Faqs

We at OpenMinds have attempted to compile a set of FAQs to address your property related queries.

  • What is the difference between built up area, super built up area, and carpet area?
    Carpet Area: This is the actual liveable area of the flat, i.e., the area enclosed within the walls & does not include the thickness of the inner walls.
    Built up Area: It is the carpet area plus the thickness of outer walls and inner wall.
    Super Built up Area: This includes the built up area along with the proportionate area of common areas such as the lobby, lifts, stairs, etc. This is usually referred to as a loading % over the carpet or the build-up area. Sometimes it may also include the common areas such, swimming pool, garden, clubhouse, etc. This term is therefore only applicable in the case of multi-dwelling units.

  • How can knowing the Carpet Area, Built-Up Area & Super Built-Up Area of a flat help me in purchasing a flat?
    This break up is extremely essential as carpet area can be as much as 65% to 85% of the build-up area. That means that if the agreement mentions 1,000 sq ft, super built up area, then the carpet area could be just 650 sq ft to 850 sq ft. If this break up is not mentioned in the agreement, demand that the vendor/ builder mention it in the sale deed. You will need to pay the price on the super build-up area & not the carpet area.

  • What is meant by the market value of the property?
    The Market value means the price at which a property could be bought in the open market on that particular date.

  • What is the meaning of leasehold and freehold properties?
    Leasehold Property is property leased to a lessee for a stipulated period. The Lessee pays lease premium and annual lease amount as fixed by the Lessor. The land ownership rights remain with the Lessor and a prior sale-permission is normally required if you plan to transfer the property.
    Freehold properties: A property where title paramount has conveyed the property in favour of the purchaser by conveyance/ sale deed with no restriction on the right of the holder of the property to further transfer the property. Record of ownership of the freehold property can be ascertained from the office of the sub-registrar. It can be transferred by registration of sale deed.

  • What are the benefits of getting a leasehold property converted to a freehold property?
    • • One can become a full-fledged owner
    • • It will increase the marketability of the property
    • • Passport Number
    • • Property can be sold, mortgaged or kept for standing security

  • Can corporate firm/houses open their offices in residential areas?
    No. The practice of opening offices in residential area is illegal. But in the usual course of business service-based industries are allowed to open their offices in such residential properties. But any complaint by the owners will force them to vacate.

