Knowledge

We Know, We Share...

You Know, You Share

This knowledge page has been created for those of you who have a dream to buy or build a HOME for you and your loved family. You are saving every penny day-to-day or already saved to buy ONE HOME – “A NEW HOME” that deals with dreams, aspirations, needs, safety, security, stability, open space, near to nature, light, water, Bazaar, school, hospital, electricity, Rail-Road-Air connectivity and peace of mind with nice neighbourhood... Even if you do not realise it, the quality of your living environment, your living physical surrounding has indelible but subtle influence in every aspect on you, your wife, your kids, your parents, your friends and relatives .
Needless to mention the temptation to buy 1st house overnight... PAUSE! You will rush looking at home, surfing the web, calling famous brokers and calling on luring full page advertisement before doing some up-front preparation... not spending time doing this preparation can be disaster. Also keep in mind that “YOU ARE NOT SOLE DECIDER” concerns of all family members who will live in it matters a lot and you need to consider their options and choices too. Your decision or collective decision will impact your lifestyle for decades to come hence your decision should be based on proper judgement of all important issues – Financial, Emotional and Legal. Offers might tempt you to decide fast, ignoring all other better options for the “Good Location, Better Connectivity and Best Budget”. Please do not push your decision beyond your limits, work out the budget carefully and identify your exact need. Do take your time, ask the right question and check out all possible options before signing on the dotted lines... You TRUST, We CARE @ GharGharINDIA.

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1For Resident of India

• Copy of PAN Card – Self Attested
• Residence proof (Driver’s License/Ration Card/Passport/Voters Id/AADHAAR) – Self Attested
• Passport-size photographs (Per Applicant)
• Cheque Book

2For Partnership Firm

• A Copy of PAN Card of the Partnership Firm – attested by the Partners
• A Copy of Partnership Deed Authority letter from the other Partners of the Partnership Firm to authorize the Partner who will be signing on the firm’s behalf
• Passport-size photographs (for Partner authorized to sign on behalf of the Firm)
• Cheque Book

3For Private Limited Company

• A Copy of PAN Card of the Company (Attested)
• Articles of Association & Memorandum of Agreement duly signed by the Company Authorities
• Board Resolution authorising the signatory of the Application Form to buy property on behalf of the Company
• Passport-size photographs (for Signatory authorized to buy property on behalf of the Company)
• Cheque Book

4For NRI/Foreign National of Indian Origin/PIO

• A Copy of Individual’s passport/Copy of Person of Indian Origin (PIO) card
• 2 Passport-size photographs (Per Applicant)
• All cheque payments should be received from the NRE/NRO/FCNR account of the customer only, or via foreign remittance. Payment from third party accounts will not be acceptable.

1What is the eligibility criterion for housing loan?

Generally, following conditions must be fulfilled:

• Minimum age of applicant: 21 years
• Salaried or self-employed with regular income

2When can I apply for home loan and steps involved in the process?

You can apply for the Home Loan even before you have selected your property or before the start of construction. You will get in -principle approvals for the loan amount which will help you decide your budget and plan the purchase of house / flat.

There are two stages in the housing loan process:

• Sanction of the loan
• Disbursement of the loan as per the progress of construction of the property.

3Who can be co-applicant for the loan?

Generally,

• All co-owners need to be co-applicants
• All co-applicants need not be co-owners.

4Can I get more than one housing loan?

• Yes. Housing loans can be given to an individual provided he has the capacity to repay. The loans can be for same property (repairs/extension etc) or for different properties.

5What are the general components of Net Monthly Income (NMI) to calculate loan eligibility?

The NMI is income from all sources of a salaried individual It Includes:

• The NMI from the salary of applicant
• The NMI from the salary of co-applicant/spouse
• The income from other sources like Rent from the existing/proposed flat, Agricultural income, Income from tuitions, other business etc.

In case of self employed / professional the NMI is Annual Income after deduction of income tax divided by 12 (as per I-T return) plus other income as above.

6How much percent of loan can be availed for the purchase of property?

Generally, Banks sanctions up to 80% Loan of Agreement Value, in some cases it might be higher. This all depend on ticket size of the flat, Customer profile & Bank.

