CERSAI & HOME BUYERS

CERSAI & HOME BUYERS

With the growth in Real Estate as an Industry, the number of Fly by night operators became unmanageable. The main sufferers became the Ignorant & Innocent common man- The Home Buyers. To prevent loaning with the same Asset Class as the Collateral, the Govt came up with one of the Internationally common practice of CERSAI.

What Is CERSAI, and why is it Relevant to a Home Buyer?

Central Registry of Securitisation Asset Reconstruction and Security Interest (CERSAI) is the Central Online Registry on the security interest. As brought out above, it aims at preventing frauds in lending against Equitable Mortgages, so that people don’t take multiple loans on the same asset from different banks. 

Legal problems are bound to happen when the same property gets linked to two loans from two different banks at the same time. It was quite common earlier, as there was no way to check whether a property has been mortgaged. To obviate these these issues, CERSAI was introduced to the real estate industry.

What is the Purpose of CERSAI?

CESAI was introduced in March 2011 to make mortgage transactions more transparent. CERSAI, is a licensed company, wherein, 51% of the equity is owned by the government, and the rest is owned equally by National Housing Bank and 10 other public sector banks.

CERSAI’s mandate was to maintain a Central Registry of  Equitable Mortgages. It contains data on the equitable mortgage taken on a property and the details of the Financial Institutions that extended the loan and the Details of the Borrower. CERSAI also allowed lenders to register transactions of securitisation and asset reconstruction. The ledger of CERSAI  therefore, contains the details of the borrower and lender.

It is Mandatory for All Financial Institutes to register all Loaning Information in CERSAI. The registration should be completed in 30 days in order to attend to the security interests. In January 2016, the mandate was extended further to start registration of security interests created on movable and intangible assets such as accounts receivables, book debt, and hypothecation as well as to start registration of all other types of mortgages used in India.

Register in CERSAI

Residential Construction Services also are under CERSAI, where the mortgage is involved. One can register using their website. There is an “entity registration” form available on the site. A digital signature is the access to the CERSAI portal. Once the form is filled, it has to be downloaded and signed by the authorized personnel and sent to the prescribed CERSAI address along with the necessary documents. Once the process is completed, a tab on the progress online can be kept.

CERSAI Charges

“What is the CERSAI charges for home loan?” The registration fee keeps changing from time to time. If you want to take a loan from a bank, you will have to pay a charge that would include the upfront or processing charges. The CERSAI registration charge and processing fee was clubbed from 1st January 2014. The cost is the same across all lenders in the country. The loan amount will ultimately determine the registration fee.

Loans that are above 5.00 Lacks will have to pay Rs. 500 + GST. Loans that are below 5 Lacks will have to pay Rs. 250 + service tax. If there is a delay in making updates regarding the transactions with CERSAI, it could result in a penalty.

Concluding Thoughts 

CERSAI and Credit Information Bureau India Limited (CIBIL) have joined hands to make the borrowing and lending process more streamlined. Lenders will be able to make lending decisions better because of this tie-up. It benefits both parties, ie the Borrower & Lender.

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Having Problems with Storages in Toilets?

Having Problems with Storage in Toilets?

Invariably, our storages in toilets & wet areas get spoilt over a period of a couple of years. So what is the remedy? For some time, a solution in the form of WPC is being used successfully. The material is ideal to be used in areas where some water splash on your storages / cabinets are likely. These are a good substitute. Please don’t use it as a water proof material, but as a water resistant material. While fabricating, one must understand that the hinges etc are of metals & would need extra care to prevent them from rust & resultant decay.

What is WPC-Wood Plastic Composite?

WPCs are composite materials made of wood fibre/wood flour and thermoplastic(s). The material has a proportion of 70 percent cellulose content (although 50/50 is more common) to plastic, the mechanical behaviour of WPCs is most similar to neat polymers (fibre plastic).

