What to Know Before Booking an Under-Construction Property in India

Buying a home is a significant financial and emotional milestone. An under-construction property in India often presents an attractive option. It offers lower prices and the promise of a brand-new home. However, this path requires careful evaluation to avoid potential problems. This guide provides a clear homebuyer checklist. It will help you understand the essential checks before booking an under-construction apartment.

Why Choose an Under-Construction Property?

Before we detail the checks, let’s understand the advantages. Knowing the benefits helps you weigh them against the risks.

Cost Advantage

Properties under construction are typically priced lower than ready-to-move-in homes in the same locality. This price difference can be substantial, making homeownership more accessible.

Higher Appreciation Potential

You buy the property at its initial price. By the time the project is complete, the property’s market value may have increased significantly. This offers a good potential for capital appreciation.

Customization Options

Early buyers often have the chance to choose specific layouts or request minor modifications. You can also select your preferred flooring, fixtures, and paint colors from the options provided by the builder.

Flexible Payment Plans

Builders offer construction-linked payment plans. You pay in installments as the construction progresses. This staggered payment schedule reduces the immediate financial burden compared to a lump-sum payment for a ready property.

The Essential Homebuyer Checklist for Under-Construction Properties

Follow this checklist to ensure you are making a secure investment. Each step is critical for a safe property purchase.

1. Verify Builder Credibility and Reputation

The builder’s track record is the most important factor. A reputable builder is more likely to deliver the project on time and with the promised quality.

• Research Past Projects: Visit projects the builder has completed. Speak with residents about the construction quality, timeliness of delivery, and the maintenance services.
• Check Delivery History: A builder reputation check involves analyzing their history of project completion. Frequent or long delays are a major red flag.
• Read Online Reviews: Look for feedback on real estate forums, social media, and consumer complaint websites. This gives you an unfiltered view of other buyers’ experiences.
• Check for Legal Disputes: Search for any ongoing legal cases or complaints filed against the builder. This information is often available on public court websites or consumer forums.

2. Conduct Thorough Property Legal Due Diligence

Legal clarity is non-negotiable. You must ensure the land on which your future home is being built has a clear and marketable title. It is best to hire a qualified property lawyer for this process.

Here are the key documents required for under-construction property verification:

• Title Deed: This document confirms the builder’s ownership of the land. The lawyer must verify its authenticity and check for a clear ownership history.
• Land Use Certificate (NA Order): This certificate confirms that the land is approved for residential construction. Agricultural land cannot be used for residential projects without this conversion.
• Commencement Certificate (CC): This is the official permission from local authorities to begin construction. Without it, any construction is illegal.
• Approved Building Plans: The construction must follow the plans approved by the municipal authority. Check that the builder is not deviating from these approved layouts.
• Encumbrance Certificate (EC): This certificate shows that the property is free from any legal dues or mortgages. It should be checked for the last 15-30 years.

3. Understand RERA Guidelines and Compliance

The Real Estate (Regulation and Development) Act, 2016 (RERA) was introduced to protect homebuyers. A project’s RERA compliance is a strong indicator of its legitimacy.

• Verify RERA Registration: Every builder must register their project with the state’s RERA authority. Visit your state’s official RERA website and verify the project’s registration number.
• Check Project Details on RERA Website: The RERA website provides crucial information, including the approved plans, project layout, and the official completion date. The builder is legally bound by this date.
• Confirm the Escrow Account: RERA guidelines for under-construction property mandate that the builder must deposit 70% of the funds collected from buyers into a separate escrow account. These funds can only be used for the construction of that specific project, which prevents financial mismanagement.

4. Scrutinize the Builder-Buyer Agreement

The Builder-Buyer Agreement (BBA) is a legally binding contract. Do not sign it without reading every clause carefully. If possible, have your lawyer review it.

Pay close attention to these clauses:

• Possession Date and Delay Penalties: The agreement must clearly state the possession date. It should also specify the penalty the builder will pay you for every month of delay.
• Carpet Area vs. Super Built-up Area: The price should be based on the carpet area (the actual usable area within the walls of your apartment), as mandated by RERA. Ensure the agreement clearly defines this.
• Payment Schedule: The payment schedule should be linked to construction milestones (e.g., foundation complete, floor slabs cast). Avoid time-based payment plans.
• Cancellation Clauses: Understand the terms for cancellation from both your side and the builder’s side. Note the refund policies and any potential deductions.
• Specifications and Amenities: The agreement must list the exact materials, brands, and fixtures that will be used. It should also detail all the promised amenities like a swimming pool, gym, or clubhouse.

5. Assess the Project’s Location and Infrastructure

A great home in a poor location can be a bad investment. Evaluate the neighborhood and its future potential.

• Connectivity: Check the property’s access to major roads, highways, and public transport like metro or bus stations.
• Social Infrastructure: Look for the proximity of essential services such as schools, hospitals, markets, and banks.
• Future Development: Research any planned government or private infrastructure projects in the area. A new metro line or business park can significantly boost your property’s value.

6. Verify the Construction Status and Quality

Regularly monitoring the construction progress is a key part of buying an under-construction property.

• Make Regular Site Visits: Visit the construction site periodically. This allows for construction status verification and helps you see the quality of the work firsthand.
• Check Material Quality: Ask the site manager about the brands of cement, steel, and other core materials being used. Compare this with the specifications mentioned in your agreement.
• Observe Workmanship: Look at the quality of plastering, brickwork, and finishing in the sample flat or in partially completed areas. This gives you an idea of the final product. Under construction property safety also includes structural integrity, which starts with good workmanship.

Major Under-Construction Property Risks and How to Mitigate Them

Awareness of potential risks helps you prepare for them. Here are common challenges and how to handle them.

Risk: Project Delays

This is the most common risk. Delays can disrupt your financial plans, especially if you are paying both rent and an EMI.

• Mitigation: Choose a builder with a strong on-time delivery record. Ensure your Builder-Buyer Agreement has a strict penalty clause for delays. Rely on the possession date mentioned on the RERA website.

Risk: Quality Discrepancies

The final product may not match the quality promised in brochures or the sample flat.

• Mitigation: Ensure all material specifications and brand names are clearly listed in your legal agreement. Regular site visits help you spot any deviations early on.

Risk: Legal and Title Issues

The project could get stuck if the builder does not have all the necessary legal approvals or if the land title is disputed.

• Mitigation: This is where property legal due diligence is critical. Hiring an experienced property lawyer to verify all documents before you pay the booking amount is the best way to avoid these issues.

Risk: Financial Strain

Unexpected costs or project delays can strain your finances. The final cost can sometimes be higher than the initial estimate due to charges like GST, registration, and miscellaneous fees.

• Mitigation: Plan your budget carefully. Account for all possible costs, not just the base price. Keep a contingency fund ready for unexpected expenses.

Conclusion: Making an Informed Decision

Booking an under-construction property in India can be a rewarding experience. It offers financial benefits and the joy of moving into a new home tailored to your preferences. However, the key to a successful purchase is thorough research and due diligence.

By following this comprehensive homebuyer checklist, you can confidently evaluate projects, verify builder credibility, and secure your investment. Remember to check every document, understand the legal agreements, and monitor the project’s progress. A careful and informed approach will help you avoid the common risks and turn your dream of homeownership into a reality. At Propacity, we empower homebuyers with the right information to make smart real estate decisions.

FAQs: Booking an Under-Construction Apartment