Citizens' Issues
How to buy home or flat in Mumbai safely and smartly

In the 2nd part of the multi-part series on legal issues and remedies for consumers, Vinod Sampat lists out the key points you need keep in mind when buying home or flats

Buying property in India is fraught with perils and risks. Very often, the terms of contract is sided towards the builders or developers and not the consumers. Therefore, consumers have to be careful while buying real estate and must ensure that everything is checked and examined in detail, including the fine print. Unfortunately, not many developers handhold consumers or take care of them. Many are scrupulous and are interested in selling properties at exorbitant rates, with some of them even flouting the law without you ever knowing about it. They don’t disclose many things, so you have to on your footing to check and verify all details in the agreement.

In the run up to the Moneylife Foundation seminar to be held on 23rd November, Advocate Vinod Sampat has highlighted key things to keep in mind while buying real estate. Before reading the rest of the article, you may want to register for the seminar beforehand as seats are on first-come, first-served basis and limited in numbers.

First, you would need to check the type of property—whether it is freehold or leasehold. Each has its own plus and minuses.







Peace of mind



Yearly lease rent to be paid

No recurring expenses



Check the lease period. After lease period property may not be renewed

No difficulties at the time of redevelopment



Possibility of litigation i.e. Bombay Port Trust property lease renewed only for five years at exorbitant rates




Problems may arise at the time of redevelopment.


Besides deciding on whether to opt for freehold or leasehold, you will need to keep in mind the following as well:

Take search (obtain a search report of the property)

Issue public notice (in local newspapers)

Read original agreement drafted by the builder and see all agreements are duly registered

Have a clause in the agreement that if the seller terminates the agreement or does not give possession on the due date then he will pay double the amount that has been collected by him till date (emphasis added)

Take irrevocable power of attorney from seller

Insist for clear and marketable title certificate from the advocate of the vendor

See that the earlier chain of agreement is duly stamped and registered

Insist for no objection certificate from the cooperative housing society

Have the area physically measured. Also see that the carpet area tallies with the society record as well as with the records of the Bombay Municipal Corporation (BMC). There are instances were builders have fooled flat purchasers by selling open passages. The area as reflected in municipal records is the correct records

Have clear cut idea of hidden expenses like transfer fees, brokerage etc

Be specific and ask hard hitting questions i.e. what all furniture items will be kept. Prepare an inventory of the same

Have separate agreement for furniture item. This will help you in saving stamp duty which is 3% on moveable property and 5% on immovable property

See that the seller has paid all his tax dues

Inquire if there are any notices received pertaining to the flat. Take an affidavit from the seller. In case of dispute this can help you to initiate criminal action against the seller

Documents should be signed before a notary and the notary number must be mentioned in the document otherwise it becomes a defective affidavit

Inquire about incidental benefit i.e. car parking spaces that would be allotted by society, club facilities, etc

Before paying token amount get the draft of all the papers approved from the seller

Ensure that the seller is holding the flat not as a trustee

Find out the market value of the property as well as the impact of capital gains tax on the seller. At times deals get cancelled if the seller has to pay high amount of tax, like tax deduction at source (TDS)

Check the status of the property after verifying the property card

Ensure that the entire chain of documents are mentioned in the agreements

In the event the flat is acquired by the transferor on account of demise of his family members insist for probate/letter of administration. In the alternative insist on the consent of all the legal heirs preferably as confirming parties

You have to ensure that proper precautions are taken else you can face problems when you offer the flat as collateral or at the time of transfer of flat

Take a token bank loan (banks have own method of doing verification of the property title). It will give peace of mind

Check if the occupation certificate/ building completion certificate is received

Deal with reputed persons be it broker or vendor

Your flat is priceless do not compromise by telling illiterate persons to prepare transfer documents

Stay tuned for the 3rd part which will be published tomorrow in the run up to Vinod Sampat’s seminar. Register for the Moneylife Foundation Event by Vinod Sampat.

Check the first part over here:



Those seeking help or advice on CHS issues can contact
Moneylife Foundation’s Legal Resource Centre (LRC) ( )




4 years ago

Great article Mr. Sampat!

