How to avoid Property Fraud or Real Estate Scams in India?

Real Estate market in India has boomed over the last decade and a half. But with no set of laws in place, property scam has also increased at the same rate. Let’s discuss top 10 real estate scams in India and learn ways to avoid them.

Though investors these days are well informed, real estate scammers do not spare anyone. From rural landlords to the top corporate executives, NRI investors to HNIs everyone has suffered at some point or the other. Although there is no fixed pill that can remove all your concerns, this article is just an attempt to highlight major real estate scams in India.  Some basic information on how you can avoid property fraud.
 

Cautionary steps before investing:

Verify builder's track record

It is natural for any investor to get attracted towards lucrative schemes. But it is important to keep in mind that there is no use of such schemes when the project never sees the light of the day. You are recommended to confirm builder’s past record of delivered projects. This would help you reduce your risk.

Understand Details

There is a popular saying, “The devil is in the details”. While investing in property you must have a comprehensive transparency on documents and transaction details.

In case of an under-construction property:

It is important to ask for the Builder-Buyer Agreement before investing and check all details. Ensure that the builder has taken all the necessary approvals. Invest in a pre-launch project only when you are confident that the builder will get authorization shortly. If not, it is better to wait for sanction. Pay specific attention to understand the delay clauses and make sure that the builder is assuring a reasonable penalty in case of any delays.

For ready-to-move-in property:

Engage a proficient agent to ensure hassle-free transaction.

Verify all property papers to certify the title ownership, that if there is a loan on the property and if property taxes are paid.

Confirm Agreement to Sale and payment terms.

Don’t hurry. Stay away from taking a speedy decision. Complete your due diligence first and then invest only when you are sure that the basic criteria are met.

Ask Questions

If you have any uncertainty, enquire your agent or the marketing team of the developer. For e.g., if the builder says that they get approval, ask for the approved layout or ask for a copy of approval application. This is important if the property is at pre-launch stage. You should not regret afterward for ignoring minor details.

Take Professional Help

In case you do not have the proficiency to carry out due diligence on the property, you are advised to look for professional help from a real estate specialist or a legal counsel. You can save lakhs of rupees that you will incur if your project is delayed or never takes off.

Get Assurances in Writing

Builders assure star and moon in their brochures. On the other hand, if you read the fine print, they will have a disclaimer mentioning that plans, images and amenities are only indicative. The builder will give you oral assurances, even during the construction phase; practically they would have no meaning. Hence, it is essential that you get everything in writing. Ask them to correspond with you only through their official email id or giving in writing on their letterhead.

Choose Bank Approved Projects

Banks carry out their own due diligence before authorising a project. So, investing in a bank approved project can lessen your risk to a great extent.

Look for Personal Recommendations

Ask for personal recommendations from your friends, family members or colleagues about their experience with a particular real estate agent or a particular builder.
 

Final Word

Now that you have a fair idea about all the major types of real estate scams India, hope that you will not hurry in investing. While you may truly come across real great deals in real estate, it is important that you always perform a methodical assessment to keep away from property scam. Sign the booking amount cheque only if the property passes all the investigations. Keep in mind, a little bit of research can save you a whole lot of mental agony and lakhs of rupees. 

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