Buying a Resale Flat in Chennai: The Checks That Matter

A new flat comes with a brochure. A resale flat comes with a biography.

Somebody bought it, lived in it, painted it, perhaps enclosed the balcony, perhaps borrowed against it, perhaps inherited it from a parent who bought it in 1998 from somebody else entirely. All of that is now part of what you are buying, whether or not anybody mentions it at the first viewing.

That sounds like a warning. It is really an argument for the resale market, done properly. A resale flat is the one kind of property where almost everything can be checked before you pay: the building is standing, the neighbours are there, the maintenance record is visible and the title has a track record. The only thing that makes it risky is skipping the checks.

Why buy resale at all?

Because resale offers things new projects often cannot.

Location. In established neighbourhoods like Mogappair, Villivakkam, Korattur or Pallavaram, there is very little new land left to build on, and the resale market is often the only way in.

Certainty. You can see the flat, the light, the water, the parking and the association at work. Everything we list in under construction or ready to move as checkable on a finished flat is checkable here.

No GST. A completed flat sold by its owner carries no GST, unlike an under-construction purchase.

Room to negotiate. An individual seller is not running a price list, and a fair offer on a flat that has been on the market for a while can land well.

The trade-off is the paperwork, which is heavier than on a new flat, because there is more history to read.

Start with the seller

Before the flat, check the person selling it.

Is the seller the sole owner, or one of several? Every co-owner has to sign the sale.

Did the seller buy the flat, or inherit it? If inherited, every legal heir has to be accounted for: a legal heir certificate, a registered partition or release among the heirs, or a will, probated where the law requires it. A flat sold by one sibling while two others live abroad is a flat with a question attached.

Is the seller selling in person or through a power of attorney? If through a power, it has to be specific to this property, properly executed, stamped, registered in Tamil Nadu, and still in force. Our note on NRI paperwork covers what a good one looks like.

Is the seller an NRI? If so, the tax you have to deduct from the price is very different, which we come to below.

Then the title

The title check on a resale flat is the same discipline as on land, with an apartment's documents layered on top. It is worth being punctilious here, because every gap you miss now becomes yours later.

The seller's own purchase documents. For a flat bought from a developer in Tamil Nadu, this has usually meant a sale deed for the undivided share of land and a construction agreement for the building, or a single composite deed. Read both.

The parent documents and the link documents, back to the original landowner who sold or developed the plot.

An encumbrance certificate for at least thirty years, covering the survey numbers of the whole plot.

The revenue records for the land, and whether they reflect the flat owners' undivided shares or still stand in the developer's or the original landowner's name. The position varies from building to building; the point is to know which you have.

All of this is set out in more detail in patta, chitta and the EC. Have a lawyer read the chain and give you a written opinion before you pay anything beyond a token advance.

Then the building

A flat is only as sound, legally, as the building it sits in.

The approved plan. Ask for the building plan approval and compare it with what is standing. Is the number of floors the same? Is the flat's layout the same?

The completion certificate, for buildings that needed one.

Deviations. Enclosed balconies, an extra room on the terrace, a shop on the ground floor of a residential building. Small changes inside a flat are common and usually harmless. Changes to the structure or the building's use are a different matter, and a flat in a building with a serious violation can be hard to sell and, in the worst cases, exposed to action by the authority.

The undivided share of land. Read it off the seller's documents. It tells you your stake in the ground and how densely the plot is built, both of which matter more as a building ages. We explain why in carpet, built-up, super built-up and UDS.

The age and condition. Walk the stairs, the terrace and the basement. Look for seepage, cracks in the structure rather than the plaster, and the state of the plumbing. Ask when the building was last painted and waterproofed.

Then the association

The owners' association is the building's government, and you are about to join it.

Ask for a no-dues certificate showing that the seller has paid all maintenance charges, and a no-objection letter for the sale if the association issues one.

Ask what the monthly maintenance is, what the corpus fund holds, and whether any large repairs or special levies are planned. A lift replacement or a full repaint next year is a cost you will share.

Ask how parking is allotted, and get the seller's allotment in writing. "We always park there" is not an allotment.

And talk to a neighbour or two. You will learn more about how the building is run in ten minutes on a landing than in an hour in the association's office.

Then the bills

Property tax receipts from the Greater Chennai Corporation or the local body, up to date.

Electricity bills, with the connection in the seller's name.

Water and sewerage receipts, where the building has a metro water connection.

