Purchase of Flats – from booking of

Flats/apartments until formation of

society/condominium
infra
What is the Legal Process For Buying a Flat in India?

 The process of buying a house in India is possibly one of the biggest personal
investments and tedious process. Living in a self owned abode is a dream aspiration for
millions in India. As home-buying is once in a lifetime event, it also has the homebuyers
emotion deeply attached to the experience since day one. 
 At the outset, any set of tips for buying a flat say that one needs to fix on a budget, location
and requirements as per personal or family needs. However, beyond that when it comes
down to making the final decision, we enter the world of legal process of buying the
house in India.
 While some people have peripheral knowledge of the legalities involved in this process,
others are confused and worried. Home buyers are often misguided by ill-informed brokers
or shady builders, resulting in loss of money and other legal risks.
 here’s a breakage of essentials into simpler steps. It is like a property buying guide – except
it covers the legal aspects and not the general ones.
The Legal Process of Buying a House in India
 1) Title Verification
 As a preliminary step, the buyer must first confirm the existence and validity of the property title. It must be free of
any mortgages or previous unpaid dues. Scrutinize all documents for a minimum period of the last 12 years, going
up to 30 years for any legal discrepancies.
 2) Seller’s Identity Verification
 As important as verifying the flat’s title documents, if not more, is verifying the identity of the seller(s). Insist on
scrutinizing valid legal documents like a PAN Card, Aadhar Card, etc.
 In case of the seller being an organisation, check for legal documents related to the company’s registration, TAN
number, etc.
 3) Documents Related to Land Use
 Ascertaining the type of land – residential, commercial, industrial, non-agricultural, mixed-use, etc. – is a crucial
step. Several state and national laws prohibit the use of land for purposes other than what it is meant for. If the land
and its usability have been converted legally, look for land conversion documents.
 Also, it is significant to examine the master plan and check that the property is developed in accordance with
zoning plan - such as public/semi-public, residential, parks and open spaces, commercial, industrial,
etc.
 4) Construction Approvals
 In the case of an already constructed building, verifying the building or layout plan is a
must. It must be sanctioned by the municipal authorities, government bodies, statutory
and regulatory authorities, etc. to provide electricity, water, environmental clearances,
fire safety, etc.
 5) Occupancy Certificate
 The seller must obtain an Occupancy Certificate (OC) before transferring the property titles. A missing OC
could create severe problems for the buyer ranging from hefty penalties to demolition of the property.
 6) Payment of Taxes
 If the seller has not paid property taxes, it attracts heavy penalty charges resulting in poor value. Be sure to
verify with the municipal authorities that the seller has not defaulted on tax payments.
 7) Mortgages and Other Claims
 In case the flat or building or land is under dispute for any reason whatsoever, the chances of an
encumbrance existing are very high. Check government websites where property registration information is
available.
 You can also issue a public notice in the newspapers, before completing a financial transaction. Third party
claims, if any, are always better to be aware of at the outset.
 8) Physical survey and access to the property
 It is very important for a buyer to examine the property through a physical survey/visit. One must properly check if the
measurements match with what has been promised on the papers. A physical survey also helps in examining the route
to the site, surrounding areas, connectivity options and other such attributes.
 9) No Objection Certificates
 One must ask the developer/seller to show copies of various no objection certificates which are issued by various
departments such as the Pollution Board, Environment Department, Sewage Board, Traffic and Coordination
Department, etc.
 10) Compliance under RERA (Real Estate Regulatory Authority)
 And the last but most important due diligence - check whether the property is registered under your state's RERA. The
RERA website also provides information about any cases or complaints filed against the developer, defaulted payments
by the developer, etc.
 Due to the nature of the investment being large, it is always better to be extra cautious while buying a flat or property. It
is also advisable to take professional legal advice for proper scrutiny of all legal documents and gain important
information.
 While scrutinising every small legal aspect may take a longer period to execute a deal, in the long run this will bring
you peace of mind and fetch a better return on investment.
Process of setting up a co-operative society