7What is difference between EMI and Pre-EMI? How is Pre-EMI calculated?

EMI – Equated Monthly Instalment. This is the amount paid monthly by a borrower to the bank or any other lender. It basically has two components –

• the portion of the principal amount
• the interest portion for that month

Pre-EMI – Prior to final disbursement of the Housing Loan, you pay interest on the portion of the loan disbursed. This interest is called pre-EMI interest. It is payable monthly/quarterly up to the date of commencement of EMI.

8Can the EMI be reset during tenure of loan? Can I make Prepayment towards loan closure?

Yes. If there is substantial revision in the rate of interest, the facility of regulating EMI can be granted to a housing loan account.

You can pay extra money (more than your EMI) any amount, anytime ahead of repayment schedule to prepay the loan.

9Over how many years can I pay the loan?

You can repay the loan over a maximum period of 20 years for both Floating Rate Loans and Fixed Rate Loans. The term will not ordinarily extend beyond your age of retirement (if you are employed) or on reaching 65 years of age whichever is earlier. If the applicant’s age is about the retirement age then he may be required to take a suitable (generally single premium) Life Insurance Policy to cover the risk up to the repayment period of loan. The Bank will help you to determine the repayment period to suit your convenience and financial ability.

10What is floating and fix rate housing loan?

Floating Rate – A loan where the interest rate is not fixed is referred to either as a floating interest rate loan, variable interest rate loan or adjustable rate loan, It is linked to a specific index or margin eg. Above/below Medium Term Prime Lending rate (MTPLR)

11What are the tax benefits available if one avails housing loan?

You will be eligible to claim both the interest and principal components of your repayment during the year.

• Interest can be claimed as a deduction under Section 24. You can claim up to Rs. 150,000 or the actual interest repaid whichever is lower. (You can claim this interest only when you are in possession of the house)
• Principal can be claimed up to the maximum of Rs. 100,000 under Section 80C. This is subject to the maximum level of Rs 100,000 across all 80C investments.
• You will need to show the statement provided by the lender showing the repayment for the year as well as the interest & principal components of the same.

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1Which documents are to checked and verified before purchase of a property?

Before you purchase a flat, you have to look at the approved layout and building plan, title search conducted by a competent advocate, ownership documents, Environmental clearance, Intimation of Disapproval, Commencement certificate etc. You may contact an advocate before purchasing a property to get detail advice. May contact an advocate before purchasing a property to get detail advice.

2What’s the difference between built up, super built up and carpet area?

• Carpet area: An area of an apartment which doesn’t include the area of the walls.
• Built up area: This includes the area of the wall also.
• Super Built up area: This includes the built-up area along with common spaces such as lobby, lifts, stairs etc. This term is applicable to multi-dwelling units.

3Who is liable to pay stamp duty and whose name is the stamps required to be purchased?

The liability of paying Stamp Duty is that of the buyer unless there is an agreement to the contrary. Section 30, of the Bombay Stamp Act, 1958 states, the liability for payment of Stamp Duty. The stamps are required to be purchased in the name of any one of the executors to the instrument.

4What is meant by the market value of the property and is stamp duty payable on the market value or on consideration as stated in the agreement?

Market value means the price at which a property could be bought in the open market on the date of execution of such instrument. The Stamp Duty is payable on the agreement value of the property or the market value whichever is higher.

5Can one obtain a refund if the agreement has not been signed between both the parties & have paid the stamp duty?

When one person possessing stamp or stamps which have been spoiled or rendered unfit or useless for the parties intended or the person does not require immediate use of the said stamps then such person should deliver the above-said stamps to the Collector. The person has to make an application under Sec. 52 of the Bombay Stamp Act and the person should also submit the affidavit mentioning the reasons for which the stamps had been purchased and the reasons why the refund application is being made.

If the applicant can convince the Collector then a refund of the stamps could be obtained only if:

The application is made within six months from the date of the purchase of stamps. The stamps should have been purchased by such person with a bonafide intention. None of the parties should have signed the paper on which the stamps have been fixed. On receipt of such application, the Collector is empowered to refund to the said person, the value of the said stamp after deducting the said amount as prescribed by the competent authorities.

