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20 terms which will Super Charge your Real Estate knowledge !

by Manish Chauhan · 98 comments

The biggest tool an investor has is knowledge on his side. But when it comes to real estate, we can see a lot of investors do not pay a lot of attention to smaller details which can create big problems for them. Today I want to hand over to you a real estate terminologies toolkit, which will explain various things to you in most simple and shortest way. When you go out to buy your home next, you will not need anyone on your side to have conversation with the builder and you will give him the feeling that you know more than him. It should help in someway.

Real Estate Terms and Termninologies

18 terms which will super charge your Real Estate knowledge

Here are those 18 terms and terminologies.

1. Carpet Area – When you buy a flat, you actually area on which you can lay carpet is called as “carpet area”. Note that builders advertise the property based on other parameters, but as a buyer this is what you are going to actually use for next many decades. Higher the Carpet area, better space you get.

2. Built up area – Built up area is the area which covers Carpet Area and the Walls and doors . A good 15-20% of space goes into walls and doors and your super built up area is generally 20% higher than carpet area. Ideally the rate quoted by builders is based on “built up area”.

3. Super Built up Area – A lot of times you will come across a term “Super Build Up area” , which is nothing but built up area along with all the space common to all the residents of society like Corridors, staircases, parking area etc . So Super Built up area is higher than Built up area. A lot of builders also use “super built up area” to advertise the projects which gives an artificial picture of property. Never rely on that

4. Sub-Registrar Office – For Registrations of Properties, there is an official department called “sub registrar office” , you can visit it to get your properties registered and also obtain any legal documents related to properties and land. If any officer tells you to “pay for Chai Pani” there, tell him you are filing a RTI and putting his name in the application for the “request” he made to you and ideally he behave properly with you. Note that you can get sub registrar office address online. Example – for Delhi its here

5. Capital Gains – When you sell a property after 3 yrs, the amount of profit you make is called “Capital Gains” . Tax will be applied on this Capital gains after applying Indexation. Also you can avoid paying this tax if divert the profits part in another property or another way of saving tax on that amount is investing in NHAI or REC bonds.

6. Encumbrance Certificate –  Encumbrance Certificate is an evidence of free title or ownership of property. This document clearly tells you if there is any legal or monitory dues on property. So if you are going to take a home loan against a flat, bank will need Encumbrance Certificate to be sure that there is no other loan going on for the same property. You can get the Encumbrance Certificate from the Sub-Registrar Office (where registration of properties take place). You can ask for upto 30 yrs of data (if available) . It takes around 15-20 days at times to get it after you have put a request to get encumbrance certificate . Read more about Emcumbrance certificate here

7. Title Deed – A title deed is a legal document used to prove ownership of a piece of property. So if you are buying property from Mr. Manish Chauhan, make sure you check the title deed. Title deed is something which you can get from Registry office of the concerned jurisdiction. Title deed is something which one must always obtain and check if you are buying an old property, because at times land and property is owned by some one old and children claim that its in their name just to speed up the process, but at times it gets ugly later. Important Tip – Never rely on Xerox Copies of the Title Deed, get it examined in original because sometimes the seller might have taken a loan and given in the original deed to lender (and does not tell you about this) .

8. Stamp Duty – Real Estate Stamp Duty is the tax collected by Govt . The stamp duty payable differs from one state to another. In some states its 3-4% and some has it at 8% also. The Stamp duty is payable on Agreement Value. So a lot of times buyers and sellers do the property agreement at lesser value and involve black money in the transaction. Its important to factor in stamp duty cost as per of your home purchase plan, because its quite a huge amount . For a Rs 50 lacs property, it can be in range of Rs 2-3 lacs. Important point is that women in many states have to pay lesser stamp duty compared to men.  For instance, in Delhi, a women need to pay a stamp duty of 4% compared with 6% for men. Thats 2% saving and for a 50 lacs house, its a saving of Rs 1 lacs” .

9. Franking Charges – When you go for home loan, there is a small charge called as “franking charges” paid you buyer to Bank . Franking (incase of real estate transaction) is actually the activity to stamping a document which proves that the Stamp duty has been paid to govt. Its an official seal kind of thing which is to be done in sub-registrar office for a small fees (Few Hundreds), this is done by the bank and they collect those charges from buyer.