Please can you elaborate when you say that BPT renews leasehold property for only 5 Years??

So if a 99 Year Lease is expiring it will only be renewed for 5 Years?

Also what is the thumb rule of discount/difference in price between Freehold and Leasehold property.

So say all else equal (identical building, location etc, amenities etc) if the price of Freehold Apartment is say going for Rs 10,000 PSF how much should a Leasehold Property go for APPROX?

Look forward to your response!


Vishrut Patel

In Reply to Karan 3 years ago

Dear Mr Karan,

Thanks for posting your comment.

As you may be aware Moneylife Foundation has launched a Legal Resource Centre ( ) to provide advice and help in such matters.

We request you to send your query through the LRC by clicking in this link

Best Regards,
Vishrut Patel

Are privileged bank customers getting more benefits?

The benefits of privilege banking remain a mere eye-wash, as privileged banking services are hardly availed, as they matter little to privileged banking customers

The new private banks (or private banking) are seen to accord the special privileged/preferred/Imperia customers status to their few in number super rich/high or ultra-high networth individual customers. Privileged banking is essentially based on the volume and size of their balances in savings bank accounts and extent of the amounts placed in term deposits e.g. Axis Bank requires minimum Rs1 lakh in savings bank or ICICI Bank for salary accounts with a monthly credit of Rs50,000 or more or a home loan between Rs40 lakh – Rs1 crore.

A series of benefits of private banking or privileged banking are being given to a select few rich and at the same time simply denying them even in a lesser degree to the lakhs of aam janata.  Small time savings bank (SB) and fixed deposit (FD) customers who have chosen to voluntarily safe keep their hard-earned savings essentially in any bank nearer to home. This is done for the ease of drawing upon them on demand in case of dire need or emergency without any elaborate paper work and delays.

Most of the so-called extra/special benefits that are sought to be extended by private banks to this handful lot of super-rich so-called ‘privileged customers’, who hardly ever seen to set foot into private bank branch portals, more often than not they are seen to leave bank visits to the secretary or chauffer. Consequently, the benefits remain a mere eye-wash, as they are seen to be hardly availed of by many as they matter little to them.

What are these private banking benefits?

  • Priority in allotment of safe deposit lockers and in the choice of the size
  • Lower locker rentals
  • Some banks are said to be offering round-the-clock locker facilities with air conditioned  mirrored changing room at tony down town areas of Mumbai like Cuffe Parade, Malabar Hill and Bandra-Kurla Complex (BKC)
  • Reduced charges and enhanced limits on credit and debit cards
  • Forex, internet banking and ATM withdrawals and bill payments
  • Bank travel and gift cards
  • Accounts and differently coloured cheque leaves prominently displaying “Privilege Customer” tag that becomes status symbols
  • They have less waiting during branch visits
  • Free pick-up for cash and cheques to be deposited as well as home delivery of cash withdrawals
  • No charges for cheque return or stop payment or signature verifications
  • Especially dedicated relationship managers who keep on calling customers phone or cell to sell mutual fund, insurance or gold even when it is made amply clear not to pestered or reminded
  • Differently designed and coloured cheque leaves distinguishing them from the other customers

The hard truth is that most of the ultra-high networth individuals (HNIs) are too rich to hardly pay any visit to the private bank branches; perhaps many may not even be aware of the exact location!  Unless and until one frequently visits the bank on puts through physical transactions they have very little to gain in their privilege status. Most of them being tech-savvy do carry out most of their transactions online through internet banking or have staff to do their running about.

These privileged or private banking customers do not require or avail of the kaal-ka-baccha bank relationship mangers, parroting blah-blahs claiming to be ‘investment advisors.’ that they are not. These marketing gimmicks only serve to massage the egos of the few super rich customers. Most have on their own retainer highly qualified financial planners and advisors.

There was a time when elders/senior citizens were beneficiaries of additional +1% in interest on FDs, it now stands reduced to a mere +0.5%. This ought to be restored by extending it to all deposits – FD and recurring deposits too. The bulk deposits discretionary higher rate cap also should be restored to the earlier Rs15 lakhs from the now increased Rs1 crore. 

