Land buyer! protect thyself!!

Recently a well-heeled family met me with a request that I examine a piece of land in the eastern parts of Chennai they were about to buy. Its title had been confirmed by a good lawyer. The lawyer had referred the clients to me with a suggestion that I conduct a technical due-diligence of the property, before the deal is inked.

I sent my engineer, got it inspected, measured and photographed. The location was fine; its quoted price was reasonable; it is part of an approved layout; has good potential for appreciation. The property had everything going for it. Or so it seemed!

As part of the technical evaluation of the land, my engineers examined the Google satellite maps and zeroed in on its location. Even as I was appreciating how well located it was, close to a main commercial street which is quite a happening place in the city suburbs, it crossed my mind that it was quite close to a major canal which is winding its way to the sea nearby.

What’s the harm, you would ask? Does not the proximity of a good canal and sea make for a premium location?

Of course, it does-but subject to some riders!

It may not be common knowledge that there are restrictions to the development of land property close to sea coasts and major canals in their proximity. These are called ‘Coastal Regulation Zone’ norms (CRZ). Any piece of property coming within this zone is subject to serious restrictions in so far as the development potential is concerned. Rather I would say there is very limited approved development that is possible in these zones. Of course this is done with a scientific rationale.

For example,should there be a tsunami again in the eastern coast of India, such canals will channelize a substantial part of the wave energy along the canal course to a good distance upstream and help dissipate it! So unless the adjoining lands located on either side of the canal are also clear of developments, there will be serious loss of life and property. Similarly leaving a buffer land on either side of the canal as well as the shore side of the sea, will ensure there is no salinity intrusion into the ground water table.

So naturally there are restrictions on development of land located close to the major canal banks as well as sea shores.

Coming back to the story on hand, after we found the property is located close to the canal bank, we examined the relevant maps of the Chennai metropolitan area. Not surprisingly on either side of the canal we found the marking of a 100m wide strip of land which was designated as part of coastal regulation zone which cannot be developed and used.

When we scaled the map and related it to the Google map we realized that the land selected by the clients is lying well within the said coastal zone.

The case looked interesting. We examined how the layout got approved by the government with this limitation, a serious one at that. When we probed further, we found the so called ‘approved layout plan’ issued by the Government had so many factual errors and several pieces of misleading information. When we approached the government body which had supposedly developed the layout and asked for the official layout plan, they were least helpful.

Through some other checks we found the so called ‘layout plan’ is a bogus one! There was an original approval, but subsequently several additions have been made by unscrupulous operators who went on adding Government lands which were part of the reserved land that are part of CRZ to the original approved layout and literally ‘expanded’ it and ultimately touched the shores of the canal breaching the CRZ restrictions.

So they plotted the extra lands which were freely available and started ‘marketing’ them. The property which was sought to be sold to the clients was apparently one such.

A successful fraud is always a mixture of facts and fiction. In this particular case the facts and fiction are so well intertwined that we are still not able to trace the origin,scope and scale of the fraud. Absence of proper documents is a major impediment in this process. Had the concerned Government department uploaded the correct layout plan pertaining to this neighborhood, our task would have been easier.

After I explained to the clients about the intricacies of the case, they reluctantly dropped the proposal. It saved them Rs.100 lacs ($160,000/-), a sum which was fixed as the consideration!!

So, friends, please be careful about investments in real estate. It always helps to conduct a technical evaluation of the target property, before you venture!!

Do write to us in case you have some interesting information or feedback!

BVe Consulting Engineers

Engineering Project Consultancy & Property Advisory Services,

Residential-Commercial-Industrial-Infrastructure Designs

Due-diligence studies -Asset valuation services

Chennai -600 083

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www.bveconsultingengineers.in

www.bveconsultingengineers.com