  • Is there a provision by which a landlord is bound to spend a certain percentage towards the maintenance of his property?
    No.
  • What % of the plot has to be kept aside for as back space and front space?
    The % area set aside for construction purposes differs with the size of the plot. In case of a 400 sq. yard plot the area is 40%, the distribution being 20% for the back space and 20% for the front. In case of a 1000 sq. yard area the area set aside is 60% for the back and the front spaces.
  • What is a Co-operative Housing Society?
    It is a society registered, or deemed to be registered, under the Co-operative Societies Act. Its objective is to provide its members with open plots for housing, dwelling houses or flats or if the dwelling houses or flats are already acquired, to provide its members common amenities and services.
  • Who is referred to as a member of the Housing Society?
    Member means a person joining in as an applicant for the registration of a co-operative Society which is subsequently registered or a person duly admitted to membership of a Society after registration. Each member will have a share certificate denoting his/her membership.
  • Who is an Associate Member of a Housing Society?
    Associate member means a member who jointly holds a share of a society with others, but whose name does not stand first in the Share Certificate.
  • What is a Draft Sale Deed?
    A draft Sale Deed is a document containing full details of the parties, property, sales consideration, advance amount paid, mode of balance amount payable, receipt of the balance amount by the seller, handing over the original documents of the property, handing over the possession of the property, indemnifying the purchaser in case of defect in the title, easement rights, etc. It is usually prepared by the buyer's lawyer.
  • What is a Sale Deed?
    Once the draft sales deed is approved by both the parties, it is registered and is then called the Sale Deed also known as conveyance deed. It is a document by which the seller transfers his right to the purchaser, who, in turn, acquires an absolute ownership of the property.
  • What is Khata?
    A Khata is an account of assessment of a property, recording details about your property such as size, location, built up area and so on for the purpose of payment of property tax. It is also a kind of identification of the person who is primarily liable for payment of property tax. It is one of the required documents in case you require a building licence, trade licence or loan from banks or any other bank/financial institutions. It is mandatory for all property owners/holders to pay property-tax, hence you need a khata.
  • What is the difference between a Khata and a Title Deed?
    A khata is an account of assessment of a property for the payment of tax. The khata does not confer ownership. However, the title deed is the document through which a person derives a title or ownership of the said property.
  • What is a lease?
    A lease is a contract between the lessor and the lessee for possession and use of the property in return of compensation by the way of rent or any other consideration from the lessee to the owner.
  • How can lease agreement be created?
    Lease agreement of an immovable property can be created through a registered instrument for a fixed tenure. The instrument must be executed by both the lessor and the lessee.
  • If the lease does not contain any clause for escalation of rent then can the lease amount on renewal be escalated?
    There is a provision in the Rent Control Act that the rent will increase 10% after every 3 years.
  • What property documents are required to get a freehold residential plot or flat?
    • • Copy of registered sale/conveyance deed through which the seller got the title
    • • Photo-copies of all earlier sale deed
    • • Agreement to sell
    • • Receipt of payments made to seller
    • • Copy of approved plan of construction
    • • Title search report
  • What are all the important documents one should check before buying any property?
    Before you purchase a flat, you have to have a title and document search conducted by a competent advocate. It is advisable to use the services of an expert in this regard. Further, one should check the approved layout plan, approved building plan, ownership documents, etc.
  • Upon buying a flat from a builder in an under-construction building, what are the documents that one should check with the builder, so as to ascertain the genuineness of the builder?
    Check the following:
    • 1. Approved plan of the building along with the number of floors
    • 2. Ensure that the floor that you are buying is approved
    • 3. Check if the land on which the builder is building is his or he has undertaken an agreement with a landlord. If so, check the title of the land ownership with the help of an advocate.
    • 4. Check the building bye-laws as applicable in that area and ensure that the builder is building without any violation of front setback, side setbacks, height, etc.
    • 5. Check specifications given in the agreement to sell from the sale brochure. Is he providing the same actually on the ground or not?
    • 6. Check the reputation of the builder.
    • 7. Ensure that urban land ceiling NOC (if applicable) has been obtained or not.
    • 8. NOC from water and electricity authorities also have to be obtained.
    • 9. NOC from lift authorities.
    • 10. Builder must have a ULC Order (though not always), IOD and Completion Certificate (CC) for the project and the MCGM approved plans in order to begin construction.
  • How to verify the authenticity of the various documents submitted by the seller of the house?
    Regarding authenticity of documents, again, you have to take the help of an advocate to conduct and prepare a search report.
  • What are the factors that I should consider while purchasing a residential flat?
    • • The Physical & Social infrastructure in and around the building & locality- transport & connectivity to highway & railway stations, schools, hospitals, market, business district, entertainment centres, hotels, restaurants, Banks, pollution levels, gardens, etc.
    • • Quoted area of the flat i.e. Carpet, Built Up Area and super Built Up Area
    • • Amenities provided like Car parking space, club house, gym, swimming pool, etc.
    • • Quality of construction
    • • Reputation of the builder
    • • Basic utilities: Sufficient water and electric supply, Gas connection & their charges
    • • Cost components: price, stamp duty, registration charges, transfer fees, monthly outgoings and society charges
    • • Potential for resale or renting out of the property
    • • Potential for value appreciation in that locality
    • • Any other distinguishing features or advantages of the property