Each of these should be in the seller's name and paid up. After registration, each of them has to be transferred to yours.

If the seller has a loan

Many resale flats are still mortgaged to the seller's bank, and the bank holds the original title documents. This is routine and entirely manageable, provided the order of events is right.

The usual route is for your payment, or your own bank's loan disbursement, to go directly to the seller's bank to close the loan. The seller's bank issues a closure letter and releases the original documents, and any registered mortgage is released by a registered document. Only then is the sale completed. What you must not do is pay the seller in full and trust that the loan will be closed afterwards.

If you are taking a loan yourself, your bank will run its own valuation and legal check, and may lend on the lower of the agreed price and its own valuation. The building's age can also affect the loan's tenure. Find out early.

The tax you deduct

Here is the step most first-time resale buyers do not know is theirs.

When you buy property from a resident seller for ₹50 lakh or more, you, the buyer, have to deduct tax at source at 1 per cent of the price and deposit it with the government, then give the seller the certificate. It is your obligation, not the seller's.

If the seller is an NRI, the deduction is much larger, calculated at the rates that apply to a non-resident's capital gains, and you need a TAN to make it. The seller may obtain a certificate from the tax department for a lower deduction; if they have one, the certificate tells you what to deduct. Talk to your chartered accountant before you sign the sale agreement, not after.

Stamp duty and registration

Stamp duty in Tamil Nadu is 7 per cent, plus a registration fee, charged on the higher of the guideline value and the agreed price. If the agreed price is below the guideline value, you pay on the guideline value anyway. Check the current registration fee and the guideline value for the property on TNREGINET when you budget.

Pricing a resale flat

How do you know whether the asking price is fair? Not from the seller, and not from the portal listing that was copied from the flat next door.

Start with recent sales of similar flats in the same building or the next street. Your lawyer's encumbrance search will show registered transactions, and a few conversations with the association and local agents will fill in the rest.

Compare like with like. Price the flat on its carpet area, not on the super built-up figure in an old brochure, and take account of the floor, the facing, the parking and the state of the interiors.

Allow for what you will spend. A flat that needs new wiring, new plumbing and new kitchen fittings is worth less than one that does not, and the gap is the cost of the work plus the months you cannot move in.

Look at the building's future. An older building on a generous plot, with a healthy undivided share of land for each flat, may carry value that the flat's condition does not show.

And remember that your bank will run its own valuation. If it comes in well below the agreed price, the bank is telling you something, and so is the shortfall in your loan.

What stays with the flat

A resale flat is often sold with things in it: a modular kitchen, wardrobes, air conditioners, a water purifier, light fittings, curtain rods, sometimes a generator connection or a solar water heater on the terrace. Sellers and buyers frequently remember these things differently on the day of handover.

List them in the sale agreement. Every fixture and appliance that stays should be named, and so should anything the seller intends to take. It is a five-minute job at the agreement stage and an argument at the handover if it was skipped.

The sequence

Take a hypothetical buyer, Ramesh, buying a two-bedroom flat in Mogappair from a family who bought it new in 2008.

He agrees a price and pays a modest token advance against a receipt.

His lawyer reads the title chain, the EC, the approvals and the seller's documents, and gives a written opinion.

He and the seller sign a sale agreement setting out the price, the balance, the timeline and the conditions, including the closure of the seller's loan.

His bank completes its valuation and legal check and sanctions his loan.

On the agreed day, his bank pays the seller's bank to close the loan, the originals are released, and Ramesh pays the balance, after deducting the 1 per cent TDS.

The sale deed is registered at the Sub-Registrar's office, with both parties present.

Ramesh transfers the property tax, the electricity connection, the water connection and the association membership into his own name, and applies to update the revenue records.

None of these steps is difficult. All of them are easier in that order.

The order matters more than the speed. A seller in a hurry may push to register first and sort out the loan, the association letter or a missing heir's signature afterwards. Resist it politely. Every document that arrives after the registration is a document you no longer have any leverage to ask for.

Resale, done properly

A resale flat rewards the buyer who reads its biography before signing the last chapter. The building is real, the neighbourhood is real, the price is negotiable and the title, once checked, has the strength of a track record behind it.

Our secondary book lists resale homes across Chennai, and every one of them goes through the same legal stage as a new project before a deal closes. You can browse two-bedroom and three-bedroom flats across Chennai, or if you already have a resale flat in mind, send us its details. We will read its history with you, page by page, before you make it yours.