Unsure of your Undivided Share of Land?

Deepa and Rajan after months of searching finally bought their “Dream Home” and were in the top of the world!  The property was at a prime location where the prices were appreciating at a fast rate.  After a couple of years, as their family was expanding, they decided to sell the flat and were really confident that the sale would fetch them a great price and that they would be able to sell off their apartment in no time!.

Many prospective buyers looked at the apartment and tried to secure a loan to buy the property. However, their requests for loans were rejected by the banks – not because of their financial standing, but because of one unanswerable question “Where is the seller’s undivided share of land in the Agreement?

Deepa and Rajan were taken aback as they realized that they were only sold the building that had depreciated over time. They did not own any proportion of the land on which the apartment was constructed.

Many property owners are unaware, that Undivided Share of Land is the share of land owned by them when they purchase the apartment. Simply put, when one buys an apartment, the potential buyer is buying two things – the constructed flat in which they reside, and a proportionate share on the land on which the apartment is built.

In real estate, the price appreciation is on the land price as technically the building itself depreciates over time.  Also in the unlikely event of an earthquake or should the government acquire the entire property for a project of national relevance, what would be the fate of the apartment owners if they did not own a portion of the land?

For any future redevelopment  of the project, it is important to have a portion of the land in the owner’s name. The sum of all the flat owners share of land has to be equal to the area of the property. It is important for potential buyers to take note that the undivided share of land should be proportionate to the area of their apartment.

There have also been cases where the builder has allocated less undivided share to apartment owners and kept some part of himself and the original landowner. Prior to investing in a property, please ensure that you examine the draft agreement and verify the percentage of land that has been allocated as undivided share of land.

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