  • In case a property is held in the name of a company, what are the important aspects which one should verify before purchasing such a property?
    Before purchasing the property, one should verify from the Registrar of Companies that the property is not mortgaged or otherwise used as a collateral security against any loan etc. Take a copy of the Article of Association & Memorandum of Association of the company. Also ensure that you take a copy of the Board Resolution which has approved to sell the property.
  • Should I inspect a property before buying it?
    Yes. Given the sheer quantum of the investment, you should try to find out as much as you can about the condition of the property and the need for any major repairs before you buy, so that you can minimize unpleasant surprises and difficulties at a later stage. A close inspection points out the positive aspects of the property, as well as the maintenance that will be necessary to keep it in good shape.
    You need to investigate the condition of the property and all its systems such as:-
    • • Plumbing systems, drainage, water faucets and sanitary fittings
    • • Electrical systems, circuit breakers, wires, capacity of the electric meter, functioning of light fittings
    • • Roof, walls, ceilings, floors, paint work
    • • Foundation, basement and visible structures
    • • Doors and windows, latches, locks
    • • Structural stability of the building
  • What factors impact property prices?
    • • Property specific factors: Builder, age of the property, construction quality, amenities, etc.
    • • Location & Neighbourhood: Government Master plan regarding that area, existing infrastructure & their development plans, connectivity to major transport sources, vicinity to schools, hospitals, entertainment avenues, banks, day-to-day needs, etc.
    • • Market Scenario: Demand-Supply, historic price trends, etc.
    • • Macroeconomic environment: Liquidity, prevailing interest rates & its expectations, overall economic outlook
  • What is the distinct advantage of holding a property in the name of a company rather than an individual?
    The advantage is that you can transfer the property along with the company without any payment duty or securing any Income Tax Clearance Certificate under 34-A and 37-I.
  • What is the distinct disadvantage of holding a property in the name of a company rather than an individual?
    If there is any income from the property, Income Tax rate for a company is more than what an individual has to pay.
  • At the time of buying a house, is it important to get a NOC from the society & the lender if the seller had obtained a loan to fund the property purchase?
    Yes. The buyer should ask the seller to get him a NOC from the society as well as the lender otherwise he will not be allowed to sell the property or take any other decision pertaining to the property.
  • How does one determine the market rent ?
    There is no prescribed manner but it can be easily found out by approaching such people as the brokers, registration authority, and appropriate authorities etc.
  • What is an EMI?
    EMI (Equated Monthly Instalment) is the amount payable to the lending institution every month, till the loan is paid back in full. It consists of a portion of the interest as well as the principal.
  • How is an EMI calculated?
    EMI Formula: l x r [(1+r)n /(1+r)n-1 ] x 1/12
    l = loan amount
    r = rate of interest
    n = term of the loan
  • Are securities required for home loans?
    In most cases, the property to be purchased becomes the security and is mortgaged till the entire loan is repaid. Some institutions may ask for additional security such as life insurance policies, FD receipts and share or savings certificates.
  • Do I require a guarantor to get a home loan?
    Some institutions ask for 1 or 2 guarantors, others require no guarantor at all.
  • What all costs are involved in buying a property? Can I get a loan to cover all these costs?
    The total cost involved includes the price of the property, the stamp duty & registration charges, society transfer charges (if it is a resale) and agent/consultant’s brokerage (if their services are used). The latter two costs are not considered by the bank while giving the loan.
  • Are Co-borrowers allowed in a housing loan?
    Yes. you can have your wife, son/daughter, father/mother as a Co-Borrower. In fact, it is compulsory to have a co-borrower. However you are again requested to check with the Bank/financial institution regarding their permissible ownership grid.
  • Is Co-Applicant/Local P.O.A mandatory for applying for Home Loans, even if I don't have a Co-Borrower in the property?
    Certain Bank/financial institution has made it mandatory for a Co-Applicant to join in the Loan (irrespective of his/her being/not being a Co-Owner in the property), with a Local Power of Attorney Holder in India. This may further be clarified with the Bank/financial institution.
  • Can a Home Loan be Pre-approved?
    Yes, you can avail for a pre-approval from any bank/financial institution. However, all pre-approvals have a validity period, which may be checked out with the concerned bank/financial institution.
  • What is the right time to apply for a home loan?
    Loans may be applied for before or after selection of property. The loan amounts are sanctioned in principle to let buyers know what amounts they can avail of. This helps them decide their budget and purchasing power. Actual sanction and disbursements are made after technical and legal verification of the property by the bank/financial institution, satisfactory verification of all necessary documents and completion of specific procedures.
  • Whether the tax benefits attached to a residential property are also available to a commercial property?
    No such benefits are not available for commercial Properties.
  • Who is liable to pay Stamp Duty - the buyer or the seller?
    Section 30, of Bombay Stamp Act, 1958 states that the liability for payment of stamp duty is that of the buyer, unless there is an agreement to the contrary.
  • Who is liable to pay Stamp Duty – the owner or the licensee?
    The liability for payment of stamp duty is that of the owner , unless there is an agreement to the contrary.
  • In whose name are the stamps required to be purchased?
    The stamps are required to be purchased in the name of any one of the executors to the Instrument. The Demand Draft will need to be made in favour of the bank which will do the franking.
  • From where can franking be done?
    One can get franking done from any Scheduled Commercial Banks and some approved authorities like the Stock Holding Corporation of India.
  • Which are the instruments that attract the payment of Stamp Duty?