6Will stamp duty have to be paid if a flat is settled through a deed & transferred amongst family members?

Yes, as per the provisions of Bombay Stamp Act, Stamp Duty will have to be paid on a deed of Family Settlement.

7What are the instruments that attract the payment of stamp duty?

The instruments like Agreement to sell, Conveyance Deed, Exchange of Property, Gift Deed, Partition Deed, and Power of Attorney, Settlement, and Deed and Transfer of Lease attract Stamp Duty on market value of the property.

8Who is the appropriate authority for knowing the market value of property?

The Sub-Registrar of the area in whose jurisdiction the property is located is the appropriate authority for knowing the market value of the property.

9Can a property transaction be done by someone on the owner’s behalf?

Yes. Though Power Of Attorney subject to eligibility of POA holder and POA content.

For all practical purposes, you can give a specific power of attorney to someone, so that in your absence, things like registration, possession, execution of an agreement for sale, agreement of leave and license etc. can be taken care. You can give a very specific POA to someone e.g. only for buying, or leasing, etc. you could fine tune the rights you would like to give out and clear that up.

10What is meant by freehold land?

A freehold property (plot or a flat) is one where there is a whole and sole owner(s) ownership is full and unconditional (within the provisions of the laws of the land) and there is not lessor / lessee involved.

11Who Is Non- Resident Indian (NRI) and Person of Indian Origin (PIO)?

An Indian Citizen who stays abroad for employment/carrying on business or vacation outside India or stays abroad under circumstances indicating an intention for an uncertain duration of stay abroad is a non-resident. (Persons posted in U. N. Organizations and officials deputed abroad by Central/state Government and Public Sector undertakings on temporary assignments are also treated as non-residents). Non-resident foreign citizen of Indian Origin are treated on par with non-residential Indian Citizen (NRIs) for the purpose of certain facilities.

A foreign citizen (other than a citizen of Pakistan, Bangladesh, Afghanistan, Bhutan, Sri Lanka or Nepal), is deemed to be of the Indian Origin if he held and Indian Passport at any time, or he or his father or parental grand-father was a citizen of India by virtue of the (Constitution of India or the Citizenship Act, 1955(57 of 1955).

12Is permission required from RBI to acquire/purchase immovable property in India?

No. General Permission is available to purchase only a residential/commercial property in India to a person resident outside India who is a citizen of India (NRI) and who is a Person of Indian Origin (PIO).

13What is the manner and formalities required towards the payments to be done under general permission guidelines?

The purchase consideration should be met either out of inward remittances in foreign exchange through normal banking channels or out of funds from NRE / FCNR accounts maintained with banks in India. They are required to file a declaration in form IPI 7 with the Central Office of Reserve Bank at Mumbai within a period of 90 days from the date of purchase of immovable property or final payment of purchase consideration along with a certified copy of the document evidencing the transactions and bank certificate regarding the consideration paid.

14Can such property be sold without permission of Reserve Bank?

Yes, Reserve Bank has granted general permission for sale of such property. However, whether the property is purchased by another foreign citizen of Indian Origin, funds towards the purchase consideration should either be remitted to India or paid out of balance in NRE / FCNR accounts.

15Can sale proceeds of such property be remitted out of India?

With respect to residential properties purchased on or after 26th May 1993, Reserve Bank considers applications for repatriation of sale proceeds up to the consideration amount remitted in foreign exchange for the acquisition of the property for two such properties. The balance amount of sale proceeds if any or sale proceeds in respect of properties purchased prior to 26th May 1993 will have to be credited to the ordinary non-resident rupee account of the owner of the property.

16What is the procedure for seeking repatriation and conditions required towards the sale proceeds?

Applications for necessary permission for remittance of sale proceeds should be made in form IPI 8 to the Central Office of Reserve Bank at Mumbai within 90 days of the sale of the property. Applications for repatriation of sale proceeds will be considered, provided the sale takes place after three years from the date of final purchase deed from the date of payment of final instalment of consideration amount, whichever is later.

17Can a foreign citizen of Indian Origin acquire or dispose of such property by way of gift to relatives/registered charitable trust/ organizations in India or abroad?

