Investment in Real Estate and Property has become a fast-paced, real-time financial growth option. This usually means the investment of not only one’s life savings but time and energy as well. The owners may not necessarily be living in that property; they might be renting it out, they might be living overseas, or it might be a vacant house or just a piece of land. This is when real estate becomes susceptible to fraud. India is witnessing a massive surge in the sale of property and equal growth in the number (and types) of frauds related to it.
What is property fraud?
Property fraud or “house stealing” is a fast-growing crime in our country. It includes an array of issues but in simple terms, it is the unlawful transfer of ownership of property. This is usually done by botching up the paperwork and defrauding the owner (usually without their knowledge or consent). The fraudster may forge your signature and make it look like you sold your property to them or can use illicit means to alter government records of property documents. This is usually done to be able to take a mortgage and/or take loans on the property. Here is a list of some property frauds that usually occur:
- Title Deception: Title fraud is the situation in which the ownership of the property is unclear. The fraudster usually makes duplicate papers of properties which his/her name and then sells it to others or claims themselves as PoA holders and sells properties. The properties that are usually the subject to such frauds are those that are unoccupied for a while, owners that are abroad, disputed and under construction properties.
- Hurried sales: Developers dupe the purchasers by claiming there are few flats left to buy to make people buy it in a hurry at very high prices. During the rushed paperwork, lots of facts about the property are hidden.
- Assured returns: Developers assure the purchasers that they will receive 12-14 perturn return till time of possession only if they invest immediately. The problems start to arise when the post dated cheques bounce.
- Delay in possession: Delay is the most common way that developers scam the purchasers. The project gets delayed for years and years together. Before investing, it is recommended to check the RERA website as it tends to show the date of possession.
- Selling the same unit to multiple buyers: The most common fraud is when one flat is sold to multiple people and the owners vanish. This also happens when one person is the owner and another has the PoA, both end up selling the property to different entities.
Simple ways to prevent it
Yes, it is always advisable to involve a lawyer or a legal advisor to avoid any mishaps. However, there is a certain degree of due diligence you may also conduct as an aware and cautious property buyer:
1. Be aware of what you are signing: It is your absolute responsibility to read all the terms and conditions of any document that you may be signing. The devil lies in the details so make sure to go through it.
2. Be specific: Acquire specific details of the property. Make sure to check the track record of the seller/developer you are purchasing from to understand the value and legitimacy of the sale. Do a google search of the developer and look for proof of identity.
3. Tangible records: It is most convenient to work in the digital space, but it is advisable to maintain tangible proof of the transactions and activities. Make sure to maintain a record of written statements specifying the authenticity of the information provided as well as of any payments that may be made.
4. Sign up to receive property alerts: The Land Registry has a facility where you may sign up to receive updates on the land/property. Any and all applications that are made to amend the Register of your Property will be notified to you.
5. Restrict the Title to your property: A restriction translates into a specific type of language that may be used while registering your property and requires you, or your solicitor, to give a certificate to verify any request that may be made.
Certain documents may be checked and verified before the deal:
1. Sale deed: Make sure to check for discrepancies in the registered sale deed and check for clear ownership title in the current owner’s name.
2. Mother deed: The Municipal Authorities can assist you in attaining this document. This reflects the ownership history of the property.
3. Encumbrance Certificate: Check the loans, title transfers, mortgages or, registered transactions that may exist against the property.
4. Approval plan: If it is a ready-to-move or a property that is under construction, the approval plan for the building may be obtained from the jurisdictional commissioner.
5. Conversion Certificate: Always make sure to check that the land or property bought is not agricultural land. A No-objection certificate must be maintained from the Tehsildar’s office.
6. Additional documents: Tax receipts, Completion Certificate, Occupancy certificate (for ready-to-move properties), PAN and Aadhar of the seller.
While investing, it is important to do your bit of research. Fraudsters are smart but we can be smarter. Waiting for the system to get more efficient in eradicating these crimes is one option but the other option is to just stay safe by doing our own bit! If you are thinking of investing in real estate and wish to uncover essential property information, visit us at www.tealindia.in. We collate, classify and curate data from multiple sources to ensure a seamless experience. We minimize risk, remove guesswork, and help you transact with confidence. Reach out today to get started!