in – that the title isn’t clean, or worse, is fake. A dirty title might have so many mortgages, liens, and encumbrances attached to it that you’ll begin considering the possibility of living with your parents forever.
Luckily, there are a few guidelines to follow to ensure you’re not setting yourself up for a ton of headaches when buying a new property. Here’s hoping these tips will help your transition of moving into your own home a bit easier.
Understand What A Title Is
A title is not the same as a deed. Deeds are legal instruments used to transfer a title from one party to another. The deed outlines the terms of the transfer including the parties involved and the parcel of land.
To formalize the transference of land ownership rights, the county clerk’s office must receive a legally recognized copy of the deed. With the deed on record, the certificate of title will change to reflect the change in ownership. Both the deed and the title are crucial instruments in real estate ownership matters.
Confirm Construction Approvals
Now let us see documents to be verified before buying land with constructed buildings. For the purchase of an apartment or land with constructed building, the buyer should also scrutinize the building plan/layout plan sanctioned by the local municipal authorities. This should come along with approvals issued by the government, statutory and regulatory authorities. See if they provided infrastructure facilities, water, sewage, electricity, environmental clearance, fire safety approval, etc.
It is necessary to request the builder for copies of NOCs from different departments, such as the Pollution Board, Environment Department, Sewage Board, and Traffic and Coordination Department. This forms the ‘intimation of disapproval’ or the first permit required for building construction.
Commission Title Searches
Prospective landowners often conduct title searches to uncover potential issues. During a title search, an investigator will look at years’ worth of land documentation to identify potential issues with land ownership.
A title search can prevent unsuspecting new owners from accepting liability for past issues. For example, a property owner cannot sell or transfer ownership rights of a property with unresolved tax issues. An outstanding lien can render any ownership transaction invalid.
Keep Everything Documented
In case there is any loan outstanding on the property you are buying, it is crucial to perform due diligence and check some documents, before signing a deal. As a potential buyer, you can ask the seller to clear the outstanding home loan amount or a part of it. You can also obtain the original property documents from the bank and get the property registered in your name, after which you can pay the remaining amount.
Additionally, you can apply for the transfer of the seller’s loan to your name, in case you are planning to take a loan for the property’s purchase. The bank will be responsible for the KYC, checking your eligibility, and checking the seller’s file, before transferring the loan to your name. You must ask for a copy of the title documents and statements pertaining to the loan outstanding due from the bank, to ensure there is full disclosure.
Get The Right Insurance
If, however, you just bought a property and you have no thought of selling it just yet, then you need to purchase title insurance for peace of mind. There are a few types out there, but the main ones are the owner’s title insurance which protects you as the buyer, and then the lender’s insurance which is meant to protect the lender. The owner’s policy helps to provide coverage that is equal to the amount you have paid for the property.
It will keep you protected if any problems arise, and you will even be provided with legal assistance in the event that you file a claim that is proven to be valid by the company. As a property owner, it is absolutely imperative that you purchase title insurance. It may seem like a fancy add-on that you may not use, but the reality is that you never know, and it is best to be prepared.
Key Takeaway
Being able to stake out a piece of land and call it your own is a major life goal for many, and it may sometimes feel beyond your reach. However, when you finally make your way there and manage to buy a new home ranch, restaurant, or what have you, it feels like you can finally cross something vital off your bucket list.
Once you become a bona fide property owner, you will need to brush up on a few key facts, fast. If you’re not entirely sure about how to reorient your perspective about property ownership, then the following quick tips should help.
Property investments are highly capital intensive and any mistake made during the process can cause a great deal of trouble for the buyer. This makes it imperative for a buyer to exercise due caution while examining the property documents.