7 Important Questions to Ask Your Home Sales Representative

7 Important Questions to Ask Your Home Sales Representative

home salesBuying a home can be a tedious affair. At every level you are faced with several questions that need to be asked. Often, with first time home buyers, the right questions to be asked can remain elusive.

The answers to all these questions will help you make an informed decision. It will also prevent any complicated legal and financial hassles in the long run.

If you are planning to invest in a home, here are some of the questions you must ask your sales representative:

  1. Ask which banks have lent their approval: It is important that you check with the sales person on which banks have come on board in terms of approvals. This will make approaching financial institutions for a loan easier for you in terms of paperwork. It also stands testimony to the quality of the project as banks will have done their due diligence.
  2. Ask for legal title clarity: Ask for the license of the project which will tell you whether the land has been rightly converted for a specific kind of use. It is also important to know whether the land acquisition is complete before you actually invest in a property that is under construction. Often builders acquire 80% of the land and end up with legal issues when trying to acquire the last 20%.
  3. Ask for a detailed breakup of the price of the property: The price breakup should include the cost of utilities such as water and electricity as well as lift services and parking spaces, besides, of course the registration costs. All taxes applicable must be included. Some legal charges may also be necessary. With this in hand you can be sure that the builder does not spring any surprises in terms of costs at a later stage.
  4. Ask for the actual size of the house: You must have a clear understanding of what constitute the built-up area, the carpet area and the super built up area. Carpet area is the actual habitable portion of the space without the thickness of the walls included. Built-up area takes into consideration the walls and the balcony as well. The super built-up area includes all of this as well as the area of the common spaces.
  5. Ask about the construction agreement terms: Ideally stick to a format where you have a strictly construction linked payment plan. This ensures that you pay a bulk of the money closer to possession or after it. This places the onus on the builder to complete the project on time.
  6. Ask about the tentative date of completion of the project: This will help you ascertain when the project will be ready for you to move in. It will also help you plan your finances. An important aspect to check is what kind of penalties may be in place should the builder not be able to complete the project in time.
  7. Ask about the remedial measures if the plan of the project changes: There are times when a builder may change a plan to suit a particular need at the point during construction. This may increase your apartment size or even decrease it. Amenities you may have been assured of may change in terms of positioning and quantity. You have to ask on the remedial measures and how the builder will handle the change in financial obligations in such cases.

You may also want to ask your sales person questions related to:

  • Extra charges that may be levied for preferential location, development charges and the like
  • What are the penalties involved should you not be able to pay on time
  • Escalation clauses if any and the means the builder will use to assure you that the rise in cost was a legitimate one.

Of course during the course of your interaction you will also find several additional questions that may spring to mind. Do remember that no question is trivial and that you should have all your doubts cleared in one go.

Take-aways

  • It is important to have all your questions listed down to ask the sales person
  • Your questions should cover land, size of home, finances, clauses among other subjects
  • No question is trivial, clear all your doubts during your interaction session
Non-Legal Options When Cancelling Your Booking

Non-Legal Options When Cancelling Your Booking

Cancel BookingI was recently having a chat with a friend who’s forte is real estate law. One of the most common cases she confronts is with people who are looking to cancel their apartment bookings and seeking refunds.

What makes things difficult in most cases is that there are no fixed guidelines on refunds or cancellation. Therefore, a consumer is bound to the clauses signed off in a sale agreement. It is only when the time to seek a refund comes that one tends to realize that the clauses are often more in the favour of the developer than the buyer.

As a prospective buyer, you may be sure of seeing the purchase of an apartment through. However, there may suddenly arise a situation where you may want to cancel the booking and seek a refund.

Here are certain things to bear in mind:

  • Ensure that your sale agreement has a clause on cancellation included.
  • If there is no clause in your agreement which mentions cancellation, you can still apply for one on various grounds such as delayed start on construction etc.
  • Never pay a booking amount by cash and always ask for a receipt for the complete amount paid.
  • Always ensure that your sale agreement clearly outlines what the charges are for cancellation and securing a refund.
  • If there is no agreement as such between the developer and buyer, make sure that you obtain a receipt or an allotment letter stating the booking amount with a clear mention of cancellation charges and procedures. This can be provided in the court while asking for a refund.