10. Registration Charges – Just like you pay Stamp Duty, you also pay Registration Charges when you register the property in your name and the charges again depends from state to state . In Maharashtra, the registration charges are 1% of property or Rs 30,000
whichever is lower.

11. Gift Deed  – Generally you “sell” the property in exchange of money. But when you have to transfer the property rights to some one without taking the money like what happens in families, then you should to pass it on as GIFT and a Gift Deed should be prepared to document the process. Note that Stamp duty is to be paid even if the property is transferred through Gift Deed. Learn more about income tax on gifts here

12. Power of Attorney – A lot of times you will find that someone is trying to sell you land or a flat, based on power of attorney, which is a legal way of transferring your rights to someone else. But Supreme court has now banned all the real estate transactions based on power of attorney. So next time someone tells you that the owner of land is outside India and hence assigned him power to sell the flat, do not get fooled, only deal with someone with clear title deed.

13. Sale Deed – A sale deed is one of the most important legal documents in a purchase or sale of a property. Once its signed by the seller and buyer only then the sale is assumed to happen legally. The registration of property and stamp duty payable is based on sale deed only. A sale deed will also contain property details , measurements and other important details.

14. Service Tax and VAT – Service tax needs to be paid only for under construction properties untill complition certificate has been obtained by builder. Because till the flat is under construction, its regarded as “service”, so service tax is applicable (3.09% at the moment). But once the construction is over and complition certificate has been obtained by Builder, then the property like “goods” , where the service tax is not applicable. In the To be Paid for Under Construction Flats. VAT again is applicable for under construction properties, but only in those states where state govt has asked for VAT. Not all states have VAT applicable.

15. Conveyance Deed – Conveyence Deed is a legal document which a builder executes in order to transfer the land title to Housing socities formed. This is generally done once all the flats are sold in a project. This step is extremelly important because if this is not done, the title of land still remains with Builder and incase in future something happens, there is unnecessary legal battles. So make sure that once the society is formed, the conveyance deed is executed.

16. Completion Certificate – Once the project is completed, the local authority visits the site and inspects the construction and various things and awards completion certificate to Builder. so Completion Certificate is kind of certificate from local authority, that now the work is complete. This is the moment a builder can officially declare about the project completion. There still can be few last minute things which might need to be addressed.
17. Possession certificate – Possession letter is issued by the Builder which is actually the official permission to take possession of property. Generally its given to those who booked property during under construction. If its a ready to move in flat, the sale deed is enough and will work just like possession certificate. Note that a builder can give possession certificate only after he has obtained completion certificate.

18. Ready Reckoner Rates or Guidelines Value – For each area, there is a official govt defined rates for property which acts like the  base price. The minimum registration and stamp duty charges has to be on those guidelines value. Builders generally charge premium over these guideline values . Read more here

19. FSI (Floor Space Index) – It is the ratio specified by local authority (generally municipal corporation or urban development authority) which governs how much area one can build over a specific plot of land. i. e. if FSI for an area is 2 and you have a 1000 sq ft plot, you can build (2 X 1000) 2000 sq ft building over it. Generally, common areas like staircase, lift, passage leading to the flat door, service ducts outside toilets and kitchens, etc. are not considered in this 2000 sq ft FSI area, which means, you can construct these areas over and above the permitted FSI area. At macro level, this magic ratio called FSI determines how much construction will come up in a city.

20 – OC (Occupancy Certificate) – Well, generally CCs (Completion Certificates) are issued by municipal corporation in stages. i. e. a 25 floors high building may be issued CC for every 5 floors depending on its design. However, building is considered to be ready-for-occupation after builder has not only completed the construction but has also made it habitable by bringing in all services like electricity, water supply, drainage connection and fire fighting facilities. The corporation, after receiving NOCs from all concerned dept. will issue OC. Ideally, builder should / can issue Possession Letter only after receiving the OC. In reality though, several (not few) buildings have OC even after years of completion and being occupied. Buildings not having OC have higher outgo towards water bill, electricity charges and property tax.

Thanks Mehul for adding last 2 points as contribution

Please add more terms

If you are aware about some other thing which you have come across or feel can be added here, please add it in comments section.

Also let us know if you feel like a “pro” now in real estate terminologies or not ?

