Buying property in India is a significant investment, and ensuring you have the right ownership documents is crucial. While some buyers opt for a full payment agreement in an attempt to save money or simplify the process, this route can lead to serious complications. A full payment agreement does not legally grant ownership, leaving the buyer vulnerable to losing the property they have paid for.
Let’s explore why registering your property is essential, the risks involved with a full payment agreement, and how to safeguard your investment.
Full Payment Agreement: A Weak Method of Ownership Transfer
A full payment agreement, while common in real estate, is not recognized as an official document of ownership. Punjab and Haryana High Court advocate Sudhir Saharan highlights that without formal registration, buyers can face legal hurdles. In such cases, the buyer cannot get the property mutated in their name, meaning there’s no official record that they own it.
The lack of proper documentation can result in future disputes. For instance, the seller (or their heirs) may later claim the property, and the buyer has little legal recourse since the full payment agreement doesn’t establish ownership rights. These cases are frequently reported, making it risky to rely solely on a full payment agreement.
Legal Issues with Full Payment Agreements
One major issue with full payment agreements is that they don’t ensure the buyer’s ownership in the eyes of the law. Without registration, proving ownership in court becomes a challenge. Since there’s no legal title transfer, the buyer stands at a disadvantage if a dispute arises. Without proper legal ownership, the buyer risks losing the property despite having paid for it.
In some cases, a seller may backtrack after a full payment agreement and refuse to register the property. While the buyer can take the matter to court, the process can be time-consuming and costly. According to Advocate Saharan, for buyers to enforce registration in such cases, the full payment agreement must be on stamped paper, signed by both parties, with payments above ₹2 lakh being made through check or bank transfer.
Registration is Crucial for Ownership
Unlike a full payment agreement, a registered sale deed is a legal document that proves the transfer of property ownership. Without registration, even after paying the full amount, you remain at risk. Once a property is registered, your ownership is legally recognized, and you can apply for property mutation (change of ownership in revenue records), ensuring complete protection of your investment.
Therefore, Saharan advises buyers to invest only in properties that can be registered. Although full payment agreements are tempting due to their lower cost and faster process, the potential risks far outweigh the benefits.
Ready-to-Move Properties: What to Check Before You Buy
For those considering ready-to-move properties, it’s important to ensure that the property is legally clear. Real estate expert Pradeep Mishra shares that while ready-to-move properties provide instant possession and rental opportunities, buyers need to be cautious and do thorough checks before completing the purchase.
Here are five key things to check:
- Title Verification: Always verify the ownership of the property. A title search at the local revenue office will help confirm that the seller is the legitimate owner and that there are no legal disputes tied to the property.
- Property Age and Quality: Knowing the age and condition of the property is essential. Older properties, while cheaper, may require significant maintenance. You can seek help from a structural engineer to ensure the building’s longevity and quality.
- Surrounding Income Groups: Understanding the area and the standard of living is crucial. A mismatch in income groups may affect your future satisfaction with the location. Be sure to visit the property’s surroundings and assess whether it fits your lifestyle and expectations.
- Shopping and Amenities: Check for basic amenities such as shops for daily essentials nearby. If the property lacks convenience stores within walking distance, you may face unnecessary hassle in day-to-day living.
- Resident Welfare Association (RWA): An active RWA ensures that the maintenance and cleanliness of the property are taken care of. Meet with the association members to discuss the facilities and services in the area. Their feedback will give you a clearer picture of what to expect once you move in.