Advantages of WPC:

·         WPCs do not corrode and are highly resistant to rot, decay, and Marine Borer attack.

·         They have good workability and can be shaped using conventional woodworking tools.

·         WPC is considered a sustainable material as can be made using recycled plastics and waste products of the wood industry.

·         The material carries the ability to be moulded into almost any desired shape.

·          A WPC member can be bent and fixed, to form strong arching curves.

·         It lacks the need for paint.

·         WPCs are manufactured in a variety of colours.

Disadvantages of WPC:

·         It is not fully water resistant as the wood fibres embedded within the material do absorb water. However, it is not very susceptible to effects of water.

·         Although these materials continue the lifespan of used and discarded materials, they have their own considerable half life or less; the polymers and adhesives added make wood-plastic composite difficult to recycle again after use.

·         WPCs have a lower strength and stiffness than wood.

·         Also, they experience time and temperature-dependent behaviour.

·         The wood particles are susceptible to fungal attack, though not as much so as solid wood, and the polymer (plastic) component is vulnerable to UV degradation.

·         It is possible that the strength and stiffness may be reduced by moisture absorption and freeze-thaw cycling.

·         Some WPC formulations are also sensitive to staining from a variety of agents (even water at times).

·         WPC has higher fire hazard properties than wood alone, as plastic has a higher chemical heat content and can melt.

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Planning to Make a House? Guidelines -  Part II (by www.colonelz.com) (contd)

You would be aware of the saying, “Time spent on Reconnaissance is never wasted”. To arrive at the final design for your house / any other building, one MUST do a detailed research on the type of Home or Space you are planning. Whether it is Residence, office or commercial space, the most important Factor is :

·        Location, Location & Location.

When we say location, it varies with the purpose. I would love to have an office in the Connaught Place; but residence, maybe not. Residence should always be at a place where you can get peace of mind, once you are back from work. Even if that entails 15 minutes of extra commute. Similarly, for office too, location is equally important. Nehru Place may be good for IT peripherals, but surely not for Furniture.

Preparatory Work. The search should be two prone-

·        Internet search. There are numerous sites which give us ideas w.r.t. the building, its various spaces, furniture & furnishing. Printerest is one such site.

·        Physical search on ground. Keep your mental faculty and eyes programmed to register exteriors and interiors which you like. Keep in mind, the utility & location –viz, office, home, hotel etc, all have different requirements and hence are designed differently.

Obvious outcome of the above should be – Collection & Collation of information, so as to derive valuable inputs / intelligence from the same. Record whatever you find suitable and use them during your interaction with the Architect & Interior Designer.

Detailing Your Requirements

As was elucidated in the previous part, you would have decided on what would be the basic components of your house, viz, Basement, Stilt for Parking, No of bedrooms, dressers, No of toilets, Powder Room, Drawing- Dining- Living room,  Verandahs, Open Area, Balconies, Store / Pooja room and so on. It is advisable to use Vastu Tips while planning the building.

Why Vastu? What is Vastu Shastra? It is the “Science of Architecture." Vastu describes the principles of design, layout, measurements, ground preparation, space arrangement and spatial geometry of buildings. It is purely scientific and has nothing to do with Religion, faith etc. Most part of non mountainous India have more prolonged summers, ranging from 7-8 months in North to almost 12 months down south. In India, throughout the year, the sun moves from SE to SW direction, as we are in the Northern Hemisphere. Hence, the southern direction is considered more suitable for Master Bedroom, Kitchen, open area to dry clothes etc. Similarly, Northern Area gets less heated up, and hence a visitor while waiting for you after ringing the Bell can get some shade. Also, Prayer / Puja area is to NE so as to have a comfortable weather.

However, please do NOT spoil the looks and comfort just because of Vastu. Vastu is an ingredient to help and NOT to hinder your design.

Financial Planning. The start point is the BUDGET. Like in any other expense, here to, there will be a tendency of Cost overrun. Hence, if you have a budget of 1 Cr, start working at 20% less as your planned Expenditure. Based on the budget, one needs to decide the Location & Plot size.

