Caveat Emptor!

Buying real estate in India is not as simple and straightforward as one might perceive. In a recent case, India’s deemed tallest towers which stood 103 metres high were demolished because of serious violations of building codes. The Supreme Court said that the Noida Authority and Supertech (the construction company) had engaged in “nefarious complicity” 

This demolition will go down in the history of India as one of the most prolific violations of building regulations and the alleged corrupt practices involving the collusion of officials. 

People who had bought into twin towers lost their life savings. The demolition of the twin tower is unique but across India builders and property developers have been found guilty of scams. Land grabbing, forged documents, using land for a purpose other than for what it is intended to be used, selling the same property to multiple buyers, and taking substantial deposits on off plan property development which never kick off or fail due to misappropriation of funds are common scams. 

Buying a ready to move residential property for investment purposes is for the risk averse. One is not assured of rental income and even if you do find a reliable tenant there is no assurance that your property will be looked after. In terms of capital appreciation, the property market in India is quite flat. 

Due to lack of space and India’s huge population high rise towers are commonplace. Most residential apartments will have a specified amount of monthly maintenance charge which is paid to a company invariably owned by the property developer. Within the first year of a new construction most buildings look shabby and uncared for which makes one wonder what really happens to maintenance charges. 

If you are buying a commercial property, the law is not in your favour. In a two-storey building of which I have personal experience there is a gym in the basement who blast their music 12 to 14 hours a day shaking the entire building. The occupiers of the building keep pleading to the gym owner to lower the volume of the high bass sound but to no avail. There is no law in India which requires a gym to soundproof its premises. These types of situations can lower the value of your property and in some cases, you may even find it difficult to sell your property.

The procedure for buying a property in India operates entirely at the risk of the buyer. Your funds must be paid in full to the vendor before the title registration formality. Once you part with your funds to the vendor you just have to pray that the vendor will not disappear with your money. Assuming that the vendor is legitimate, the registration process of the title deed of your property is booked in advance at your local Registry Office. The pre-agreed sale deed between the vendor and the vendee is presented to the Registrar at the Registry Office who will sign off the title deed. It seems very simple but not quite so. In another case of which I have personal knowledge the agreed sale deed was tempered with after it was signed by the Registrar and without the consent and knowledge of the vendee the sale deed had a handwritten note and a typed noted in a different font inserted on the executed sale deed by the vendor and vendor’s agent who is a member of the Institute of Chartered Accountants India. 

The effect of this handwritten note and typed note is that it has diluted the value of the property despite the vendee having paid the full price.  To add insult to injury the law firm representing the vendee did not even object to the handwritten and the typed note.  This is the extent of the shockingness of the acts committed involving a chartered accountant and a lawyer. 

Foreign entities and individuals must take extreme caution in buying a property in India. If you wish to acquire a property in India, it would be best to purchase a plot of land and build to your specification and in accordance with approved building regulations. Even then it can be a risk as you never know if the plot of land is disputed at a time in future. 



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