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Why you need to hire a real estate lawyer when buying a house

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We examine the important role that a real estate lawyer plays, in a property purchase journey and why home buyers must avail of the services of an attorney throughout the process Prabhat Kumar bought an apartment in Greater Noida West through a trusted property agent. However, following the collapse of a building in Shahberi, which forced the authorities into action, Kumar’s project was found to be illegal. Kumar believed that since the bank had financed the project and it was registered, the project was legally safe to invest in. Today, he is fighting a legal battle along with others, while the builder has already been booked. Kumar’s case is akin to many across the country, where the home buyers go to lawyers, only when the damage has already been done. Ironically, buyers tend to trust and pay more to the property brokers than the lawyers.

Some countries have specific laws that mandate the presence of an attorney at specific points in the purchase process, to help the buyers to understand the legalities and avoid future litigation. There is a clear mandate against conflict of interest and the real estate attorney can only represent the buyer or the seller. In India, home buyers are not legally required to hire an attorney, to buy or sell the property. Moreover, as the lawyers cannot advertise, finding a real estate attorney is also challenging.

There are two reasons why an average home buyer in India does not hire a lawyer during a property purchase. One is the lack of education on the importance of due diligence and secondly, property prices are significantly high compared to income levels, thereby, prompting the average buyer to avoid additional costs.

What does a real estate attorney do for a buyer?

Advocate Devesh Ratan points out that due diligence is an ongoing process in real estate transactions. According to him, it is required at three different stages – pre-purchase, during the purchase, and even after the purchase. In the pre-purchase stage, a buyer needs to know whether the builder has the necessary approvals. During the purchase, due diligence pertains to the documents that are signed by the buyer. “You need to know what papers you are signing. In all probability, you would be signing an allotment letter, which may also be called a booking form or agreement for sale, which is on stamp paper. When you sign those papers, it means you have given your consent, and hence, retracting is a tough job. Even during the purchase, you need to be careful with the papers you are signing and the payment made to the builder or the broker. After the purchase and till the time you get the handover of the property, issues like delayed timelines and ensuring that the layout is as per the approvals, etc., need to be checked,” says Ratan.

Venket Rao, founder of Intygrat adds that even the smallest real estate deal involves a lot of money. While we ask many questions when purchasing even a washing machine, when it comes to real estate, we simply trust a mediator and believe in whatever the seller provides in the name of title /clear documents. “A real estate purchase involves complicated documentation. Therefore, the first thing one should do after identifying a property, even before making any commitment/booking/advance, is to engage a professional in doing proper or at least preliminary due diligence, even if it is a RERA-registered property or even from a reputed builder. Ideally, a legal professional should be associated throughout the transaction – from the initial booking till the sale deed registration,” advises Rao.

Do we need a lawyer for RERA and complaints to the consumer forum?

In case of a dispute, a home buyer can appear on his own in the Consumer Commission or RERA and it is not compulsory to have a lawyer. A complainant can register online on the RERA portal and give the necessary factual details over there. However, a builder will always approach the RERA through a lawyer who will know the provisions and the grey areas of the law and would be well equipped to argue against the buyer’s interest.

For example, a builder’s lawyer may argue that the buyer should wait for another six months to get possession of a project that has been delayed by three years. However, as per the Real Estate Act, the buyer has the right to claim a full refund with interest without waiting anymore. A lawyer would be well-versed with these details, which a buyer may not know.

Many in India believe that legal due diligence is an unnecessary additional expense and the reliance is more on mediators representing the buyer and the seller. However, a legal lacuna in documentation, title or otherwise, can lead to a lot of complications and put the whole investment at risk. This is where a real estate attorney is crucial, in protecting the buyers’ interests.

Why do you need a lawyer when buying a house?

  • A real estate lawyer will perform a thorough check of the land title and approvals.
  • A real estate lawyer will make sure the contract is not unfair.
  • He will help you identify any contingencies you may have overlooked.
  • The more complex the transaction, the more likely you are to benefit from the lawyer’s expertise.
  • Even with self-help windows like RERA, a lawyer can counter the legal team of the builder more effectively.
  • To make the builder legally liable if the project is delayed or commitments are not fulfilled.
  • In most cases, legal due diligence in advance saves you from future litigation.

When do you need a lawyer when buying a house?

  • To check the land titles and approvals.
  • To ascertain if the property to be purchased is already mortgaged.
  • To understand the numerous documents that need to be signed.
  • To sign documents of mortgage with the financial institution.
  • When you have points of conflict and/or disagreements with the other party.
  • When you are supposed to give a consent/satisfaction report for possession and you are not satisfied.
  • When you are forced to sign one-sided maintenance agreements.


Source – https://housing.com/news/why-you-need-to-hire-a-real-estate-lawyer-when-buying-a-house/

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