Here’s What a Cancellation Clause Reads Like –

The Bangalore District Consumer Disputes Redressal Forum recently ruled that if there is a delay in construction of the project or you as the buyer see no progress, then you are entitled to a full refund. However, even here, the cause for delay may be justified by the builder and you may still see a delay in refund. All cases that go to a consumer court will have different outcomes.

In general, cancellation of booking and refund charges are deducted on basis of what is signed off on in a sale agreement. This may be Earnest Money or 10% of the total value of the project, when a refund is given. To forfeit this is at the discretion of the builder, however, whatever may be the deduction you are entitled to a clear break-up of the charges.

Here Are Some Options That You Can Look Into to Avoid Going to Court

No builder would want to be taken to court over failure to provide a refund. One of the most common reasons for delay in refund is because cash from the booking of one project is diverted to another that is closer to completion. Considering there are no fixed guidelines on how to get your refund, there are a few options that you may consider or place before your builder:

  • Move your booking to another apartment by the builder, which suits your specifications and is closer to completion. This usually does not involve any deductions.
  • If a full refund is not an option the builder is providing you, then you may consider bringing in another buyer, having the sale agreement transferred into his name and securing your booking amount from this new buyer.
  • Use the power of numbers. Get more people, who may be in a similar situation dealing with delayed construction with the same project and force the builder to either complete the project or offer discounts.

In the end, you have to know that applying for a cancellation and securing a refund is based entirely on your dealing with your builder. Many cases work out in a mutually beneficial manner and quite a few take the legal route. Have your bases covered at the time of signing the sale agreement to ensure you have a stronger case.

Take-aways

  • There are no guidelines governing cancellation and refund of an apartment booking
  • Having the cancellation clause clearly spelt out will help to a large extent
  • The issue may be resolved in multiple ways without seeking legal assistance
  • Recourse may be sought in a consumer redressal forum and the outcome is on a per case basis

This is the first segment of a two blog series. In the next article we will talk of how you can cancel your booking and secure a refund. Stay tuned!

Information in hand or no man’s land!

Information in hand or no man’s land!

encroached propertyA friend of mine is in the process of building a home on a BDA allotted site that he acquired a while back. However, he was a bit hesitant to get the work started and was constantly in talks with his lawyer to check on the antecedents of the property. He wanted to make sure that the property title was clear despite, having a clear transaction record for the same. The fear that his property may be encroaching in some way kept him from beginning the construction.

His worry came from the recent HRBR Layout case where close to 150 residents of the 1st Block were served eviction notices. It was said that their homes encroached on a tank bed. This came to light almost three decades after the layout was allotted and homes built. Of course, there is a stay order on the eviction now, but it has kept several families on tenterhooks.

I got in touch with a good friend of mine – Suhasini Rao, a lawyer focusing on public law and policy. She broke down the concept of encroachment and made it easier to understand. She answered basic questions that may help allay fears.

Meaning of land encroachment:

Land encroachment is a situation where property is used (either through building upon it or by taking advantage of the land through agriculture or any other beneficial medium) without legal permission or consent of the owner of such property.

Suhasini makes things easier to understand with the following examples:

Imagine three plots of land where the corner plot has an old bungalow on it. The other two plots are empty. Now, an apartment building is being built on the site of an old bungalow. The developer may have purchased the bungalow and its plot, demolish the old structure and will now proceed to build the new apartment building. During the construction, an additional 10 foot wide strip of land of the adjoining plot is incorporated into the parking area of the new building. This use of the additional land from the adjoining plot without permission from the owner of the plot would amount to encroachment.

