GENERAL QUESTIONS ON SEIZED PROPERTY SALES (May not apply to acquired property and
What are the formalities required to be completed by foreign citizen of Indian
Origin for purchasing residential immovable property in India under the general
They are required to file a declaration in form IPI 7 with the Central Office of
Reserve Bank at Mumbai within a period of 90 days from the date of purchase of immovable
property or final payment of purchase consideration along with a certified copy
of the document evidencing the transactions and bank certificate regarding the consideration
Can such property be sold without the permission of Reserve Bank?
Yes, Reserve Bank has granted general permission for sale of such property. However
whether the property is purchased by another foreign citizen of Indian Origin, funds
towards the purchase consideration should either be remitted to India or paid out
of balance in NRE/FCNR accounts.
Can sale proceeds of such property if and when sold be remitted out of India?
In respect of residential properties purchased on or after 26th May 1993, Reserve
Bank considers applications for repatriation of sale proceeds up to the consideration
amount remitted in foreign exchange for the acquisition of the property for two
such properties. The balance amount of sale proceeds if any or sale proceeds in
respect of properties purchased prior to 26th May 1993 will have to be credited
to the ordinary non-resident rupee account of the owner of the property.
In what manner the purchase consideration for the residential immovable property
should be paid by foreign citizen of Indian Origin under the general permission?
The purchase consideration should be met either out of inward remittances in foreign
exchange through normal banking channels or out of funds from NRE/FCNR accounts
maintained with banks in India.
Are any conditions required to be fulfilled if repatriation of sale proceeds
Applications for repatriation of sale proceeds are considered provided the sale
takes place after three years from the date of final purchase deed from the date
of payment of final installment of consideration amount, whichever is later.
What is the procedure for seeking such repatriation?
Applications for necessary permission for remittance of sale proceeds should be
made inform IPI 8 to the Central Office of Reserve Bank at Mumbai within 90 days
of the sale of the property.
Can foreign citizen of Indian Origin acquire or dispose of residential property
by way of gift?
Yes. Reserve Bank has granted general permission to foreign citizen of Indian Origin
to acquire or dispose of properties up to two houses by way of gift from or to a
relative who may be an Indian Citizen or a person of Indian origin whether resident
in India or not, subject to compliance with applicable tax laws.
Can immovable property held in India, be transferred by way of gift to relatives/registered
charitable trusts/organizations in India?
Yes. General permission has been granted by Reserve Bank to non-resident persons(foreign
citizen) of Indian Origin to transfer by way of gift immovable property held by
them in India to relatives and charitable trust/organizations subject to the conditions
that the provisions of any other law, including Foreign Contribution (Regulation)
Act, 1976, as applicable, are duly complied with.
Can foreign citizen of Indian Origin acquire commercial properties in India?
Yes. Under the general permission granted by Reserve Bank properties other than
agricultural land/farm house/plantation property can be acquired by foreign citizen
of Indian Origin provided the purchase consideration is met either out of inward
remittance in foreign exchange through normal banking channels or out of funds from
the purchaser's NRE/FCNR accounts maintained with banks in India and a declaration
is submitted to the Central Office of Reserve Bank in Form IPI 7 within a period
of 90 days from the date of purchase of the property/final payment of purchase consideration.
Can they dispose of such property?
Can sale proceeds of such property be remitted out of India?
Yes. Repatriation of original investment in respect of properties purchased by foreign
citizen of Indian Origin on or after 26th May 1993 will be allowed to be remitted
up to the consideration amount originally remitted from abroad provided the property
is sold after a period of three years from the date of the final purchase deed or
from the date of payment of final installment of consideration amount, whichever
is later. Application for the purpose is acquired to be made to the Central Office
of Reserve Bank within 90 days of the sales of property in Form IPI 8.
Can the properties (residential/commercial) be given on rent if not required
for immediate use?
Yes. Reserve Bank has granted general permission for letting out any immovable property
in India. The rental income or proceeds of any investment of such income are eligible
Can authorized dealer grant housing loan to non-residents of Indian nationality
where he is a principal borrower with his resident close relative as a co-obligator/guarantor
or where the land is owned jointly by such NRI borrower with his resident close
Yes. However, in such cases the payment of margin money and repayment of the loan
installment should be made by the NRI.
