How to Verify a Seller's Ownership Before Paying a Token Advance

A token advance is meant to hold a property while both sides prepare for the actual transaction — it is not meant to be your first real check on whether the seller genuinely owns what they are selling. That check should happen before, not after, money changes hands.

Step 1: Confirm the name on the documents matches the person in front of you

Ask for the seller's ID proof and compare it against the name on the property's parent document (the document that shows how they acquired it — a prior sale deed, a gift deed, a will, or a partition deed). A mismatch is not automatically fraud — it could mean an inheritance or name change — but it needs an explanation and supporting paperwork, not just a verbal assurance.

Step 2: Pull an Encumbrance Certificate (EC)

The EC shows registered transactions against the property for a chosen period — sales, mortgages, gifts — and lets you see whether the chain of ownership is consistent with what the seller is telling you. It will not catch everything (unregistered claims will not show), but it is the single most useful public document you can check before paying anything. See our full guide to reading an EC in Tamil Nadu.

Step 3: Check for an existing loan or mortgage on the property

If the property was used as collateral for a loan that has not been closed, the seller may not be legally free to sell it without clearing that loan first. The EC often reveals this, but it is worth asking the seller directly and requesting a loan closure or No Objection Certificate if one existed.

Step 4: Verify Patta/Chitta for land, or the parent building approval for a built property

For plots and land, the current Patta and Chitta should be in the seller's name (or the name of whoever is authorizing the sale, with proper legal standing if it is not the recorded owner). For an apartment, check that the building itself has valid planning approval — the seller owning their specific unit does not help you if the entire building lacks approval.

Step 5: If the seller is acting through a Power of Attorney, verify it independently

A Power of Attorney (POA) sale is common, especially for NRI sellers, but it needs extra scrutiny — confirm the POA is genuinely registered, has not been revoked, and actually authorizes a sale (not just management of the property). See our guide on POA for property transactions in Tamil Nadu.

Step 6: Ask who else might have a claim

If the property was inherited, ask whether all legal heirs have consented to the sale, or whether it went through a formal partition. A sale by one heir without the others' consent is a common source of disputes that surface years later, often after you have already paid and moved in.

What a token advance agreement should include

• The exact amount, and what happens to it if the deal does not proceed on either side.
• A reasonable timeline for the buyer to complete due diligence before the advance becomes non-refundable.
• A clear description of the property matching the actual survey number and document records — not just a colloquial address.