Another example of encroachment is the many slums and makeshift colonies that dot our cities. Often, these slum-dwellings are made on public (also known as Government-owned) lands in parks, on pavements, derelict government buildings, open spaces and common grounds, abandoned warehouses, along waterfronts, etc.

Rules in regard to encroachment:

  • Encroachment of land, especially public land, is regulated through many different legislations. In Karnataka, the Karnataka Public Land Corporation Limited is the Government-owned Company entrusted with the maintenance of public immovable property. Effectively, this Company acquires and utilizes land for the Govt. of Karnataka and various other government-bodies and therefore, is closely associated in addressing issues of encroachment.
  • It is good to conduct a thorough background check of the property before dealing with it in any manner. This background check should include a review of the title of the property (also known as a ‘title search’), a review of the land revenue records of the property, a review of the property tax records of the property and also, a status check on the encroachment of the property, if any. Remember to check whether the property is subject to any litigation.
  • Encroachment of public spaces (such as footpaths, public gardens, etc.) is usually dealt with by clearing the area and removing all encroachments. Sometimes, if the matter is of a serious nature with a heavy impact on human life, a different course of action can be taken by the authorities by legalizing such encroachment.
  • Encroachment of private property is usually dealt with by owners of properties that have been encroached upon through various means such as court-ordered removal of encroachment, or the payment of compensation for damages to property. Such instances are often cases of trespass or unauthorized occupation of property.

How to check for possible encroachment before buying a property:

While buying, renting or otherwise dealing with any immovable property such as land, buildings, apartments, etc., it is absolutely vital to check the legal status of that property. To know whether the property is a part of an encroached public land or not, one can approach the KPLCL office to see the status of the property.

As a consumer, you have the following rights:

  1. Always be well-informed about the property you are dealing with. This involves carrying out an extensive check of the property’s records and titles.
  2. Approach relevant authorities – local land revenue office, BBMP, KPLCL, etc. to understand the status of the property. You can ask for copies of documents relating to the property that help clarify the status of the property.
  3. In case of encroachment, approach the Tahsildar of the area within which the property is located to seek information about the status of the property and actions to be taken against encroachment, if any. Information of actions to be taken against encroachment can also be obtained from the BBMP office.

While encroachment is a reality in some cases, as a consumer you have every right to make use of available facilities and ensure that your property is in the clear. Sound legal counsel is also necessary.

TAKE-AWAYS

  1. Encroachment of public land is governed by several legislations.
  2. You may approach relevant local authorities to check the status of your land.
  3. The Karnataka Public Land Corporation Limited is where you may go to check on the status of your land.
  4. The Tahsildar of your locality is the main authority to approach.
What Matters Most : Location or Property ?

What Matters Most : Location or Property ?

location_locationIt was a pleasant family get together over the weekend at my friend’s home located in the Central Business District (CBD). Satiated after lunch, everyone picked corners to settle down and start the conversation.

My friend and I were nursing our coffees when the talk took towards investing in a new home. I was a bit taken back that my friend was considering a new investment.

Here he was, located in the heart of Bangalore city, looking to find another home in Electronic City, the upcoming IT hub. Why? It’s because…his job requires him to be there through most of the week.

His wife has a job in the same vicinity and they have their child admitted to a school close to their office for convenience of pick up and drop.They had purchased their home in the CBD over a decade ago and today, the relevance of its location has changed for them.

This led us to think on how relevant the location of where you purchase your house is. So, buying a new house is not just about finalising the property anymore.

With newer infrastructural systems coming in place – highways, ring roads, flyovers, bridges as well as the Metro trains, distances are becoming shorter and perhaps the focus on amenities like living in ‘green’ corridors and other such factors are gaining significance.