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{ 98 comments… read them below or add one }

1 bharat shah August 1, 2013 at 11:35 am

thank you for the article compiling terms for property transaction. one more terms i like to state is the land underlying the estate , which is , as per my impression, mentioned in the sale deed. it is important, because the intrinsic value of the property at the time is function of the land cost plus cost (depreciated cost, in case of old property) of the construction. some have impression that they can latter build more floors on the ground floor house as they wish , but that is limited to floor space index(=total built up area allowed/the land underlying the property) allowed in that area and other rules and regulation. so the land underlying the property is important .

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2 Manish Chauhan August 5, 2013 at 1:13 pm

Thanks for adding that important point. Will come up with another article on that point in future

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3 Sushil Girdher August 1, 2013 at 11:40 am

Sir
Very Good Articles….Almost all the terms was already known to me….except a little confusion………..what is the diffrence between sale deed and conveyance deed……….as far as i think…conveyance deed is when property is registered in the name of first time buyer from govt authority like HUDA in Haryana…..and sale deed is when it is further sold to third party by original allotee….am i right?

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4 Sivakumar Jayaraman August 1, 2013 at 11:58 am

This article is very informative and thanks for this, what happens if the power is executed sometime in 2005 and then registered by the power agent to his son. Is it possibel to cancel this power now leagaly by the original land owners?

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5 Manish Chauhan August 5, 2013 at 1:04 pm

I am not sure if I have knowledge to answer that . please take help of our forum on this – http://www.jagoinvestor.com/forum/

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6 Manish Chauhan August 5, 2013 at 1:12 pm

Sale Deed is document give by Builder to the Buyer of property to transfer the ownership of Flat.

Conveyance Deed is document given by Builder to Society formed to handover the rights of land and other powers .

Manish

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7 Pramod August 1, 2013 at 11:54 am

Thank you Manish & team. Good collection of details and one must know these terms before investing for house.

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8 Manish Chauhan August 5, 2013 at 1:11 pm

Welcome

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9 mudasir August 1, 2013 at 12:01 pm

Too good. Im speechless. Thanks and keep the good work up!

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10 Manish Chauhan August 5, 2013 at 1:03 pm

Welcome :)

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11 Dhiraj Bathija August 1, 2013 at 12:11 pm

A couple of other terms:
1. There is some document called “saat baara” (7/12 ). I think it’s applicable for land transactions
2. search report

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12 Manish Chauhan August 5, 2013 at 1:03 pm

But is it applicable for all over India or some state specific term ?

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13 Dhiraj Bathija August 5, 2013 at 1:20 pm

not sure Manish.
A couple of other terms that I came across –
1. TDR – Transfer of Development Rights
2. FSI – Floor Space Index

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14 Manish Chauhan August 5, 2013 at 1:28 pm

Will look at them

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15 Lakshmipathy G August 1, 2013 at 12:11 pm

Thanks Manish for the Compilation of the terms.

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16 Manish Chauhan August 5, 2013 at 1:03 pm

Welcome :)

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17 Chandrashekhar Chandvale August 1, 2013 at 12:34 pm

Dear Sir,
Very important and informative definitions are neatly given. Many thanks for this article.

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18 Manish Chauhan August 5, 2013 at 12:58 pm

Welcome

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19 S.Sivaram August 1, 2013 at 12:44 pm

Dear sir

Many Thanks can you all tell us as to what Documents are to be obtained from the home loan provider once the Loan is fully paid off
Can u also explain whether at the fag end of closing the Home loan is it worth to pledge Jewels and pay off the Home Loan
Please sir I expect reply here itself in the Forum for the benefit of others

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20 Manish Chauhan August 5, 2013 at 12:58 pm

I will need to look at that and come up with another article

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21 mux August 1, 2013 at 12:46 pm

Hi Manish

It will be good to clarify that if a person is holding a new under construction property for 3 years and has yet not got the possession certificate, then the long term capital gains would be applicable. But once the possession certificate is received, then one needs to hold the property for another 3 years for long term capital gains to be applicable.
Can you please confirm if this is correct.

regards
mux

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22 Manish Chauhan August 5, 2013 at 12:57 pm

It would take things into consideration from the date property was registered, because thats when you buy the property on papers