Plot Selection

Dilemma of Cost vs Location & Size. The starting point of construction is the Plot selection & purchase. It’s common experience that one always likes something which is beyond my planned budget. A 200 yd plot in suburb may be cheaper than a 100 yd plot in the city. Take a call, based on your & your spouse’s office, children education, parents / in laws residence and numerous other factors.

Remember, the house you will make will be mainly used by you. All your relatives would visit you very rarely. However, your friend circle does matter. The overriding factor should be your and your Spouse’s as also your children’s requirements. If these are well taken care of, others are secondary. Even with your Best friend, you don’t call on every third day. You have to go to office / school 5-6 days a week. Even your pets (if any), should be a factor while deciding the residence.

Connectivity. I prefer my office to be close to the main highway, as it helps my clients to visit us easily. Same ain’t true for home. It is better that your house is, a few hundred meters away from the main Highway. Honking and heavy traffic are not enjoyable after all.    

Size. It’s a saying- “In a 3000 sq ft house, you live in a 200 sq ft and in the balance, lives your EGO”. Depending on the No of persons likely to inhabit in the house, one could take a decision of the size. Maintaining a big house is costly and time consuming. Housekeeping personnel and Maids are getting costlier and rarer. Apart from the common spaces like Drawing room, kitchen, etc, one should 1 to 2 rooms more than the No of rooms likely to be occupied by permanent residents. If it is a couple only, at the max you should go for a 3 BHK. Beyond that would be more for your Ego and for gossiping in Kitty Parties- you know, the Delhi Show off club?

Dimension & Alignment. An ideal plot should be rectangular, with 90 Degree corners. If you get a cheaper plot in non regular shape, work out the area available on carving out the largest rectangle. The price of that rectangle is the amount you should consider in the deal. A wider frontage gives better options to the architect and vice-versa. Normally, a ratio of  1:1.5:: Width: Length is suitable. Max stretch could be 1:2. However, the frontage of small plots like 50/100 yds should not be less than about 15 ft, or else, your house would give a feel of a Railway Compartment.

Cost. Depending on the location, plot cost may form a formidable part of the cost of your house. The cost of construction varies from say Rs 2000/ for a decent house to Rs 4000 / 5000/- per sft for a very high end construction and interiors. Plan accordingly. How to arrive at the right price? You would have often experienced, when you want to sell a thing, market would be in doldrums and you would be offered rock bottom price. Similarly, when you go to buy, you find that that’s the last piece available and the prices are likely to go up further. Simple way is, if you want to buy, ask the Brokers / check on the Net rates for selling. Once you get both the rates, ie, seller’s & buyer’s, average it out and that would be the near correct price. Again, location would matter and 2 adjoining plots’ rates could vary a lot, in case on is a Corner plot.

Hope you have understood / assimilated the above easily. To prevent boredom setting in, would call it a day here.

How to select the Architect, layout, material to be used, earmarking areas for not so often thought of chores like washing area, etc, would be discussed in the Parts to come ahead. We would also cover specifics of Bedroom, Kitchen, Dresser, Living Area, Drawing Room, Dining area, Toilet, Verandah and more, in days to come.

To be continued in Part III………………………………..

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Planning to Make a House? Guidelines - Part I (by www.colonelz.com)

Planning to Make a House? Guidelines -  Part I (by www.colonelz.com)

In the era of Flat / Apartment living, not many go for own house construction. However, some of us still prefer Independent houses, if affordable. It is also a suitable option when friends / family want to have a common building as home. Major advantages of making ones’ own house are:

·         The cost incurred is at least 20- 25 % less, compared to buying any type of residence.

·         The design & material is as per your liking.

·         You can space the construction as per your funding state.

·         Obviously, you would be confident about the quality of material used.

·         You get to decide who your neighbors are.

