Terms You Need to Know Before Buying Property – Part1

//Terms You Need to Know Before Buying Property – Part1

Terms You Need to Know Before Buying Property – Part1

Investing in properties takes a huge amount of mental preparation. One needs to be fully prepared and thoroughly versed with every detailed term and clause. To turn investment transactions into simpler deals, given below are a list of terms that you need to know while looking for a property.

Class A, B, C

Classes A, B, C refers to property classifications to make it easier to communicate about the quality and rating of a property quickly.
Class A: Properties with highest quality buildings in the market. Generally newer properties built within the last 15 years with top amenities, high-income earning tenants and low vacancy rates.
Class B: Properties older than Class A, with lower income tenants and may or may not be professionally management. These can be viewed as “value-add” investment opportunity because through renovation and common area improvements, the property can be upgraded.
Class C: Properties that are typically more than 20 years old and located in disadvantageous locations. Generally in need of renovation and generate lowest rental rates.

IT/ITES
Information Technology and IT-enabled Services (ITeS) is the leading sector pushing real estate growth and investment.

TOD approval
A transfer-on-death (TOD) deed, or beneficiary deed, assures a property owner to execute a deed that allows a named beneficiary to obtain title to the property at the owner’s death without going through probate.

OC certificate
Certificate of Occupancy or completion certificate is a document which is issued at the end of the construction by a local government agency or planning authority. The document is a proof of the building’s compliance with applicable building codes and other laws.

Demised Premises
Demised premises refer to premises that have been transferred by lease. Therefore, they are generally the parts of the premises that the leaseholder or tenant is permitted to occupy.

Sanctioned Building Plan
Person/persons having right of erection on a plot of land, or who is the owner of a plot of land having deed of conveyance and mutation certificate and has no dues towards property and other Municipal tax may apply for a building sanction plan.

Permits/Approvals/Licenses
Permits/Approvals/Licenses refer to the formal sanction of building plans by the designated government agency as meeting the requirements of prescribed codes. Authorization to proceed with the construction or reconfiguration of a specific structure at a particular site, in accordance with the approved drawings and specifications is essential.

Building by-laws
In order to get the green signal to start construction, you need to ensure that your house plan follows the building by-laws of the locality. These laws are a set of rules and regulations drawn up by the government of every country, to assure a systematic and disciplined growth of the town or city.

Indemnity
Indemnity is a contractual obligation of one party (indemnitor) to compensate the loss occurred to the other party (indemnitee) due to the act of the indemnitor or any other party.

Registration fees
Registration fee is a term which refers to a sum of money required to enroll in an official register. It is generally intended to defray the cost of administration but may include damage deposits or taxes. The term particularly refers to a fee levied on property transactions by state governments in India.

Incidental charges
Incidental charges are costs of items and services that are not part of the main bill. You must give a credit card to cover any incidental charges such as phone calls and room service. Payment for accommodation and incidental charges must be made when checking out.

Lessor, Lessee, Lease term
Lessee: A person or organization who rents land or property from a lessor. The lessee is also known as the “tenant” and must uphold specific obligations as defined in the lease agreement and by law. The lease is a legally binding document and if the lessee violates its terms he or she could be evicted by the lessor.

Lessor: A person or organization who owns land or property and grants a lease or lets the property to a lessee in return for periodic payment as agreed on a legal document.

Lease term: A fixed, non-cancelable period for which a lease agreement is in force. It is also called lease period or lease tenure.

Fit-Outs
Fit out is a term used to describe the process of making interior spaces suitable for occupation. It is often used in relation to office developments, where the base construction is completed by the developer, and the final fit-out by the occupant.

Lock-in Period
Lock-in period refers to a predetermined amount of time following an initial public offering where large shareholders, such as company executives and investors representing considerable ownership, are restricted from selling their shares.

Rent
Rent is a fixed amount of money that a tenant pays to the owner for the regular use of property like office/home space etc.

Third Party Insurances

Third-party insurance is essentially a form of liability insurance purchased by an insured (first party) from an insurer (second party) for protection against the claims of another (third party).

Sinking Fund
A sinking fund is a means of repaying funds borrowed through a bond issue through periodic payments to a trustee who retires part of the issue by purchasing the bonds in the open market.

Pro-Rata Payment
The term “pro rata” means proportionally. It refers to the division of real estate expenses according to the proportion of ownership or rental.

Force Majeure
Force majeure is a clause in legal contracts that remove liability for unforeseen and unavoidable natural calamities that hinder the expected course of events and restrict participants from fulfilling obligations.

Signage
Signage refers to images that are made and printed on a suitable media for providing all the necessary information about the real estate, realtor, or a real estate agent, broker etc.

“As is where is basis” (regarding the right to vacate)
This term means that the buyer is accepting the house in the condition they see it.

Fire NOC
Fire NOC is issued by the respective state fire service that verifies if a building is resistant or unlikely to observe any fire-related accidents. By meeting certain guidelines laid down by the fire department, an applicant can be obtained from NOC for a residential/ commercial building. The guidelines vary according to different states.

By |2019-01-23T11:33:26+00:00September 7th, 2018|Realty Terminology|Comments Off on Terms You Need to Know Before Buying Property – Part1

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