 The laws governing the societies are “THE co-operative societies act, 1912
[1]” which is a central Act formed by the Union with the liberty to the
concerned states to form their State Act governing the societies to suit their
local conditions but the condition being that it should not be in derogation to
the central Act. Many states have enacted their own co-operative society Act
and rules there under but more or less the requirements to be met by
persons who want to form the society remains the same.
 Promotion of its object, self-help and mutual aid are the fundamental
principles of co-operation. The objectives of commercial organization and co-
operative organizations are fundamentally different. In a commercial
organization, earning and maximizing the profits can be the sole motive but
whereas in a co-operative organization profit cannot or should not be the
sole motive. It should almost in all circumstances conduct itself in a business
like a manner in attaining its objectives efficiently.
 The following steps have to be followed while forming a Co-operative society, they are
 Step 1: Ten Individuals together who are desirous of forming a Society
 To form a society, law mandates that 10 members minimum must show intention to
be part of the society having same aim and objective to be achieved through the
society for their mutual benefit and thereby be desirous to be part of it.
 Step 2: Provisional Committee to select Chief Promoter
 Once a group of individuals have a desire to form a society the next step should be
there must be a provisional committee of which everyone is part of and all of them
should by mutual consent or by majority whichever their prefer must choose a person
who will be a chief promoter of the society which is going to be formed by them.
 Step 3: A Name for the Society has to be selected
 Thereafter once a chief promoter is selected by set of individuals among them, they
have to select a name for the co-operative society which they wish to form
 Step 4: Application has to be made to the Registration Authority
 Once the name of the society is selected by the members then they have to make a
application to the registration authority stating that they have a intention to form a
society and the name of the society has to be given to the authority for its approval
and registering authority has to confirm that name is in conformity with laws and
issue a confirmation certificate to the members. Then when the members get their
name approval from the authority it is valid for 3 months from the date of approval.
 Step 5: entrance fees and share capital
 Thereafter once name approval comes from the concerned authority, the entrance fee and the share
capital must be collected from the concerned prospective members to meet the statutory requirements
under law and it can be prescribed by the members themselves or society act mandates certain fees to be
paid by them.
 Step 6: Bank Account
 Thereafter once the prescribed fee and share capital is collect from the prospective members, then as per
the directions of the registering authority promoter has to open a bank account in the name of the society
and deposit the said fees and share capital in that account and a certificate has to be obtained from the
bank to that effect
 Step 7: Application for registration
 Once the bank formalities are completed then the promoter has to apply for the society formation to the
registration authority and it has to be accompanied with set of documents, they are
  Form No. A in quadruplicate signed by 90% of the promoter members
 1. List of promoter members
 2. Bank Certificate
 3.  Detailed explanation of working of the society.
 4.  Four copies of proposed bye-laws of the society.
 5. Proof of payment of registration charges.
 6. other documents such as affidavits, indemnity bonds, any documents specified by the Registrar also
have to be submitted.
 All these documents have to be submitted at the time of applying for registration of the
society to the registering authority and the authority after it is satisfied with the
documents submitted to it has to apply its mind to whether or not to register the said
society.
 Step 8: Registrar has to acknowledge
 After the submission of the said documents has mentioned in step 7, the registrar of
that municipal ward has to enter the particulars in the book called the “register of
Application” which is generally specified in form B and give it a serial number to the
application. Thereafter the registrar has to issue a receipt to that effect and give it to
prospective members to know the status of the application when it is pending.
 Then the registrar after perusal of the records submitted to him/her has to make a
decision whether has to issue a certificate of registration or not and if there are any
discrepancies noticed then he/she has to inform the members of the same and get it
rectified if any.
 Step 9: Registration
 Last step is that the registering authority after being satisfied with the documents
meeting the legal requirements will notify the registration of the society in the official
gazette mentioned by the state or central government and should issue the registration
certificate of the society and give it to the members of the society.
 Conclusion
 In India, Co-operative Societies were regarded as ideal instruments
to motivate the people to come together and help themselves in the
process of eliminating the unscrupulous middlemen making a huge
profit at the expense of the society.
 The main guiding factor if an individual or group of individuals want
to form a society must be whether all the concerned members have
common goal to achieve or not, it is important factor because only
when they share common desire or intention then only society is
desirable otherwise the whole purpose of forming a society will be
defeated.
 Societies like any other business structure come with certain
advantages and disadvantages, they are:
 Advantages
• Cooperative stores supply quality goods unlike other shops wherein
adulterated foods maybe given to its consumers and thus saved them
from adulteration and other malpractices.
• As consumers or members of the society are the owners and
managers of such stores, genuine requirements of the majority of
consumers can be met. In other words, goods required by a majority
of the customers or members of the society are always dealt by such
stores.
• Cooperative societies are an important form of democratic business
enterprise because ownership is not vested in one person completely
so as a result, no single group can secure control over the
organisation.
 Disadvantages
• It only caters to the needs of small and medium-income groups so
when there are large group with higher economic interest then it is
preferable to choose another business model.
• There is much dependence on the honesty, integrity and loyalty of
members and workers and once there are trust issues between the
members it is hard to transact business thereafter.
• It is limited to certain objectives hence profits are minimal.
• Management of society usually rests in the hands of people with less
managerial experience due to which society will suffer and many do
not invest in hiring professionals to handle the society due to lack of
funds or interest so henceforth growth of the society maybe put to
stake by its own members.
Difference of process of formation of
Condominium
 An alternative to a cooperative society was introduced by the Maharashtra Apartment Ownership Act, 1970, which
provides for the formation of a condominium. The buyers of premises in a condominium are called apartment owners
who form an association known as an ‘association of apartment owners’, in case of both, residential as well as non-
residential premises.

