Legal terms that NRIs buying property in India should know

NRIs often consider buying property in India and eventually settling down in the country after their retirement. For NRIs, this decision can hold special spiritual and personal significance, as it allows them to reconnect with their roots and immerse themselves in the country’s rich culture and traditions. However, before making any property purchase, NRIs must be aware of certain legal jargons associated with such transactions. Here, we share some of the common legal terms that an NRI buying a property in India must know:

1. Title Deed: The title deed is a legal document that establishes the ownership of a property. Before deciding on a property, NRIs must check the deed and verify whether the seller’s name is on it. The property can only be legally sold to the NRI buyer if the seller is also the title deed holder.

2. Power of Attorney (POA): NRIs can use a Power of Attorney to appoint a trusted individual, often a close relative or friend, to act on their behalf in property transactions. This arrangement makes it easier to handle transactions even when NRIs are abroad. It is important for them to understand the differences between specific and general POA, as well as the scope of granting a POA to someone.

3. Stamp Duty: Stamp duty is a tax levied by various Indian states on property transactions. The stamp duty rate can differ based on the state where the property is being purchased. NRIs must familiarise themselves with the stamp duty rules and rates beforehand. Proper payment of stamp duty during the property purchase is necessary to avoid legal ramifications.

4. Mutation of Property: Mutation is the process through which property ownership is legally transferred after a transaction. NRIs must undertake the property mutation to ensure it is officially passed on to their name from the previous owner. Mutation documents can be used to establish proof of ownership.

5. Occupancy Certificate: Local authorities inspect a property to verify whether it is fit for occupancy and if all building regulations and codes have been followed. Before buying a property, NRIs need to ensure it has been issued a proper occupancy certificate. This can help them avoid future legal issues.

6. Goods and Services Tax (GST): If an NRI is buying an under-construction property, they must understand their liability regarding the Goods and Services Tax. They need to pay the applicable GST on time to ensure compliance with the country’s tax laws.

7. Real Estate Regulatory Authority (RERA): It was established to ensure transparency in property transactions. The provisions under RERA protect property buyers from being misled by false information from builders. Therefore, NRIs must ensure that the property they choose is registered under RERA. Such registration ensures that the property is being developed and sold in adherence to RERA guidelines.

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