PURCHASING FLAT IN INDIA

NRIs should be aware that courts are slow in India and cases that involve property can take decades to settle. Hence it is better to be careful to check and verify documents before purchasing property in India.

Horror stories of real estate transactions are not uncommon in India. Most registration offices for property in India are not computerized yet. Records are kept in manual registers and it is all the more necessary to get all required documents and keep them with care.

NRI residing abroad should remember some of the following points when purchasing a flat or vacant land in India.

1. Builder’s reputation should be checked out. What other projects has this builder built? Don’t just look at glossy brochures and be satisfied.

2. See the documentation for the lands on which to flats are to be built. There should be a proper certificate issued by a lawyer with a standing of at least three years.

Documents usually name the parties from whom the land has been acquired etc. ( It is always better to get your own lawyer to advise you on such matters.)

3. Check that the plans provided by the builder have been approved by the local government authorities.

4. What happens if project is delayed? It is not uncommon for builders to raise prices later if market prices go up. So ask questions before giving deposits.

5. Get promises in writing as verbal promises are not worthless when there is a dispute.

6. Take steps to make the builder aware that you will be provided with a completion certificate that has been granted by the local authorities BEFORE possession.

7. Get clarification in writing on how builder will hand over after construction is completed. Such as cooperative society etc. This may not seem important to many purchasers when buying but can prove to be a costly affair later.

Note: I have purchased a flat in India and now our building complex is having a dispute over who runs the building. The builder is not willing to give up control and has formed a management authority to run the building. At the same time some residents have formed a society and want control.

This type of situation is common in India as builders do not want to give up control. The reasoning behind this is usually greed.

When flats are resold by owners they need a no objection certificate (NOC) from the society. If no society then the builder provides this and he will usually charge a hefty fee for giving an NOC.

This can be a percentage of the sale price and can run into lakhs of rupees.

I am told that in case a builder does not hand over control to a elected society in a building. Then he still owns the land and any relaxation in building codes entitles him to construct more flats etc in the building and keep the sale proceeds. He may for instance if the law permits add another floor to the building.

8. In India builders will usually refuse to take full money by cheque. There is usually a black market amount involved which means cash payment.

Stay away from such transactions. NRIs should only make cheque payments and some reputable builders understand and accept this. Making cheque payments will also help later in repatriating your money incase you sell the flat at a later date.

Property Purchases in India by NRIs

NRI INVESTMENTS IN INDIAN REAL ESTATE

New! Agricultural land - Transfer property sale money abroad >>>>>    

NRIs with foreign passports can now acquire housing properties with their earnings abroad. NRIs today can acquire, hold, sell or gift properties. Renting of their properties is also permitted.

Gifting of properties is freely permitted and NRIs may sell up to two residential properties and remit the proceeds of the sale abroad (subject to certain conditions) provided the purchase of these properties were made from foreign exchange.

Some highlights for property related matters of interest to NRIs:

1. NRIs can acquire any immovable property in India except agricultural land, plantations or farm houses.

2. Payment must be made from funds remitted from abroad by proper banking channels or from legally held NRI accounts in India to which money has been deposit from foreign earnings.

3. NRIs may sell any immovable property they own in India.

4. NRIs who already own agricultural land, plantation or farm house may dispose these by way of gift or sale to a resident person who is a citizen of India.

5. Rental income can be remitted outside India after any applicable taxes have been paid.

REPATRIATION OF SALE PROCEEDS OF PROPERTY SOLD IN INDIA

Repatriation of the sale proceeds is allowed if:

√ The property is sold at least three years after acquisition.

√ The property was acquired in accordance with the provisions of foreign exchange laws in force when the property was purchased.

√ The amount that can be repatriated will be up to the amount submitted in foreign exchange through normal banking channels
when the property was purchased.

√ In case the properties that are sold are residential properties.
Then repatriation is allowed only twice.

√ In case a property was received by way of inheritance then
permission of the reserve bank may be required.

√ In case a property was paid for in Rupees then ownership must
have been for at least ten years.

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