Go for pre-approved property

Projects pre-approved by banks assures buyers that all legal requirements have been met by the builder

Have you heard of the construction of a building being stalled because the builder hasnt received requisite approvals and does not have all the documentation in place? It can be rather annoying,because one does not know when the construction will re-start 8211; that will have a financial and emotional impact on those already invested in the property.

Which is why,before purchasing any property,the buyer needs to make sure that the builder possesses the requisite approvals. How many of us are aware of the approvals that are mandatory for the construction? Instead of worrying about the builders documentation and the legality of the construction,its best to look for a pre-approved property.

What does a pre-approved property imply?

It means that the titles and the documents of the property have been examined by a bank/financial institution FI on the request of a builder. Banks/FIs have the technical know-how,so their assessment will be a comprehensive one- it also takes into consideration things like the track record of the builder among several other things.

If the property is pre-approved by a bank/ FI,as a buyer it would be safe to assume that the builders documents are in place and the construction is legally authorised. The reason being,banks/FIs have a vested interest. They would have provided loans to quite a few buyers of that property. Any delay in construction,would affect the bank/FI financially as EMIs for several customers would start on the possession of the property. Also many a time,banks provide loans quickly to the builder of the property that they have pre-approved. So their due diligence can be relied on as it is in their interest also that construction goes on uninterrupted.

However,this does not imply that the bank/FI will in any way be responsible for the delay in construction by the builder for whatever reason. Also,you cannot expect the bank/FI to take any legal action against the builder or waive off any charges for you. Pre-approved just means that the property is legally authorised and the builder has a trustworthy reputation.

What is the benefit to a home buyer?

The home buyer frees himself from worrying whether the property complies to all the requisite legal and technical aspects or not- here he need not worry about delay in construction due to improper documentation

Loan sanction to buyers of pre-approved projects is quicker- the bank/FI has already done the due diligence of the property,the records of which they maintain time taken for processing the loan application is reduced

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Pre-approved property is a good indicator of project quality as banks/FIs take into consideration all parameters including the track record of the builder before putting the pre-approved stamp.

Buying a property is hardly an easy decision to make. It is the single largest asset investment which will have a long term financial impact. So it is best to ensure your investment is safe and secure from a legal perspective so that you shield yourself from unpleasant surprises later. Look for pre-approved properties,which the builders will usually share at the time the project becomes available for booking. Also,institutions such as ICICI Bank and LIC Housing Finance among others,do provide the list of properties pre-approved by them upon request. l

Author is,CEO,BankBazaar.com