How to Identify Property Scams

The Scale of Property Fraud in India

Property fraud costs Indian buyers over ₹10,000 crores annually. You are not alone if you're worried about scams:

30-40% of property transactions have some form of undisclosed liability or legal issue
Thousands of properties sold with fake documents every year
₹50+ lakh average loss per fraud victim
Months/Years to recover from property fraud through courts

The good news? Most property scams are preventable with knowledge and proper verification. Let's learn how.

Top 10 Most Common Property Scams

1. Fake Ownership / Title Fraud

How it works: Scammer poses as owner of property they don't actually own and sells it to you

Red flags: Seller unwilling to show original title deed, Seller can't produce clear chain of ownership, Property registered under different name than seller

Protection: Get title search done by lawyer (₹5,000-10,000), verify from municipal records that seller is registered owner

2. Mortgaged Property Sale

How it works: Property is mortgaged to a bank, but seller sells it to you without disclosing the liability

Red flags: Seller rushing to complete sale, Seller unwilling to get bank NOC (No Objection Certificate), Seller demands cash payment

Protection: Verify with banks if property has loans, Get legal clearance certificate before payment

3. Fraudulent Documents

How it works: Seller produces fake property documents (title deeds, tax receipts) to appear legitimate

Red flags: Documents look low-quality or photocopied, Different signatures on documents, Dates don't match property history, No matching records in government database

Protection: Always get original certified copies, Cross-verify all documents with government departments online

4. Power of Attorney Fraud

How it works: Someone sells property using old Power of Attorney without current owner's consent

Red flags: Seller can't show recent communication with principal, POA is very old (10+ years), Principal not available for verification

Protection: Never buy property on POA basis, Get consent letter directly from registered owner

5. Encroached / Disputed Property

How it works: Property has boundary disputes or is partially occupied by government/others, but seller doesn't disclose

Red flags: Neighbors deny seller's ownership, Some part of property inaccessible, Property boundary doesn't match documents

Protection: Get survey done by independent surveyor, Check for court cases related to property

6. Under-Construction Project Scams

How it works: Builder delays project indefinitely or never completes it after collecting money

Red flags: Builder not registered with RERA, No clear completion timeline, Frequent changes to project specifications, Builder has history of delays

Protection: Only buy RERA-registered projects, Verify builder's track record, Ensure bank escrow for construction funds

7. Tenant-Occupied Property Fraud

How it works: Property has long-term tenant with exclusive occupancy rights, but seller hides this fact

Red flags: Tenant still living in property after "sale", Seller doesn't provide tenant eviction certificate, Tenant has rights of succession

Protection: Meet the tenant directly, Get tenant's written agreement for eviction, Budget for tenant compensation if needed

8. Restricted Land Sales

How it works: Seller sells agricultural, government, or restricted land claiming it can be freely bought

Red flags: Land in green zone or airport buffer, Seller claims restriction will be removed soon, No one else buying similar land in area

Protection: Check land classification at municipal office, Get legal opinion on restrictions before buying

9. Non-Existent Property Scams

How it works: Seller collects booking amount for property that doesn't actually exist

Red flags: Property address doesn't exist, Photos appear to be stock images or from other properties, Seller unwilling to meet at property

Protection: Always visit property yourself, Verify address on Google Maps and municipal records, Get independent survey done

10. Multiple Sales / Forged Transfer

How it works: Property already sold to someone else, but seller forges documents to sell again

Red flags: Property registered to different buyer recently, Ownership change not yet updated in property records, Previous buyer's name appears in recent documents

Protection: Get latest property records from registration office, Verify current registered owner matches seller

Critical Red Flags - When to Walk Away

Seller unwilling to produce original documents or title deed

Price significantly below market rate (too good to be true)

Seller pressuring you for quick decision or cash payment

Property address doesn't match documents or doesn't exist

Discrepancy in property area (claimed vs actual)

Seller can't explain chain of ownership

No matching records in municipal/government database

Property in someone else's name with different signature on documents

Seller has only Power of Attorney (not registered owner)

Outstanding loans, mortgages, or financial liabilities on property

Pending court cases or disputes related to property

Property in flood zone, earthquake zone, or restricted area without disclosure

Builder doesn't have RERA registration (for new projects)

Tenant claims exclusive occupancy rights

Seller demands payment through untraced channels (cash, cryptocurrency)

Government acquisition notices or environmental restrictions

Seller's identity documents don't match property ownership records

Property tax or municipal dues are outstanding

Document Verification Checklist

Never proceed without verifying these documents:

Step-by-Step Property Verification Process

Step 1: Initial Online Verification (Free)

Search property address on Google Maps - verify it exists
Check municipal property database - confirm ownership
Search for court cases in property court - identify disputes
Check property valuation on multiple real estate sites - compare price
Search seller's name in news - identify known scammers

Step 2: Document Verification (₹5,000-15,000)