    The instruments like Agreement to sell, Conveyance Deed, Exchange of property, Gift Deed, Partition Deed, Power of Attorney, Leave & License Agreement and Transfer of lease attract Stamp Duty on market value of the property attract Stamp Duty.
  • Is the stamp duty same across India?
    No..
  • How is the amount of Stamp Duty payable computed?
    As per the regulations, the stamp duty is paid on index value or agreement value whichever is higher. For both commercial & residential property, the stamp duty is 5%. However, these rates are subject to change.
  • Is it advisable to register the document(s) at the time of purchase of immovable property?
    Yes, it is always advisable to register the document(s) at the time of purchase of immovable property. In some cases it is compulsory to register the document(s). Even in cases where it is not compulsory to register the document(s) then also registration of document(s) is strongly recommended because:
    • • The title gets additionally secured
    • • If you propose to obtain a loan in future then at that time banks or financial institutions might insist for registration of documents(s)
    • • Even if you propose to register the document(s) in future there is a possibility that the seller may not co-operate with you
    • • The certified true copy of the document(s) can be obtained from the registering authorities after completion of index at any point of time and even if you lose the document(s) you can still establish your bonafide ownership of the property.
  • At the time of registration should the area in the agreement be mentioned as carpet area, built-up area of super built-up area?
    The Registering Authorities insist that the area must be mentioned as built up area. If the vendor has mentioned the area as carpet area then the registering authorities compel the persons to mention the area on built-up basis on the rubber stamp which is affixed by them at the time of registration. Information insisted upon by the registering authorities before registering the document/s is as under:-
    • • Number Of Floors
    • • Built-up Area
    • • City Survey No. (for the city of Mumbai) C.S.No. (for suburbs in Mumbai)
    • • Ward
    • • Village&
    • • Taluka
  • What should the parties do if the Registrar refuses to register the document(s)?
    On refusal to register the document by the Registrar, the parties or their representative(s) under section 72 & 73 of the Indian Registration Act, 1908 can within 30 days from the date of order or refusal, institute proceedings in the Civil Court in whose jurisdiction the office of the Registrar is situated.
  • What are different forms of Power of Attorney?
    Some of the different forms of power of attorney are:-
    • • Power of attorney to sell or lease out a particular property
    • • Power of attorney to recover debts
    • • Power of attorney by a firm
    • • Power of attorney by trustee
    • • General power of attorney to a manager of the estate
  • Is a POA revocable?
    Yes. A POA can be either revocable or irrevocable, depending on what sort of a POA one has made.
  • Are deals based on registered power of attorney/registered will/original allotment letter/agreement to sell/ change of address legally safe?
    Yes, such deals are considered legally safe.
  • How can gift of immovable property be made?
    A gift of immovable property must be made by registered deed irrespective of its value. It should be attested by two persons.
  • What are the legal formalities for gifting a flat in a Co-operative Housing Society?
    Gift of an immovable property is considered as a 'transfer' under the provisions of the TOP Act and you have to have the transaction registered through a Gift Deed and pay stamp duty as per provisions of the relevant stamp act depending in which state the property is situated.
  • Is it compulsory to have a Will on Stamp Paper only?
    It is not necessary. It can be on a plain paper also and the requisite condition is that the testator making the Will in presence of two witnesses should sign it.
  • Is it necessary to obtain any permission, from the Income Tax authorities if I want to transfer any immovable property?
    There is restriction on transfer of immovable property under Section 269UC of the Income Tax act.
  • Can someone who has inherited a property which was taken on loan and pays the EMI for it, claim tax benefits of principal and interest payment?
    No. The person who had borrowed the funds directly is only eligible to claim such deductions and rebates. These facilities are not available to the successor to the property. This was the view taken by the Gujarat High Court in respect of CIT v Rajkot Seeds Oil & Bullion Merchant Association Ltd. (1975) 101ITR748.
  • Whether incidental charges like brokerage, registration fees, stamp duty and other charges arising out of sale of house property is deductable from profit arising on sale?
    These expenses are allowable expenses from the full value of consideration of the sale of house property.
  • If I am a tenant (old rental) of a property in Mumbai in a good area like Andheri, can I transfer my tenancy? If yes, what amount of money can I demand from the Landlord for transfer of tenancy?
    Yes, you can transfer the tenancy, with the permission of the landlord. The rate is that which is prevailing in the market, the norm being that the landlord shall be entitled to 1/3rd share.
  • Now that the Maharashtra Rent Control Bill has come into force and the Pugree has been legalised, what is the percentage of sharing between the landlords and the tenants?
    A No fixed percentage is prescribed by the Act, but the norm is 1/3 share goes to the landlord.
  • Where does one register new tenancies in Mumbai?
    With the Registrar of Sub Assurances located at Old Custom House, ShahidBhagat Singh Road, Fort, Mumbai-400001 and at BandraKurla Complex, Bandra.
  • Is one required to register existing tenancies as well?
    No.
  • In case a tenant is not protected by the Rent Act, what is the procedure to ask him to vacate and what is the notice period required to be given?
    Normal procedure is to send a notice to the tenant, failing which a court case may be filed which usually takes 10 to 20 years to reach a verdict.
  • This is with reference to the Bombay Rent Act. We are tenants of an old building, which was repaired, by all the tenants in the year 1995-96. We are 32 tenants and would like to form a Co-operative Housing Society without the landlord's permission. Can we form the society ?
    Yes.
  • 70% of the tenants are ready to form a society. Is there any new provision in the new rent act for forming a society?
    There is no new provision in the new Rent Act regarding the prescribed percentage of tenants willing to form a society.

