Buying Land or Plot in India? Here is a 10 point checklist India's First Free Online / On-call Financial Advisory India’s First Free Online / On-call Financial Advisory / Best Free Financial Advice

Are you looking for buying a plot or a piece of land? If not today, may be you have this dream of owning a plot sometime in the future.

Buying a land has in a way become a premium thing these days especially in big cities because land is scarce commodity and the pride is associated with having your own plot where you can build the house as per your wish.

If you happen to visit any real estate exhibition, you will come across many plots projects along with the residential apartment schemes. These plots are generally within 20-100 km of the city radius and often marketed as second home or vacation homes.

On top of it the pricing is attractive (often within 5-20 lacs) and there is also the facility of installments which makes it too easy to own a plot. The deal is often pay a token amount and pay the rest amount in parts (EMI).

1. Is the land on the name of the builder?

The first question you should ask the sales person is that if the builder has legal rights to sell the land or not. Find out who is the current owner of the land? Is it builder himself or not?

A lot of builders either buy the entire land from the previous owner or enter into a joint agreement with the owners to sell or develop the land and sell the plot scheme. No matter what, make sure that this part is clear. Ask for the documents which clearly shows the builder has legal rights on the plot himself. Here is a story on how small builders do frauds

2. Has developer taken a loan from Bank for the project?

Builders often take bank loan for the Plot schemes and even residential schemes. It’s a sign that the builder is more serious about the project and it’s also a positive sign, because if there is the money with builder which will be specifically used for the project development. The builder is not dependent fully on the advance money the home buyers. It shows that there is a cash flow dedicated for the project and the issue of cash crunch will be minimized.

It’s not always the case the the scheme has a bank loan, but still enquire about it. If bank loan is there, its a proof that the bank has done thorough verification from their side on the legalities and only then granted a big amount (often in crores).

3. Where is the NA order ?

By default, all the land in India is AGRICULTURE LAND, unless it’s defined for some other purpose by the govt. So a piece of land is either agricultural or non-agricultural (commonly called as NA in real estate industry)

Agricultural land can be used for agri purpose, where as if you want to do any other thing other than agriculture then one has to first convert that agri land to non-agricultural (NA)

However just because a land has got NA status, does not mean that one can start using it for residential purpose, because there are various types of NA like

  • NA – Commercial
  • NA – Warehouses
  • NA – Resort
  • NA – IT
  • NA – Residential (this is the one where one can build a residential house)

4. What is the FSI for the plot?

Suppose you bought a plot of size 2000 sqft for building the house on it.

How much construction can you do?

Here comes the concept of FSI or Floor space index. FSI simply means how much construction can be done on a piece of land and it depends on the location of the plot.

FSI of 100% means if you have plot of size 2000 sqft, you can build a house of 2000 sqft on that. If the FSI is 75% , then you can only build 1500 sqft of house on that 2000 sqft land.

I recently came across a project called Royal Purandar near Pune when I went to visit a plot exibition. The lady at the counter told me that the plot sizes starts from 5000 sqft and goes upto 40,000 sqft (which is very big). I was shocked to hear about so big plot sizes because 5,000 and 10,000 sqft plots are quite big.

However when I asked her what is the FSI of the plot, she told me it was just 15%. So with FSI of 15% , if you buy a plot of 5000 sqft size, you can just build 750 sqft of house, which is generally a small bungalow.

There is nothing wrong with that, but you should be at least aware about it.

5. What are the other projects done by the builder?

You should ask the sales person about the other projects done by the builder.

Check if they have done other similar projects in past?

What was the response for it? What is the quality of those projects?

Were there any legal issues with those schemes?

Are the buyers happy with builder work there?

You can often get some clue about all this on the internet or the online forums. Just go to the website of the builder and find out what are the other schemes he has done. Search with the other project names and see what others are talking about?

If you get a chance, I suggest paying a visit to the past projects once. Spending half day in this will only help you further to take the decision.

6. When will the Sale Deed happen?

You will often hear about the “agreement to sale” which is executed when you book the flat/plot and clear your initial payments (around 35-40%). This is the time when you pay stamp duty and registration charges. Once the agreement to sale is completed, a lot of buyers think that the flat/plot is registered on their name and now they are legally safe.

However this is a myth and the “agreement to sale” does not make you a valid buyer. The agreement to sale (often called ATS) is just the AGREEMENT TO SALE (ATS), means it’s an agreement between buyer and seller on the initial points and terms under which the sale will happen in the future.

It mentions the terms and conditions of the deal, how much initial payments are you making along with cheque number and also the future dates, by when you will clear the payments etc.

“Sale Deed” is the document which needs to be registered in the office of sub registrar in order to make the sale happen. Unless the sale deed is done, you do not become a legal owner.

Hence, ask the builder or salesperson about the sale deed? When is it going to happen? The sale deed is generally done, only when the builder gets all the dues from your end.

7. Will I get an individual 7/12 extract in my name?

Let me first help you understand what is “7/12 extract”?

Its a term which you will often hear in states like Maharashtra and Gujarat. In Karnataka its called 7/12 Uttara. It’s the document maintained by the revenue department which mentions how the land moved from one owner to another owner in last 30 yrs. So in a way its a history of the land and you will find exactly on which date who sold to whom. This way you will find out who is the current owner of the land also.

8. What will be the per annum maintenance after buying the plot?

Once you buy the plot, there is an annual maintenance which needs to be paid which goes towards maintaining the basic amenities like security, upkeep of the project, gardens, water, security etc. It should not be a surprise for you later. This maintenance is generally paid on yearly basis and it’s proportional to the plot size. For example, if it’s Rs 4 per sqft and your plot size is 2000 sqft, then your maintenance per year would be Rs 8000.

9. Is the plot on a flat land or on a slope?

Don’t assume that your plot is always going to be a piece of flat land. If it’s a big project, it might happen that the overall land which builder has acquired is uneven or has slopes. So when it’s divided into several small plots, many plots might be on the slope or it might be uneven.

10. What are the arrangements for water and other basic amenities?

Always ask how they are going to provide water and other basic amenities.

Is it going to come from municipality or the gram panchayat?

Or they are doing their own arrangement for it?

What about electricity?

Are they going to arrange for a individual electricity meter?

How much are they charging for it?

If the plot/land is too much away from the main road, then what about the access road?

Who will develop it? What about fencing of plots?

What about security?

Ask everything in detail and in points.

With this I think we have completed the main highlevel 10 things you should ask when you are buying a plot. Below is another video on this topic where some industry level people are talking about the same issue of buying land and the complexities involved.

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