SmartOwner’s Property Due Diligence Checklist

Before investing in an Indian property, it is important to conduct a thorough due-diligence on the project to mitigate risks specific to the Indian real estate market. Property due diligence can be classified into:

SmartOwner’s team has several decades of combined experience in real estate due diligence and our clients benefit from exhaustive due diligence conducted on the properties in which they invest. All properties listed on SmartOwner.com also come with a title opinion from a leading law firm in India.

The first step in product due-diligence is to understand the potential of the location in terms of:

• Commercial development: Analyzing the job trends and office space development in the property’s catchment area to understand future demand for residential properties. Every 100 square feet of office space is used by one employee, so 10 million square feet of new office space means that 100,000 new households will need homes.

• General Infrastructure: Conducting research on upcoming infrastructure developments near the property. This includes an analysis of road realignment plans, road widening, etc.

• Social Infrastructure: Researching existing and planned malls, schools, hospitals and other social infrastructure near the proposed property. Social infrastructure is what makes a mid-priced neighborhood move upmarket.

• Sales velocity: Analyzing the demand and supply trends of the micro market by taking into consideration the current sold, available and proposed residential inventory by similar developers and their sales velocities. Sales velocity is critical in estimating project durations and expected returns.

• Comparable properties: Comparable properties that have recently sold is the single best way to assess the current market value of a property. Comparables must be carefully selected to ensure that they are not superior in terms of location, specifications or amenities.

• Gap Analysis: Performing gap analysis of target customer group needs and the existing availability in the market to estimate product fit and related demand.

• Pricing Analysis: Performing the pricing analysis keeping into consideration the existing project’s specification, location and the USPs compared to similar properties.

01 | Product due-diligence and

02 | Legal due-diligence

Product due-diligence

Step 1: Location Analysis

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The second step in product due-diligence is understand the feasibility of construction on the land in terms of:

• Station Survey: Conducting a total station survey to know the actual boundary, extent and contour of the property and superimposing the current possession and actual revenue boundaries as per the revenue records of the property through an authorized private surveyor.

• Revenue Survey: Conducting a revenue survey by issuing notices to neighboring owners and obtaining consent from neighbors over the schedule and boundary parameters as well as getting a certified final sketch from a government surveyor.

• Geo-technical Survey: Conducting a geo-technical survey from an authorized geologist to inspect and know the status of the underground rock deposits and formations below the land to understand the feasibility of construction. This avoids unexpected delays in project construction.

• Soil Test: Getting a soil test conducted from an authorized entity to know the water level and the soil conditions for drilling bore wells and execution of overall infrastructure of the proposed project.

Step 3: Field-level checks

The third step in product due-diligence is to do a detailed on-ground analysis to understand if there are any risks associated with the property. This involves meeting government officials to get information about the property such as:

• Government Notice Checks: Checking if there are any notices or Government orders issued regarding any new development near the property.

• Project Feasibility Checks: Understanding the project feasibility taking into consideration the current zoning, conversion status, ownership status and primary legal viability.

• Sub Registrar Meeting: Meeting the Sub Registrar of the concerned jurisdiction to understand the legal aspects related to the registration of land, SR Value(scheduled rates), documentary implications and requirements, pending court proceedings related to any survey numbers (if any) and duties & charges to be paid to the Sub Registrar on the proposed property.

• Tahsildar Meeting: Meeting the Tahsildhar for all the revenue requirements, matching the original Village maps to know the water bodies (nalas), cart-tracks and any non-convertible land, sub division of any survey numbers in the property (if any), confirmation related to the sources of the title (Grant, Inam) of the property, etc.

• Village Accountant Meeting: Meeting the Village Accountant regarding the verification of the family trees of the landowners, taxes paid till date, identification of properties falling under the village limit and Gramatana.