  • VAASTU


  • What is VastuShastra?
    VastuShastra is the ancient art and science of building.
    There are many age old books on VaastuShastra. Some of them are SamaranganaSutradhara, Mayamata, Manasara, MatsyaPurana, BrihatSamhita, etc. In the last few years a large number of modern authors have written on VaastuShastra and there is a wide spread proliferation of literature on Vastu today.
  • Is there any relationship between Vastu and Astrology?
    There is a close relationship between Vastu and Astrology. In astrology, the fourth house has been attributed to immovable property, amongst other things. If the lord of the fourth house, the planets in the fourth house, the aspects to the fourth house, etc. are all good, then the person will enjoy property. Otherwise, the results will be negative. There are also many special conditions or ‘yogas’ such as AyatnaGrihaPrapti Yoga, VichitraPrakaraSoudha Yoga, etc. which destine a person to different conditions of property holding. Further, one has also to see the planetary configurations at a given point of time, in conjunction with one’s nakshatra in order to fix a muhurta or an auspicious time for starting various stages of construction work as well as the grihapravesh.
  • Is Vastu applicable only to residences or to other types of buildings also ?
    A Vastu is applicable to all types of buildings. For example, we have vastu for temples (prasada), palaces (rajagruha), sala (residence), etc.
  • Is Vastu applicable to the building of towns also ?
    Yes, it is called nagaravastu.
  • What is the role of geographic directions in designing buildings?
    Geographic directions such as North, South, East and West are very important in Vastu. In fact, all buildings are supposed to exactly face each of these cardinal directions and not at an angle.
  • What are the prescriptions for the size of a dwelling?
    The size of a plot and the building are to be worked out in accordance to certain formulae called the AyadiShadvarga. Based on these, one can arrive at the correct size.
  • What should be the shape of a plot?
    Vastu prescribes a square or a rectangular shape for the plot of land as well as the dwelling unit.
  • Which direction should the plot face ?
    The plot can face any of the four cardinal directions. Based on which side it faces, the position of the main entrance is decided.
  • In which direction should the plot of land slope ?
    It is required for the plot to slope either to the east or to the north.
  • Where should the well or water pump be located ?
    It should be located in the north east corner of the plot.
  • Where should the tap in the garden be located ?
    It should be located in the north east corner of the plot.
  • Where should the main entrance of the building be located ?
    The house, in the form of a square or a rectangle, is superimposed with a grid of nine by nine divisions. Based on the direction, either north, south, east or west, the division in which the main entrance is to be located is determined.
  • What is brahmastahna ?
    This is the centre of the plot/dwelling which is attributed to lord Brahma. This place is to be kept empty.
  • Where should the master bed room be ?
    The master bedroom should be located in the south west part of the house.
  • Where should the kitchen be ?
    The kitchen should be located in the south east part of the house.
  • Where should the puja room be ?
    The puja room should be in the north east corner of the house.
  • Where should the guest room be ?
    The guest room should be in the north west of the house.



  • Disclaimer: The purpose of this FAQ is to provide a general understanding on the various issues relating to House Property. The above FAQ have been prepared on the basis of knowledge gained over the period of time, expert advice & referring to various legal & taxation requirements. Reasonable efforts have been taken in collecting, preparing and providing quality information, but we do not warrant or guarantee the accuracy, completeness, adequacy or currency of the information. The contents of the FAQ are subject to changes / amendments made by any of the regulatory authorities, although such changes may not take place on a real time basis. The above are only guidelines and not precise prescriptions for building a house as per Vastushastra. Application of the above should be done only under consultation and guidance of a Vastu expert who will examine the property and make specific recommendations.