Invest in farm land the legal way & profit from it
Investment on a piece of land is a safe bet as it assures huge return on investment. But how safe is your property deal? With land grabbers on the prowl and often multiple individuals claiming ownership of a single plot, buyers have to be extremely careful before investing in land, and also take steps to prevent encroachments.
NRI Law Group suggests some do`s and don`ts to lock a legal and smooth land deal.
Legal Issues
Don't Forget To Ask A Good Law Firm To Do Due Paper Work!
Once you have zeroed in on the land, you have to turn your attention to the most important hurdle you may have to surmount: the legal issues. Tell yourself again and again that this is the most crucial step involved in buying a piece of agricultural land. Mr. Ghuman suggests an easy way out: "Ask a sound law firm to do due diligence. Ensure that the title of the land is clear. If you do not have the wherewithal to check the legal issues, then engage a proper realtor or local broker to check them." "The most common mistake is that people don't see if the land has been properly acquired or not, whether the farmers have been rehabilitated or not. There can be numerous problems. You buy land and then realise there are many issues," says Ghuman. He gives some useful tips on how to avoid such mistakes: "Study the state bylaws before buying agricultural land. Land should not have any encumbrance or litigation on it. Also, have a thorough title due-diligence done on the land with at least 30 years historical title check done. There should be no minor, etc, as owner of the land. Make sure that there are no village roads/lanes, well, etc, on the land and there are no LT/HT electrical wires running thought the land." Get your land demarcated clearly, and ensure that the seller gets the boundary wall or fencing done before the title is transferred, he says.Before signing the cheque for the purchase, you need to carefully plan how you are going to take care of the land. Living in a city and taking care of a land far away won't be an easy task. Ghuman suggests a viable solution: "You can hire contract farming firms that will man age the land for you. These contract farming firms may be on a profit-sharing basis. Prior to the acquisition of the land, a contract farming firm could do the testing of the soil to determine what crop can be grown."
Security Issues
Security issues related to such land are usually more complex, feel experts. "If you buy land in a community society then at least there is somebody to look after the land. But if you buy an independent plot, then there is the problem of guarding it as well, which can become very costly," says Ghuman. "Get the fencing and security right, it is very important," says Narayan. "Prima facie, one needs to make sure that there is no land grabbing or the neighbour doesn't extend the boundaries to your land. Hence, basic costs are for creating a boundary wall and a guard," says Ghuman.
A Home Away From Home
But don't start building holiday home in the air, though. Laws prohibit building of holiday homes on agricultural land. Ghuman says, "A farm land is ideally a piece of land where you can do farming. It should not be confused with a holiday home. Different states have different laws for conversion of farm land into a holiday home, motel, hotel. There is a process laid down by each state which governs the change of land use." So, before you build a holiday home, study the laws of the state where you plan to buy the land. Ghuman warns that holiday homes are not great investment options. "A holiday home is mainly a lifestyle option. There's not much scope for investment in such a home because the liquidity is not great." But make no mistake, land is always a valuable investment. "Holding land may be sensible, given the increasing demand for food grains," says Ghuman. "If you have already bought land, it is better to hold on to it as the purchase cost is not likely to be very high," says Ghuman.
