Avoid a Campa Cola building-like mess: 4 ways to check if your dream home is legal
Campa Cola building row is not the first time that an illegal construction has been asked to be demolished. So how do you ensure the property you are buying is legal? Here are four red flags to watch out for, writes Vivina Vishwanathan.business Updated: Jun 21, 2014 12:15 IST
After the Supreme Court’s judgment on February 27, 2013, the illegal flats in the Campa Cola Compound in Worli, Mumbai, are scheduled to be demolished beginning June 20. The compound has seven high-rise buildings, and though the builders had permission to build only five floors, some of the buildings have 17 and 20 floors.
“We are not vacating the place and will try our best to save our house,” said Karan Sethia, 24, who lives on the sixth floor of one of the buildings. This is not the first time that an illegal construction has been asked to be demolished. In April, the Allahabad high court had ordered the demolition of two 40-storeyed buildings in Noida.
So how do you ensure the property you are buying is legal? Here are four red flags to watch out for.
* Get your papers right
When you buy a property, the proof that it is legal can be seen in the agreement papers. Documentation is the first check point. “When you buy a property, you will have to sign a set of documents. Builders are supposed to show you all the agreement documents. In fact, you are supposed to sign an agreement that you have inspected the property that you are buying and are satisfied with it,” said Jehangir Gai, a Mumbai-based consumer activist.
You can also get the document from a municipal corporation or sub-registrar. “Vigilance is the key. Documents that are registered are available for public inspection. If the documents have not been registered, the sale would not have been effective,” said Aakanksha Joshi, associate partner, Economic Laws Practice, a law firm.
But can the authorities refuse to give the documents? “If the construction is legal, no one will deny you the documents that are actually meant for public inspection,” said Gai.
At the time of possession, the builder has to send your details to the authority concerned, who will then issue your occupancy certificate (OC) or no-objection certificate. These are important documents to have because an OC proves that the building you plan to occupy has been built as per the approved plan. Unless you have an OC, basic amenities such as water and sanitary connection are also not provided.
* Small tweak, big problem
It is also important to ensure that the house you are buying is exactly as per the approved layout; even small changes such as adding a roof to your garden space are not acceptable.
All residential projects needs approval for every sq. ft that is used for occupancy. Floor area ratio (FAR) or floor space index denotes how much area you are allowed to construct on a given plot size. The constructed area would include the basic structure, walls, and staircase or lobby space, if any. FAR is calculated using a simple formula: total covered area of all floors divided by the plot area.Any construction beyond the permissible area is illegal. If you don’t fully understand all the details consult a lawyer and get the documents checked professionally.
* Too cheap to be legal
If you are getting a project below the market value, it’s a definite red flag. “You should ask questions such as why is a builder being so kind to you? Why is the quoted price below the market price? The problem is that people get excited with discounts. They assume that real estate prices will appreciate, and believe the sales talk could be the last opportunity for them to buy a project at such a price. You should remember that you are not buying a `10 or a `100 product, but putting in lakhs and crores. Due diligence is a must,” said Himanshu Shekhar, a lawyer for the Campa Cola Residents’ Association.
If the documents are not in place and there is less or no demand for such projects, builders tend to sell below the market value. While there is advantage of price, there is a risk of being thrown out of your house. If a financial institution refuses you a loan, it is also a red flag indicating that the house you are planning to buy is illegal. “Taking finance from a reputed bank or non-banking finance company helps you validate if the project that you plan to take a loan on is valid. Banks generally reject loan applications for projects that don’t have a clear title, or don’t have an OC or a no-objection certificate,” said Anuj Puri, chairman and country head, Jones Lang LaSalle India, a global property consultancy.
* Our take
A house is likely to be the most expensive purchase you ever make. So you should be responsible while buying a property and diligently getting all the required information on the property and the builder. An illegal construction can be very troublesome. “Risk of demolition is a major problem,” said Joshi. Apart from the threat of a legal battle, you also compromise on safety.
(Zahra Khan contributed to this story)