Whether you are buying your dream home or an investment property, it is important to have all the necessary documents in order.
Below is a list of the most common documents required for Non-Resident Indians (NRI) buying property in India. Having these ready ahead of time will help ensure a smooth transaction.
Documents Checklist for NRI Buying Property
Here are the common documents to be produced by the buyer, and seller during a property transaction:
Documents To Be Produced by The Buyer
The buyer should have these documents ready before the property registration:
1. Passport and OCI Card (if applicable)
To buy property in India, an NRI will need to produce their passport. A person with an Indian passport or OCI Card does not need to obtain prior approval from RBI to purchase any residential or commercial property in India.
Overseas Citizens of India (OCI) would need to present their OCI Cards along with their foreign passports to purchase property in India.
2. Proof of Address
NRIs need to submit a document as proof of their address in India. The acceptable list of documents includes Aadhaar cards, Ration cards, Electricity bills, Telephone bills, or any other utility bills.
In case the NRI buyer doesn’t have a residence in India, he/she has to provide proof of overseas residential address. These can be through documents like a Driving license, Identity card, Work permit, Utility bills etc.
3. PAN Card
In India, Permanent Account Number (PAN) is used to track and regulate taxable income. A PAN card is essential for an NRI investor, especially if he or she intends to rent out the property later as the rental income is taxable. Furthermore, any future capital gain arising from the sale of the property will be subject to taxation.
However, in the absence of a PAN, the NRI can use Form 60, which is an exemption from providing the PAN.
4 Power of Attorney (if applicable)
If a purchase transaction takes a long time or the NRI is not in India, he can appoint a legal representative in India, and transfer the rights to execute the transaction through a Power of Attorney (POA). A Power of Attorney authorizes another person residing in India to complete the transaction on your behalf.
A general Power of Attorney is not enough for property transactions. To execute a property transaction, you will need a special POA, which is registered, and notarized. If the POA is prepared from abroad, it has to be through the Indian Embassy or Consulate.
5. Loan Sanction Letter (if applicable)
NRIs are also eligible for obtaining home loans to finance their property purchase like Resident Indians. The loan sanction letter is proof that the applicant is eligible to avail of a certain amount of loan from its lender (bank or financial institution) subject to the fulfilment of specific terms and conditions as mentioned by the lender.
Based on the supplemental documents submitted along with the application, the letter is issued only after the bank evaluates the applicant’s credit history and other credentials. The seller can demand the loan sanction letter to ensure that the buyer will be able to pay the property price within the stipulated period.
6. Passport-size photographs
A few passport-size photographs of the buyer will be required during the registration process.
Documents To Be Produced by The Seller
The seller should provide these documents to the buyer during the transaction:
1. Title Deed with Chain of Titles
If the property is pre-owned, the seller has to produce the present title deed under his/her name. The title deed in the name of the seller establishes his ownership of the property.
In the case of multiple previous owners, the seller should also be able to provide the older title deeds and chain of title (preferably for the last 15 years), the history of transfer of title from the previous owners to the present seller and a list of all the previous owners.
2. Land Records
In the case of apartments or buildings, a land title deed may be required in addition to the property title deed.
A land title deed, which states which land belongs to whom, is the document that defines land ownership. Having a clear land title protects the rights of the title-holder against other claims made by anyone else to the property. It is also a good idea to get a surveyor sketch in case of a plot.
There may also be additional documents needed in some cases. For instance, if the property was a government-owned land in the past, there would be restrictions on transferring them to another person. You have to check the type and history of the land through your local governing body.
Please note that some states may have specific paperwork that you need to be aware of. If in doubt, always take legal advice from a qualified professional.
3. Mutation Extracts
The mutation is an entry in the revenue records of a local municipal corporation that shows a transfer or change of ownership. It also includes information concerning the type of ownership, number of homeowners (and their share), financing on the property, tenants (if any), cultivable and non-cultivable areas, and irrigation sources (if any).
4. Updated Encumbrance Certificate
An encumbrance certificate is required to prove that the property does not have any pending legal dues or mortgages.
If the previous owner has taken any debt on the property or any loan that is pending then you can easily check it on the Encumbrance Certificate. This is one of the key documents banks ask for before they grant a loan to the buyer. It is advisable to get an Encumbrance Certificate for the past 15 years.
This certificate also has all the details related to the transactions that happened over a period of time. In India, Form 15 is issued if a property has any encumbrance registered; otherwise, Form 16 will be given to the owner, stating there are no encumbrances.
A non-Encumbrance certificate is a certificate that shows there was no previous mortgage, home loan or debt on the property.
5. Latest Property Tax Receipts
The buyer should ensure that the previous owner has paid all property tax and building tax and there are no pending dues. Property tax receipts also help in proving the legal status of the property.