Can NRIs obtain loans for acquisition of house/flat for residential purpose
from authorized dealers/financial institutions providing housing finance?
Reserve Bank has granted general permission to certain financial institutions providing
housing finance e.g. HDFC, LIC Housing Finance Ltd., etc., and authorized dealers
to grant housing loans to non-resident Indian nationals for acquisition of a house/flat
for self-occupation subject to certain conditions. The purpose of the loan, margin
money and the quantum of loan will be at par with those applicable to housing loans
to residents. Repayment of loan should be made within a period not exceeding 15
years out of inward remittance or out of funds held in the investor's NRE/FCNR/NRO
Can Indian companies grant loans to their NRI staff?
Reserve Bank permits Indian Firms/Companies to grant housing loans to their employees
deputed abroad and holding Indian passports subject to certain conditions.
While purchasing real estate most developers demand a Power of Attorney in their
favor, is there a way to avoid it?
One can choose not to grant the Power of Attorney (POA) to the developers. However
this will mandate the mailing of all documents to your foreign residence and associated
time delays. A good compromise is to grant the POA to the builder only for specific
necessary items. If you are an NRI or a Property Buyer/Investor you need to understand
your Investment Horizons in Real Estate pretty well. Term of Investment - This is
important as you need to hold on for at least 1 to 3 Years for a decent capital
appreciation and if you sell your property within 3 years you are in for a short
term capital gains which is at par with the Income Tax rules of nearly 30 to 35%
as applicable. It is better to stay invested for 3 years and then plan the next
investments with Capital Gains etc. Pre-Launch offers - Investing in property means
also an entry load by paying stamp duty and registration fees and other incidental
charges to the Builder etc. If you are investing it is always wise to invest as
soon as the project is launched as this gives you enough time for appreciation as
usually the builder goes in the Stock Market kind of a mode in the first year of
its property by hiking the prices every few months. Know your Builder - It is imperative
to know your Builder and the project as at the time of your exit the builder has
to be extremely co-operative, the first question to shoot when you are buying an
Under Construction Project is - If I sell what happens? When can I Sell? Will you
charge me some transfer fees? How the paper work will be done between the Seller,
Builder and the Buyer? Invest with Deep Thought - The present market is volatile
in Mumbai and it is imperative for you to give a deep thought on various accounts,
which begins from the Project, Infrastructure available within the Project, Outside
the project in the neighborhood, Selling prospects, Leasing prospects, Neighborhood
development, Distances to Schools, Markets, Malls, Hospitals, Highways, Airports,
Railway stations etc. These should act as your analysis points. For NRIs - especially
before coming to India, make sure you are carrying most of the relevant papers with
you. You should always have an NRE and an NRO account in India and if you are looking
to invest in Mumbai then one should have an account in Mumbai for easiness. Review
your NRI allowances by the Government of India every budget etc. Home Loans - You
can set off your EMI's if you invest wisely in a property as the rates are presently
around 8% and your rental returns are around 4-6%. You can be a happy man if you
do this fool proof homework as your EMI can be hedged off against the rent receipts
to a certain degree. Re-Sale Properties - In a booming market every property owner
wants to encash his property at the best value. A few issues which we face is the
commitment level of the seller and we can stumble on to good transactions at times,
but this is more of a time consuming process at times. The repair value, old building
and other property documentation issues can be challenging in certain transactions.
Returns - It is always advisable to take a conservative approach in both Capital
Appreciation and Rental returns. However one can safely expect appreciations anywhere
upwards of 15% Per Year and Rental Yields of 4 to 6%. Commercial and Malls - The
opening of new Malls is surely a good sign but one has to be very careful in investments
in Malls and Commercial real estate. The returns though can be constant, but for
smaller players the Malls and Commercial complexes can be too hot to handle as the
outgoings are pretty steep and there is a huge difference between the built up and
carpet ratio. It is excellent for self use and business or for a pre-leased option.
What are the options available for obtaining guarantors while applying for a
One will need a guarantor for a loan mainly for collateral security. The guarantor
will have to demonstrate appropriate net worth to cover for the loan. Usually one
can have a guarantor in any city where the loan issuer has a branch. Talk to loan
issuers they will work something out for NRIs and foreign banks.
