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Freedom251 › Blog › Indian real estate

What Due Diligence Should You Do Before Investing in Indian Real Estate?

By Freedom251 Team · · 9 min read

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Before investing in Indian real estate, verify five things in order: the exact asset and seller, the title and encumbrances, land and boundary records, project approvals and RERA disclosures where applicable, and the full tax and ownership cost. Only after those checks should you decide whether the expected rent, resale prospects and price suit your investment plan. A registration entry, broker assurance, brochure or RERA number is not by itself a legal opinion or an investment recommendation.

This is a national framework, not a title certificate or state-specific legal, tax, valuation or investment advice. Land records, stamp duty, registration charges, land-use rules and approvals differ by state or Union territory (UT), city, property type and buyer status. Use the relevant local authorities and obtain independent advice before committing funds.

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1. Identify exactly what and whom you are buying

Start with a precise identity for the asset. Record the state, district, municipality, survey or plot number, phase, unit number, floor, carpet area or land extent, boundaries, address and intended use. Use the same description in every document and compare it with the property on site. For an apartment, reconcile the unit, carpet area, parking and common facilities. For land, reconcile survey numbers, sub-divisions, extent, access and physical boundaries.

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Verify the seller’s identity and authority

Obtain identity and ownership documents for every seller. If the owner is represented by a power-of-attorney holder, confirm that the authority is valid for this transaction and that execution formalities are satisfied. For co-owned property, verify each co-owner’s consent or signature. For a company, trust, partnership or other entity, obtain evidence that the person signing is authorised and that any required internal approvals exist.

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Ask for prior transfer documents, current revenue or municipal records and details of mortgages, litigation, acquisition notices, leases, easements and other recorded or claimed interests. A local conveyancing lawyer should determine which certified searches and documents are appropriate for the jurisdiction and the title history. A registry entry proves that an instrument was registered; it does not, on its own, establish that the seller has indefeasible title or that no competing claim exists.

2. Check title, encumbrances and the physical parcel

Trace the title chain

Your lawyer should examine how ownership moved from earlier holders to the current seller and whether each transfer was properly executed and recorded. The review should cover the seller’s legal title, the authority to sell, mortgages and releases, court or tribunal disputes, government acquisition notices, tenancy or lease rights, easements, family or succession claims and restrictions on transfer.

For a developer project, the Real Estate (Regulation and Development) Act, 2016 (RERA) requires project-registration material to include a declaration about legal title and details of encumbrances. Treat those disclosures as evidence to check, not as a substitute for an independent title opinion. Ask counsel to resolve any missing, inconsistent or outdated entry before you pay a substantial advance.

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Reconcile documents with the ground

Compare the title papers, land records, sanctioned plans, agreement, site plan and the physical property. Check the access road, adjoining parcels, dimensions, floor and unit location, utility connections and any construction that is not shown in approved plans. If a plot’s map and on-ground boundaries do not align, engage a locally licensed surveyor before signing. Do not rely on a salesperson’s measurement or an online listing.

3. Use the correct land records and registration authority

The Department of Land Resources explains that land administration is a state/UT responsibility. A Records of Rights (RoR) is a textual record showing rights in land and how those rights were derived. Spatial records are maps establishing parcel boundaries. These records answer different questions and should be checked together where available.

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Obtain current, jurisdiction-specific records

Locate the official land-record service for the state or UT where the property sits. Obtain certified or current extracts required by local practice, then reconcile the owner’s name, survey or plot number, area, land classification and recorded interests with the seller’s documents. Check whether the record is current and whether mutation after a prior transfer has been completed. A record that still shows an earlier owner is a warning to investigate, not proof that the sale is automatically invalid.

Compare the spatial map with the site and title description. In rural or plotted transactions, a survey can identify encroachments, access problems and boundary shifts that a textual extract cannot show. Ask counsel which revenue, municipal, development-authority and registration searches apply to the property’s location.