Hire a property lawyer (₹5,000-10,000)
Request certified copies of all documents from seller
Lawyer conducts title search from original ownership
Verify signatures and notarization on all documents
Cross-check documents with government records

Step 3: Physical Verification (₹2,000-5,000)

Visit property personally multiple times
Hire independent structural engineer for inspection (₹2,000-5,000)
Talk to neighbors - verify ownership and any issues
Check water, electricity, sewage connections
Verify property boundaries match documents

Step 4: Final Legal Clearance (₹10,000-20,000)

Get title insurance if available (₹5,000-10,000)
Lawyer verifies 50-year property history
Confirm all encumbrances cleared
Get final legal opinion before payment
Draft sale agreement with lawyer involvement

💡 Cost of Verification vs Risk: Spending ₹15,000-30,000 on proper verification is far cheaper than losing ₹50 lakhs on fraudulent property. Skip this at your own peril.

Safe Buying Practices

Safer Ways to Buy Property:

Buy from RERA-registered builders for new projects

Buy from established properties managed by known organizations

Use authenticated property portals with seller verification

Buy from sellers recommended by trusted friends/family

Use seller-verified platforms like ishanya.ai with owner authentication

Prefer registered direct owner sales over broker intermediaries

Involve lawyer in all stages of transaction

Use bank escrow for fund transfers (not direct cash)

Get written agreements for all promises

Register property immediately after purchase

Get comprehensive property insurance

Keep all documents in safe deposit for 7+ years

Payment Safety Tips:

Never pay cash: Always use bank transfers with evidence
Stagger payments: 10% booking → 40% after possession → balance on registration
Get receipts: Written receipt for every payment from registered owner
Use escrow: Bank holds money until conditions are met
Verify account: Confirm seller's bank account details before transfer
Document everything: Keep all communication in writing (WhatsApp, email)
Lawyer oversight: Have lawyer review payment terms before any money changes hands

What to Do If You Suspect Property Fraud

Immediate Actions:

Stop payment immediately - don't proceed with next installment
Preserve all evidence - documents, communications, photos, contracts
Don't sign any new documents without legal review
Contact a property lawyer immediately (₹10,000-15,000 consultation fee)
Get independent legal opinion on your position
Document all communications with seller (record calls, save messages)

Legal Recourse:

Consumer Court: For fake documents and misrepresentation (quick, less formal)
Civil Court: For contract breach and property disputes (lengthy but comprehensive)
Criminal Court: For fraud, forgery, cheating (criminal penalties possible)
Registration Office: File complaint to stop fraudulent registration
Police: File FIR for criminal fraud (helps in legal proceedings)
RERA Authority: If fraud involves registered builder/project

⚠️ Important: Property fraud cases take 2-7 years to resolve through courts and recovery is not guaranteed. Prevention is infinitely better than fighting fraud in court.

Frequently Asked Questions

How can I verify a seller is the actual owner?

Check property records in municipal office online - it will show current registered owner's name and details. Cross-verify with seller's PAN card. If different, don't proceed.

What's the safest way to make property payment?

Always use bank transfers to seller's verified bank account. Get receipt from seller signed with their identity proof details. Never pay cash or cryptocurrency.

Can I recover money if I've already paid for fraudulent property?

Yes, through legal action (court case, police FIR, consumer court). But recovery is uncertain and takes 2-7 years. Prevention is far better.

Is title insurance available in India?

Yes, some insurance companies offer title insurance (₹5,000-15,000 for ₹50 lakh property). It covers losses from hidden title defects discovered later.

What if seller has Power of Attorney instead of actual ownership?

Never buy on POA basis. Insist on sale by the actual registered owner. POA can be revoked or challenged in court, leaving you vulnerable.

How can ishanya.ai help prevent property fraud?

ishanya.ai verifies sellers' identity and ownership before listing. AI identifies fraud patterns. You can communicate directly with verified owners, reducing broker fraud risk.

What if property is in disputed/disputed territory?

Avoid such properties entirely. Disputed properties take years to resolve even in court, and ownership can be challenged. Only buy properties with clear, undisputed title.

Is it safe to buy without a lawyer?

Absolutely not. A lawyer (₹10,000-20,000 investment) can prevent ₹50 lakh losses. Never skip legal verification - it's the most critical protection.

Key Takeaways

Property fraud costs Indian buyers ₹10,000+ crores annually
Most common frauds: Fake ownership, mortgaged properties, fraudulent documents
Always verify documents with government records before payment
Hire a property lawyer (₹10,000-20,000) - it's the best investment
Never buy on Power of Attorney or from non-registered owners
Get independent survey and structural inspection before purchase
Always use bank transfers for payment - never pay cash
Verify seller's identity thoroughly - cross-check all documents
Check for court cases, mortgages, and outstanding dues
Walk away at first red flag - there are always other properties
Prevention is far better than fighting fraud in court (2-7 years)
Use verified platforms like ishanya.ai to reduce fraud risk