• Assistant Commissioner Meeting: Meeting the Assistant Commissioner to verify the ILRR (index of land and revenue records), to establish the origination of title to the property, to understand if the land has been granted to the backward community and if requisite conditions under the PTCL act have been complied with for alienating the property, to ensure that the property doesn’t fall foul of any of the provision as provided

under the concerned land revenue procedures, and for permission to get the Official Memorandum of the

Step 2: Land Survey

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Step 4: NOCs and Permits

• Planning Authority Meeting: Meeting the concerned planning authority regarding the zonal classification, bye laws and the implications on the proposed development as well as to obtain the necessary plan approval for the project.

• Water Supply and Sewage Board Meeting: Meeting the concerned water supply and sewage board to obtain necessary approvals.

• Electricity Board Meeting: Meeting the concerned electricity board to obtain necessary approvals.

• Pollution Control Board and Fire Department Meeting: Meeting Pollution control board and Fire Department for obtaining environmental clearance and permission for developments.

• Airport Authority Meeting: Meeting the Airport authority for obtaining relevant NOCs (No Objection

certificate) for development.

• State and National Highway Authorities Meeting: Meeting the State and National Highway authorities to ensure that there are no proposed acquisitions of the property.

• Housing Board, Industrial Area Development Board Meeting: Meeting the concerned Housing Board, Industrial Area Development Board to ensure that there are no proposed acquisitions for any scheme of development on the proposed property by them.

Legal due-diligenceAn exhaustive legal due-diligence is required to ensure that the property is clean and does not have any investment risk associated with it. Below are the list of documents that need to be checked for the legal due-diligence:

1) Title Documents: Antecedent documents of title (These could include sale deeds, partition deeds, wills, gift deeds etc.);

a) If sale deed executed by minor, prior permission to sell from court / subsequent ratification;b) If sale deed executed by Power of Attorney holder, copy of such Power of Attorney;c) If property devolved under a Will, whether probate/letters of administration have been provided, if any;d) In case of intestate succession, succession certificate/survivorship certificate/genealogical tree;e) If land acquired by / from an instrumentality of the state, acquisition document/s, grant order/s etc;f) If property acquired from the State Industrial Areas Development Board, documents relating to allotment, lease cum sale agreement, possession certificate, sale deed, correspondences, receipts for having paid tax and maintenance charges, documents relating to construction on the property, statutory compliances, etc.,;

2) Endorsements:a) Endorsement from the City Development Authority / City Infrastructure Corridor Area Planning Authority / City Airport Area Planning Authority that the property has not been acquired or is the subject matter of any

scheme of development by the aforesaid authorities;b) Endorsement from the State Industrial Areas Development Board that the property has not been notified for acquisition by the State Industrial Areas Development Board;c) Endorsement from the State Housing Board that the property has not been acquired or is the subject matter of any scheme of development by the KHB;

3) Layout Plan a) Duly approved by the City Development Authority, City Metropolitan Region Development Authority or the City Corridor Planning Authority in respect of layouts formed in areas beyond the limits of the City Municipal Corporation and within the limits of City Municipal Councils;

4) Special Properties:a) In the case of cinema buildings, No-objection certificate in Form – D issued by the Deputy Commissioner (Licensing Authority) under Rule 28 of the State Cinemas (Regulation) Rules, 1971;b) Confirmation as to whether any monument which is declared as a ‘protected monument’ or a ‘regulated monument’ by the Archaeological Survey of India, is within the distance of 10 meters or 200 meters respectively, from the Property;

5) Latest Tax paid Receipts;

6) Encumbrances and Litigation:a) Encumbrance certificates for a period of 30 years;b) Details and documents pertaining to litigation, if any, pertaining to / connected with the Property;c) Details and documents pertaining to any mortgage (including equitable mortgage), encumbrance or charge created in respect of the Property, including those that have been satisfied as on date;d) Pahani / RTC (Record of Rights Tenancy and Cultivation) for a period of 30 years;

7) Other Documents:a) Extracts of entries made in the Mutation Register pursuant to each transfer of ownership of the property;b) Revision Settlement Akarband;c) Index of Lands Record of Rights;d) Tippani, PhodiPrathi;e) Village Maps;