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Understand online registration systems

NGDRS and e-registration tools are configurable platforms used by participating states and UTs. State Inspector General of Registration offices remain custodians of registration data, and implementation and data-sharing arrangements differ. An online encumbrance-certificate feature or a searchable record does not establish that a particular property’s history is complete or current. Use the responsible state/UT authority and retain certified copies and official receipts.

4. For a developer project, verify RERA registration and disclosures

Find the project and the exact phase in the relevant state or UT RERA portal. Confirm whether registration is required and whether an exemption applies under the Act. A large development may have separate registrations for phases; checking a similarly named project or an earlier phase is not enough.

Match the portal entry to the offer

Compare the filed information with what the promoter is selling:

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  • Promoter identity and the land on which the project is being developed.
  • Title declaration and disclosed encumbrances.
  • Sanctioned plans, development works, project location and boundaries.
  • Apartment carpet area, unit number, floor, parking and promised facilities.
  • Proposed allotment letter, sale agreement and conveyance deed.
  • Promised completion or possession period and any stated extensions or revisions.

Ask the authority or your lawyer to explain discrepancies between the portal, brochure, sample agreement and sales presentation. Do not treat a RERA registration number as proof that construction quality, pricing, rental demand or every local approval is satisfactory.

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Know what the 70% account rule means

RERA provides that “seventy per cent. of the amounts realised for the real estate project from the allottees, from time to time, shall be deposited in a separate account to be maintained in a scheduled bank to cover the cost of construction and the land cost and shall be used only for that purpose.” This is a statutory project-fund requirement, not a guarantee that a project will finish on time and not an account holding money for an individual buyer.

The Act also states that “The State Government shall, by notification, establish an Authority to be known as the Real Estate Regulatory Authority to exercise the powers conferred on it and to perform the functions assigned to it under this Act.” Check the state/UT authority for the project’s current filings, orders and complaint information.

5. Make the contract match the verified evidence

Before signing or transferring a substantial amount, have counsel compare the allotment or sale agreement and eventual conveyance deed with the verified title papers, RoR, maps and sanctioned plans. The property description, carpet area or land extent, boundaries, parking, common areas, facilities, payment schedule, possession date, default remedies and cancellation rights should be unambiguous.

Protect a token or advance

If you must pay a token, the written token agreement should state what happens if title, approvals, financing or material project representations fail due diligence. It should identify the asset and seller precisely, set out refund conditions and avoid language that converts a refundable expression of interest into a non-refundable commitment. A broker’s assurance is not a substitute for those terms.

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Check execution and closing conditions

Confirm the seller’s identity and capacity, co-owner or entity approvals, lender release requirements, witness and signing formalities, possession conditions and delivery of original or certified documents. Confirm who bears existing dues, taxes, maintenance, transfer fees and repairs. Do not sign a deed that leaves a material description or payment obligation to a later informal promise.

6. Check land use, construction and local permissions

The central framework cannot identify every approval for an unspecified property. Depending on location and property type, ask the relevant planning, municipal, development, revenue and utility authorities about land-use classification, building or layout permission, completion or occupancy status, access, water and electricity, fire or environmental requirements, development charges, local restrictions and outstanding dues.

For agricultural land, verify eligibility and conversion requirements for your proposed use. For an apartment, confirm that the building and the offered unit correspond to sanctioned plans and that the promised common facilities are approved or lawfully provided. For a plot, confirm that the layout, road access and utilities are authorised rather than merely shown in marketing material.

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7. Calculate taxes and every closing cost

State stamp duty and registration charges are local and cannot be reduced to one national rate. Obtain a written transaction cost sheet before you commit. It should separate the consideration from stamp duty, registration, applicable taxes, legal and survey fees, lender charges, association or maintenance obligations, property tax, immediate repairs and recurring ownership costs.