Yes. Reserve Bank has granted general permission to a foreign citizen of Indian Origin to acquire or dispose of properties up to two houses by way of gift from or to a relative who may be an Indian Citizen or a person of Indian origin whether resident in India or not, subject to compliance with applicable tax laws.

18Can the properties be given on rent if not required for immediate use?

Yes. Reserve Bank has granted general permission for letting out any immovable property in India. The rental income or proceeds of any investment of such income are eligible for repatriation.


1Know Your RERA (All About RERA)

RERA - Real Estate (Regulations and Development) Act, 2016
Prologue


The need for regulations and uniform guidelines was being felt by the industry which perceived negatively by consumers because of unscrupulous activities of few. A long standing demand by the industry and consumers was largely unmet e.g. delays in grant of project approvals and dispute resolution. There was no better time to introduce Real Estate (Regulations and Development) Act as the Indian Government is focusing on – housing for all, smart cities and infrastructure development, fulfilment of these goals will require enablers such as the Act.

The Act paves way for empowering all stakeholders engaged in the business and consumption of real estate, be it – consumers, real estate developers, brokers/ intermediaries amongst others. However all commercial and residential real estate including plots, apartments, shops, offices and other such properties are all covered under the Act.

A few of the overarching themes in the Act are following –

1. Consumer rights and protection
2. Regulatory oversight on real estate developers and brokers/ intermediaries
3. Defining the duties of real estate developers and default scenarios
4. Setting up timelines for registration of projects and dispute resolution
5. Clearly defining penalties and liabilities of real estate developer and brokers/ intermediaries
6. Roles and duties of investors

Definitions of often used terms in this document –

Consumer: A person who has bought/ booked / intends to buy a plot, apartment or building from a real estate developer. Real estate developer: A person who develops a building or a township of apartments and commercial complexes on an independently or a jointly owned land, which are later partially or completely sold to the consumers. It also includes a person who converts an existing building or apartments thereof and who acts as a builder, contractor or coloniser.

Project: Is a real estate project that is undertaken by real estate developer and a project can be an offering of Units (defined below) of one kind of mixed (i.e. apartments, plots, offices, shop, building) Intermediary: An intermediary is a person who negotiates the transactions of buying and selling a property between two parties and receives remuneration for the same (It typically includes brokers and property dealers).

Unit: A single apartment, plot, shop or an office which is a part of a building or township being developed

Person: includes
i) an individual;
ii) a Hindu undivided family;
iii) a company;
iv) a firm under Indian Partnership Act; 1932 or Limited Liability Partnership Act, 2008, as the case may be;
v) the West Bengal Real State Regulatory Authority;
vi) an association of persons or a body of individuals whether incorporated or not;
vii) a co-operative society registered under any law relating to co-operative societies;
viii) any such other entity as the appropriate Government, may specify in this behalf.

Carpet Area: means the net usable floor area of an apartment, excluding the area covered by the external walls, areas under services shafts, exclusive balcony or verandah area and exclusive open terrace area, but includes the area covered by the internal partition walls of the apartment.

2What is Real Estate (Regulation and Development) Act, 2016?

The Real Estate (Regulation and Development) Act, 2016 (the Act, from here on) is a Government of India initiative to bring about the much needed transparency and order to the real estate related transactions by creating a systematic and a uniform regulatory environment, thereby protecting consumer interest and making real estate developers accountable for timely completion of projects. The Act paves the way for setting up of Real Estate Regulatory Authority (RERA, henceforth) for regulation and promotion of real estate sector while promoting transparency and equity in real estate transactions.

3What was the need for setting up RERAs?

Real estate sector is supposedly one of the largest contributors to Indian economy and amongst the largest employers too. However real estate transactions in the country have largely been a tiresome and ambiguous affair for consumers. Real estate developers have been found to violate prudential norms of conducting business which has further resulted in litigations and disputes. In worst cases consumers have been handed over poor quality units which at times can also be a hazard. The need for clean-up of this system was being felt for long.