Common sense demands, on the contrary, that the benefits ought to have been first and foremost extended to the lakhs of small customers, the elders, widows, pensioners and housewives who have been loyally maintaining dedicated accounts with just one bank branch for decades at a stretch.   These savings accounts aggregating to crores constitute over 14.5% of the total low interest bearing deposits that the banks earn fabulously by advancing to borrowers at higher rates. Denying them the benefits is patently discriminatory.

(Nagesh Kini is a Mumbai-based chartered accountant turned activist.)



Yerram Raju Behara

4 years ago

Privy purses gone but the privileged class remains. Banks are more system centric than customer centric. The privileges that the author narrated are for those who transact through net for as is made out and confirmed by the users that these privileged class of customers hardly have time to visit the bank branch. There is a rush for CASA deposits as the banks are forced to compete with other financial products when it comes to FDs.
Excepting the reduced 0.5% additional interest on FDs, the senior citizens have no seniority anywhere in treatment. Earlier, there used to be a lounge where after presenting his/her token he/she can sit and browse through news papers or magazines until his/her turn comes. Now he has to wait in the que. A few empathisers now and then extend the privilege to the senior citizens.


4 years ago

Most of the bank customers who are opting these Privileged accounts are feeling status symbol of having a priority or patina or privilege account. They do have separate counters / lobby / relationship managers there by special care is being taken care. However opting for other facilities is not to the full extent

Deepak Sholapurkar

4 years ago

Good Article, "Privileged Customer" is a synonym for selling the waste products like ULIP's etc through there RM's.

When ever I asked about required things like Lockers RM's never replied but they were always there to call and try to sell Insurance/investment products.


4 years ago

Sometimes I feel that the banks intentionally bracket customers so that their RM's get a Ready bunch of customers whom they can target .. for selling their Schemes & products which are beneficial for the banks & the RM's Annual bonuses


4 years ago

Awesome article. My blood boils whenever i visit airports and see Jet Airlines operating many booths for their "privileged" customers while there are only a few check-in counters with long queues, for us lesser mortals.

They should have some decency and take over some of the common public passengers in times of heavy traffic. We will understand if any "privilege" customer comes and he is taken to the front of the queue.


nagesh kini

In Reply to bhaskar 4 years ago

Bhasker - what's your take on Shashi Tharoor "Cattle class" remark for the Economy Class flyers?
The Executive and First Class are only there for the moneyed CIPs Commercially Important Persons and netas and top babus!

Mrinal Thakkar

In Reply to bhaskar 4 years ago


In my opinion , the privilege system in Banking works in a completely diffrent way than the one in Airlines.

Airlines have privilege counters for their loyal customers who repeatedly fly on the same airline. In this case , we can also opine why Jet Airways allows Economy "Privilege" Card passengers to check in at Business class counters,isn't this a disadvantage for the people who pay nearly 5 times more to travel on Business/First Class.

In banking however, the Bank and its products are same across the board , the only diffrentiation being the AQB/AMB that customers maintain. the POV in the article in that why are the loyal people of the Bank(who have lower AQB/AMB) being suffered because some wealthy HNI walks in(who may not even use services) and RMs want their money at any cost.

i myself being a priority customer know how pushy these RMs are...these people sell FMPs to senior citizen(in this case my uncle) at 9.66% estimate whereas a PSU gives him 9.75%p.a on an FD. i mean whats the point taking the risk


4 years ago

Dear nagesh,

You have hit the nail on the head by your well researched article on these " Priority customers ". Being one myself, I hardly visit the branch and generlly my assistants go to the branch whenever required though it is quite seldom . most of the work is done online now adays ...

Mrinal Thakkar

4 years ago

On the Dot Article

Will the Volcker Rule barring banks from proprietary trading be implemented?

Four years after Paul Volcker suggested that banks should not do proprietary trading (a cause of global financial turbulence), there has been no action.