8) Certificates:a) Certificate from the appropriate authority to state that transactions relating to the Property are not hit by the provisions of the State Land Reforms Act;b) Certificate from the appropriate authority to state that there are no tenancy claims on the Property; c) Certificate from the appropriate authority to the effect that the Property does not come within the purview of the State Scheduled Caste and Scheduled Tribe (Prevention of Transfer of Certain Lands) Act, 1978;

9) Land Use:a) If land use has been converted from agricultural use to non-agricultural (residential / commercial / industrial / public, semi-public) use, then copy of Conversion Sanctioned Certificate issued by the concerned Tahsildar and the Official memorandum issued by the Special Deputy Commissioner in respect thereof;b) Change of land use order issued by the City Development Authority, if applicable;

10) Khata:a) Khata Certificate in respect of the property. Note: Khata is an account maintained by the Municipal Authorities which reflect the name of the owner thereof. (In areas within the limits of the City Municipal Council, the Khata would be in the form of two registers, namely, House/Land tax assessment list in Form 9 and Demand Register in Form 10);

b) Khata Extract which reflects the assessment of tax on the property;

11) Sanctions and Certificates:a) Building license, if any;b) Sanctioned building plan, if any;c) Commencement certificate, if any;d) Occupancy / Completion certificate, if any;

12) NOCs: In the case of high rise buildings (ground plus four floors and above), no-objection certificates froma) City Water Supply and Sewerage Board,b) City Electricity Supply Company,c) Fire Services Department,d) Airports Authority of India,e) Telecommunications Department (in case of high rise building above 7 floors),f) Railways (in case of buildings abutting railway margin)

13) Permissions and Clearances:a) Permission from the City Water Supply and Sewerage Board – water;b) Permission from the State Power Transmission Company Limited / City Electricity Supply Company – electricity;c) Clearance certificate issued by the Office of the Deputy General of Police, Home Guards (Civil Security and Fire Services);d) Permission for lifts, if any, issued by the Inspector of Lifts, Office of the Electrical Inspectorate;e) Clearance from the Airports Authority of India;

14) Bills:a) Latest electricity bills;b) Latest water bills;c) No due certificates from the Society / Association in respect of maintenance, if the property is part of a building.

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residential conversion of the property.

• District Commissioner Meeting: Meeting the District Commissioner regarding the residential conversion of the property to ensure that all the procedures for conversion have been complied with.

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1) Title Documents: Antecedent documents of title (These could include sale deeds, partition deeds, wills, gift deeds etc.);

a) If sale deed executed by minor, prior permission to sell from court / subsequent ratification;b) If sale deed executed by Power of Attorney holder, copy of such Power of Attorney;c) If property devolved under a Will, whether probate/letters of administration have been provided, if any;d) In case of intestate succession, succession certificate/survivorship certificate/genealogical tree;e) If land acquired by / from an instrumentality of the state, acquisition document/s, grant order/s etc;f) If property acquired from the State Industrial Areas Development Board, documents relating to allotment, lease cum sale agreement, possession certificate, sale deed, correspondences, receipts for having paid tax and maintenance charges, documents relating to construction on the property, statutory compliances, etc.,;

2) Endorsements:a) Endorsement from the City Development Authority / City Infrastructure Corridor Area Planning Authority / City Airport Area Planning Authority that the property has not been acquired or is the subject matter of any

scheme of development by the aforesaid authorities;b) Endorsement from the State Industrial Areas Development Board that the property has not been notified for acquisition by the State Industrial Areas Development Board;c) Endorsement from the State Housing Board that the property has not been acquired or is the subject matter of any scheme of development by the KHB;

3) Layout Plan a) Duly approved by the City Development Authority, City Metropolitan Region Development Authority or the City Corridor Planning Authority in respect of layouts formed in areas beyond the limits of the City Municipal Corporation and within the limits of City Municipal Councils;

