An NRI property transaction still requires the usual property checks. Title, encumbrances, possession, tax and registration all matter. Non resident status can also bring FEMA rules into the transaction, including rules on the type of property, payment and transfer.

RBI’s master directions state that an NRI or OCI may acquire specified immovable property in India, while agricultural land, plantation property and farm houses are treated differently. The exact transaction should therefore be checked before funds or documents are committed.

1. Confirm the buyer/seller status and property type

Establish whether the person is an NRI, OCI or another category of person resident outside India and identify whether the asset is residential, commercial, agricultural, plantation property or farm house.

The permitted route can differ materially by status and property type.

2. Perform ordinary title due diligence as well

FEMA compliance does not cure a defective title. Review the seller’s ownership chain, encumbrances, approvals, possession and project status just as in any other property transaction.

For inherited property, also verify the succession documents through which title is claimed.

3. Use permitted banking channels

RBI directions prescribe permitted payment mechanisms for NRI/OCI acquisition and prohibit some informal methods. Keep bank records showing how purchase consideration was remitted or paid.

Do not separate the legal file from the payment trail; both may be required later.

4. Powers of attorney need transaction drafting

An overseas owner may use a power of attorney for defined acts in India, but the authority should be no wider than necessary and execution/authentication requirements must be checked for the place where it is signed.

A power of attorney should not be treated as a substitute for legal title.

5. Sale proceeds and repatriation require separate planning

Selling property and moving funds abroad can involve banking, tax and FEMA conditions that are distinct from execution of the sale deed. Obtain transaction tax and authorised dealer advice where required.

The sale documentation should not promise unrestricted repatriation unless the regulatory conditions are actually satisfied.

NRI property file

Keep the resident status and property documents together.

  • Passport/OCI and residential status documents as required.
  • Title chain, property records and RERA/approval material where applicable.
  • Banking trail for acquisition/payment.
  • Power of attorney and authentication documents if used.
  • Tax, withholding and repatriation advice/records where relevant.

Reference framework

Legal framework referred to in this article

  • Foreign Exchange Management Act, 1999
  • RBI Master Direction on Acquisition or Transfer of Immovable Property under FEMA
  • Transfer of Property Act, 1882 and Registration Act, 1908
  • Applicable state property and stamp laws

Primary materials

This article summarises the legal and regulatory framework relevant to the topic. Later amendments, factual differences and applicable directions may affect the position.