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23 S.Sivaram August 1, 2013 at 12:52 pm

Dear sir

Another Important thing which I noticed when we apply for Encumberance Certificate for say 10Years in Tamilnadu it just gives the Name of the Previous Owners but on any ground it does not highlight whether any loan is subsistiting thereby buyer can be aware as to go ahead with the property or not.I dont know how other states gives the encumberance certificate which is a very important document can u please elobrate much as to how to go about it for the benefit of every investors in real estate

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24 Manish Chauhan August 5, 2013 at 12:54 pm

I am not sure of the details here. May be someone who has dealt with it can comment on it

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25 muralikrishnan August 8, 2013 at 11:05 am

Hi Manish,
Generally after releasing full loan amount, all banks will register this mortgage details is sub-register office.It is called as MOD. So if any one check Encumbrance Certificate for that property, it will contain that mortgage details.Once the loan is fully paid, bank will cancel that mortgage details Note: Normally these process is followed by all banks and NBFC. If the owner got the loan from the private parties these details might not be registered and EC wont show that details.
Thanks,
Murali

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26 Manish Chauhan August 9, 2013 at 9:37 am

Thanks for that info :)

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27 S.Sivaram August 1, 2013 at 1:02 pm

can you dwell upon

Monthly Simple Interest Vis a Vis Monthly Compound Interest
Jewel Loan Vis a Vis Home Loan in the light of the above

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28 Manish Chauhan August 5, 2013 at 12:51 pm

That should call for a seperate post .

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29 brijesh mandavi August 1, 2013 at 1:09 pm

Dear Manish, thanks for providing valuable real estate terminologies. excellent.

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30 Manish Chauhan August 5, 2013 at 12:50 pm

Thanks . spread it !

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31 Sachin August 1, 2013 at 1:34 pm

Thanks Manish for informative post.

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32 Manish Chauhan August 5, 2013 at 12:50 pm

Welcome

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33 Asif August 1, 2013 at 1:47 pm

Thanks a lot. this is very useful.

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34 Manish Chauhan August 5, 2013 at 12:49 pm

Thanks

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35 tejash August 1, 2013 at 1:47 pm

very informative one.

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36 Manish Chauhan August 5, 2013 at 12:49 pm

Thanks

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37 vivek August 1, 2013 at 3:24 pm

Can anybody will add the term FSI or Floor Space Index ( Chatai Nirdeshank) as now days this term is very popular,but very few people are known to it?

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38 Manish Chauhan August 5, 2013 at 12:41 pm

Will do that Vivek !

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39 Mohammad August 1, 2013 at 4:15 pm

I am confused whether to invest in real estate or mutual funds. Currently, all i have is fixed deposits. I know i should do better, for i am only 25 years old. What is your opinion, Manish? Does real estate give as good returns as mutual funds?

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40 Manish Chauhan August 5, 2013 at 12:41 pm

Cant answer that, because they are not guaranteed. there are various time frames where one has beaten another in terms of returns. So there are many angles for taking that decisions

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41 angan chandra August 1, 2013 at 7:56 pm

related article-http://rupee2wealth.com/the-documents-need-to-checked-for-first-time-home-buyers

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42 Manish Chauhan August 5, 2013 at 12:40 pm

Will do :) . thanks

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43 PARITOSH TRIVEDI August 1, 2013 at 8:29 pm

Thanks for sharing this informative article.Will surely help a lot.
Keep it up.

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44 Manish Chauhan August 5, 2013 at 12:48 pm

Welcome

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45 Sreedhar August 1, 2013 at 10:01 pm

Nice article. It is very informative. Specially for the people who are curious to buy home, but doesnot know the fundamentals of realestate and taxes.

thank you very much.

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46 SK Ray August 2, 2013 at 8:05 am

Dear Manishji ,

Thank you so much for this splendid article on Real Estate. I had zero knowledge on real estate sector. But your article on this subject has really enhanced my knowledge on this sector. thank U once again,
with regards,
S K Ray

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47 Manish Chauhan August 5, 2013 at 12:38 pm

Welcome SK :)

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48 Jatin August 2, 2013 at 9:50 am

What is “7/12 Utara” & OC ?