4) Special Properties:a) In the case of cinema buildings, No-objection certificate in Form – D issued by the Deputy Commissioner (Licensing Authority) under Rule 28 of the State Cinemas (Regulation) Rules, 1971;b) Confirmation as to whether any monument which is declared as a ‘protected monument’ or a ‘regulated monument’ by the Archaeological Survey of India, is within the distance of 10 meters or 200 meters respectively, from the Property;

5) Latest Tax paid Receipts;

6) Encumbrances and Litigation:a) Encumbrance certificates for a period of 30 years;b) Details and documents pertaining to litigation, if any, pertaining to / connected with the Property;c) Details and documents pertaining to any mortgage (including equitable mortgage), encumbrance or charge created in respect of the Property, including those that have been satisfied as on date;d) Pahani / RTC (Record of Rights Tenancy and Cultivation) for a period of 30 years;

7) Other Documents:a) Extracts of entries made in the Mutation Register pursuant to each transfer of ownership of the property;b) Revision Settlement Akarband;c) Index of Lands Record of Rights;d) Tippani, PhodiPrathi;e) Village Maps;

8) Certificates:a) Certificate from the appropriate authority to state that transactions relating to the Property are not hit by the provisions of the State Land Reforms Act;b) Certificate from the appropriate authority to state that there are no tenancy claims on the Property; c) Certificate from the appropriate authority to the effect that the Property does not come within the purview of the State Scheduled Caste and Scheduled Tribe (Prevention of Transfer of Certain Lands) Act, 1978;

9) Land Use:a) If land use has been converted from agricultural use to non-agricultural (residential / commercial / industrial / public, semi-public) use, then copy of Conversion Sanctioned Certificate issued by the concerned Tahsildar and the Official memorandum issued by the Special Deputy Commissioner in respect thereof;b) Change of land use order issued by the City Development Authority, if applicable;

10) Khata:a) Khata Certificate in respect of the property. Note: Khata is an account maintained by the Municipal Authorities which reflect the name of the owner thereof. (In areas within the limits of the City Municipal Council, the Khata would be in the form of two registers, namely, House/Land tax assessment list in Form 9 and Demand Register in Form 10);

b) Khata Extract which reflects the assessment of tax on the property;

11) Sanctions and Certificates:a) Building license, if any;b) Sanctioned building plan, if any;c) Commencement certificate, if any;d) Occupancy / Completion certificate, if any;

12) NOCs: In the case of high rise buildings (ground plus four floors and above), no-objection certificates froma) City Water Supply and Sewerage Board,b) City Electricity Supply Company,c) Fire Services Department,d) Airports Authority of India,e) Telecommunications Department (in case of high rise building above 7 floors),f) Railways (in case of buildings abutting railway margin)

13) Permissions and Clearances:a) Permission from the City Water Supply and Sewerage Board – water;b) Permission from the State Power Transmission Company Limited / City Electricity Supply Company – electricity;c) Clearance certificate issued by the Office of the Deputy General of Police, Home Guards (Civil Security and Fire Services);d) Permission for lifts, if any, issued by the Inspector of Lifts, Office of the Electrical Inspectorate;e) Clearance from the Airports Authority of India;

14) Bills:a) Latest electricity bills;b) Latest water bills;c) No due certificates from the Society / Association in respect of maintenance, if the property is part of a building.

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1) Title Documents: Antecedent documents of title (These could include sale deeds, partition deeds, wills, gift deeds etc.);

a) If sale deed executed by minor, prior permission to sell from court / subsequent ratification;b) If sale deed executed by Power of Attorney holder, copy of such Power of Attorney;c) If property devolved under a Will, whether probate/letters of administration have been provided, if any;d) In case of intestate succession, succession certificate/survivorship certificate/genealogical tree;e) If land acquired by / from an instrumentality of the state, acquisition document/s, grant order/s etc;f) If property acquired from the State Industrial Areas Development Board, documents relating to allotment, lease cum sale agreement, possession certificate, sale deed, correspondences, receipts for having paid tax and maintenance charges, documents relating to construction on the property, statutory compliances, etc.,;

