Secondary home buy? Run a 30-year title search, get encumbrance certificate

For the title to be clean, there should be an unbroken chain of registered documents, with the latest in the seller's name

With new launches increasingly concentrated in the premium and luxury segments, the share of houses priced below ₹1 crore has declined. Many value-conscious end-users, who feel priced out of the primary market, are turning to the resale (secondary) market, according to a new report by NoBroker.

 

More realistic price points 

With land prices and construction costs rising, developers are increasingly focusing on premium and luxury housing, which offers better margins. “New supply in mid-range and affordable segments, especially in well-established city locations, has shrunk,” says Saurabh Garg, co-founder and chief business officer, NoBroker. Buyers with budgets of up to ₹1 crore now find limited options in the primary market.

 

“Several popular micro-markets are saturated for new development, leaving redevelopment and resales as the main options,” says Rahul Phondge, chief operating officer – residential services, ANAROCK Group.

 

Garg says resale homes are available in established localities with existing infrastructure, at price points that are often found to be more realistic than new launches.

 

Phondge highlights that under-construction homes attract goods and services tax (GST), which adds to the cost burden.

 

Many buyers also prefer resale properties because they remove construction risk, long waiting periods, and uncertainty around final costs. Buyers also do not have to bear the burden of equated monthly instalments (EMIs) and rent simultaneously.

 

In secondary market purchases, end-users can check the built home, neighbourhood quality, infrastructure, and everyday liveability. They can evaluate the condition of the property and society, and obtain resident feedback before deciding.

 

Due diligence is key 

Older buildings that are structurally unsafe or in disrepair can pose risks, including seepage and leakage. “If a building is very old, buyers should engage a professional to inspect the structure,” says Phondge.

 

Buyers should use recent transactions in the same society, including similar configurations, as benchmarks to ensure that the price quoted to them is fair.

 

Thorough legal due diligence is a must in secondary home purchases. Buyers should verify the property’s title by checking the full ownership trail since launch and the original title deeds. “Buyers should have a lawyer run a 30-year title search and verify an unbroken chain of registered documents,” says Suresh Palav, partner, IndiaLaw LLP. The latest registered sale or conveyance deed should be in the seller’s name. Buyers should walk away from the deal if the title chain is broken or unclear. The lawyer they engage should also check for pending litigation or government acquisition.

 

Before committing to the purchase, buyers should obtain an encumbrance certificate. “This is to verify that the property is free of liens, loans and disputes,” says Phondge.

 

They should also ensure that the project has approved plans. “It should also have a completion certificate, an occupancy certificate, and Real Estate Regulatory Authority (RERA) approval,” says Garg.

 

Flat buyers should check that the seller is a recorded member of the society or association and has paid all maintenance dues. The seller should also not have been involved in disputes with the society.

 

“Buyers should obtain a no-objection certificate (NOC) from the housing society and ensure the share certificate is duly transferred to them,” says Phondge.

 

Red flags that should make you walk away 

In certain situations, buyers may be better off walking away from a property. Ownership claims and ongoing disputes make a deal risky. All co-owners and legal heirs should have given their consent for the sale.

 

“Buyers should walk away if original papers are not produced or if the title chain is broken or unclear. Unregistered paperwork signals risk,” says Palav.

 

Major unauthorised modifications should also prompt buyers to reconsider. Palav adds that deep discounts combined with pressure to pay cash should make buyers wary.

 

Precautions when applying for loan 

Banks scrutinise the property as much as the borrower before sanctioning a loan for a resale property. “They focus on clear title and clean ownership history,” says Adhil Shetty, chief executive officer, BankBazaar. Loans get delayed if the property’s documents are incomplete.

 

Shetty adds that missing occupancy certificates, deviations between approved plans and the actual property, and absence of NOCs, especially from the society and previous owners (including co-inheritors), can also stall approval.

 

“Buyers should get the bank loan checks started early and avoid paying token money until the loan approval comes through,” says Shetty. He suggests borrowers should ideally hire an independent legal adviser or lawyer to check the property papers, independent of the bank’s due diligence.

 

Finally, they should have a strong credit score of 790–800 or above.

 

All-in costs buyers should factor in

• Brokerage charges
• Stamp duty, registration charges, society transfer fees
• Society transfer charges, NOC fees, maintenance deposits
• Electricity meter transfer charge
• Repainting, renovation or furnishing costs that may be needed
• Loan processing charges
• Term plan for loan coverage
• Home insurance and property tax