6. Proof of Seller’s Address
An Indian resident seller has to provide his/her address proof in India. In the case of an NRI seller, one has to provide proof of his/her address in India as well as abroad. This can be in the form of an Aadhaar card, Passport, Utility bills etc.
7. Copy of Seller’s PAN Card
In the case of individual sellers, a copy of the seller’s PAN Card may be required if there is TDS to be paid on the transaction. Normally this is applicable on transactions above Rs. 50 lakhs.
Additional Documents in case of Apartments & Buildings
1. Building Permit and Building Plan
To ensure that the construction of the property has been done in accordance with set rules and regulations, the buyer must obtain copies of the building permit and building plan that have been approved by the statutory body.
2. Allotment Letter
An allotment letter is issued by a property developer or a housing authority. It states the property description and the sum paid by the buyer to the developer, thereby verifying an individual’s ownership of the property.
3. Possession Letter
This document is provided by the developer to the first buyer and sets a date on which the latter would grant the former the possession of the property.
In the case of a resale property, this document should be produced before the new buyer. Also, the bank or any other lending institution requires a copy of the possession letter of the existing owner to be able to process the application for a home loan.
4. Completion Certificate
Upon completion of construction, it is mandatory for the developer or the owner of a stand-alone property to get a completion certificate from the local authority. This certificate is awarded only if the authorities inspect and are satisfied that the project/building has been constructed according to the approved building plan and mandatory standards have been maintained.
This certificate is crucial to ensure the supply of basic amenities such as water, electricity and drainage system. The builder cannot give possession to the buyer unless the completion certificate is obtained.
5. Occupancy Certificate
An Occupancy Certificate is issued at the end of the construction by a local government agency or planning authority. It indicates that the property is in a suitable condition for occupancy.
The developer is responsible for obtaining an Occupancy Certificate and it is issued only once the building has been completed in all respects and is ready to be occupied. Any subsequent resale of the property would also have a copy of the Occupancy Certificate as part of the list of documents required to be produced by the seller.
6. No Objection Certificates (NOC)
During the construction of a housing project, a developer may have to obtain several NOCs from various authorities. Individuals purchasing directly from the developer (direct sale) or the present owner (secondary sale) should obtain copies of the NOCs and keep them on file.
7. Notice of Commencement (if applicable)
In some places, a Notice of Commencement from the corporation, municipality or panchayat, may be required if you are purchasing a house or apartment.
8. Conveyance Deed (if applicable)
Conveyance refers to the transfer of the title for land and building by the landowner in favour of the housing society by execution of the Conveyance Deed. Through Conveyance Deed, it is possible for the housing society to get a legal title in its name.
In the absence of conveyance:
- An individual who has purchased a flat in the building, will not have ownership of the land where the building is constructed.
- If there is any damage to the building, it cannot be reconstructed without the permission of the landowner.
- The landowner may mortgage the property since he/she is the legal owner.
- The landowner may make a profit from the sale of open spaces, gardens, terraces, parking spaces, etc. within the society.
9. NOC from the Housing Society (if applicable)
For an apartment in a particular housing society, a letter from the society is needed for the sales process. This document states the seller is a member of the society and has no outstanding payments.
10. Share Certificate from the Housing Society (if applicable)
Some housing societies also issue share certificates to individual owners. You need to check with your society if this is applicable.
11. RERA Registration Certificate (if applicable)
RERA Certificate is issued by the Real Estate Regulatory Authority (RERA) of a State to the builders who register their projects with the state RERA. As per the RERA Act, a builder cannot promote his project or market it for sale without getting a RERA Certificate from the authority.
Sale Deed to be Prepared for the Transaction
The Sale Deed, which establishes the ownership of the title to the property, is the most important document when buying property in India. During the transaction, a new Sale Deed has to be prepared and agreed upon by both parties before signing.
The sale deed has to be registered at the office of the Sub-Registrar of the area where the property is located.
The process of buying property can be daunting, but with the help of this documents checklist, it doesn’t have to be. Just follow this checklist and you’ll be ready to go. Good luck with your home purchase!
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Frequently Asked Questions
Can NRI buy property in India without Power of Attorney?
If the NRI is not present in India, they must provide a Power of Attorney. To execute a property transaction, you will need a special Power of Attorney that is registered and notarized and not a general Power of Attorney.
Can NRIs buy property in India without an Aadhar card?
Yes, an Aadhar card is not compulsory for an NRI/OCI to buy property in India.
Does NRI need a TAN number for buying a property?
TAN number is not required if the property is purchased from a Resident Indian. TAN is needed in case the property is purchased from a Non-Resident Indian.
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