Paper work involved while purchase of a property
Short listing a house that you want to buy is only half the battle won. What follows is getting the home loan approved, completing the various legal formalities and ensuring that you do not get wrongly entangled in any agreement. But how does a home buyer get to know that he is falling in a legal trap and how does he prevent the same? For the purpose, a home buyer has to be fully aware of the various terms and conditions of the paperwork involved in the process of property purchase. To determine the property transactions knowledge of the home owners and the potential home buyers alike, MakaanIQ asked them whether they know the paper work involved while purchase of a property.
The maximum number of home buyers said that they do not know anything about the paper work and relied completely on their builder/agent/property dealer for signing at the dotted line. A few respondents said that they are aware of some of the legal procedures involved in the property transactions. Understanding the need, in this article, MakaanIQ highlights the two most useful agreements and their importance at the time of buying a home.
Purchase Agreement: Generally, a purchase agreement form is a legal contract for the purchase and sale of a piece of property. It is related to real estate transactions as a way of finalizing and recording the purchase of a possession, its price and all the discussed and related terms. A purchase agreement is also known as a buy sell agreement. The purchase agreement forms are available online or can be obtained from any source that has the legal permission to hold them.
The most important factor in the existence of the agreement form is that it proves to be a recorded statement that avoids any problems with the law. In case of a disagreement, the foremost thing that helps is the purchase agreement. As Benjamin Franklin rightly said, "An ounce of prevention is worth a pound of cure."
The following are the areas that should be kept in mind while filling up a purchase agreement:
- Do not rush up through the contract. One should dedicate good enough time in the completion of the form.
- One should include all important and significant terms and conditions. The contract should cover everything that is important. It should separately mention the actual price of the house and the other various costs that one will need to bear for buying the house. Make sure that the agreement clearly mentions the size of the house. With the approval of the real estate bill, it is mandatory to mention the carpet area; however, in the case of properties already in existence, one should purchase the property on the basis of the carpet area and the same should be mentioned in the contract.
- There should be an inclusion of an arbitration provision because disputes are generally resolved more swiftly through arbitration.
- The contract should meet all the valid legal requirements.
- It is advisable that the writing of the contract follows simple English. It should be understandable to both laymen and legal authorities.
- It can be beneficial to get in touch with a real estate expert to understand the terms and fill the form in a way that it protects you completely.
Home Loan agreement: Loan agreement is a ‘contract’ between the borrower (a home owner) and the lender (banks and financial institutions) that draws the terms of a loan. The loan agreement is in place right after the initial verifications are done by the financial institutes and the loan amount is transferred only after the agreement is in place and is signed by both the parties. In the excitement to be the owner of the dream home, the home loan agreement, especially the terms and conditions, are generally over looked; the very same terms and conditions pose the threat of re-possession later.
The type of interest rates: make a decision regarding the type of interest rate you’ll opt for, the two being fixed and floating. Make sure to check for the reset clause that banks usually include in the agreements. Read the clause carefully as in case of an increase in the interest rates the borrower ends up paying a higher EMI.
The purchase of real estate must be through a signed document. Only a written document upholds validity and is enforceable by law. Therefore, all the initial terms and changes should be included in the various agreements while buying a house and the contract should be signed and dated by every representative who is involved in the transactions.