Common challenges faced by NRI investors

Investing in property can be a quite a task, but it becomes all the more difficult when the buyer lives in a different country. Here are some issues faced by Non-Resident Indians (NRIs) while investing in real estate in India:


Lack of awareness of legal rights:

The most common problem faced by NRIs while investing in real estate in India is lack of clarity on the rights available to them. Since they stay overseas, it becomes very difficult for NRIs to stay updated with changes in Indian laws. Brokers use this to their advantage and deceive NRIs while selling properties. For example, as per the Foreign Exchange Management Act (FEMA), NRIs can purchase only residential or commercial property in India. They are not allowed to invest in agricultural land or farmhouse. However, many cases have come into the limelight where brokers have tricked NRIs into buying agricultural properties. Since Punjab and Haryana have a large number of NRIs, a considerable number of cases where farmland or agricultural land have been illegally sold to NRIs have been reported from these states.


To save themselves from such fraud, investors are advised to deal only with certified real estate brokers. With the development of Real Estate Regulatory Authority (RERA), all brokers are mandated to get themselves verified by the respective state authority.


Illegal possession:

Another common problem faced by NRI investors is that of illegal possession and gatecrashers. It is not possible for NRIs to keep an eye on their property 24×7 and therefore, large numbers of cases have been found where illegal occupants have taken over a property. Therefore, it is advisable that no matter who the occupant is — their immediate or extended family members or a trustworthy friend — NRIs should ensure that they have a legal documentation with the person before giving possession of the property. In case of illegal possession, NRI cells at police stations can be contacted for taking necessary legal actions.


Developers with dubious records:

A large number of NRI investors have suffered because they had invested their money with builders whose projects were delayed. Earlier, there were no platforms where one could check the track records of builders. That led to many default cases. However, with RERA in place, buyers can now check the track record of builders on the RERA websites of the respective states. Apart from this, there are many social media and online portals where NRIs can check feedback from previous buyers. NRIs can also check discussion forums to get more information about the projects they are interested in.


Though RERA will bring more transparency in the unorganised real estate market of India, it is only a platform that provides access to all information. Due diligence is still the responsibility of the investors.

Content Source – India Law Offices

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