The Real Estate Development and Regulation Bill

The Real Estate Development and Regulation Bill   @atulaynehra

“Common Man” is the most commonly and recently coined term that has been used time and again in last one decade. Atleast when it comes to exploitation of right and duties of a common man in various spheres of life. One such important aspect of anybody’s life is ownership of a real estate – and when it comes to real estate, most of the people may or may not be interested in the topic altogether due to the cobweb intricacies that are involved when someone have to deal with .

Given the facts that the economy has major contribution from the real estate and building industry which does not have any specific guidelines to control the menace by the businesses involved, and for the benefit of the Common man – On the June 4^th 2013 , the much awaited draft of the bill regulating real estate and building industry was approved by the Union Cabinet.

There has been some noteworthy provision that has been proposed, though some of those have created a ruckus within the entire builder lobby. As a business model across India the developers use to pay a small amount for the land followed by launching the project and marketing it to the prospective buyers. As a result the project get’s funded from the money that has been collected from the prospective buyers. With this all the risks involved in delay of project due to permissions , approvals or any litigation's etc directly passed on to the buyer, making them to suffer excessively. Now the above will become a thing of past if the provision of NOT Selling and promoting till all the approvals which are required for completion of the project are received. This provision if opted will restrict developers will not be able to market or sell any project without 100 percent approvals.

The above provision also restricts the developers to divert money from one project to any other or for any other purpose.

There has always been and ambiguity in terms of the area being defined as super area and covered area , where in carpet area was always a mystery, the real estate regulation and development bill on other hand will bring in standardization in the industry introducing definitions to apartment, carpet area, common area etc

The bill in addition to above also fulfills the demand of having an independent dispute resolution judicial mechanism to resolve the issues between builder, developer and the investors. Having such Tribunal in place will be a relief for all those investors, flat purchasers, housing societies who has been in pain all ways when it came to resolution.

  

The bill although has a long way to go to be considered as a law, we hope this is would soon be approved and come in force.  

How to register or transfer your property

The Transfer of property in India is covered under the transfer of property act 1882. The Transfer ofproperty act defines ‘transfer of property‘ as an act by which a person conveys property to one or more persons, or himself and one or more other persons. The act of transfer may be done in present or for future. The person may include an individual, company or association or body of individuals, and any kind of property may be transferred.

A registration of property is done at the time of transfer of property from one owner to another by payment of required stamp duty and registration charges. Registration of property means the registration of documents under the provisions of the Registration Act, 1908. The documents are submitted to the registrar and the buyer and seller both has to be present at the time of registration of property.

Transfer and registration of property can happen or be required to done under many circumstances, for each situation the documents required or the instruments used can be different and can have different purpose. Below mentioned are few instruments used to transfer property or share in property.

Sale Deed

A document prepared on the basis of previous ownership document for the transfer of property from seller to buyer, providing the buyer the absolute and undisputed ownership of property

Gift Deed or Will

Transferring a property can be either as a gift or by a will. A gift deed is mostly use while the transfer of property is within the family, a gift deed for an immovable property is compulsory to be registered with the sub-registrar of assurances as per Section 17 of the Registration Act, 1908, failing which the transfer will be invalid. Additionally, such a transfer is irrevocable. Once the property is gifted, it belongs to the beneficiary and you cannot reverse the transfer or even ask for monetary compensation.

A will is applicable only after the lifetime of the executor. A registered will entitles the beneficiary to get the property transferred on their name after the lifetime of the executor.

Relinquishment deed

Relinquishment Deed

A relinquishment deed is used if one wants to transfer his rights in a particular property to another co-owner. Such a transfer is also irrevocable even if it is without any exchange of money. As with all documents related to the transfer of immovable property, a relinquishment deed needs to be signed by both parties and registered.

As transfer of property involves transaction of large sums of money, it is important to be assured on the documents that are required and used under different way of transfer of property. It is a good idea to get the property documents prepared and verified by a property lawyer beforehand.

