Document Checklist Before Buying Distressed Property

Due to the risks that come with distressed property, it is important to check the papers that show who owns the property. A safe investment, whether it’s in distressed property or not, is one that doesn’t have any legal problems or money problems. So, whether you are buying from a person or a bank at an auction, you must make sure that these documents are in order:

Contents

01. Document checklist for Distressed Property

• The Title of the Property
• Sale Deed
• Possession Timeline
• Contracts to Rent​
• Development sanctions
• Certificate of Recovery
• Asset Reconstruction Company

When a bank puts a property up for auction, it usually checks to make sure that the title is clear. But if there is more competition to sell these properties, mistakes might be made. This is especially true for properties that are still being built, where the developer might go beyond the approved plan. When you buy from an individual seller, the documents are even more important because there is a higher chance of fraud.

The buyer must get the original property sale deed and real receipts showing that the full amount of the sale has been sent to the bank.

If you are buying a house that is still being built, make sure you know when it will be finished and what will happen if the builder misses the deadline.

When buying a pre-leased asset, it’s important to check the lease contracts and see when they end so you can figure out how they will affect your finances in the future.

Check for encroachment, approvals from the development authority for building structures, and necessary restrictions from the municipal authority for power and water supply.

The auction must be run by a bank that has a Recovery Certificate (RC) from the Department of Financial Services’ Debt Recovery Tribunal (DRT). The RC gives financial institutions and banks permission to auction off properties that they have taken back.

These are companies that help banks hold auctions of homes that have been taken back by the banks. You need to check these companies’ credentials and make sure they are linked to a well-known public financial institution. One private company that does this is Asset Reconstruction Company (India) Ltd.

So, these are the essential documents that buyers should check before buying a distressed property. 

Disclaimer: The opinions shown above are mainly for informational reasons and are based on market research. Deal Acres is not responsible for any actions made as a result of relying on the provided material and makes no representations as to its accuracy, completeness, or reliability.