Real estate investments can involve several legal issues that may lead to financial loss or disputes. Here are some key legal risks to watch out for:
1. Title & Ownership Issues
Fraudulent Sellers – The seller may not be the legal owner of the property.
Multiple Ownership Claims – Disputes between family members or co-owners over ownership rights.
Encumbrances – Property may have unpaid loans, liens, or legal disputes affecting its ownership.
Forgery & Fake Documents – Some properties are sold with fraudulent title deeds or forged signatures.
Solution: Conduct a Title Search and check the Encumbrance Certificate (EC) before buying.
2. RERA & Regulatory Compliance
Non-RERA Approved Projects – In India, projects without RERA registration may not be legally compliant.
Project Delays & Builder Fraud – Many developers delay possession, leading to legal disputes.
Misleading Advertisements – Builders promising features that are not actually delivered.
Solution: Verify the project on the RERA website and check all agreements before investing.
3. Zoning & Land Use Violations
Illegal Constructions – Some buildings violate municipal zoning laws and may face demolition.
Agricultural Land Issues – Buying farmland in states where non-farmers cannot legally own it.
Unauthorized Land Conversions – Land must be converted for residential or commercial use legally.
Solution: Verify zoning approvals and land conversion certificates from local authorities.
4. Litigation & Disputed Properties
Ongoing Court Cases – Some properties are under legal dispute due to inheritance claims or fraud.
Possession Disputes – Tenants or illegal occupants refusing to vacate a property.
Partition & Family Disputes – Issues in jointly owned ancestral properties.
Solution: Get a Legal Due Diligence Report from a real estate lawyer before buying.
5. Loan & Mortgage Issues
Mortgaged Property Fraud – Sellers may hide that a property is under a bank loan.
Loan Default & Foreclosure Risks – If the previous owner defaults, the bank may seize the property.
Solution: Check for any bank liens or mortgage encumbrances before purchasing.