Property Due Diligence Before Purchase: A Complete Legal Checklist for Buyers

Author: Advocate Harshit Sachar
Place of Practice: Ludhiana, Punjab
Jurisdiction: India

Property due diligence before purchase involves verifying ownership title, checking encumbrances, reviewing revenue and municipal records, confirming approvals, ensuring absence of litigation, and examining sale documents. Proper legal verification reduces the risk of fraud, disputed ownership, and future litigation.

Why Property Due Diligence Is Critical

Many buyers assume that registration guarantees clear title.
This is legally incorrect.

Common risks include:

• Seller not being true owner

• Property under litigation

• Hidden loans or mortgages

• Unauthorized construction

• Revenue record discrepancies

A small verification effort before purchase can prevent years of litigation.

Step-by-Step Property Due Diligence Checklist

1️⃣ Verify Title Ownership

Check:

• Who is the current registered owner?

• Whether ownership matches sale deed records

• How the seller acquired the property

Examine the chain of title for at least 20–30 years.

Breaks in title history can create serious legal issues.

2️⃣ Obtain Encumbrance Certificate (EC)

An Encumbrance Certificate shows:

• Registered transactions

• Mortgages

• Charges on property

If property is mortgaged or pledged, bank consent is mandatory before sale.

3️⃣ Check Revenue & Municipal Records

Verify:

• Mutation entries

• Jamabandi records (for agricultural land)

• Property tax receipts

• Municipal approvals

Revenue entries must match the sale deed details.

4️⃣ Search for Pending Litigation

Conduct court record searches to check:

• Civil suits

• Partition claims

• Injunction orders

• Stay orders

Buying property under litigation exposes the buyer to legal risk under principles of “lis pendens”.

5️⃣ Verify Land Use & Zoning

Ensure property is:

• Approved for residential/commercial use

• Not part of acquisition proceedings

• Not falling under restricted land categories

Improper land use can result in demolition or penalties.

6️⃣ Check Building Approvals (If Constructed Property)

Verify:

• Sanctioned building plan

• Completion certificate

• Occupancy certificate

Unauthorized construction can invite sealing or demolition.

7️⃣ Examine Sale Deed Draft Carefully

Check:

• Indemnity clauses

• Clear description of property

• Boundaries and measurements

• Absence of vague or ambiguous terms

Do not rely solely on verbal assurances.

8️⃣ Verify Identity of Seller

Confirm:

• Aadhaar / PAN details

• Authority if selling through Power of Attorney

• Company resolution if corporate seller

Fraudulent identity cases are increasing.

9️⃣ Loan & Bank Clearance

If seller has taken loan:

• Obtain No Objection Certificate (NOC)

• Ensure bank charge is removed

• Verify release deed registration

Without bank clearance, title remains defective.

Common Mistakes Buyers Make

❌ Relying only on broker’s word
❌ Skipping title search to save cost
❌ Not checking litigation status
❌ Paying large advance without verification
❌ Ignoring minor document inconsistencies

Most property frauds occur due to negligence, not complexity.

Can Due Diligence Be Done After Agreement?

Yes, but:

• It is safer before paying substantial amount

• Insert condition clause in agreement subject to clear title verification

Early verification provides exit option.

FAQs

Is registration enough proof of clear title?
No. Registration does not guarantee absence of litigation or encumbrances.

How many years of title should be checked?
Generally 20–30 years for safe verification.

Is legal opinion necessary?
Strongly advisable in high-value transactions.

Can property be sold if under loan?
Yes, but bank consent and charge removal are mandatory.

Final Legal Insight

Property purchase is often a lifetime investment. Proper due diligence is not an optional formality but a legal safeguard. Careful verification of title, records, approvals, and litigation status protects buyers from financial loss and prolonged disputes.

Disclaimer

This article is for general informational purposes only and does not constitute legal advice. Property laws vary depending on state regulations and specific factual circumstances. Buyers are advised to obtain professional legal verification before finalizing any property transaction.