December 22, 2022
The legalities involved in the sale or purchase of a property in Goa can make it a long and complicated affair. While these can be dealt with if you have a good lawyer, it’s best to start out with some understanding of your own. Real estate terminology is one such thing that can make it all more complex than it needs to be. Before you embark on your journey of investing in property in Goa, make sure to do some research of your own. To start with, here are 13 real estate terms you should know.
The Real Estate Regulatory Authority Act was passed by the Indian government in 2016 to streamline the real estate space. It concerns all stakeholders, homeowners, brokers, and developers involved in the construction, buying, selling, renting, and leasing of property. Verse yourself with this Act so you can keep frauds at bay and are aware of your own obligations too.
There are several rules that a real estate developer in Goa must follow while constructing a new property. These are clubbed together under the common umbrella term of ‘building bye-laws. They help prevent haphazard constructions and encroachment while also prioritising the residents’ health and comfort and protecting the rights of employed construction workers. Request your potential developer in North Goa to provide you with a copy of the bye-laws.
In real estate terminology, the carpet area is the space in a property that can be covered with a carpet. This generally means all your usable floor space comprises the carpet area. It’s important to know this in order to get a fair price for the property you are purchasing. So make sure you know whether the developer is referring to the carpet area or the built-up area when you zero down on a.
The built-up area in a residence is the total sum of the net usable area (floor space) and the area covered by inner walls and balconies. What spaces are covered in the built-up area (eg. outer walls or dry balcony areas) are specified in the RERA that you should familiarise yourself with before purchasing a house. A house’s usable floor space i.e. carpet area will generally be around 70% of the total built-up area.
Chain of Title is a crucial document that provides information on the ownership transfers that the property has been through. This is also commonly referred to as a ‘title deed’ or ‘sale deed’, a document that records the transfer of ownership of property. Each time the property is sold or bought, it has to be freshly registered at the sub-registrar’s office, adding a link to the pre-existing chain of titles for the property.
It is important that the property you plan to invest in has a clear title. Also referred to as a ‘clean title’, this document assures the buyer that the property associated with it is clean i.e. it does not have any ownership or encroachment issues. A clear title ensures that you will remain the sole owner of the property once you buy it.
A collateral is a valuable item that acts as a guarantor for an individual seeking a loan from the bank. A property, gold, or other such assets of value can act as collaterals that can be seized if the borrower fails to repay the loan.
Encumbrance refers to a statement that specifies the various ways in which a property owner can utilise it. This claim is usually made by a third party that is not the owner. Some examples of encumbrances are zoning laws that restrict a property from being used commercially and leases that allow the owner to rent it out.
A fiduciary is an individual who has the Power of Attorney to act on behalf of the property owner. They are expected to understand the owner’s opinions and interests and make decisions in their absence.
The Floor Space Index (FSI) or the Floor Area Ratio (FAR) is calculated as the ratio of the built-up area in a building to the area of the total plot on which it is built. The FSI is regulated by the National Building Code of India and directs developers on the number of floors they can have in a building.
For eg, if FSI = 1.5 for the plot of 9000 sq feet that you can own, the total area for floor space in a building you construct will be calculated as follows:
1.5 x 9000 = 13500 sq feet
This means keeping with the other municipal construction rules, you can have either 3 floors of 4500 sq feet or 4 floors of 3375 sq feet.
The letter of intent (LOI) is a document that specifies all the terms of a sales or lease contract. It is usually used as a base on which the final contract is crafted once the exchange is finalised. It is non-binding until it is signed after which it will be treated as a purchase agreement or a lease agreement.
An occupancy certificate is an important document stating that a particular property complies with all national building codes and qualifies for occupancy. A municipal corporation issues it and it is crucial to obtain one before you finalise the purchase of your property.
The Preferential Location Charges (PLC) of a property are the additional costs added to its base price depending on its location. For instance, if you want the sea-facing bungalow in a gated complex, it might cost you more than one located in its interiors. What aspects qualify for PLC are usually determined by the builder.
Buying a house in Goa gets easy when you know what you need to look out for. Stay abreast of all essential laws and make sure you ask your seller to furnish you with all the necessary documents. A little patience and research can ensure that you invest in the right kind of property.
Real Estate Terms You Need To Know