1. Primarily RERAs will have an oversight on the real estate transactions and promote timely and satisfactory completion of projects, protect consumer interest and bring about transparency in all proceedings related to the sale, construction and handover of projects.

2. The Act brings all stakeholders – consumer, real estate developer and intermediaries under the purview of the RERA.

3. RERA will also maintain a web portal which will host almost all the relevant information a consumer requires from a real estate developer including – details of land titles, project approvals, construction progress, names of intermediaries, contractors etc.

4. RERA thereby becomes one body which can be approached during disputes arising out of real estate transactions and contracts, and this body will have power to impose penalties and punishment as set out under the Act.

4Is the Act applicable to both residential and commercial projects?

Yes

5Are there any supporting government bodies set up to assist the RERA?

Yes. A Central Advisory council will be set up to advise the Central Government on the implications of the Act, recommend policy, protect consumer interest and to oversee the growth and development of the real estate sector. In addition, there will be a dedicated Appellate Tribunal set up for RERAs to hear appeals from orders of the RERAs and the adjudicating officer.

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1What are the roles and responsibilities of a real estate developer as stated in the Act?

The RERA has made the following compulsory for them-

1. It is mandatory for the real estate developer to register the project with the concerned RERA and obtain a valid registration number before going ahead with the project
2. The real estate developer is required to submit all documents related to the project which are considered necessary by the RERA
3. The real estate developer must deposit 70% of the amount received from the consumers in an escrow account from time to time and ensure that the amount is solely used for the project for which it was taken
4. Adhere to the project plan at all times
5. Refund the money taken from the consumers with applicable interest in case the project cannot be completed for some reason
6. Compensate the consumer for the time delay if any repair structural defects if any in the construction even after 5 years of handover of the project. The Act lists down roles and responsibilities of the real estate developer at project launch, construction and handover stages. In fact the Act goes a step further and makes the real estate developer accountable for the project quality up to 5 years after handover of the project. The Act has been drafted well to define various nuances of real estate sector such as – phase wise development, commencement certificate, occupancy certificate amongst others. Also in its spirit the Act puts an end to the practice of launches without approvals (sometimes referred as soft launch) thereby a consumer is guarded to that extent as a violating real estate developer will suffer revocation of registration, penalties and be listed on public portal as a defaulter.

2What are the documents to be produced by the real estate developer during registration of a project with the RERA?

Details of the project such as name, address, type, names and photographs of the Promoters etc.

1. Details of project already launched by the real estate developer and their status (in the preceding 5 years)
2. Approval and commencement certificates obtained from the West Bengal Real State Regulatory Authority for each phase of the project.
3. Sanctioned plan and layout plan, development plan for the project and details of facilities being made available like drinking water, electricity etc.
4. Proforma of allotment letter, agreement for sale and conveyance deed to be signed with the consumers
5. Number of garages and their respective areas which are for sale in project;
6. Location of the project with clear demarcation of the land dedicated for the project.
7. Number, type and carpet areas of units to be sold along with details of open areas if any like terraces, balconies etc.
8. Details of associated engineers, contractors and architects and intermediaries in the project
9. A declaration stating that the land of the project is verified authenticated and the developer has a legal title to it, that the project will be completed within specified timeline and that 70% of money received from the consumers shall be deposited in a dedicated escrow account and this amount will be used solely for that particular project.

3The Act has mandated real estate developers to specify ‘carpet area’ rather than ‘super built up area’. How will that help?

Carpet area is a measure of net usable area of the unit and does not include common areas, balconies, verandahs etc. whereas, the super built up area could be an addition of both. Therefore, to ensure that the consumer knows what he is paying for, it has been made mandatory for the real estate developer to specify carpet area. Essentially Carpet Area is the area within the walls of a unit where a consumer can reside or have his office. Even when the balconies, verandahs or terraces are exclusively available within a unit these cannot be added to the Carpet Area prescribed in the Act. The Act thereby enacts a straightforward definition to be adopted across the country.

4What are the actions to be taken by the RERA after an application has been submitted for project registration?

The RERA is required to either grant registration or reject the application within 30 days of its submission. On acceptance of application, the real estate developer is to be provided with a login id and password to access the RERA portal for submission of documents and details. If the application is not in conformation with the guidelines and RERA finds it worth rejecting, it is mandatory that the applicant be heard in the matter before rejection.