2) Endorsements:a) Endorsement from the City Development Authority / City Infrastructure Corridor Area Planning Authority / City Airport Area Planning Authority that the property has not been acquired or is the subject matter of any

scheme of development by the aforesaid authorities;b) Endorsement from the State Industrial Areas Development Board that the property has not been notified for acquisition by the State Industrial Areas Development Board;c) Endorsement from the State Housing Board that the property has not been acquired or is the subject matter of any scheme of development by the KHB;

3) Layout Plan a) Duly approved by the City Development Authority, City Metropolitan Region Development Authority or the City Corridor Planning Authority in respect of layouts formed in areas beyond the limits of the City Municipal Corporation and within the limits of City Municipal Councils;

4) Special Properties:a) In the case of cinema buildings, No-objection certificate in Form – D issued by the Deputy Commissioner (Licensing Authority) under Rule 28 of the State Cinemas (Regulation) Rules, 1971;b) Confirmation as to whether any monument which is declared as a ‘protected monument’ or a ‘regulated monument’ by the Archaeological Survey of India, is within the distance of 10 meters or 200 meters respectively, from the Property;

5) Latest Tax paid Receipts;

6) Encumbrances and Litigation:a) Encumbrance certificates for a period of 30 years;b) Details and documents pertaining to litigation, if any, pertaining to / connected with the Property;c) Details and documents pertaining to any mortgage (including equitable mortgage), encumbrance or charge created in respect of the Property, including those that have been satisfied as on date;d) Pahani / RTC (Record of Rights Tenancy and Cultivation) for a period of 30 years;

7) Other Documents:a) Extracts of entries made in the Mutation Register pursuant to each transfer of ownership of the property;b) Revision Settlement Akarband;c) Index of Lands Record of Rights;d) Tippani, PhodiPrathi;e) Village Maps;

8) Certificates:a) Certificate from the appropriate authority to state that transactions relating to the Property are not hit by the provisions of the State Land Reforms Act;b) Certificate from the appropriate authority to state that there are no tenancy claims on the Property; c) Certificate from the appropriate authority to the effect that the Property does not come within the purview of the State Scheduled Caste and Scheduled Tribe (Prevention of Transfer of Certain Lands) Act, 1978;

9) Land Use:a) If land use has been converted from agricultural use to non-agricultural (residential / commercial / industrial / public, semi-public) use, then copy of Conversion Sanctioned Certificate issued by the concerned Tahsildar and the Official memorandum issued by the Special Deputy Commissioner in respect thereof;b) Change of land use order issued by the City Development Authority, if applicable;

10) Khata:a) Khata Certificate in respect of the property. Note: Khata is an account maintained by the Municipal Authorities which reflect the name of the owner thereof. (In areas within the limits of the City Municipal Council, the Khata would be in the form of two registers, namely, House/Land tax assessment list in Form 9 and Demand Register in Form 10);

b) Khata Extract which reflects the assessment of tax on the property;

11) Sanctions and Certificates:a) Building license, if any;b) Sanctioned building plan, if any;c) Commencement certificate, if any;d) Occupancy / Completion certificate, if any;

12) NOCs: In the case of high rise buildings (ground plus four floors and above), no-objection certificates froma) City Water Supply and Sewerage Board,b) City Electricity Supply Company,c) Fire Services Department,d) Airports Authority of India,e) Telecommunications Department (in case of high rise building above 7 floors),f) Railways (in case of buildings abutting railway margin)

13) Permissions and Clearances:a) Permission from the City Water Supply and Sewerage Board – water;b) Permission from the State Power Transmission Company Limited / City Electricity Supply Company – electricity;c) Clearance certificate issued by the Office of the Deputy General of Police, Home Guards (Civil Security and Fire Services);d) Permission for lifts, if any, issued by the Inspector of Lifts, Office of the Electrical Inspectorate;e) Clearance from the Airports Authority of India;

14) Bills:a) Latest electricity bills;b) Latest water bills;c) No due certificates from the Society / Association in respect of maintenance, if the property is part of a building.

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