What are the criteria regarding avail of home loans for NRIs in India?
According to Reserve Bank guidelines for NRIs The loan amount shall not exceed 85%
of the cost of the dwelling unit. Own contribution, which is the cost of dwelling
unit financed less the loan amount, can be met from direct remittances from abroad
only through normal banking channels, your Non-Resident (External) [NR (E)] Account
and /or Non-Resident (Ordinary) [NR (O)] account and /or Non-Resident Special Rupee
account [NRSR] in India. Repayment of the loan, comprising of the principal and
interest including all the charges are to be remitted from abroad only through normal
banking channels, your Non-Resident (External) [NR (E)] Account and /or Non-Resident
(Ordinary) [NR (O)] account and /or Non-Resident Special Rupee account [NRSR] in
Can an NRI give a Power of Attorney to a person in India for completion of loan
formalities on their behalf?
Yes. We very well understand that as an NRI you have a different set of needs with
respect to your real estate management and investment requirements and we also understand
that it needs special set of services to cater to your requirements. The good news
from India is that government has allowed 100% repatriation for NRIs. Reserve Bank
has granted general permission to certain financial institutions providing housing
finance e.g. HDFC,LIC Housing Finance Ltd.,etc. to grant housing loans to non-resident
Indian nationals for acquisition of houses/flats for self-occupation subject to
How much loan can one get?
You can get a Home Loan of up to 85% of the Total Consideration Value.
What are the conditions if the power of attorney is being executed outside India?
The attorney should preferably be a resident of India. The power of attorney should
be executed on a stamp paper/plain paper as the case may be as applicable in the
country in which the power of attorney is executed. Any authorized official of the
Indian Embassy/Consulate/Trade commissioner in the country where the executants
resides should attest the signature of the executants. The attorney's signature
should be verified in India by Notary Public or his employer or his banker on a
separate piece of paper, which should be submitted to SHFL together with the power
What is the difference between Joint Ownership and ownership as Tenants in Common?
These are two types of ownership of a property. In case of joint tenancy, the ownership
of property will automatically transfer to the other owner/s if one of the joint
owners dies irrespective of what his/her will states. Normally, the properties among
husband and wife are owned jointly. It means on the title of property, the individual
shares are not mentioned. Normally we will say that property is owned in 50:50 partnership,
but it is not the case. It is in case of Tenants in Common, that individual shares
of the owners are defined. On the title, it will show as ½ share of say X and ½
share of say Y. In case of this type of ownership, the share of one person will
not transfer to other if he/she dies. It will go to his/her legal heirs in accordance
with law (in case there is no Will); otherwise it will go according to your Will,
if a valid Will is there. Normally if you buy a property jointly with say your friend
or business partner, you will find that your solicitor has done the ownership rightly
as tenants in common and the title shows your individual shares.
My mortgage is $345000, but the loan documents I have signed with bank show
the priority amount as $550000. Can you please explain to me what this priority
Let’s take an example: You have taken a mortgage of $345000 today. The total amount
outstanding against you can go up in future. It can be that you take a top up and
borrow more or it can be, say that you are unable to pay your mortgage and it goes
in arrears and the expenses, interest of the lender start to accrue and get added
to loan. In the mean time, say you have taken another loan from some other financial
institution and that institution has got second mortgage over the property, first
charge being of your bank. Now, you are unable to come up with payment and clear
the arrears of loan and the lender takes your property to mortgagee sale. There
are competing claims against your house between your bank and the second financial
institution. You owe to bank, together with default interest, penalties, legal fees
incurred by bank, say $570000, you owe to second lender $35000 in total. The property
is sold forcibly and the net sale proceeds are $580000 (for example). In this scenario,
your bank will get $550000 as they have got priority up to this amount. They will
have to compete with other creditors for rest of the amount. Normally, the lending
institutions safeguard their positions and that is the reason, priority amounts
are set at higher amount. For you, as a borrower, it has got no adverse effect as
the bank cannot ask for more than what is due to them on any date. If you owe to
them as in your case, $345000, you will need to pay $345000 only.