This is a welcome change being brought through the Act that information pertaining to real estate projects will go online and regulators won’t even allow marketing of projects that are not registered with the RERA.

5What happens if the concerned RERA fails to respond to the applicant within the stipulated thirty days time?

In this case, the application is considered accepted and the project, successfully registered. The RERA is mandated to provide the applicant a login id and password for its web portal within 7 days of expiry of the said period of thirty days.

The Act thereby sets timelines on the regulator within which it has to respond to various requests.

6What is the validity period for a particular project registration?

The registration will be valid for a period specified by the real estate developer in the application form. Hence the real estate developer is accountable to adhere to timelines otherwise he risks suffering losses / penalties.

7Under what circumstances can the RERA extend the validity of the registration?

The RERA, if it considers necessary, may extend the validity of registration in the event of a natural calamity like flood, drought, fire etc and also in case of a war. Basically only force majeure events are the ones where real estate developer can have some leeway of not delivering on time. However he is still required to make a presentation to RERA for seeking extension and pay applicable fee. Also such extension will be for a period of one year in aggregate.

8What happens to on-going projects? Will they have to be registered as well?

Yes. If the project in question meets the criterion for registration (as defined ahead), the application for the same has to be submitted within 3 months of commencement of the Act.

9Do all projects fall under the radar of RERA? Are there any exceptions?

No. Only projects which are still under construction at the time of enactment of the Act and any new project thereon are under the purview of the RERA, provided- they are developed on a land area of more than 500 sq meter or which have more than 8 units with all phases combined.

Essentially almost all large projects which have not obtained completion certificate will immediately come under the purview of the Act. Thereby consumers of under construction project can seek protection under the Act. While the central government provides for these minimum area requirements the local governments can change the area requirements to conform to the Act, if required such minimum area threshold can be revised even lower.

10. Is there a common platform to access the details of the registered real estate developers and their projects?

Yes. A web based system will be made operational within one year of establishment of the RERA, for submission of details and documents by the real estate developer and this information can easily be accessed by consumers.

It is for the first time that an initiative of this sort is coming into play whereby real estate developers have to make several declarations and comply with norms, while all such information is online for consumers to access.

11On what grounds can the RERA revoke a registration?

Upon receiving a complaint against the real estate developer, the RERA can revoke registration if it is satisfied that the real estate developer has not complied to the rules and regulations stated under the Act or rules and regulations made thereunder, or has violated the terms and conditions of approval given by the West Bengal Real State Regulatory Authority or is involved in unfair practices to sell, market or advertise his project.

12What are the prerequisites for a real estate developer to appeal to the Appellate Tribunal?

The appeal made by the real estate developer will not be entertained by the Appellate Tribunal until he deposits 30% or higher of the penalty which would be decided in case of no appeal or the total amount to be paid to the consumer (which includes interest as well as the compensation to be paid) with the Appellate Tribunal.

13Does the RERA recognise agreement for sale or does it make it mandatory to register property at purchase to qualify?

No, RERA recognises both registration of property and registration of agreement for sale. In fact the Act mandates that an agreement for sale needs to be registered once 10% of the contracted amount is collected from a consumer by real estate developer. This provision thereby takes into account that there is lack of uniformity across various states of India i.e. in some places property registration takes place at time of purchase while in others only an agreement for sale is signed at time of purchase.

14Can a real estate developer change plans once the project is launched or is under construction?

The Act takes into account 2 scenarios –

1. Minor changes – Minor changes can be made to a unit plan (which includes plans, fixtures, fittings etc) after proper declaration and intimation to the customer and certification by an architect or an engineer that such changes are required for architectural and structural reasons. Such minor changes are also allowed which are requested by a consumer. But these do not include changes in area or height, or removal of part of a building or any such change which the West Bengal Real State Regulatory Authority feels materially deviates from the product offering.
2. Any other change i.e. change to sanctioned plans, layout plans, and specifications of buildings or common areas cannot be brought about without consent of at least 2/3rd of consumers of the project. The consenting consumers do not include real estate developer who might still own units in the project. In fact for the purposes of this clause the Act counts all such consumers who might own several units in a project through direct and indirect ownership (company, HUF and family) as one irrespective of the number of units held.