Although the basic purpose of both the models is similar, there are many differences between a society and
condominium, some of which are:
 FORMATION: To form a society, generally 10 persons, each from a different family who reside in the area of operation
of the society (within the same city) and who have taken premises in the building, would be required. However, even
one person who owns the entire building can form a condominium provided there are at least five apartments in the
building.
 OWNERSHIP: In the case of a society, the title of the land and the building is conveyed to the society, which becomes
the owner thereof. Persons who have purchased premises are made members of the society and are allotted the
particular premises. In the case of a condominium, the title of each apartment rests with the apartment owner, who
also has a proportionate undivided interest in the land on which the building stands, the common areas and facilities of
the building.
 BY-LAWS: A society adopts the model bylaws in which little can be changed. While adopting the bylaws in a
condominium, suitable changes can be made, so long as the provisions of the Act are not contravened.
 SHARE CERTIFICATE: A society issues certain shares to its members, as per the bylaws and the share certificate
becomes an important title deed, since the allotment of the premises are related thereto. This is not so in a
condominium.
 MANAGEMENT: The affairs of the society are managed by the managing committee, which is elected by the
members of the society. The managing committee elects a chairman, secretary and a treasurer. Similarly, the
affairs of a condominium are managed by the board of managers, who are elected by the members of the
apartment owners association. The board also elects a president, vice-president, secretary and a treasurer.
 TRANSFER FEES: Under the model bylaws, a society can charge only Rs 500 as transfer fees and a maximum of
Rs 25,000 as a premium. In case of a condominium, the bylaws can be more flexible and the amount of transfer
fees can be provided therein.
 PERMISSION TO LET: In a condominium, the owner can give his apartment on lease or leave and license basis
without the approval of the board of managers, while in a society, permission is required.
 VOTING RIGHTS: In a society, every member has one vote, irrespective of the area of his premises. In a
condominium, every apartment owner has a voting right in proportion to the value of his premises, which is
generally as per the area of the apartment owned by him and which is defined while forming the
condominium.
 DISPUTES: In a society, disputes are generally referred to the registrar appointed under the Act or to a
cooperative court, depending on the nature of the dispute. In the case of a condominium, the court having
jurisdiction over the area in which the condominium is located, hears the disputes.
 EXPULSION: A society can expel its member under certain extreme circumstances. In case of a condominium,
there is no such provision. However, if an apartment owner fails to comply with the bylaws or the rules and
regulations, either damages or injunctive relief or both can be claimed against him.NOMINATION: In a society,
a member can nominate a person in whose favour shares of the society should be transferred upon the
member’s death. No such facility is available in a condominium. An apartment can be transferred to a person to
whom the apartment owner bequeaths the same by his will or to the legal representative of the apartment
owner’s estate