NRI buying property in India: 7 things to check before you send money

What should an NRI check before buying property in India? Seven things, in this order: what you are allowed to buy, whether the project is registered, what area you are paying for, whether the title is clean, how the money will travel, what the agreement says before a large advance, and what the whole purchase really costs. Money is hard to bring back once it is sent, so this is the order that protects it.

Please read this first. Holdengard is not a broker or adviser. It is not RERA-registered and holds no real-estate licence at present. This post is general information, not legal, tax or investment advice, and it promises no outcome. State rules and bank requirements differ, so where we are unsure we say so. For any point that matters, verify with a licensed local professional: a lawyer, a chartered accountant and your authorised dealer bank.

1. Check what you are allowed to buy

Rules on what NRIs and OCI cardholders may buy are not the same for every kind of property. Residential and commercial property are generally treated differently from agricultural land, plantation property and farmhouses. Do not assume a friend's purchase tells you what applies to you.

Do this: ask your authorised dealer bank to confirm the current FEMA rules for the exact property type, and check for any state-level restriction or process. We have not verified the current rules in this post, so they are to be verified.

2. Check that the project is registered

For a new or under-construction home, section 3(1) of the Real Estate (Regulation and Development) Act, 2016 says a promoter cannot advertise, market, book or sell in a project without registering it with the state's Real Estate Regulatory Authority. Section 11(2) says the advertisement must carry the Authority's website address and the registration number.

Do this: ask for the registration number in writing. Then look the project up yourself on your state's RERA website and match the name, the promoter, the address and the completion date. A screenshot is not proof. Exemptions exist, such as small projects, so if the seller says the project is exempt, ask which exemption and check the state rule (to be verified).

3. Check that the price is based on carpet area

Section 2(k) of the Act defines carpet area as the net usable floor area of an apartment. It excludes external walls, services shafts, the exclusive balcony or verandah and the exclusive open terrace, but includes the internal partition walls. A brochure's "super" or "saleable" area is not the measure the Act uses.

Do this: ask for the price per square foot of carpet area, and compare it with the carpet area in the registered documents. Our post on carpet area vs super area shows why the gap matters.

4. Check the title and the documents

For a resale flat, the roadmap lists the title documents, the chain of ownership, the society no-objection certificate, no dues and no litigation. Visit in person, or use a trusted representative you can verify.

Do this: have your own lawyer do a title search before you pay beyond a token. Do not use the seller's lawyer for this.

5. Plan how the money will travel

Payments from abroad usually go through an NRE or NRO account, and the bank will want certain paperwork. A home loan for an NRI has its own eligibility and documents. Currency also matters: what if the rupee moves 5 or 10 per cent before your last payment?

For a registered project, the Act requires 70 per cent of the amounts collected from buyers to go into a separate account at a scheduled bank for construction and land costs (section 4(2)(l)(D)).

Do this: pay only to the account named in the registered or agreed documents, never to a personal account or an unrelated company. Ask your bank which account type and forms apply to you. Account, remittance and loan rules are to be verified with your bank.

6. Read the agreement before a large advance

Section 13(1) of the Act says a promoter shall not accept more than ten per cent of the cost as an advance or application fee without first entering into a written agreement for sale and registering it. The Act also sets remedies for delay (section 18) and for defects found within five years of possession (section 14(3)).

Do this: read the draft agreement before you pay beyond the token. Check the payment schedule, the possession date, the specifications and the carpet area, and make sure it does not quietly waive your rights. Ask your lawyer to read the clauses on delay and defects.

7. Add up the full cost and the tax

The price is not the total. Stamp duty and registration charges, GST on under-construction property, tax deducted at source when you buy from or sell as an NRI, and your own tax in India and where you live all change the real cost. Rates differ by state and change, so they are to be verified with a chartered accountant.

Do this: run the numbers in the NRI Total Cost Calculator with figures you have checked, and see the roadmap's questions for your accountant.

Extra point: be careful with a power of attorney

If you cannot be there, the roadmap suggests giving the narrowest authority for the shortest time, to someone you trust and can verify. Have a lawyer draft it, and check how it must be executed and attested from your country (to be verified).

A one-page summary

Related reading: the five RERA checks before you pay a token and the NRI hub.

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