15What is a project phase? Does a real estate developer need to register the complete project even if he is launching a project on just a small portion of it?

The Act recognises that a large land parcel or a township isn’t developed at one go. In fact real estate developers may want to change plans of the subsequent projects launched in the township. Thereby the Act permits the real estate developers to register their projects in a phase wise manner as separate projects. Hence a real estate developer is then allowed to make changes in future to the phases not registered yet.

16What are the penalties that a real estate developer would face if he fails to adhere to the registration mandates or any other directions prescribed by the RERA?

If the real estate developer violates the registration procedures prescribed by the Act, he will be required to pay up to 10% of the total estimated cost of the project in question. If found continuing the offence, the real estate developer will be punishable either with imprisonment (up to 3 years) or a fine which may extend up to a further 10% of the above project cost.

17How does the Act impact Joint Developer or Joint Venture Agreements where landlord and developer are two different parties but both are beneficiaries of sale of project?

The Act makes both the developers and the landlord or any such party which is beneficiary of a sale of a project and receive payments from consumers as real estate developers (Promoters), and are liable to adhere to the Act.

18How does it impact the real estate developer’s arrangements with real estate agents, contractors, architect, structural engineers and similar parties (Declaration required at registration).

Firstly only registered real estate agents are supposed to function in the real estate business. Also the Act makes it mandatory on the real estate developer to make a declaration about the real estate agents, architects, structural engineers and similar parties to the RERA. And since this information is all available online a consumer can have access to it at all the time.

19Are there norms on advertisements or promotions?

This is one big change coming through as a result of imposition of stricter guidelines for marketing and timing of marketing of projects. It has been seen that real estate developers use attractive marketing material including brochures, media advertisements and other forms to lure consumers. However several times there is a big disconnect between actual product and what is being shown in the marketing collateral. The Act doesn’t permit such activities as anything shown in the marketing material needs to be in line with the final product or else real estate developer will be liable to penalties under the Act.

The advertisement or prospectus issued or published by the developer shall mention prominently the website address of the the West Bengal Real State Regulatory Authority, wherein all details of the registered project have been entered and include the registration number obtained from the Authority and such other matters incidental thereto.

20Does a real estate developer need to report sales, progress and other such things with regards to projects?

Yes, from the date of enactment of the Act the real estate developers will have to share information with the consumers on an on-going basis. This information includes – amount of sales concluded, progress of projects, receipt of pending approvals and other such declarations which are key to project delivery.

21Can a real estate developer exit the project mid-way by selling to another developer or party?

While a developer is allowed to sell the project to another investor he can do so only by taking written approval of 2/3rd of project’s consumers and also the prior approval of the RERA. Again if a consumer or his family or by other means holds more than one unit in a project he is considered as one consumer only. Also the RERA need to be informed of such sale and incoming party then assumes all the rights and liabilities as the previous promoter of the project (including project delivery timelines and other such matters).


1What are the mandatory rules for an intermediary?

An intermediary is required to be registered with the RERA and possess a valid registration number before facilitating a sale or purchase of a project or acting on behalf of any real estate developer for the same. He is also required to maintain and preserve books of account, records and documents as prescribed by the Act. He shall also facilitate the possession of all information to the consumer, at the time of booking and provide any other assistance as prescribed.

2On what grounds can the registration of an intermediary be revoked by the RERA?

Misrepresentation, fraud, breach of any terms and conditions of the Act and any sort of unfair practice can cause the registration to be revoked; but not before the intermediary is given a chance to be heard.

The Act makes it tougher for the intermediaries to conduct business in an unprofessional manner and in a way prompts them to adopt ethical means of dealing with consumers.

3What are the penalties that an intermediary would face if he fails to adhere to the mandates prescribed by the RERA?