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Check Section 194-IA withholding

Current Income Tax Department guidance, reflecting the Finance Act, 2026, describes a 1% tax deduction for a qualifying purchase of non-agricultural immovable property from a resident seller. Under that guidance, no deduction is made under Section 194-IA when both the consideration and the stamp duty value are below ₹50 lakh. The threshold is not a single-price test: seller residency, property classification and the stamp duty value matter.

The guidance also addresses aggregation where there are multiple buyers or sellers and includes certain incidental transfer charges in consideration. Confirm whether the rule applies to your facts, the current reporting and deposit process, and all deadlines with a tax professional before payment. Keep proof of deduction, deposit and reporting with the transaction file.

8. Separate legal clearance from investment quality

A property can be legally well documented and still be a poor investment at the asking price. Conversely, attractive projected returns do not cure a title defect or missing approval. Evaluate economics only after the legal and factual checks are underway.

Use a complete investment worksheet

  • Total acquisition cost: purchase price plus stamp duty, registration, taxes, legal and survey work, financing costs and immediate repairs.
  • Recurring cost: property tax, association or maintenance charges, insurance, repairs, utilities paid by the owner and loan interest.
  • Realistic income: expected rent after vacancy, brokerage, management, maintenance and taxes; use evidence from comparable units rather than a developer projection.
  • Liquidity: likely buyer pool, transfer restrictions, access to financing and the time and cost required to sell.
  • Holding period: whether the property fits your planned exit date and ability to carry costs during delays or vacancies.
  • Concentration risk: how much of your assets and borrowing would be tied to one location, project or property type.

No reliable national rent, yield, appreciation or resale figure can answer those questions. Require property-specific evidence for the city, neighbourhood, building and unit you are considering.

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9. A practical due-diligence sequence

Before paying a token or advance

  1. Write down the exact state, district, survey or unit identifiers, phase, area, boundaries, address and seller.
  2. Collect ownership and authority documents, prior transfers, current revenue or municipal records and disclosed mortgages, litigation, notices, leases and easements.
  3. Engage a local property lawyer to select the certified title and encumbrance searches appropriate to that jurisdiction.
  4. For a developer sale, check the exact project and phase in the state/UT RERA portal and review title, encumbrance, plans, boundaries, proposed documents and completion commitments.
  5. Resolve missing or inconsistent filings before increasing your payment.
  6. Put refund and failure conditions into any token agreement.

Before signing and paying the balance

  1. Reconcile every description and measurement across title papers, RoR, spatial maps, plans, agreement and site inspection.
  2. Use a licensed local surveyor when plot boundaries or map evidence do not align.
  3. Confirm land use, planning permissions, completion or occupancy status, access, utilities, dues and restrictions with the relevant authority and counsel.
  4. Verify seller identity, co-owner or entity approvals, lender release and execution formalities.
  5. Obtain a written all-in cost sheet and have a tax professional check withholding, including Section 194-IA where relevant.
  6. Register the executed transfer as required, retain official receipts and certified copies, and complete the local mutation or record-update process.

10. Warning signs that should pause the transaction

  • The unit, plot number, area or boundaries differ between the brochure, agreement, title papers, portal entry and site.
  • The seller refuses to provide prior transfers, a mortgage release, certified records or authority documents.
  • A project is marketed under a name or phase that does not match its RERA entry.
  • Possession, facilities or approvals are promised orally but absent from the filed documents or contract.
  • A token is described as non-refundable before title and approval checks.
  • The seller pressures you to pay before your lawyer can search records or before tax and closing costs are calculated.
  • An online record appears clean but has no clear date, certification or explanation of mutation and boundary status.

11. Keep a transaction file

Maintain copies of the offer, seller identity and authority documents, title chain, certified land and registration records, encumbrance searches, RERA pages and downloaded filings, sanctioned plans, approvals, survey report, signed agreements, payment proofs, tax deductions, registration receipts and mutation application. Record the date and source of each online extract. This file helps your lawyer, lender, tax professional and future buyer identify what was actually verified.

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