Original publication at Content.magicbricks.com by AtulayNehra

15 to 20 % Loading : The difference between Super and Carpet area : AND YOU PAY FOR IT !

15 to 20 % Loading : The difference between Super and Carpet area : AND YOU PAY FOR IT ! @atulaynehra writes

Comparison of two residential flat of the same area may surprise you at the end, if you actually measure the actual usable area or the carpet area with the super area or the area for which you have made payments to the developer.  The builders advertise that the flat on sale is of 1,500 sq ft. But be aware this includes areas like staircases, passages and lifts and so on. Hence, it’s important you know how much the carpet area is. The carpet area is the actual usable area. The difference between super built-up and carpet area is called loading. In most case this difference should not exceed 30 percent.

The property buyers today pay for the construction cost of the area that falls under the FSI- free areas. The carpet area is confined to the four walls of a house or habitable area. Everything outside, such as balcony, terrace deck, passageway, flower beds, lift area, entrance lobby, clubhouse, common passages, lift lobbies, terrace area and in some cases even open spaces, is included in the super built-up or the useable area. At times super area also includes the area which you don’t use but is part of the complex you stay in.

For eg : Assuming there are four flats on say 4^th floor of a residential complex with 1500 sft super area, of which 20% is super area which cumulate to 300 sft . This 300 sft area goes in lift lobbies, passages , balconies etc , interestingly at least 150 sft of this area is such on which developer is paid 4 times (150x4), i.e by 4 owners of flats at 4^th floor. As the developer is being paid 4 times , If given a thought the cost of house can be bought down if the construction cost of the lobby is divided into four equal part  rather than loading same amount to all four, as the developer pays for only 150 sft while charges for 600 sft. 

In consideration to the current ongoing cost of acquiring a house, it is important that certain regulations are set to control the menace and the costs differences in the super and carpet area concept.

So, is there a way out……..

The answer is NO, as there is no strict regulation to control this loading and each developer has its defined percentages of loading. It is advisable to check the exact carpet , buildup and super area details while considering an apartment to buy. 

Multiple Pricing for Same Project: Good for Smart Investor @atulaynehra writes

Multiple Pricing for Same Project: Good for Smart Investor @atulaynehra writes

It is no more surprising for investors or even the end users to feel cheated even after securing the best deal from the market for the best chosen project.

Recently a friend bought a property in a leading developer’s project, which was offered an apartment with plush specification for some 5000 psft plus the additional costs of another 250 psft, he after researching a lot about the project managed to secure a deal at 4500 psft, plus the additional costs. A month down the line similar property is offered to him at an all inclusive price of 4500 psft, which comes as shocking surprise to him.

So how exactly is this Happening?

In most of the projects today the developers accepts advance payments from the so called channel partners (Brokers) , widely known as underwriting, where in a size able number of apartment is committed by the consultant to be sold within a given time line for which the consultant may or may not have given a financial commitment to the developer. This commitment comes to the underwriter at an advantage of 13 to 15 percent lower than the market price.

This inventory (the number of flats booked by the underwriter) that the underwriter has booked is further distributed to the other small brokers in the market to be sold to the investors or the end users on a 10- 11 percent fee. These brokers retail these units to their investors against the minimal possible discount of the 10-11 percent they will get.

As the investor by now would have already inquired with the 10 -20 brokers a standard discount of 5 to 8 percent is offered (depending on the project).

This is where the issues like Credit Note, promissory notes start. The developers generally have a fixed price on which they will register any booking hence any discount given lower than the booking amount has to be adjusted from the fee which the broker will get, this is when the broker issues the credit notes, these notes – These notes whether honored or not at the time of third installment is a separate discussion.

In nutshell, if we look at the multiple pricing that is being circulated in the market –though beneficial for investors but sometimes leads to a chaotic situation where the investor end up not buying too.

Investors should  always compare the company , services  with the offered discounts as you might be missing on the customer services and support against those luring short term gains.