So, the final decision of purchase depends on your personal needs. If you are unsure of whether the property is more important or the location, here are some points to consider:

  • There is More to a Location than Geography: Yes a good location is about being well placed from office, school and other facilities, but it is also about being placed in a safe neighbourhood.It covers the aspect of you being among like-minded people, good civic facilities and in an area which has appreciation potential. You have to remember that you can always change the way your property looks, but there is scarcely any scope of changing your location once the purchase has been made.
  • The Right Location Can Be a Money-Saver: If you plan to buy a home in an upcoming location to save on money, this may not be a good idea. You may spend on several additional things to bring the property up to your standard of living.Instead, investing in a property in a more central location in relation to your needs may help you save money on other aspects.

These two considerations bring us down to the fact that location, though still important has several more meanings to it today. Here are some aspects associated with it:

  • Geographic location
  • City or Suburb and where you would like to be placed
  • Neighbourhood and safety for your family
  • Proximity to school or office
  • Proximity to medical facilities (especially when you are living with senior citizens)
  • Proximity to friends for socialization opportunities
  • Entertainment options
  • Society’s viewpoint of the location. Location may also be perceived as a status symbol

There are several aspects for you to evaluate when you are examining the location of a potential property. Trying to understand what your needs may be in the short and mid-term will help you make a better decision on the location of your home.

Take-Away

  • Location, though important even today, has several new aspects to evaluate
  • A property may be modified, but a location cannot be
  • Placing your personal needs, current and future in perspective will help make a better decision on location.
Jigani- An Independent Home is now a possibility

Jigani- An Independent Home is now a possibility

Jigani Road ViewA close friend of mine, based in the CBD area for the past several years, recently got the job opportunity of a lifetime. The only hitch, in his opinion, was that his new office would be in the Jigani Industrial area. Seeing as it is situated close to 40kms away from the CBD, he was unsure of whether the move would be a logical one to make. His best recourse, as far as I saw it, was to plan on investing in property at Jigani and moving base there. This led to both of us looking into the potential of the area in depth.

Jigani lies between Bannerghatta National Park and Electronic City, making it an important location in South Bangalore. Close to a decade ago, the approach roads to the Bannerghatta National Park and beyond were close to non-existent. However now, the connectivity has improved immensely. The major plus point of the area is the fact that it is located very close to Electronic City and the Jigani Industrial Area.

Jigani may be approached by the Bannerghatta Main Road or what is also known as the Jigani-Anekal Road. This goes on to become the SH-87 and connects to large segments of South Bangalore. Since it also connects to the NICE corridor, the approach to several surrounding areas such as HSR Layout, Electronic City and Bommasandra is easy. The main bus-stops of Otis and APS Circles as well as Harapanahalli help commuters get to different parts of the city.

Major features of the area:

Presence of several lakes in the area

  • Hennagara Lake
  • Bidre Kere Lake
  • Jigani Lake

Schools in the area

  • Achiever’s Academy
  • Ebenezer International School
  • Treamis World School

Medical facilities in the area

  • Narayana Hrudyalaya
  • Sparsh Hospital
  • Narayana Health City
  • Narayana Netralaya

Shopping Options in the area

  • D-Mart
  • Metro
  • Hosa Road Markets

Potential in the Jigani Area

The good thing about the Jigani area is the fact that it has been neatly segregated into residential and commercial areas. Since it is still in the nascent stage of realty development, there is a significant amount of residential plots that are available. Being largely in demand by a burgeoning IT crowd, there are multistoried apartments and independent villas that are coming up all around.

What may perhaps be considered a drawback is the presence of granite factories in the vicinity and the amount of dust they throw up. Interior roads and sewage lines in the area also need to be developed.

 

Price points

  • Residential plots for purchase: Approximately Rs 950/sqft.
  • Price range of 2-3BHK apartments: Rs 23 to Rs 75 lakh depending on the brand value of the builder.
  • Rentals are not too many right now considering the place is still under development by owners who want to use the place themselves. However, apartments are in the range of Rs 7000 to Rs 13,000 a month and independent homes are around Rs 8000 to Rs 18,000 per month.
  • The scope for purchase of homes will continue to rise in the coming years. With independent homes being an option for purchase, the demand is likely to be high here in Jigani.

