Who is the ‘promoter’ as per the Real Estate Law?
The Act covers all private and public bodies that develop real estate projects for sale. Therefore, the development authorities and housing boards are also in its fold. It also mentions, “where the person who constructs or converts a building into apartments or develops a plot for sale and the person who sells apartments or plots are different persons, both shall be deemed to be the promoters and shall be jointly liable as such for the functions and responsibilities specified, under this Act or the rules and regulations made thereunder”. Therefore, it stands true in cases where a joint development is in question.
Why should I use a real estate salesperson?
The reason why you might want to consider hiring a professional real estate agent.
- Education & experience of the real estate
You don’t need to know everything about buying and selling real estate if you hire a real estate professional.
- Neighbourhood knowledge
Agents either posses intimate knowledge or they know where to find industry buzz about your neighbourhood.
They can identify comparable sales and hand these facts to you; in addition to pointing you in the direction you can find more information.
- Price Guidance
Contrary to what some people believe agents do not select prices for sellers are buyer.
However an agent helps to guide clients to make right choices.
Agents will advise a negotiation strategy
- Market conditions and information’s
Real estate agents can disclose market conditions, which will govern your selling or buying process.
Many factors determine how you will proceed. Data such as average per sft cost of similar properties,
Medium and average sales prices, average days on market and ratio of best to sold prices, among other criteria will have a huge bearing on what you ultimately decide to do
- Professional Networking
Due to legal liability, many agents will hesitate to recommend a certain individual of company over another, but they do know which vendors have a reputation for efficiency, competency and competitive pricing. Agents can however give you a list of reference with who they worked and provide background information to help you make a wise decisions
- Negotiation skills and confidentiality
Top producing agents negotiate well because, unlike most buyers and sellers, they can remove themselves from the emotional aspects of the transactions and because they are skilled.
Its part of their job discreption.
Agents are not messengers, delivering buyers offers to sellers and wise versa. They are proffestionals who are trained to present their clients case in the best light and agree to hold client information confidental from competing interests
What is the difference between a real estate agent and a real estate broker?
Many people unfamiliar with real estate industry use the terms real estate agent, broker and realtor interchangeably. There are differences among the three, however, in terms of the qualifications and the exact services each professional offers.
A real estate agent is a professional in the industry who has taken and passed all required real estate classes, along with the real estate licensing exam in the state in which he or she intends to work. As the starting point for most of those going into the real estate field, it is the most encompassing of the titles. Agents are also referred to as real estate associates.
What are the rights and duties of the buyer?
Section 19 of the real estate Act says that a homebuyer will be:
- Entitled to obtain the information relating to sanctioned plans, layout plans along with the specifications, approved by the competent authority and such other information.
- Entitled to know stage-wise time schedule of completion of the project, including the provisions for water, sanitation, electricity and other amenities.
- Entitled to claim the possession of apartment, plot or building.
- Association of allottees will be entitled to claim the possession of the common areas.
- Entitled to claim the refund of amount paid along with interest at such rate as may be prescribed and compensation in the manner as provided under the Act.
- Entitled to have the necessary documents and plans, including that of common areas, after handing over the physical possession of the unit.
- Responsible for making necessary payments as specified in the sale agreement at the proper time and place. They will also have to pay their share of the registration charges, municipal taxes, water and electricity charges, maintenance charges, ground rent, and other charges.
- Responsible for mandatorily participating in the formation of an association or society or cooperative society of allottees.
- Liable to pay interest as prescribed. The interest may be reduced if mutually agreed by promoter and allottee.
- Take possession of the unit within two months of receiving the occupancy certificate.
- Responsible for participate in registration of the conveyance deed.
What if the project you invested in is delayed?
All ongoing projects would come under the ambit of the new law. However, developers of delayed projects would be given one more chance to set a reasonable timeline to complete the delivery. If the promoter fails to do it yet again, he will have to pay the penalties as directed under the law.
Note: You can demand penalty from developer if the project has been delayed under the provisions of this Act.
What is the ‘escrow account’ and ‘separate account’?
Section 4(2)(l)(D) provides that the promoter shall maintain a ‘separate account’ for every project undertaken by him wherein seventy percent of the money received from the allottees shall be deposited for the purposes of land purchase and construction. The account has to be self-maintained and is not an escrow account requiring the approval of the Authority for withdrawal. Section 4(2)(l)(D) clearly provides that the funds can only be used for construction and land cost.
Our endeavor is to simplify the most important decision of your life – buying a home. We combine the power of the internet to provide comprehensive information along with the services of a property advisor who offers genuine and unbiased advice and helps conclude the transaction successfully.
