How to Stay Safe from Property Frauds During Purchase
Buying a property is one of the most significant financial decisions in a person’s life, and it often involves large sums of money. Unfortunately, it can also be a target for fraudsters who use various tactics to deceive buyers. Property frauds can lead to legal complications, financial loss, and long-term stress, which is why it’s essential to be cautious and take steps to protect yourself throughout the property purchase process.
In this guide, we’ll explore common types of property frauds and provide actionable tips on how to stay safe during a property transaction.
1. Common Types of Property Frauds
a. Title Fraud
One of the most common types of property fraud occurs when the seller does not have a clear or legitimate title to the property. In some cases, fraudsters sell properties they do not own or properties with unresolved legal disputes or encumbrances. Buyers who purchase such properties may face legal challenges to establish ownership.
b. Impersonation Fraud
In impersonation fraud, a fraudster pretends to be the legitimate property owner and sells or mortgages the property without the owner’s knowledge. Buyers who unknowingly purchase these properties often face legal disputes from the actual owner, leaving them with no legal rights to the property.
c. Fake Documentation
In some cases, fraudsters may use fake or forged property documents (such as ownership deeds, approvals, or property tax receipts) to sell a property. This can result in buyers purchasing properties based on fraudulent information, which may lead to legal disputes or loss of the property.
d. Property Sold to Multiple Buyers
This type of fraud occurs when a single property is fraudulently sold to multiple buyers. The fraudster collects payments from each buyer and then disappears, leaving the buyers in a legal battle over ownership.
e. Pre-Construction Property Scams
In pre-construction scams, fraudsters sell properties that are under development or not yet constructed, often using fake approvals and unrealistic promises about project timelines. Buyers who fall victim to such scams may find that the project never gets completed or that the property was never approved for construction.
2. Tips to Stay Safe from Property Frauds
a. Verify the Property Title
The first step in protecting yourself from property fraud is to verify the property’s title thoroughly. Here’s how:
- Check for Encumbrances: Ensure that the property is free of encumbrances (outstanding loans, legal disputes, or claims by third parties). You can obtain an encumbrance certificate from the local sub-registrar’s office to verify this.
- Request the Title Deed: Ask the seller for the original title deed and check whether it is clear and legally valid. The title deed should be free of any legal disputes or mortgages.
- Consult a Property Lawyer: Hire a legal expert to verify the authenticity of the property title and documents. A property lawyer can help identify any red flags, including forged documents, ownership disputes, or unresolved legal cases.
b. Check the Seller’s Identity
To avoid impersonation fraud, always verify the identity of the seller. Here are some steps you can take:
- Verify Personal Identification: Ask the seller for valid identification documents, such as an Aadhaar card, passport, or PAN card, to confirm their identity.
- Cross-Check the Seller’s Name on Property Documents: Ensure that the seller’s name on the property documents matches their personal identification.
- Request Proof of Ownership: Ask the seller for proof of ownership, such as previous sale deeds or property tax receipts, to verify that they are the legitimate owner of the property.
c. Inspect Property Documents Thoroughly
Fake documentation is a common tactic in property frauds. Make sure to scrutinize all documents provided by the seller:
- Approval from Authorities: Ensure that the property has the necessary approvals from local authorities, such as building permits, land-use approvals, and environmental clearances.
- Check for Completion or Occupancy Certificates: For properties that are already constructed, ask for the completion certificate (CC) or occupancy certificate (OC) issued by the local municipal authority. These documents confirm that the construction was completed as per legal regulations and the property is fit for occupancy.
- Get Certified Copies: Obtain certified copies of the property’s documents from the sub-registrar’s office to verify their authenticity. This helps ensure that the documents provided by the seller are genuine and match the official records.
d. Conduct a Physical Inspection
Always physically inspect the property to ensure it exists and matches the description provided by the seller:
- Visit the Property: Visit the property in person to confirm that it is in the location stated and that it meets your expectations in terms of size, layout, and condition.
- Talk to Neighbors: Speaking with neighbors or people living near the property can provide additional information about the property’s ownership history, any disputes, or ongoing construction.
- Verify Property Boundaries: Check the boundaries of the property to ensure they align with the details in the property documents. Any discrepancies in property size or boundaries could be a red flag.
e. Cross-Check Multiple Ownership Transfers
If the property has changed hands multiple times, cross-check the history of ownership transfers:
- Obtain the Sale Deed History: Review the chain of ownership through past sale deeds and ensure there are no gaps in the ownership records.
- Avoid Properties with Suspicious Transfer History: Be cautious if the property has been transferred multiple times in a short period or if the ownership history seems unclear. This could be a sign of fraud.
f. Check for Pending Legal Issues
Conduct thorough research to ensure there are no pending legal issues related to the property:
- Litigation Search: Perform a litigation search to determine if there are any ongoing legal disputes involving the property. This can be done through legal databases or by consulting a lawyer.
- Public Notices: Look for public notices in newspapers or online regarding the property, which may indicate disputes, objections, or legal claims on the property.
g. Avoid Cash Transactions
One of the tactics used in property frauds is insisting on cash transactions, which leave no traceable record. To protect yourself:
- Insist on Bank Transfers: Always make payments through bank transfers, cheques, or demand drafts, which provide a clear record of the transaction. Avoid paying large sums in cash.
- Document All Payments: Keep a record of all payments made during the transaction process, including advance payments and installments. Ensure you receive receipts for every payment.
h. Engage a Trusted Real Estate Agent
If you are unfamiliar with the property market, consider hiring a reliable and experienced real estate agent to guide you through the process:
- Check Agent’s Credentials: Verify the agent’s credentials, including their license and past experience, to ensure they are legitimate and trustworthy.
- Get References: Ask for references from previous clients to confirm the agent’s reputation and success in handling property transactions.
i. Register the Property
Once you’ve finalized the deal, it is crucial to register the property in your name to establish legal ownership:
- Register with the Sub-Registrar: Ensure the property is registered at the sub-registrar’s office by executing a proper sale deed. This step formalizes the transfer of ownership and protects your legal rights to the property.
- Pay Stamp Duty and Registration Fees: Make sure that the applicable stamp duty and registration fees are paid as part of the property registration process.
3. How to Report Property Fraud
If you suspect or become a victim of property fraud, take immediate action:
- File a Complaint with the Police: Report the fraud to the local police station and file a formal complaint. You may also file a First Information Report (FIR) to initiate legal proceedings.
- Contact a Lawyer: Consult with a property lawyer to understand your legal options and take appropriate legal action to recover the property or seek compensation.
- Notify Authorities: Inform local government authorities and the sub-registrar’s office to block the property from further fraudulent transactions until the issue is resolved.
Conclusion
Property frauds are a real risk in the real estate market, but with vigilance and proper due diligence, you can protect yourself from falling victim to scams. By verifying property titles, checking the seller’s credentials, conducting thorough inspections, and engaging legal experts, you can ensure that your property purchase is safe and secure. Taking the right precautions during the buying process will help you avoid legal complications, financial losses, and long-term stress, allowing you to enjoy your property with peace of mind.