Double Closing

Real estate is an investment option that can help double your money within a short span of time. Though one requires huge amount of funds to begin a real estate transaction, once the money is invested at the right place, the returns could be bountiful.

Closing is when the deal is finalized and the title is transferred to the buyer from the seller. A double closing occurs when there is third party involved in the transaction who benefits from the process. When a person purchases a plot and finds that another buyer is ready to buy it at an appraised value, then the first buyer would be willing to sell the property to the second buyer with enormous profit margin. Simultaneous closing is effectuated where the middleman buys the property and sells it at the same time.

Double closing is also done when the buyer or seller do not wish to reveal their identity. The buyer and seller never come in contact with each other instead an investor (middleman) helps in the transactions and completes the legal formalities.

The catch here is that the buyer and seller may find out about the double closing if the contract is read accurately and that may stop them for signing it. When the seller finds out that someone is willing to pay more for his/her property then why would he/she sign. And if the buyer finds out that the property is available at lower costs, then why would he/she pay more? Double closing thus needs a lot of skill, knowledge and luck.

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Short sale before foreclosure

Short sale is when the amount of a real estate is depreciated by negotiation or is sold by a financially crippled seller. During times of financial crisis one has to let go their property in order to pay the debt and cover the losses. In such a circumstance immediate barter becomes a requirement hence the price is reduced to gain quick buyers.

This kind of bargain can be termed beneficial for both the seller and buyer. The buyer benefits if an esteemed property is available at low price and the seller benefits because he/she can pay away the debts.

In order to negotiate, the buyer can do some research on similar properties and in neighboring areas to find out its worth. If the buyer finds that the property is over priced, he/she can show some comparisons to the seller and lower the price.

The whole procedure can take a long time to effectuate and can turn out to be risky if the seller does not keep the buyer informed. Hence the buyer should ask for proofs of the financial documents like the bank papers pertaining to the property before making a decision.

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The rules of down payment

Down payment is some amount of money provided to the seller before buying a property to guarantee your commitment towards the property. A part of the property price has to be paid from your own pocket after which one can take a home loan or personal loan.

Down payment varies depending on the investment plan or the sellers demands. Heavy down payment may reduce the interest rates while interest rates soar on minimal down payment.

The down payment you pay also affects your ability to qualify for a loan. Banks provide loans depending on your capacity to fulfill the down payment needs and a fixed monthly income. If one is unable to pay the down payment then the loan application may get rejected.

Make sure that the loan programme allows you pay a particular amount of down payment. The loan is designed in accordance with the down payment. Hence decide on a loan provider before finalizing a property and paying the down payment.

If one is unable to pay the down payment themselves then there are other ways to retrieve it. For example one can get money by surrendering some assets like a life insurance policy, shares, etc.

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Chain of title and Insurance

A property may be transferred from one hand to other and in the whole transaction the property goes through many alterations. The registrar office maintains the records of these transfers and it is known as chain of title. A document that gives the history of ownership of land along with the current owner is known as chain of title.

It is important to maintain a record of land transactions so that all the legalities can be met with. A system known as Torrens title system is used for this purpose that helps in tracking the past and present ownership.

Since the property switches hands several times it can get dilapidated or internally damaged. The damages may be foreseen by the new owner but he/she may have to face the brunt of repairing the damages. To avoid this situation the concept of title insurance was introduced. Insurance of buildings was made mandatory in 2001 but not everybody follows this rule.

Getting insurance on chain of title can be quite beneficial. An insured property increases the confidence of a new buyer and can also aggrandize the bank formalities as an insured property seems more dependable. Insurance can increase the cost attached with the property but it ensures that the owner is investing in a secured estate.

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Concept of Land Trust

A piece of land that has limited access to the public comes under the land trust. Land that needs conservation is under the ownership of the government or private party so that the resources are not hampered. Usually land used for agricultural purposes or wild-life conservation are owned in this manner. Land trust is either under a non-profit organization or one party holds its ownership for the benefits of another.

For the administration of the land monetary assistance is provided by the government with the help of grants or donations. The taxes attributed with these lands are lowered as it is not for commercial use.

A way of donating for these lands is through bargain sale. In a bargain sale the landowner sells the property to an organization at a lower rate than its actual worth. The remaining amount is considered a donation to the organization. Hence the donation may not be in tangible form but the organization saves money on its investments.

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A promissory note

A promissory note is issued in writing by the borrower stating that he/she will repay the money within a specific time and with certain amount of interest. Promissory notes are usually drafted for small amounts as it has some restrictions. In case of a real estate loan, a lien or mortgage is much preferred over promissory note.

The note includes the amount that needs to be repaid, the date of sanctioning and the last date of submission, names of the lender and borrower, reason for taking the loan, the rate of interest, terms of the loan, clauses leading to late payment, etc.

The promissory note is a part of negotiable instruments act of 1881 as the amount or time for the payment is negotiable depending on the promisor and promise. An unsecured money market instrument issued in the form of a promissory note is called Commercial paper. This was introduced in the year 1990 with a view to enabling highly rated corporate borrowers/ to diversify their sources of short-term borrowings and to provide an additional instrument to investors.

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Home Registration

The registration process in India can be exasperating as it takes immense amount of time and money. Depending on the time availability between the buyer and seller, a time is affixed with the registrar. Registration formalities take place in the sub registrar’s office.

Registration of home or land is carried out to ascertain the property rights to the owner. Once the house is registered under a particular name, that person becomes the owner of the house. It is thus important to carry out these formalities in presence of an advocate and solve all the legal issues pertaining to land registration.

The property location, legal ownership document, date of purchase of the title, property transfer and inheritance issues, if transferred the legal authority of the transferee, clearance certificate from urban land ceilings authorities, payment of all dues like property taxes, electricity and water bills and any previous alterations in the property registration are the points that require careful scanning. All the documentation and negotiation procedures cannot be met with without the presence of a lawyer.

Home Registration ensures that the right person gets hold of the property and is the sole owner of the land.

(ref.www.indiahousing.com)