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49 Manish Chauhan August 5, 2013 at 12:37 pm

these are specific to state I guess . Will have to find it out

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50 Jatin August 6, 2013 at 11:06 am

Ok. Thank you.

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51 Joel Trinidade August 2, 2013 at 10:26 am

Dear Manish,

Two more words that could have been added to the list which get thrown around quiet frequently by builders are 1) Loading 2) Development charges.

Regards
Joel

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52 Manish Chauhan August 5, 2013 at 12:25 pm

Joel

Yes, these are also important terms, but is there a standard definition for each of these terms ?

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53 Sundeep August 2, 2013 at 11:09 am

Enlightening article. But every state has some terms in the local language. For example which of these documents is “khata” , a term used in Karnataka?

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54 Manish Chauhan August 5, 2013 at 12:22 pm

yes, each state will have some terms for their state . But thats outside the scope of this article for now :)

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55 Sujit Agarwal August 2, 2013 at 11:10 am

Thanks Manish!
I have a few more things to add.
1. During possession, the purchaser should ensure that he has indeed got the carpet area that he paid for (mentioned in the agreement). It is seen in Pune (not sure about other cities, but I guess situation may not be very different) that some builders (I am talking about renowned ones) give as less carpet area as 100 sq ft. for a flat of 943 sq ft. I.e. the owner ends up paying about 15% more than what he gets. One can register an FIR, or go for consumer forum with his case. Unlike Civil courts, Consumer Courts give time bound rule, and most of the time its from consumers side. There are Govt. certified Architects who give you on Affidavit (which can be used in Court) Design flaws & other issues in the flat (and entire society, if you wish), at a cost, which are against the Govt. prescribed Norms (Construction Rules, DO Rules, etc.)
2. Builders delay Society formation as much as they can. This is because, they get Flat Owners Corpus Money to be used, freely. So flat owners need to help form the society as soon as possible
3. As per Supreme Ruling, Builder should give Car Parking free of cost

regards,

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56 Manish Chauhan August 5, 2013 at 12:21 pm

Sujit

Thanks for that information Sujit. Car parking should not be charged seperately. but then dont you think that the pricing includes that already :)

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57 Chhaya S. August 2, 2013 at 11:54 am

Thanks Manish for valuable information.

There is one more called “Indemnity Bond” which created in favour of Transferee by Transferor to indemnify the Transferee against any loss/ damage caused on purchase of the property and/or to indemnify for any charge, lien and mortgage created on the purchased property.

The “Power of Attorney” in case of purchase of property should always be “Irrevocable Power of Attorney”.

Chhaya S.

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58 Amit Kukreja August 2, 2013 at 12:00 pm

There are many more that can be added to the list, particularly for the properties that are under-construction stage:

– Space Buyer Agreement
– Builder Buyer Agreement
– Allotment Letter/Card
– No Objection Certificate
– Tripartite Agreement
– Demand Note/Letter
– Payment Schedule
– Offer of Possession Letter
– Signature Verification Certificate
– Affidavits
– Payment History
etc etc…

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59 hari August 4, 2013 at 8:00 pm

Hi Manish,

Thanks for initiating this thread.
Can you please add the above mentioned words also to the list.
Some more ..

1) occupancy certificate
2) A-Khatha , B-Khatha (these two terminologies are used in karnataka)
3) List of all the NOCs required and buyer should know
4) UDS (undivided share in the land)
5) Approved Plan
6) Voilations: General Voilations builders make
7) Survey Number & how to validate them
8) JD (Joint development)

Thank you
Srihari

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60 Manish Chauhan August 5, 2013 at 10:23 am

Hi Srihari

Let me check them and do the need ful soon

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61 Manish Chauhan August 5, 2013 at 12:19 pm

Thanks for sharing that list Amit

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62 SK August 2, 2013 at 2:48 pm

I purcahsed a new flat from a builder in a mutistoried apartment at a city in Manahrashtra (but Not in Mumbai). I have got the Sale-deed registered with my photograph and finger-print. I got the the builder’s name replaced with my name in the city’s municiple corporation’s tax records and now the tax demand note comes in my name. Howveer, in the the tax demand note there is a footnote which says” This is not a proof of ownership”

I wish to know “what is the proof of ownership in this case”. Is the “sale-deed” proof of ownership by me? Does the law in Maharashtra require me to obtain some other document as proof of ownership?

