Important Real Estate Terms

Some terms & terminologies are very relevant in the real estate industry but a lot of investors actually have no knowledge about what they mean. These details may seem small but fine print matters in the long run. Not only will you have a good grasp over these real estate terms but also be able to convey to the builder that you are well updated about the industry.

1. Carpet Area: The carpet area is the net useable area and is measured as the area between the inner walls of a structure. When you buy a property, the builder should usually quote the price based on carpet area of the flat, which he does not unless you ask for it.  
2. Built-up Area: Built-up area includes the entire carpet area together with the area of the walls and the doors. This measure is almost 15-20% more than the carpet area.
3. Super Built-up Area: In addition to the built-up area, a proportionate amount of the common space of your society that all residents can use, like the parking areas, lobby, staircase, hallways etc.). Most of the builders use this figure to market their projects and give out a wrong idea to their customers about the actual size of the flats.
4. Capital Gains: Long term capital gains represent the profit made on a sale of property 3 years after making the purchase. This is entitled to tax after the application of indexation. A seller can avoid paying this tax if he or she diverts this amount into buying any other property
5. Encumbrance Certificate: This is the certificate that entitles you to the ownership of your property. All legal or monitory dues on the property is also evident from this document. Usually, the bank needs this document for any home loans that you may be applying for to ensure that there is no mortgage already existing on that property.
6. Title Deed: This document proves the ownership of the property and is very important when you are buying the property. Check the title deed to ensure that you are buying it from the right owner. Always ask for an original of the document
7. Stamp Duty: This is the tax that you need to pay to the government for purchasing your property. The stamp duty differs from state to state and can be 3-8%. This tax is payable on the Agreement Value. Do consider the stamp duty while making a budget for purchase of a house as it can be very high.
8. Franking Charges: This is a small charge that you need to pay to the bank when you take a home loan. This is actually a stamping in which an official seal is put on the document of purchase that needs to be done at the sub-registrar’s office for a very small fee. The bank does the franking and collects the charge from the buyer.
9. Registration Charges: This is a charge that is similar to stamp duty and is also based on the Agreement Value and is paid at the time of registration of your property. This again varies from state to state and may be 1% of the property or lower.  
10. Power of Attorney: This is a legal process in which you transfer your rights as property holder to someone else. In case of Real Estate the right to sell or buy property has been banned by the Supreme Court  
11. Sale Deed: The sale is considered to be legal only when this document has been signed by both the buyer and the seller. This document contains all particulars, including the details of the property.
12. Service tax & VAT: The Service Tax needs to be paid only in case of properties that are under construction. For completed properties no such tax is applicable. VAT is similar to this and is applicable only to properties that are not completed. But not all State Governments charge a separate VAT.
13. Conveyance Deed: This deed is a document that the builder needs to have to legally transfer the title of the land to the housing society that has been formed. This is compulsory or the title will remain with the builder and may cause legal hassles later.
14. Ready Reckoner Rates: This is is a rate that has been specified by the Government and is the base price on which the Registration charges, the stamp duty and other legal matters are based on. 

Well, after knowing these important real estate terms, you can be more aware of what you are getting into and taxes and documents that you need and what they signify.