What comes first? Sale agree­ment reg­is­tra­tion or pay­ment for book­ing?

More clar­ity is needed on reg­is­tra­tion of sale agree­ment and pay­ment of book­ing amount in the real es­tate reg­u­la­tory bill

HT Estates - - FRONT PAGE - Jee­van Prakash Sharma

The Real Es­tate (Regulation and De­vel­op­ment) Bill 2015 is ex­pected to largely reg­u­late and pre­vent fraud and cheat­ing in the real es­tate sec­tor and take care of the in­ter­ests of home­buy­ers. How­ever, am­bi­gu­ity in the bill’s pro­vi­sion to reg­is­ter the sale agree­ment be­fore pay­ing the book­ing amount needs more clar­ity if home­buy­ers have to ac­tu­ally ben­e­fit from it.

Though the Bill was re­cently ap­proved by the Union Cab­i­net chaired by Prime Min­is­ter Naren­dra Modi and is likely to be tabled in the up­com­ing Bud­get ses­sion of Par­lia­ment, its pro­vi­sions still lack clar­ity on many im­por­tant is­sues. One of them is sec­tion 13, which deals with com­pul­sory reg­is­tra­tion of agree­ment for sale, ie, builder­buyer agree­ment.

Ac­cord­ing to sub sec­tion 1 of sec­tion 13 of the bill, “A pro­moter shall not ac­cept a sum more than 10% of the cost of the apart­ment, plot, or build­ing as the case may be, as an ad­vance pay­ment or an ap­pli­ca­tion fee, from a per­son with­out first en­ter­ing into a writ­ten agree­ment for sale with such per­son and reg­is­ter the said agree­ment for sale, un­der law for the time be­ing in force.”

Sub sec­tion 2 of sec­tion 13 says that the agree­ment for sale will spec­ify the par­tic­u­lars of the pro­ject’s de­vel­op­ment, in­clud­ing con­struc­tion of build­ing and apart­ments, along with spec­i­fi­ca­tions and de­tails of in­ter­nal and ex­ter­nal de­vel­op­ment work and other de­tails such as rates of in­ter­est payable by the pro­moter to the al­lot­tee and the al­lot­tee to the pro­moter in case of de­fault.

This sole pro­vi­sion un­der chap­ter III – Func­tions and Du­ties of Pro­moter – will en­sure mul­ti­ple ben­e­fits to home­buy­ers and gov­ern­ments. It will en­sure con­sumers’ safety from the first day of en­ter­ing into a deal with a real es­tate de­vel­oper. Var­i­ous state gov­ern­ments will also be able to earn rev­enues on th­ese trans­ac­tions.

Should the book­ing amount be paid first?

While some le­gal ex­perts say that sign­ing a sale agree­ment be­fore pay­ing the book­ing money will pro­tect home­buy­ers’ in­ter­ests, oth­ers point out that the book­ing amount is al­ways paid be­fore an agree­ment is signed and so the rel­e­vant sec­tion has to be mod­i­fied to help home­buy­ers.

“The best part of this sec­tion is that home­buy­ers will en­ter into an agree­ment for sale first and then pay the book­ing amount. The ad­van­tage they get is that they are then aware of each and ev­ery de­tail of the pro­ject as well as terms and con­di­tions be­fore mak­ing any pay­ment to the de­vel­oper. This does not hap­pen now. To­day, home­buy­ers pay t he book­ing amount and then wait for sev­eral months for the de­vel­oper to come for­ward to sign a builder-buyer agree­ment. In many cases, the builder-buyer agree­ment is signed af­ter home­buy­ers pay 30% of the to­tal cost of the pro­ject,” says DK Garg, a Supreme Court lawyer.

A for­mer in­spec­tor gen­eral (rev­enue) of the Delhi govern­ment, who doesn’t want to be named, how­ever con­tra­dicts ale mount scour­age nd ues tes, ee­ment e stra­tion gis­tra­tion ent ctively Garg, say­ing, “In a sale agree-agree­ment the to­ta­lal cost of the flat as well as the ad­vance money given to the seller is men­tioned among other de­tails. So how can the agree­ment be reg­is­tered first and the pay­ment be made later? Also, if a builder reg­is­ters an agree­ment for sale with a home­buyer for any flat, that prop­erty will be blocked and the builder won’t be able to sign any other sale agree­ment with other par­ties. What hap­pens if the buyer de­faults on pay­ing the book­ing amount? In my opin­ion the sale agree­ment should be reg­is­tered in the of­fice of the sub-reg­is­trar and the book­ing amount should be paid when the sale agree­ment is reg­is­tered. There should be no ques­tion of any pay­ment be­fore or af­ter that.”

He adds, “If it i s not rec­ti­fied and made prac­ti­cal, like many other pro­vi­sions, it will re­main only a pro­vi­sion in the law books.”

Pro­tect­ing con­sumers’ in­ter­ests

Realty ex­perts feel reg­is­ter­ing a sale agree­ment at the time of pay­ing the book­ing amount will go a long way in reg­u­lat­ing the sec­tor and tak­ing care of home­buy­ers’ in­ter­ests.

Peo­ple who have re­cently bought prop­er­ties com­plain that in the ab­sence of a real es­tate reg­u­la­tory act, pay­ment of book­ing amount, which is nor­mally 10% of the cost of the pro­ject, is a “trap” laid out for them by de­vel­op­ers. Since a builder-buy­er­a­gree­men­tis­signed­buy­er­a­gree­men­tis­signed sev­eral months af­ter pay­ment of the book­ing amount, de­vel­op­ers ex­ploit it and im­pose un­fair and one-sided con­di­tions on home­buy­ers in the agree­ment. If a home­buyer protests the de­vel­op­ers threaten to for­feit the book­ing amount.

A case in point is Greater Noida West (Noida Ex­ten­sion). Many home­buy­ers there had booked apart­ments af­ter pay­ing 10% book­ing amount when prop­erty prices were af­ford­able. Much to their dis­may, when con­struc­tion restarted af­ter a gap of some months af­ter the res­o­lu­tion

ISTOCK

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.