At some point in your life, you may consider investing in a real estate development in India. You can become overwhelmed by the complexity of the industry’s many elements and property terms. In particular, there may be misunderstandings and problems while agreeing on a deal with a seller due to the numerous foreign and confusing terms used in the real estate industry. It’s unfortunate that some sellers or agents could take advantage of your ignorance, so before making any purchases, make sure you do your homework.
To make the best decision and prevent yourself from getting fooled by the agents and dealers, you need to have a proper knowledge of these legal terms related to real estate in India. If you are a first-time investor in India, then these legal terms are very important for you as they are related to real estate investment and property transactions.
Here are the top 10 important real estate terms that you must know of-
Carpet Area
You might hear the term “carpet area” a lot when looking for real estate. The actual usable area of a property that a carpet can cover is known as Carpet Area real estate. This means that it is the space on the land that is available for use, minus the wall thickness. It’s important to know a property’s carpet area since it can help you gauge how much space is suitable for your requirements. It is also a key component in figuring out how much the property is worth and is frequently used to figure out how much it will cost to rent or sell.
Built-Up Area
The term “built-up area” should also be understood after comprehending carpet area, as it is an essential component in property evaluation. Despite their occasional confusion, these real estate terms have different meanings. The carpeted area and the space occupied by walls, including the wall’s thickness, are included in the built-up area of the property. This indicates that the built-up area includes all of the property’s interior space, including any walls, balconies, and other projections. Determining the truly usable space within a property and computing its worth and possible return on investment requires an understanding of the built-up area.
Stamp Duty
Stamp duty, a levy that the government collects on real estate, is another word that is used a lot. You’ll discover that state-by-state variations exist for this tax. It is 3% in certain areas and may reach 8% in others. This is an important term to grasp because it is one of the key phrases in real estate. For example, compared to male owners, female owners pay substantially less in stamp duty. Therefore, you can save a lot of money on stamp duty if you register a property in the name of a female family member.
Floor Area Ratio
The link between the land on which a building is built and the floor area that is either usable or permitted for use is known as the Floor Area Ratio, or FAR. Municipalities set the FAR guidelines, which vary widely from one locality to the next. The ratio will change based on changes in growth patterns, population density variations, construction-related activities, and the characteristics of the building’s space or land.
Ground Coverage
The built-up area at ground level, or the ground level directly above the plinth, is known as the ground coverage area. The ground coverage area is calculated in percentage terms. How is the area of ground coverage calculated? The following is the formula for ground coverage: (Maximum built-up area at any floor / Plot area) X 100 = Ground Coverage Area
Title Deed
One of the most important property terminology you need to understand is this one from real estate. A title deed is a legal document proving who owns the property. The owner’s name must match the name on the original title deed paperwork, thus you must carefully review the document. You need to look into the full chain of title deeds, from the point of allocation to the final owner, just to be sure.
Adjustable Rate Mortgage
An adjustable-rate mortgage is a type of loan in which the interest rate fluctuates following an initial fixed-rate period. As a result, your interest rate may rise or fall by the market. It is one of the more well-known and frequently used terminology in the real estate industry, so if you want to go with it, make sure you thoroughly read the terms and circumstances.
Fixed Rate Mortgage
Borrowers also have access to fixed-rate mortgages in addition to adjustable-rate mortgages. The primary distinction between the two is that, in the case of a fixed-rate mortgage, the interest rate does not fluctuate over the course of the loan in response to changes in the market, because they will always be aware of their monthly payments, this gives borrowers security and predictability in their mortgage payments.
Due to this, fixed-rate mortgages are preferred by people who place a high value on financial planning and budgeting. On the other hand, an adjustable-rate mortgage may have interest rates that change in response to market conditions, which could eventually result in greater payments and uncertainty. It is essential for everyone working in the real estate industry to comprehend these property phrases.
General Power Of Attorney
The General power of attorney (PoA) enables an individual or organisation to act on your behalf. These abilities include managing financial and commercial transactions, purchasing life insurance, resolving disputes, managing company ventures, donating, and hiring experts. If you are physically or psychologically incapable of handling your affairs, or if you will be out of the country and require someone to handle specific concerns, a general power of attorney (rather than a special PoA) is a useful tool. An estate plan generally includes a general power of attorney (PoA) to ensure that someone can manage finances. An agent must accurately document every transaction they complete on your behalf and give you information on a regular basis to ensure you are aware.
