We discuss the importance of legal assistance when buying a home and how it can help homebuyers protect themselves from defects and save money on the transaction.
Buying a property is not just about paying the money and taking ownership of the unit. The process and documentation associated with the transaction are complicate and often beyond a layperson’s understanding. Also, not everyone will be familiar with the various laws surrounding property acquisition. Since you put your life savings into purchasing the property, the process requires you to obtain a legal opinion to protect your interests.
Importance of the title and marketability of the property
The buyer needs to verify that the seller has a good title to the property. The subject of ownership is so complicate. That real estate regulations require a developer to obtain title insurance for the property. They are developing to protect buyers against claims or defects in title to the property. Defects of title can exist in the form of the legal position/conditions of the property on which the property was built or existing easement rights to the property. Which one would not be aware of without a thorough investigation. Suppose the property has been pledg by depositing the original documents. In that case, a buyer may not know if the original documents have been serve on them. As it is not difficult for people to obtain copies of documents made to look like the original ones…
To avoid litigation related to the property you are buying, it is important to ensure that the developer has properly complied with all laws and procedures related to the construction of the property. Many properties have not received occupancy certificates because certain conditions imposed by the local authorities at the time the plan was approved have not been met.
Real estate purchase agreement and other documents
Buying a property involves studying various documents and preparing many documents. Only a person trained in interpreting legal documents can help the buyer identify restrictive clauses in previous buyer contracts. This may relate to land as the property may have been built on owner-occupied land. Where the title passes to the buyer. The land may also have been acquired under a lease agreement where ownership of the land ultimately reverts to the original owner at the end of the lease term.
Most homebuyers do not enlist the help of lawyers to draft the purchase agreement. Instead ask the agent to help them close the deal. In most cases, the brokers have a standard contract in which they only add the data of the property and the buyer and seller. They seldom realize that there may be special circumstances that justify. The contract being draf to specific guidelines, for example, where a legal heir or executor is selling the property.
If you are taking out a home loan, a legal review of the contract can help you understand the terms on which you are taking out the home loan. These may include fees for prepaying or transferring the mortgage loan, fees for changing the mortgage loan from a variable rate to a fixed rate and vice versa, or the circumstances in which the lender may take possession of the property.
Stamp Duty and Income Tax Implications of Buying Real Estate
All real estate transactions require the buyer to pay stamp duty on the property’s market value. Each state has its stamp duty rate, popularly known as the Circular Rate. The rates shown on the stamp duty counter are the principle on which stamp duty is payable on a property. However, certain deductions from the market value are allowed depending on the property’s age, whether a leasehold or condominium, etc. Deductions are also allowe if the building does not have an elevator. A solicitor can better advise you on such matters to ensure that you do not end up paying more stamp duty than is lawfully owe on such transactions.
Under Section 50C of the Income Tax Act, if the stamp tax accountant’s valuation exceeds the transaction value. The seller is presume to have received consideration as determined by the stamp tax accountant. Must pay capital gains tax accordingly unless the difference is not more than five per cent of the order value. Similarly, the buyer must also pay Section 56(2)(x) taxes on the difference above Rs 50,000 or 105 per cent of the transaction value and stamp duty assessment.
Only a person who knows all the laws related to buying real estate can help you save money and keep your interest in the property. Property seekers should hire a law firm and not just a lawyer. The one to two per cent of real estate costs you spend on it will help you make the right decisions when buying real estate.