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63 Manish Chauhan August 5, 2013 at 12:19 pm

Sale deed is enough for proof of ownership !

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64 Ramesh August 2, 2013 at 2:58 pm

Thanks for the details. Is 7/12 not a required document or this is only required when we purchase a plot/land. Do we have some other specific documents to look for when we purchase a plot or farm land. Also one different question not sure whether addressed before – What are the various types of NA land and its purpose.

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65 Manish Chauhan August 5, 2013 at 12:18 pm

Hi Ramesh

I am not sure about this 7/12 document . Let me find out more on this and come back with an article itself :)

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66 tsashok August 3, 2013 at 11:56 pm

Very nice article.

Few more things to be considered.

1. While purchasing the flat, please ask for amenities. My builder has given the Flat with Walls and doors as like in the building plan. Not provided any shelfs even i told him that i was ready to pay. As i had done many works after construction, i had spent more money.
2. if he does not complete the house in time, we need to pay EMI as well as rent for the existing house. So, we need to put a clause in the deed(!!) that if he does not give the house within this time, he needs to pay Rs… per month until he handsover the house. (many builders are giving the house after 3 years after giving the advance..)

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67 Manish Chauhan August 5, 2013 at 10:56 am

Thats a good idea and thanks for sharing that .

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68 Nikunj August 4, 2013 at 5:23 pm

Service tax has been further increased with effect from 9th may.

In the recent Finance bill 2013, for the purpose of service tax computation the taxable value the service tax has been increased from 25% to 30%. According to Finance bill the taxable value shall remain 25% where the carpet area of residential unit is upto 2000 square feet. or the amount charged is less than One Crore Rupees., taxable portion for service tax purpose will remain as 25%; in all other cases taxable portion for service tax purpose will be 30%.

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69 Manish Chauhan August 5, 2013 at 10:20 am

Thanks for that info Nikunj , so service tax can range between what values ?

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70 Ram August 5, 2013 at 9:46 am

Thanks Manish for the useful article

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71 Manish Chauhan August 5, 2013 at 10:10 am

Welcome Ram :)

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72 Mohit Pandey August 5, 2013 at 11:35 am

Nice compilation Manish :)

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73 Manish Chauhan August 5, 2013 at 11:36 am

Thanks Mohit

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74 Sameera August 5, 2013 at 12:04 pm

Hi Manish, great blog shared above. Thanks for sharing information about real estate investments. Really a great help for real estate investors. Awaiting for more blogs like this.

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75 Bhuvanesh August 5, 2013 at 1:26 pm

What is AGPA? Agreement and General power of attorney.

I hear from the builder that this has cost of 6% whereas registration would cost 8%. Since I am planning to sell this flat in few months…..i was thinking of going with AGPA…..can I sell using that?

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76 Manish Chauhan August 5, 2013 at 2:27 pm

Read the article again, Power of Attorney is now not allowed in real estate transactions .

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77 Bhuvanesh August 5, 2013 at 3:05 pm

But this is not just Power of Attorney but it also has an agreement angle to it. BTW, this is in Hyderabad, if that helps

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78 Manish Chauhan August 5, 2013 at 3:14 pm

I am not aware about it then. check on our forum – http://www.jagoinvestor.com/forum/

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79 A Jain August 5, 2013 at 3:27 pm

A commercial complex builder is have started selling to second floor without construction by measuring area. Which exact document should I ask from him to verify if the second floor construction is legal and there are no FSI issues in that complex ? Or is there any document (blue print or approved map kind of stuff ), I can obtain & which govt department ?

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80 Manish Chauhan August 9, 2013 at 11:04 am

You should ask them for the approval documents from the muncipality !

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81 Sandeep August 6, 2013 at 2:21 pm

Thanks Manish for sharing valuable information. one must have knowledge of this terms before buying or selling property.

good one.

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82 Manish Chauhan August 9, 2013 at 10:37 am

True !

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83 Arudra Kumar August 7, 2013 at 3:55 pm

Manish,

What is Plinth Area ?

Regards,
Arudra

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84 Manish Chauhan August 9, 2013 at 10:08 am

Its same as Build up area . In US etc, this word is used , In India its generally referred to Build up !