·         There is NO unending wait for Possession, as is the norm today, w.r.t. Builders.

For most of us, making a house for ourselves, generally is a once in a life experience. There are many stages of construction, which could be as follows:

·         Planning Stage, which includes:

o   Plot selection.

o   Selection of Architect.

o   Time plan, from planning stage to finishing.

o   Listing of needs one wants in the house:

§  Basement, wanted or not.

§  Stilt for Parking? Or drive way?

§  No of bedrooms.

§  Should bedrooms have dressers, or bedroom should have large wardrobes.

§  No of toilets & do you need a Powder Room?

§  Common Drawing Dining room or separate.

§  Do you want Living room?

§  Verandahs, Open Area & Balconies.

§  Service balcony requirements.

§  Store / Pooja room

§  Location for Housekeeping Necessities - Washing Machine, Dish Washer, Vacuum Cleaner and more.

§  Servant Quarter.

§  Lawn / kitchen garden.

§  AC type to be used, i.e., Central, VRV, Cassette, Split or Window.

o   Financial Planning.

§  Rough cost of construction varies from 1500 to 4000/ per sft, including furnishing. Normally, a decent middle class house works out to be around INR 2000 to 2200/ per sft, all inclusive.

§  Plan to Start with Roughly 20 % of the Budget.

§  Plan for about 20 % every 4-6 months.

§  Overall Cost incurred on civil work & furnishing is generally similar, ie, 45-55% each.

§  Cost of making basement is similar to the floors, as it mandates Water Proofing, as also has 3 walls, one in RCC & 2 in brick, on either side of RCC.

§  Larger the Built up Area, cheaper is the average cost per sft.

§  Break in Construction work, increases cost.

§  Delay in funding would also lead to cost escalation.

o   Documentation & Approvals

§  All Municipalities or Urban Development Authorities have certain Rules and Regulations which one has to abide with. Front & Rear Set-backs to be left, side lane to be left, max & min height from Road level, etc are some inputs which are important. Ignorance may prove costly and cause hassles at a later time.

§  Some Important documents which you need to have are – Conveyance Deed for plot; Possession Letter from Society; Plot Boundaries details (eg, to North – 12 Mtr road, to South, Plot No x, etc); Sale Deed & Chain of Buyers & Sellers.

§  Bank Loan approval, if funding is required.

§  Approvals for Temporary Electrical, Water & Sewage Connection.

§  Rules for Rain Water Harvesting.

§  Is Solar Lighting Compulsory & whether Govt offers any subsidy on it.

§  Go through the Rules. Generally these are available On Line. In case it isn’t, get a Copy of the latest rules.

§  Approvals are many. Some of them are:

·         Plot, Measurement, Alignment & Marking on Ground by Authorities.

·         Building Plan Approval. It is very important to Freeze your Plans before submitting for Building Plans Approval.  Minor modifications are penalized in Compoundable manner, however, any Violation if not compoundable, would cause headache for you. Use a qualified architect for the same.

·         DPC approval i.e., when the construction work reaches Ground Level.

·          Approval on Completion of Building.

·         Approval from PHC (Health Deptt) & other Govt agencies, as required by the local laws.

To be continued in Part II………………………………..

Taking / Giving Property on Rent? Our Advise----- Be Wise

Tenents. Points to be considered:

·         near / around the property, public transport, neighborhood gentry, proximity to essential markets, schools, hospitals, etc.

·         Check the safety aspects, especially for working / single women. You could get the crime rate in the area on internet.

·         Find out the age of the property. If possible, speak to the previous tenants or the neighbours.

·         by him to the property owner. This agreement is ideally drafted before the tenant occupies that place. Necessary Inclusions of the rental agreement or the Lease Deed would be;

·         Include start and end date of the tenancy

·         Monthly Rent amount payable and the date of payment- should generally be 10^th of the month, especially for salaried persons, to avoid cheque bounce.