Takeaways

  • Jigani is placed close to Electronics City and Jigani Industrial area, making it an ideal residential option.
  • Jigani is still in the nascent stage of realty development and so land and independent homes are available for purchase in plenty.
  • Connectivity to South Bangalore via the NICE road and Bannerghatta main road ensure that the CBD is not too far away.
  • The scope of purchasing property is higher than rental opportunities right now.
To Buy or Not to Buy – The Big Debate

To Buy or Not to Buy – The Big Debate

Owning-Versus-Renting-a-HomeRemember the good old days right after college? Your biggest worries – forgetting your friend’s birthday, picking a place to party or buying cool gadgets.

Over the years, you have climbed the ladder of success, have a loving family and then, the time comes to make certain decisions. The most important being – to rent or buy a house.

Here are some pointers to help you arrive at this crucial decision.

Location Wise

Rented House

A rented apartment offers you the marvelous convenience of picking a location most suitable in terms of distance from work, ease of access to the city’s centre, etc.

While rent varies depending on the location, it is more affordable than investing in an apartment in the same area – at least on a short-term basis. Plus, if you do not like the apartment, you can always scout for a new place and move after the agreement period.

Own Home

In the larger scheme of things, you will retire from work at a certain age and would want to settle in your own place. There’s no predicting how much the real estate market would appreciate by then.

Getting a home loan may become difficult when you are closer to retirement.

Solution

If you do not have the budget to invest in a house that meets your convenience, invest in one as a long term, futuristic investment. Identify a location you and your family want to settle down in, pick an area and buy a house from a reliable builder.

You can rent it out till a later date when you actually want to move there and enjoy retired life. An ideal way of having your cake and eating it too.

Return on Investment

Rented House

With the ever-growing demand for real estate, property prices sometimes rise steeply and remain there for a long period of time. Rent prices are not immune to this price rise; your rent could increase as most rent agreements have a clause for an annual hike of approximately 10 per cent.

However, property prices almost double every year, especially in the metros. So renting may be more realistic.

Own Home

Even with all the steep price hikes, your down payment and home loan is an investment towards a permanent property you will own, whereas rent is an expense towards a temporary abode.

If the prices keep moving upwards, you are better off investing in your prime years than waiting.

Solution

There are online tools that help assess your investment. Conduct a risk analysis based on factors such as return on investment, tax benefits, etc. to understand your risk appetite and financial health.

You can also do something as simple as calculating the price-to-rent ratio – divide the total cost of buying a house by your annual rent. If the ratio is between 1 and 15, you would benefit more from buying a house. If the ratio is above 15, you should probably rent.

Financial Strength & Flexibility

Rented House

The biggest cost you will accrue while renting a house is the deposit. This deposit is just security money and is most likely to come back to you in full, unless there is any damage.

Apart from the rent, there is little monthly expenditure towards maintenance. If you rent a fully furnished apartment, it saves you bucks and leaves you with more disposable income.

However, a rented house also translates to restrictions and limitations; you cannot make any alterations to the house or drastically change the decor per your interests.

Own Home

Buying a house is probably going to be the biggest investment you will ever make. It is going to pinch your savings, but at the end of the day, you will have a place you call your own.

You can decorate it the way you want, make major renovations – the works!

Solution

You can avail a home loan of about 40% of your monthly income, but you need to make arrangements for the down payment, which could be up to 20% of the price. Additionally, you need to set aside funds for home decor, furnishing, monthly household expenses, etc.

Consider these expenditures before you take the big step.

Buying a house is a crucial decision and one of the most important milestones of your life. Make a decision based on where you see yourself in the larger scheme of things and what would make you happy. After all, you only live once.

Takeaways

  • Evaluate each aspect of both rented home as well as owned home; both have their own pros and cons.
  • A rented home gives you flexibility to move.
  • Owning a home gives you stability.
  • Buying a home is a decision to be made keeping in mind the larger scheme of things.