Whether you’re a real estate investor or a newbie, a handy real estate guide is a must. With new laws and developments each day there are vast array of things that a person needs to understand. Real Estate terminologies can get tricky and confusing, when you have no or incomplete knowledge about them; especially true in the case for new home buyers.
Normally when we meet a real estate advisor there are various terms that we don’t really understand and just stare blankly and nod our ways through the process. Many home buyers get confused between carpet area, built-up area and super built-up area, which are the most important terminologies of a real estate property.
Below is a quick reference guide for real estate keywords:
- Carpet area:Carpet Area is the area enclosed within the walls. This area does not include the thickness of the inner walls. It is the actual useable area of a flat.
- Built-up Area:Built up area includes everything from the thickness of the outer walls, carpet area and balcony area except the inside walls.
- Super built-up area:This generally comprises of the built-up area and also all miscellaneous area including the lobby, stairs, corridors, lifts etc. and are proportionally divided among the flats.
- Per square foot rate:Generally developers decide the value of the property based on the per square foot rate of the super built-up area. This is the reason for the super built-up area is termed as “ Saleable area”
- Floor space index (FSI):Floor space index or FSI as it is normally termed as, is a calculation of the actual ratio between the local total built-up area and the available plot area permitted by the government for a specific locality. A higher FSI will have a higher built-up area. FSI does not include common areas like staircase, passage leading to door, service space outside toilets and kitchens, etc. which means, you can construct these areas over and above the permitted FSI area.
- Conveyance:A deed of conveyance is a signed legal document that shows a title or deed has been transferred. It is used to prove ownership in a piece of property. A deed of conveyance is signed, witnessed, and notarized by the seller and the buyer as well as anyone else with a vested interest in the property being transferred
- Lease agreement:Lease agreement is one type of contractual agreement made between the user and the owner to lease out the property for a period of time.
- License agreement:License agreement is referred as the written agreement which is entered into by the owner of the property who gives permission to another person to use the property or involve any activity with regards to the property.
- Non-disclosure agreement:A non-disclosure agreement or NDA is a legal contract signed between two or more parties outlining confidential materials, knowledge or valuable information which the parties share among themselves for business but wish to restrict the access to third parties.
- Inheritance:Inheriting a property is the practice of passing on of a property, titles, debts and any other obligations upon the death of a person or under other circumstances.
- Subletting:It is basically the practice of an existing tenant to ease out small fraction of the whole property to another person and the subtenant pays the rent to the tenant instead of paying it to the owner.
- Stamp Duty:It is a tax, similar to income tax, collected by the government. Stamp duty is payable under Section 3 of the Indian Stamp Act, 1899. It is payable before execution of the document or on the day of execution of document or on the next working day of executing such a document. The purchaser/transferee has to pay stamp duty or in case of exchange of properties.
- Registration Charges: Like Stamp Duty, you also have to pay Registration Charges when you register the property in your name and the charges again depend from state to state. In Maharashtra, the registration charge is 1% of property or INR 30,000 whichever is lesser.
- CC: Commencement Certificate is mandatory to commence any construction of a property. The certificate is issued by the town planning and engineering department post the inspection of the basic foundation for a superstructure and building boundaries. This also means that the builder would have obtained the required licenses, sanctions and permissions for the map that are required before you can even start excavating.
- Completion Certificate:A completion certification is an important and mandatory legal document proving to the fact that a new building has been constructed and completed according to all the safety norms and regulations of the Buildings Act.
- Sale Deed: A sale deed is one of the most important legal documents in a purchase of a property. After it is 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.
- Gift Deed: Basically you “sell” the property in exchange of money. But when you to transfer the property rights to someone taking the cost for that, as it happens in families, then you have to pass it on as ‘GIFT’ and a Gift Deed should be prepared to document the process. Note you have to pay for the stamp duty while transferring the property.
- Encumbrance Certificate– Encumbrance Certificate is an evidence of free ownership of a property. So if you are taking a home loan against a flat, bank will need Encumbrance Certificate to validate that there is no other loan process going on for the same property. Investor can get the Encumbrance Certificate from the Sub-Registrar Office, where you get your property registered.
These real estate terms will help you understand the real estate terminologies real quick. Happy Buying!