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January 20, 2016

Basic terms used in real estate industry

Acre- Often used in Indian Real Estate unit of measurement of a big chunk of land area. 1 Acre equals to 43560 Sqft.

Agreement to sale- A written agreement to sell in future between seller and purchaser in which the purchaser agrees to buy certain real estate and the seller agrees to sell upon terms of the agreement.

Assessed Valuation - The value that a taxing authority places on real property for the purpose of determining the amount of taxation for that property.

Benami Ownership – In Benami Ownership, the title of the property is in one party’s name and the real ownership is in another party’s name.

Beneficiary- The person /persons /institution designated to receive the income from a trust,estate or a deed of trust. A contingent beneficiary has conditions attached to his /her/their/ its rights

Built -up Area - Includes the carpet area, the wall thickness

Carpet Area - The actual usable area of an apartment / office unit/ showroom etc. minus Wall thickness. Simply put, it is that area within the walls where you can actually lay a carpet.

CBD (Central Business District)- The main commercial area of a town and its immediate radius of 23 kms,typically located towards the city centre,which forms the hub of all major commercial activity in a city.Most of the larger corporate entities, large retail outlets and financial institutions would be located in this area.

Circle rate- This is the minimum rate decided by the government authorities for valuation of land in a particular area.

Comprehensive Development Plan (CDP) – The Master Plan approved by an authority.

Disclosure for Mortgages- This information includes the number of pre-approvals made, the number of mortgages granted, loan amounts, etc. for the piece of property.

Deed- The legal document conveying title to a property.

Defacto Possession- Also called Constructive Possession; the actual physical possession is called Defecto Possession. The actual possession should be held without force or fraud.

Dejure Possession- Also called juridical Possession; it means possession in the eyes of the law. This may not be accompanied by Defacto Possession. Even when the property is lying locked, the Dejure possessor is the Defacto possessor of the property.

EDC- External Development Charges.

Earnest Money Deposit or EMD- A nominal sum of money given as a token to the vendor, signifying the assent to a contract of sale or the like, that the parties are in the earnest or have made up their minds.

Encroachment- The physical intrusion of a structure or improvement on the land of another. For example, a neighbour ’s fence or construction that crosses over your property line.

Encumbrance Certificate- A report issued by registrar of Assurances or Sub- Registrar ’s office after due verification of the relevant documents certifying that the property in question is free from all encumbrances such as mortgages, leases, easements or restrictions.

Fair Market Value- The highest price that a buyer, willing but not compelled to buy, would pay, and the lowest a seller, willing but not compelled to sell, would accept. In other words a value decided by the market forces.

Freehold Property- A property where title paramount has conveyed the property in favour of the purchaser by conveyance/ sale deed with no restriction on the right of the holder of the property to further transfer the property. Record of ownership of the freehold property can be ascertained from the office of the sub-register- It can be transferred by registration of sale deed. It’s a property where the owner has complete control of the land all the buildings on it. When you buy a freehold property, you get absolute right to it, subject to the law ad applicable regulations. This means you can transfer or considered more valuable than a leasehold one.

F S I or Floor Space Index / F A R or Floor Area Ratio- The maximum amount of construction allowed on a given plot of land. This is purely dependent on the plot area and would vary from one locality to another based on factors such as the road width. It’s the ratio of the total area of all the floors in a building to the total plot area. So if the FSI is 2, the total floor area of a multi – storied building cannot exceed twice the size of the plot.

IDC- Infrastructural development charges.

Industrial Property- Any property used for a manufacturing purpose. Areas where industrial activity may be carried out are specified by the respective local authorities.

Joint Ownership Agreement – An agreement between owners defining their rights, ownership, monetary obligations and responsibilities.
LOI- The letter of Intent is a non-binding offer to buy a commercial place.

Lease Hold- Such a property is leased from the freeholder for a specific period of time on certain terms and conditions. The lease can be transferred to another person after taking permission from the lessor. Most lease agreement is for 99 years. At the end of this tenure, the property reverts to the freehold owner. The lease also specifies the person or party responsible for maintaining the property.

Mixed land use- The term could be used for residential properties that the provision commercial use on the ground floor and apartments on upper floors. Mixed use is the use of commercial and residential simultaneously

Mutation- Mutation means transfer/ change of name in the records of the corporation for the concerned property. Mutation of a property is the entry of the transfer of tittle in the revenue records of the local municipal body. Since it id only for the purpose of paying property taxes, it doesn’t provide a legal title to the person mentioned in the mutation records. As the state collects property tax, the procedure and fees differ among states.

No Objection Certificate or NOC- A certificate issued by the concerned local authority that the plans are in order and conform to the guidelines and rules in force. In other words, the authority concerned has NO OBJECTION to the commencement of construction.

NA order – Land can be called non agriculture land, if any activity in the nature of development is carried over on the land which makes land unfit for cultivation. Under section 44of the Maharashtra Land Revenue Code 1966, before carrying out any development on the land, an eligible person has to apply to the collector for the permission to convert the use of agricultural land for any non-agricultural purpose, or to change the use of land from one non-agricultural purpose to another non- agricultural purpose.

Occupancy Certificate or OC- A certificate issued by the local development authority certifying that all necessary works have been completed as per the sanctioned plans and that the property is fit for occupation. The OC is issued after clearance from the water, electricity, sewerage, fire fighting.
PLC- Preferential Location Charges.

Possession- Possession of the property without completion is not possible, Handover of property can only be after completion certificate is received. Sale Deed- Sale deed provides the buyer the absolute and undisputed ownership of the property. With this law, the seller transfers his right of property to the buyer. Subsequently, it is executed to the execution of the sale agreement and after compliance of various terms and conditions detailed in the agreement.

Super Built- up Area or Super area- The plinth area along with a share of all common areas proportionately divided amongst all unit owners makes up the Super Built-up area. The common areas include corridors, balconies, swimming pool, garden, clubhouse, the lift wells etc. This is also known as the usable area.

Title Search- An investigation of public records into the history of ownership of a property to check for liens, unpaid claims, restrictions or problems, to prove that the seller can transfer free and clear. Urban Land Ceiling and Registration Act (ULCRA)- Popularly referred to as ULC act. Legislation that was enforced to prevent profiteering and hoarding in the urban land market as well as prevent urban congestion.
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