I Step: Check out our website
Visit Pride Homes to see and compare the best suited property from a vast database of properties from best builders. We provide comprehensive information on location, builder, unique selling points of the project, layout plan, floor plans, pricing, specifications and amenities on all properties.
II Step: Select the property that meets your criteria
Property selection is based on the following:
- Evaluating various choices available on the basis of your requirement
- Meeting our advisors who will help you shortlist the properties that suit your needs.. We will advise you on the location, price and future prospects of the property, home loans, etc. All properties are verified and available in 100% cheque
- We arrange a site visit to all the shortlisted properties
III Step: Closing the deal
Once you have decided on the property of your choice, we help you:
- Close the deal by handling all the paperwork
- Guiding you through the application forms, allotment and arranging home loan from a reputed bank, if required
- Ensure a convenient and hassle free transaction
- Our services to you continue till the registry of the flat. This includes payment reminders, collection of cheques and handling all documentation with the builder and the bank.
Details for Home loans
Q1. What are the types of Home loans available?
Ans.: The following different kinds of home loans are available:
- Home Purchase Loan
A common type of loan taken for purchasing a home. - Home Improvement Loan
A loan given for implementing repair works and renovations at home. - Home Construction Loan
A loan available for the construction of a new home. - Home Extension Loan
Home extension loans are given for expanding or extending an existing home. For example, addition of an extra room, etc. - Land Purchase Loan
This type of loan is sanctioned for purchase of a land, for both home construction or investment purposes. - Balance Transfer Loan
This loans help you pay off an existing home loan with a higher interest rate, and avail of a loan with a lower rate of interest. - Refinance Loan
This loan helps you pay off the debt you may have incurred from private sources such as relatives and friends in order to purchase your present home. - Loans for NRIs
This loan is tailored to suit the requirements of NRIs who wish to build or buy a home in India.
Q2. What are the eligibility conditions for a home loan?
Ans.: To qualify for a home loan, most of the lending institutions in India require you to be:
- An Indian resident or NRI
- Above 24 years of age at the commencement of the loan
- Below 60 or retirement age when the loan matures
- Either self employed or salaried
Q3. What are the interest rates offered for home loans? What are: Daily Reducing, Monthly Reducing and Yearly Reducing?
Ans.: Interest rates are different from institution to institution and generally range from about 8.75% to around 12 %. The interest on home loans in India is usually calculated either on monthly reducing or yearly reducing balance. In some cases, daily reducing basis is also adopted.
- Annual reducing:
In this system, the principal, for which you pay interest, reduces at the end of the year. Thus you continue to pay interest on a certain portion of the principal which you have actually paid back to the lender. This means the EMI for the monthly reducing system is effectively less than the annual reducing system. - Monthly reducing:
In this system, the principal, for which you pay interest, reduces every month as you pay your EMI. - Daily Reducing:
In this system, the principal, for which you pay interest, reduces from the day you pay your EMI. EMI in the daily reducing system is less than the monthly reducing system.
Q4. What is a floating rate?
Ans.: This is the rate of interest that fluctuates according to the market lending rate. This means you stand the risk of paying more than you budgeted for in case the lending rate goes up
do not benefit, even if rates of interest drop in the market.
Q5. What are the other costs that usually accompany a home loan?
Ans.: Home loans are usually accompanied by the following extra costs:
- Processing Charge:
A fee payable to the lender on applying for a loan. It is either a fixed amount not linked to the loan or may also be a percentage of the loan amount. The loan amount required cannot be less than the processing fee. - Pre-payment Penalties:
When a loan is paid back before the end of the agreed duration, a penalty is charged by some banks/companies, which is usually 2% of the amount being paid. - Miscellaneous Costs:
Some lenders may levy documentation or consultant charges.
Q6. How do HFCs decide on the loan amount?
Ans.: Usually, most companies give up to a maximum of 85% of the cost of the house. The 15%, sometimes called ‘seed money’, will have to be provided by the loan applicant. The amount, for which the applicant is eligible, is determined by the age, income, no. of dependents, monthly outgoing and repayment capacity. This varies from case to case.
Q7. Are securities required for home loans?
Ans.: In most cases, the property to be purchased itself becomes the security and is mortgaged to the lending institution till the entire loan is repaid. Some institutions may ask for additional security such as life insurance policies, FD receipts and share or savings certificates.
Q8. What is the time required for loan disbursement?
Ans.: On an average, loans are disbursed within 3-15 days after satisfactory and complete documentation and completion of all relevant procedures, including proof that 15% of the cost has been paid upfront to the seller of the property.
