Things to consider while selling the property

Things to Consider While Selling a Property in India

Selling a property is a significant financial and legal transaction that requires careful planning, understanding of laws, and attention to detail. Below is a comprehensive guide on the important factors and steps to consider while selling a property in India:

1. Verification of Property Documents

Ensure that all property documents are in order and readily available before initiating the sale process. Key documents include:

- Title Deed: Proof of ownership, showing that the seller has the legal right to sell the property.

- Encumbrance Certificate (EC): Ensures the property is free from legal or financial liabilities.

- Occupancy Certificate (OC): Indicates the property has been constructed as per approved plans.

- Building Plan Approval: Validates that construction has adhered to local laws.

- Tax Receipts: Evidence of up-to-date payment of property taxes.

2. Property Valuation

Hire a professional real estate evaluator or consult local real estate agents to determine the correct market value of your property. Consider factors like:

- Location and infrastructure development.

- Current market trends and demand for properties in the area.

- Age and condition of the property.

This helps avoid undervaluation or overpricing, ensuring a fair deal.

3. Checking Loan Clearance (if applicable)

If the property has an existing home loan, ensure the loan is paid off and obtain a No Objection Certificate (NOC) from the lending institution. A property with unpaid loans can complicate the sale process.

4. Compliance with Legal and Taxation Laws

Adhere to legal requirements to avoid penalties and disputes:

- Capital Gains Tax: Long-term or short-term capital gains tax is applicable, depending on how long the property was owned. Consult a tax advisor for strategies like reinvestment to reduce tax liabilities.

- Goods and Services Tax (GST): Applicable in certain cases like under-construction properties.

- TDS Deduction: If the property value exceeds ?50 lakhs, the buyer must deduct 1% TDS and deposit it with the government. Provide your PAN details to the buyer for the TDS filing.

5. Appointing an Agent or Going Solo

Decide whether to sell the property on your own or through a real estate agent. While agents charge a commission (typically 1-2% of the sale price), they can:

- Connect you with potential buyers.

- Assist in price negotiation and paperwork.

If you’re handling the sale directly, leverage online property platforms, advertisements, and local connections to market the property.

6. Drafting a Sale Agreement

Prepare a detailed and legally binding Agreement to Sell, which must include:

- Agreed sale price.

- Payment terms (advance and installments).

- Property details (address, size, boundaries, etc.).

- Date of possession.

- Conditions for cancellation.

This document sets the terms of the transaction before the final sale deed is executed.

7. Obtaining NOC from Relevant Authorities

In case the property is in a housing society, get a NOC from the society or Residents’ Welfare Association (RWA). Additionally, some properties may require NOCs from:

- Local municipal authorities.

- Urban development bodies.

- Environmental clearances (for large plots).

8. Handling Possession and Registration

Once the sale price is agreed upon and payment is received as per the terms of the sale agreement:

- Execute the Sale Deed at the local Sub-Registrar’s Office.

- Ensure both buyer and seller’s presence, along with witnesses, for property registration.

- Provide all necessary documents such as title deed, tax receipts, and NOCs.

The buyer pays the stamp duty and registration fees to complete the transaction.

9. Maintenance of Records

Keep copies of all documents related to the sale, including:

- Sale Agreement.

- Registered Sale Deed.

- Payment receipts.

- NOCs and other supporting documents.

This can help address any future legal or tax issues.

10. Handling Encroachments or Disputes

Ensure the property is free of disputes such as:

- Encroachments or illegal occupants.

- Title disputes or co-ownership issues.

- Litigation or claims made by third parties.

Any pending issues should be resolved before initiating the sale.

11. Safety Precautions While Dealing with Buyers

- Screen potential buyers and verify their financial capability.

- Avoid signing blank papers or sharing original property documents until the payment terms are secured.

- Prefer transactions through banking channels for traceability.

12. Consult Legal and Financial Experts

Always consult:

- Lawyers: To verify documents, draft agreements, and ensure legal compliance.

- Accountants: For understanding tax implications and investment strategies post-sale.

FAQs on Selling Property in India

1. Can a property under joint ownership be sold?

Yes, but all co-owners must consent to the sale and sign the sale deed.

2. Are power of attorney sales legal?

While properties sold under Power of Attorney (POA) are common, ensure the POA is registered and specific to the purpose of the sale.

3. How long does it take to sell a property?

The timeframe varies based on market conditions, property location, pricing, and marketing efforts. On average, it can take 1-6 months.

4. What is the process to calculate capital gains tax?

Capital gains tax depends on the duration of ownership:

- Long-term capital gains (after 2 years) attract 20% tax with indexation benefits.

- Short-term capital gains (less than 2 years) are taxed as per your income slab.

5. What precautions should a seller take for property disputes?

Verify the property’s ownership and resolve any legal disputes or claims before advertising for sale.

Selling a property is a significant financial decision that requires due diligence, compliance with legal formalities, and transparent dealings to ensure a smooth process.

Disclaimer: This information is intended for general guidance only and does not constitute legal advice. Please consult with a qualified lawyer for personalized advice specific to your situation.

Adcocate J.S. Rohilla (Civil & Criminal Lawyer in Indore)

Contact: 88271 22304

www.jsrohilla.in