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Pre-approved property-investment option for the cautious

If you are extremely paranoid about investing in realty for fear of titles, pre-approved properties are the safest bet for you! the property has its titles and the approval documents of the concerned property examined by a bank beforehand.

Pooja Gawde

10 Oct 2008

When Mr. Chakravarty decided to invest in a property, being cautious by nature, he was looking at investing in a house in a pre-approved project.


What are these 'pre-approved projects'? A pre-approved property is essentially one wherein the titles and the approval documents of the concerned property have been examined by a bank on the request of a builder.


Generally, if a builder gets pre-approved by a number of banks and other housing finance institutions, it adds to the builder's reputation and the buyer's trust in the project.


If one is buying a property in a pre-approved project, is can be safe to assume that the property is legally and technically clear.


When banks sanction loans, they take into account several factors relating to a residential property. The various factors considered by the bank such as age of the building, the title of the property etc. However, in the case of a pre-approved property, one can be assured of quality construction and authorized construction. 


Once the project is approved, the documents relating to the property/project are also put on record in a common file in the bank. This essentially means that whenever a buyer wishes to buy a flat in 'that' particular project/property, the bank may not really assess the title of the property again.


While approving a project, the bank reviews the builder's ability and track record to complete the project in time before agreeing to 'pre-approve' the property. This does not go to say that the bank will or is responsible for any delay in construction or changes made by the builder with reference to the development of the property.


In an event of such a circumstance wherein the builder delays possession, the buyer is still liable to pay the equated monthly installments (EMIs) to the bank on time.


Another advantage of buying a house in a pre-approved property is that some builders have a scheme where in the buyer can payoff the entire purchase price even though the property is still under construction. This also means that the buyer gets a significant discount to the market price to compensate for the risk and interest cost that he will incur even though the property is not yet fully ready.


Buying a house in a pre-approved project can also get the buyer a benefit of what is known as an 'Advance Disbursement Facility' (ADF). One needs to make a careful decision while choosing such a scheme as any delay in getting possession from the builder can result in a loss. The stage of construction is reviewed on a common basis and payment released on a common basis.


Some real estate firms such as Emaar-MGF land Pvt. Ltd and Ideal Properties have some pre-approved projects. Emaar-MGF have a project called 'THE PALM SPRINGS' in NCR and Jabalpur-based realty firm called Ideal Properties have a project called 'Ideal Hills' which is in the main residential area of Jabalpur.