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85 astrosunil September 27, 2013 at 5:41 pm

As far as I understood Plinth area = Carpet area + walls . Consider your house is rectangle in shape. This rectangle’s area is Plinth area.

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86 Manish Chauhan September 30, 2013 at 8:57 am

Thanks for sharing that

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87 DIPEN TRIVEDI August 15, 2013 at 12:57 pm

Thanks Manish. good article for real estate investors.eagerly wait for next article.Thanks once again

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88 Manish Chauhan August 21, 2013 at 2:16 pm

Welcome !

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89 Mehul August 16, 2013 at 4:27 pm

I come from real estate background (now, don’t hit me, ok?), so here are my two cents:

FSI (Floor Space Index): It is the ratio specified by local authority (generally municipal corporation or urban development authority) which governs how much area one can build over a specific plot of land. i. e. if FSI for an area is 2 and you have a 1000 sq ft plot, you can build (2 X 1000) 2000 sq ft building over it. Generally, common areas like staircase, lift, passage leading to the flat door, service ducts outside toilets and kitchens, etc. are not considered in this 2000 sq ft FSI area, which means, you can construct these areas over and above the permitted FSI area. At macro level, this magic ratio called FSI determines how much construction will come up in a city.

OC (Occupancy Certificate): Well, generally CCs (Completion Certificates) are issued by municipal corporation in stages. i. e. a 25 floors high building may be issued CC for every 5 floors depending on its design. However, building is considered to be ready-for-occupation after builder has not only completed the construction but has also made it habitable by bringing in all services like electricity, water supply, drainage connection and fire fighting facilities. The corporation, after receiving NOCs from all concerned dept. will issue OC. Ideally, builder should / can issue Possession Letter only after receiving the OC. In reality though, several (not few) buildings have OC even after years of completion and being occupied. Buildings not having OC have higher outgo towards water bill, electricity charges and property tax.

Carpet Area / Usable Carpet Area: Well, Usable Carpet Area is another ‘innovative’ term. Loading is done on Carpet Area to arrive at Super-built up area (Sale-able area), and since these loading figure nowadays is going in the ‘senior-citizen’ range, builders add areas where you can’t actually lay the ‘carpet’ but may be able to step down, like flower beds, chhajjas, architectural bands projecting out of the floors, etc. to carpet area and call the sum area as ‘usable carpet area’!

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90 Manish Chauhan August 21, 2013 at 1:43 pm

Thanks Mehul

For adding those points here. I am adding them to the main article :)

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91 Mehul August 21, 2013 at 3:39 pm

Pleasure Manish!

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92 astrosunil September 27, 2013 at 5:46 pm

Thanks for the nice article , Can you also write a flowchart of the same, the documents which come into picture at various stages for an under construction appt. I have booked an appt, advocate has said all ok with documents. Builder said he has applied with SBI/HDFC etc & waiting for approval document. What is this document called ? With this document if I approach the same bank, will my loan be approved faster ?

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93 Manish Chauhan September 30, 2013 at 8:57 am

There are so many documents, you need to ask the builder about the doc name !

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94 Chetan Ambi November 16, 2013 at 9:47 am

This is very very good article on real estate. Very informative!! I am planning to buy a site and started reading article on real estate in jagoinvestor from few days. Jagoinvestor is the encyclopedia of personal finance in India.

[On a lighter note] I have been seeing quality articles on real estate recently from you. Are you buying flat/site in Bangalore or you bought it already? :)

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95 Manish Chauhan November 16, 2013 at 10:06 am

Yea Chetan

I got one in Pune recently :) . Thats the reason I am writing more these dasy on Real estate :) . Also , I reside in Pune now , not bangalore ! . It was 3 yrs back when I was in Bangalore, now I am shifted to Pune

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96 Satish P October 15, 2014 at 6:26 pm

Dear Manish,
Thanks for the wonderful atricle.

I have a question regarding the Service tax& VAT.
Is it applicable if flat registration done before obtaining O.C or C.C from
Cidco,Navi mumbai.

Please reply!!

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97 Manish Chauhan October 15, 2014 at 10:09 pm

Yes, if OC is not there, you will pay Service tax and VAT !

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98 Satish P October 16, 2014 at 3:24 pm

Thank you MAnish!!

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