·         Security deposit amount to

·         Conditions of termination of Agreement.

·         Notice period for vacating the house.

·         Provisions of electricity, water and power facility & their payment procedure.

Property Owner / Landlord. Rented Property generates additional income by way of lease or rent. But if leased to a wrong person, could cause numerous problems. It requires substantial care and a lot of aspects have to be kept in mind while selecting the right paying guests (PG) or purchasers on rent (rent party):

·         Must check financial capability and background of the prospective tenant (Second party). (Too good offers are dangerous. If the going rental is Rs X and you get offer of Rs 2X, reject it)

·         Police verification of the prospective tenant is a must. This process helps in background check of the tenant. Not doing this is a punishable offence under Section 188 of the Indian Penal Code.

·         Take the permanent address proof of the prospective tenant.

·         Take the bank statement of the bank from which the payment cheques are made.

·         Meet the tenants one on one, interact with them and get to know them. Don’t leave it on the broker – his sole interest is Brokerage.

·         Services of Registered Brokers only must be used. If he charges service tax, (currently 14%), he should deposit the challan & give details of it to you.

·         It is imperative for the landowner to ask the appointed broker to provide the agency registration number, valid signature and agency seal/ stamp on every page of the 'Lease and License' accord so that the broker can be held accountable to look after any legal disputes in future.

·         If possible, rent your property to Tenants with families. If renting to Bachelors, obtain “Comfort Letter” from the Employer of the prospective tenant & do a call check with the Company’s HR / Admin.

·         Lease Deed/ Rental Agreement - A rent agreement or a lease deed is a legal document that contains the details of the rights of a tenant to occupy certain property for a fixed period of time in return of the rent paid by him to the property owner. This agreement must be drafted before the tenant occupies the place. Necessary Inclusions of the rental agreement or the Lease Deed would be;

·         If the period of time is 12 months or less, registration is not compulsory. If more than 12 months, you are legally bound to register which costs a miniscule amount (nearly 1% of the total rent value, depending on the local laws), making it a very authentic legal document.

·         Clear mention of Dates; to and from.

·         Notice period required from both sides; owner and tenant.

·         Rental value and the security deposit made by the tenant and any advance payments done.

·         The annual rent is generally 2-3% of the capital value and differs according to the location and amenities provided. 

·         Date of monthly rent payment (usually around 10^th of each month, especially for salaried tenants).

·         Annual increase in Rent Clause.

·         Mode of payment; ECS mandate or Post dated cheques. AVOID CASH TRANSACTIONS.

·         Clear mention of the size of the property and the number of rooms, bathrooms, kitchen, etc.

Wishing you a Happy Letting out/in of your homes. You may make lifelong friends with your Tenants / Landlord. Happy Safe homes are very important.

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Guaranteed Returns Schemes on Real Estate

Guaranteed Return Schemes

Most of us would have come across lucrative advertisements talking of 11-12% Guaranteed returns on your investments in Real Estate - mostly in Commercial Property like Offices / Shops etc. When Banks etc are giving you just 6-8% returns, why is The Builder ready to give so much more. Its simple Finance. There are one or more of the reasons below:

• The Banks lend only up to a limit, which is decided by various factors. They mainly dwell at high probability of recovery of the loan in case of default.
• If the Builder wants more money, he goes to the Non Structured / Grey market, where he pays much more by way of Interest.
• Due to his paymant capability / track record, Financial Institutions are not lending to him.

The most important point to consider is the credibility & reliability of the Proposer. Even in marriage, we commit a lot but many forget them soon enough. His commitments to you are supposedly sacrosanct, but in Indian Context, its debatable.

Hence, please don't be swayed by mouth watering offers. Follow the dictum - " Anything which is too Good, is Bad".

If you really wish to have a better return, go in for Reputed & Good Listed Companies issuing such Debt Instruments. These could be bought on line in demat form. Your money matters.
Safe & Happy Investing is very important.
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