Property prices in India might be significantly increasing but owing to the depreciating Indian rupee value NRIs consider property investment in India as a lucrative option. However, it can be a nightmare for a NRI to invest in any property in India if the paperwork is not in order or is missing. He/she can make a property investment an easier process by acquiring clearly typed, written, approved and scrutinized property documents. What are those important property documents?
A NRI having a valid Indian passport is entitled to invest in a property in India. But if the NRI holds an overseas passport, he/she should acquire a PIO (Person of Indian Origin) card via the respective country’s embassy or consulate. It is mandatory that the passport has the latest visa stamp and the date of entry stamp. However, a NRI holding his/her birth certificate or parent’s Indian passport will also be entitled to invest in a property in India.
2. Residence proof in India/abroad:
A NRI can submit his/her residence proof in India through a telephone bill, electricity bill, ration card, LIC Policy, society maintenance bill, mobile bill or utility bill. Proof of residence abroad also requires the same documents as above but with an addition of a driving license, social security card, identity card, work permit, copy of credit card and bank statements of all the NRE/NRO accounts in India for the last six months. However a NRI can acquire the ‘proof of address card’ that serves as both the proof of identification and proof of address, from the Indian Postal Department. It is mandatory that the proofs are submitted in the name of the primary applicant and not in the joint applicant’s name. For cases where the address proof and visa are not printed in English, one should provide a duly notarized translated copy in English. NRIs residing in Middle East should produce a copy of the employment card as well. Documents related to salary and income should be attested by the employer (if the salary is not credited to a bank) and all the other documents should be certified by the Indian Embassy abroad.
3. PAN (Permanent Account Number):
A NRI should acquire a PAN Card for his taxable income in India and for all the property transactions he/she would like to make. A NRI can acquire a PAN Card from the SEBI (Securities and Exchange Board of India) by filling in Form 49A along with the required documents and a minimal fee. Having a PAN Card gives complete BO (Beneficiary Ownership) to a NRI. A PAN Card helps a NRI while buying an under construction property as the property cannot be registered instantly. A NRI cannot disburse a loan with an unregistered property.
4. NOC (No-Objection certificate):
A NRI should seek an NOC to secure his investment and money. Acquiring a NOC from the local municipality will ensure that the builder has all the building permissions to build the project. The NOC will be issued to denote no objection from the fire department services, permission for drainage, permission for water supply, sewage connections, power load sanction from the electricity board, approval from the pollution control board and permission from the public health authorities.
5. Sale Deed and Agreement of Sale:
An Agreement of Sale is the initial contract signed by the buyer for under construction properties. A NRI does not require this if he/she is buying a ready for possession property and instead can directly sign the final Sale Deed with the payment against the balance amount due for the purchase of the property. The Agreement of Sale should be registered with the concerned authorities. A Sale Deed is required in the event of a property sale by a third party such as a realty promoter and is the final Deed. A NRI should ensure that the person selling the property is the rightful owner of the property and has a registered POA (Power of Attorney) to sell the property. It is always advisable that a NRI invests in a property sold by a reputed builder/developer with flawless records. It is important that the Sale Deed is executed by the seller and the buyer. It should include complete details such as the origin of the property title, past payments made, payment terms, precise identification of the property along with neighbouring survey numbers, cheque and draft references. The NRI should check if the Sale Deed contains clauses that violates his/her rights and interests over the property and that it does not contain clauses for additional construction in violation of the Apartment Ownership Act. A final Sale Deed will be executed by the seller on stamp papers with appropriate value (the prevailing rate of the stamp duty in the concerned state). A Sale Deed should be signed while taking possession of the project and must be registered at the sub-registrar’s office of jurisdiction. It is advisable that a buyer be present at the time of signing the Agreement of Sale, Sale Deed and its registration. In case this is not possible, the NRI buyer can appoint a POA (Power of Attorney).
6. POA (Power of Attorney):
Although a NRI is required to be present for most of the formalities of a property transaction, he/she also has an option to give POA to another person in case of his/her absence. A POA is an authorization that gives power to another person on one?s behalf. The person granting authorization is known as a ‘Donor’, ‘Grantor’ or a ‘Principal’ and the person being granted the POA is known as the ‘Donee’ or a ‘Grantee’. There are two types of POAs a NRI can grant to the chosen person; the General Power of Attorney and the Special/Specific Power of Attorney. In a General POA, the person given the POA is liable to undertake various transactions, whereas under Special/Specific POA the person given the POA will be liable to undertake only specific transactions. Granting a POA to another representative will help a NRI to purchase and sell a property from abroad, subject to certain terms and conditions as per the RBI. It is mandatory that the POA is executed on a stamp paper/plain paper as per the concerned country’s norms. Once the NRI signs the POA before a consulate officer or a notary of a country, he/she should get the signature on the deed attested by the Indian consulate officer. It is important that the NRI signs on every page and sends a covering letter/note with a date on it. However, the POA should be sent to India to be presented for adjudication within a period of three months.
7. Encumbrance Certificate:
A NRI should get an Encumbrance Certificate for the property denoting its mortgaged/non mortgaged position. The property owner would have pledged the property to a bank to seek loan in the past. Acquiring an Encumbrance Certificate will show all the past property transactions registered for a specified period. Similarly, a Non-Encumbrance Certificate also plays the same role and can be acquired to check if the property to be invested in is mortgaged or not. A NRI can obtain an Encumbrance Certificate from the sub-registrar’s office by submitting the application form, property details, proof of residence and a minimal fee. It is advisable that one should ask for an Encumbrance Certificate for the past 30 years.
8. Release Certificate:
A NRI should seek a Release Certificate if the property he/she is investing in was pledged by the seller in the past. Although the property loan would have been repaid by the owner, seeking a Release Certificate will confirm all the loan payments made along with the outstanding dues on the property. The Release Certificate document will be issued by the same bank that provided the loan to the home owner.
Acquiring a Khata is helpful during a new property registration, property sale and at the time of transferring the title of the inherited property by a NRI. Khata is nothing but a record stating the entry of the property owner’s details with the Corporation/Municipality. It majorly consists of two things; Khata Extract and Khata Certificate. It consists of details such as the name of the property owner, the type of property and the paid property taxes.
10. Mother Deed:
If a NRI is investing in a used property, he/she should ask for a Mother Deed. A Mother Deed is an important property document that traces the origin of the land and property. It generally determines the ownership of a property and all its previous transactions. If the Mother Deed/ parent document is not available, one can obtain certified copies from the registering authorities. The Mother Deed consists of complete details of the property.
Obtaining a Patta from the tehsildar’s office testifies the ownership of a land with buildings, apartments or houses on it. A Patta is a legal document showing that the property is being occupied and that the owner has a lawful possession over it. The Patta also acts as a useful evidence if there is a problem with the property Title.
12. Other Documents:
Besides all these important property documents, a NRI should also ask the builder/seller for an approved layout plan and a clear title of the property. An approved layout plan is useful if he/she is investing in a private layout. All the private layouts will be thoroughly checked and licensed by the municipality of the concerned state. A clear title states the authenticity of the property and shows that it is free from a lawsuit.