Q9. What are the tax benefits of home loans?
Ans.: Both principal as well as interest of home loans attract tax benefits. With effect from 1st April 2005 (i.e. assessment year 2005-07) under section 80C of the Income Tax Act 1965:
Principal amount of repayment of loan along with other savings such as PF, PPF, Life Insurance premium etc up to a maximum of Rs 1, 00,000/- will be eligible for deduction from gross income.
Interest paid up to a maximum of Rs 1, 50,000/- will be eligible for deduction from gross income on loan after completion of construction will be deductible from income from property.
Home Loan Documents
Generally, the documents required to process a loan application are almost similar across all banks, however they may differ depending upon specific requirements and other factors.
The following documents are required by financial institutions to process a loan application:
- Proof of age
- Proof of address
- Proof of income of the applicant & co-applicant
- Bank statements of the last 6 months
- Passport size photographs of the applicant & co-applicant
Salaried individuals
- Salary slip / Form 16 A
- A photocopy of the first and last pages of Ration card or copy of PAN/Telephone/Electricity bills
- A photocopy of Investments (FD Certificates, Shares, any fixed assets, etc., or any other documents supporting the financial background of the borrower)
- A photocopy of LIC policies with the latest premium payment receipts (if any)
- Photographs (as applicable)
- A photocopy of bank statements of the last six months
Self-Employed/Businessmen
- A brief introduction of Business/Profession.
- Balance Sheet, Profit and Loss account and statement of income with Income Tax returns for the last 3 years certified by a CA.
- A photocopy of Advance Tax payments (if applicable).
- A photocopy of Registration Certificate of establishment under shops and Establishments Act/Factories Act.
- A photocopy of Registration Certificate for deduction of Profession Tax (if applicable).
- Bank statements of Current and Saving accounts for the last 6 months.
- A photocopy of Certificate of Practice(if applicable).
- A photocopy of any bank loan (if applicable).
- A photocopy of the first and last pages of the Ration card or a copy of PAN/Telephone/Electricity Bills.
- A photocopy of LIC policy (if applicable).
- A photocopy of LIC policy (if applicable).
If a flat is purchased from the builder
- Original copy of your agreement with the builder.
- 7/12 extract or property register card of the land under construction.
- Index II extract of your agreement with the builder.
- Copy of N.A. permission for the land from the collector.
- Search and title report (with the details of documents) for the last 30 years.
- Development agreement between the owner of land and the builder.
- Copy of order under the Urban Land Ceiling Act.
- Copy of building plans sanctioned by the competent authority.
- Commencement certificate granted by Corporation / Nagar Palika.
- Building completion certificate(if available).
- The latest receipts of taxes paid.
- Partnership deed or memorandum of association of the builders firm.
If constructing on own land
- Original sale deed of land and extract of Index II.
- 12 extract or property register card in your name.
- Copy of N.A. permission for land from the collector.
- Search and title report (with the details of documents) for the last 30 years.
- Copy of order under Urban Land Ceiling Act.
- Copy of the building plans sanctioned by the competent authority.
- Building permission granted by Corporation / Nagar Palika.
- The latest receipts of taxes paid.
- Estimate of cost of construction certified by the architect.
All You Need To Know About Karnataka RERA
The Karnataka State Assembly approved its own set of rules for the Real Estate (Regulation & Development) Act, 2016, on July 5 and now, the final Karnataka RERA rules are notified. Here is the Karnataka RERA website RERA Karnataka
Here are certain things that you need to know about the Karnataka RERA, which are significantly different from the central guidelines:
- The Karnataka RERA will not have projects for which sale deeds have been executed for 60 per cent of units under its purview.
- Projects, where common areas have been handed over to the registered association, which is represented by majority allottees, are exempted from the act.
- Projects which have received completion/ occupation certificate or projects where an application for completion/occupancy certificate has been filed or even projects with partial occupancy certificates have been excluded from the act.
- The imprisonment clause on violations have been diluted with the punishment being limited to a payment of 10 per cent of the estimated cost of the real estate project and any person in custody in connection with that offence shall be set free.
- The state law mandates developers to follow the guidance value decided by authorities as the base price to estimate project costs.
- For broker registration, the fee in case of an individual applicant is Rs 25,000 and Rs 2 lakh for an applicant (being) other than an individual. In comparison, property brokers in states such as Gujarat and Uttar Pradesh will have to pay only Rs 10,000 for registration.
The rules regarding depositing 70 per cent of the amount realised from the buyers in a separate account and disclosure of the size of the apartment based on carpet area remains intact.
