Things a Buyer Should Know Before Investing In a Pre-Launch Project
Mar 10, 2017 Home Trading Steps
Buying a house is an expensive affair and getting to buy a property at 20 to 30 percent cheaper price, is a win- win situation for both developer and buyer. This is one of the major reasons why buyers invest in pre-launch projects but end up waiting to get the possession of the property for more time than anticipated. It happens because the developer needs many clearances before the project actually starts.
According to the law, a developer cannot take any money from the buyer before getting all the clearances. But sometimes, the developers try to raise their funds through pre-booking because the cost of funds is cheaper than bank loans. If the developer has started the project without getting the proper clearances from various government bodies like civic body, development authority, then the government can later stall the project causing a long delay.
What can a buyer do?
As tempting it is to buy the property at cheaper prices, it is wise to make necessary checks before investing in a pre-launch project. Buyers should do a thorough background check of the developer and their previous projects. If the developer is renowned and has delivered his previous projects than buyer may go ahead and book the property. But if the developer is new, then it might not be too wise to invest in a pre-launch project. If it a joint project between two developers, it is better to check their background individually and if they have delivered any project like this before. Before booking a flat a buyer should ask for Intimation of Disapproval (IOD) and Commencement Certificate (CC).
An Intimation of Disapproval (IOD) documents that has approval from various authorities and government authorities. And a Commencement Certificate is the proof that the developer has the green light to start the project. Sometimes, these may come in phases. Like, for eg, a developer can take permission for a 10 storey building hoping to get approval for other floors later. There is, however, no guarantee that the developer will get the clearance of further floors. Developers try to sell the higher floors which haven’t been given the permission. It is, therefore, wise to book the property for which permission has been granted.
According to the law, a developer cannot take any money from the buyer before getting all the clearances. But sometimes, the developers try to raise their funds through pre-booking because the cost of funds is cheaper than bank loans. If the developer has started the project without getting the proper clearances from various government bodies like civic body, development authority, then the government can later stall the project causing a long delay.
What can a buyer do?
As tempting it is to buy the property at cheaper prices, it is wise to make necessary checks before investing in a pre-launch project. Buyers should do a thorough background check of the developer and their previous projects. If the developer is renowned and has delivered his previous projects than buyer may go ahead and book the property. But if the developer is new, then it might not be too wise to invest in a pre-launch project. If it a joint project between two developers, it is better to check their background individually and if they have delivered any project like this before. Before booking a flat a buyer should ask for Intimation of Disapproval (IOD) and Commencement Certificate (CC).
An Intimation of Disapproval (IOD) documents that has approval from various authorities and government authorities. And a Commencement Certificate is the proof that the developer has the green light to start the project. Sometimes, these may come in phases. Like, for eg, a developer can take permission for a 10 storey building hoping to get approval for other floors later. There is, however, no guarantee that the developer will get the clearance of further floors. Developers try to sell the higher floors which haven’t been given the permission. It is, therefore, wise to book the property for which permission has been granted.
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