One of the most controversial regulations of recent times, the Volcker Rule is yet to see the light of the day in USA. It has been now almost four years since the idea of prohibiting banks from doing proprietary trading was thought of in USA, which is the core of Volcker Rule, but till date nothing substantial has happened but timeline for implementation has got extended many times. The USA is abuzz with the news of another extension.  As per Financial Times report,” The Federal Reserve is considering a delay in the compliance date for the highly anticipated Volcker regulation, giving banks additional time to conform to its provisions, according to people familiar with the matter. Banks are currently required to comply with the rule – which bans proprietary trading that puts a bank’s own capital at risk – by July 2014. But regulators are still putting the final touches on the long-delayed proposal, and the final rule will probably not be released until December – giving banks less than a year to make changes to comply with the proposal.”

It all began with the financial crisis that engulfed the largest economy of the world in 2008. The rule, named after former Federal Reserve Chairman Paul Volcker, was put forth in 2010 to restrict banks from making speculative bets and trades with their own capital.

The key feature of the “Volcker Rule” is that it prohibits an insured depository institution and its affiliates from:

  • engaging in “proprietary trading”
  • acquiring or retaining any equity, partnership, or other ownership interest in a hedge fund or private equity fund; and
  • sponsoring a hedge fund or a private equity fund.

The Volcker Rule has been debated (over last 4 odd years) at length but some of issues have remained unresolved till now and implementation of the regulation has been getting extended.

Why is it that the implementation of Volcker Rule is getting delayed? There is more than one reason for this. Let us look at some of prominent reasons for the delay:

Hedging Exemption:  While Volcker Rule has a provision to ban proprietary trading for the depository institutions, it allows proprietary trading for the purpose of hedging. As per the rule the hedging exemption covers a banking entity’s purchase or sale of a covered financial position designed to reduce specific risks in connection with or related to certain positions, contracts, or other holdings of the banking entity. The hedging exemption is available subject to certain terms and conditions as per the proposed legislation which says ,” The banking entity should have an established internal compliance program to ensure, among other things, that the subject activities are risk-mitigating hedging activities, including written policies and procedures regarding the instruments, techniques and strategies that may be used for permissible hedging activities”. The recent London Whale Scandal has highlighted that hedging activity can put investment banks at risk and hence banning proprietary trading alone does not serve the purpose.  Hedging provision for Volcker Rule has become the main bone of contention. This is very clearly reflected in the public comments from some senior politicians and regulators.

Misuse of market making provisions:  Another grey area in the rule is the market making provision. The Commodity Futures Trading Commission (CFTC), the commodity market regulator, has made its stand clear on the implementation of Volcker rule in context of current market making provision. It is very clear that it is difficult to identify the difference between market making provisions and proprietary trading.  Recently CFTC chairman Gary Gensler has indicated that he wants a more stringent application of the market-making and risk-mitigating hedge exemptions which are a part of Volcker Rule. This has come in the wake of London Whale trading scandal, in which JP Morgan's incurred losses of approximately $6.2 billion in the credit default swap market. What was initially thought to be a hedging strategy was later on found motivated by attempts to reduce the unit's consumption of regulatory capital.

It is feared in USA that market making may become home to proprietary trading, thereby defeating the purpose of Volcker rule which attempts to prevent misuse of proprietary trading. The CFTC chairman has recently stated that "I spent 18 years on Wall Street, and a lot of proprietary trading happens on market-making desks. If you are a good market-making trader, you often use the flow of that market-making to do some proprietary trading, whether that is for three minutes or three days”.

Cultural Gap causing the rift:  Many men, many minds is another issue with finalisation of Volcker Rule. The Dodd-Frank statute convenes the Federal Reserve Board, the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency, the Securities and Exchange Commission, and the Commodity Futures Trading Commission to write the Volcker Rule. It is conflict between banking cops and market cops which is getting too difficult to manage. While regulators such as Fed and FDIC are responsible for banking regulations, SEC and CFTC are market regulators. Arriving at a consensus seems to be an issue because of difference in approaches.

For an economy devastated by wrong doings of banks, Volcker Rule was thought to be the panacea to prevent the wrong doings in the future. Whether banks will be reined in a better way post implementation of Volcker Rule needs to be tested yet, the bigger challenge is the finalisation of the provisions of rules. The war of words on the drafting of legislation needs to be managed first.


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