You have found your perfect property, loan has been approved, and terms have been negotiated. All you need now, is to get started on a giant pile of documentation and boring bureaucratic procedures. It might get confusing and registration offices will absolutely toss you around from place to place in order to collect any pending documents that you might need. In a previous article we had talked about the process of commercial leasing. Now, we are following up with a comprehensive checklist of all documents that you need and why you need them, so that you have no questions and any pending documents while registering the property to your name.
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Documents to Check for Before Investing in a Commercial Property
1. Rental Agreement/Lease Deed: In case you are investing in a pre-leased commercial property, this document includes all the terms and conditions of transfer of ownership/ residency. It determines the lock-in period of the tenant, lease term and terms and conditions of termination of the agreement.
2. Identity, Address Proof and Photographs: These documents identify one as the current occupier or lessor of the property.
3. Police Verification: This verification is a background check on both you and the property owner involved in the transaction to ensure that neither parties are under any outstanding legal obligations.
4. Rental Receipts: Rental receipts serve as tangible evidence that the tenant has paid the rent, establishing a clear record of financial transactions between the tenant and the previous landlord.
5. No Objection Certificate (NOC): Obtaining an NOC is a procedural step to mitigate legal and regulatory risks and ensures a transparent and trouble-free leasing process, for the previous owner, for the Municipality ensuring whether the property adheres to code, the bank ensuring that there are no outstanding financial obligations, or stakeholders, if the property is part of a larger complex.
6. Tenant Verification Form: The information gathered through tenant verification may influence the terms of the lease agreement, such as the duration of the lease, security deposit requirements, and rental amounts.
7. Post-dated Cheques: In case of payment delays or disputes, post-dated cheques serve as tangible evidence of the agreed-upon payment schedule. This provides a legal basis for landlords to take action in case of non-compliance with the lease terms.
8. Stamp Duty and Registration: Stamp Duty ensures the legal validity of the lease agreement. It acts as proof that the document is executed and helps prevent fraud or disputes related to the terms of the lease.
9. Maintenance Agreement: It clearly outlines the responsibilities of the landlord and tenant regarding property maintenance. This helps avoid disputes and ensures both parties are aware of their obligations.
10. Inventory and Inspection Report: This gives an idea of the condition of the property and all the furniture and amenities that come with the property. It also mentions whether you are taking occupancy of the property as-is or some maintenance is needed.
11. Exit Checklist: This document mitigates legal risks by documenting the property's condition upon exit, reducing the likelihood of disputes over damages or unfulfilled lease requirements.
12. Legal Compliance Documents: Legal documents, such as lease agreements and contracts, provide a clear understanding of the terms and conditions, preventing misunderstandings and disputes between the landlord and tenant.
Investing in an asset as large as real estate requires constant vigilance and one should ensure that no stones are left unturned. This is an easy market to lose your way in due to confusion and sheer frustration. It is always better to go through a wealth and property management company such as PropReturns that does all the due diligence for you and leaves no room for error when it comes to protecting your asset.