If an intermediary violates the rules prescribed by the RERA, he will be liable to a penalty for every day of the violation caused and the sum could increase up to 5% of the total estimated cost of the unit in question. If the intermediary breaches any orders, decisions or directions given by the Appellate Tribunal, he could face imprisonment of upto 1 year or would have to pay fine for each day of violation which may extend upto 10% of total estimated cost of the unit in question

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1What are the novel measures taken to secure consumer interest and empower him?

1. The consumer is entitled to receive information about the sanctioned plan, layout plan as approved by the the West Bengal Real State Regulatory Authority, stage wise time schedule of the project completion and the services promised by the real estate developer like drinking water facility, electricity, sanitation etc. After receiving the physical possession of the unit, the consumer has a right to obtain the necessary documents and plans including that of the common areas.
2. The consumers can claim possession of the unit and the association of consumers can collectively claim possession of the common areas as declared by the real estate developer.
3. If the real estate developer fails to meet the timeline or does not deliver what was promised, the consumer has a right to claim refund of amount paid along with prescribed interest and compensation for the same.
Also consumers will have to be updated about project progress, sales and construction status by the real estate developer.

2What are the responsibilities of a consumer?

1. It is mandatory for a consumer to make timely payments to the real estate developer as per the agreement for sale. He will also have to pay his share of registration charges, municipal taxes, maintenance charges, ground rent, electricity charges, water supply charges and any other services.
2. Once the occupancy certificate is issued by the real estate developer, the consumer is required to take possession within two months’ time.
3. If the consumer is not able to make timely payments for his purchase, he is required to pay interest at a prescribed rate.
4. It is compulsory for a consumer to exhibit active participation in the formation of an association, a cooperative society or any federation of consumers.
5. A consumer shall participate towards registration of the conveyance deed of the unit.

3What is an escrow account and why is RERA mandating 70% funds collected be deposited in an escrow account by a real estate developer?

An escrow account is under the purview of a third party essentially a bank or a recognised lender. This provision thereby results in further oversight of the bank account and signing authority is with the escrow account manager say a trustee or a bank or a lender.

One of the biggest pain points for consumers has been project delays. Amongst other reasons for delay, the use of collections from one project into business expansion or construction of other project or siphoning of funds by real estate developers have also been primary causes. Thereby to protect consumer of a project the Act mandates that of all collections 70% funds be deposited in an escrow account maintained with a scheduled commercial bank. These funds can be accessed by a real estate developer solely for purpose of construction of the project to which it belongs. The real estate developer can withdraw funds from this account in proportion to stage of work. The request for withdrawal of funds is to be certified by an engineer, architect and a chartered accountant in practice that real estate developer’s claims are justified.

Thereby this de-risks consumer to an extent that his payments to real estate developer are being channelized for the good of the project where he owns a unit/ units.

4What is the provision for an aggrieved person to lodge a complaint? Does he have to go through the existing judicial system?

The Act mandates setting up of an Appellate tribunal by the appropriate government within one year of the Act coming into force. So RERA is the first body to approach in case of disputes and as per set of rules this body can establish the nature of violation and prescribe the penalty/ punishment. Any person aggrieved by the decisions of the RERA or an adjudicating officer can appeal to the Appellate Tribunal. This set up will fast track the process of dispute settlement since it minimises the involvement of the existing judicial system.

A person can appeal in High Court if he is aggrieved by decision of the Appellate Tribunal however this isn’t allowed in cases where the decision was reached after consent of the disputing parties. The person has to approach High Court within 60 days of receiving the decision.

5What happens if an Appellate Tribunal is not established for a particular jurisdiction during the time of appeal?

In this case, the appropriate Government shall appoint any other body as Appellate Tribunal that currently exists to hear the appeals in the interim.

6In the above case, what will happen if the Appellate Tribunal is established during the course of hearing?

The particular appeal will be transferred to the established Appellate Tribunal under the Act and will no longer be with the one which is temporarily appointed.

7What actions are taken by the RERA after the registration of any real estate developer is revoked? How will the project be completed then?

In the above case,

1. The RERA will debar the real estate developer from accessing the web portal for the project in which he has defaulted and list him under the defaulters
2. The RERA will also inform RERAs of other states and union territories
3. It will direct the bank to freeze the bank account for the particular project and consequently unfreeze it to facilitate further development of project
4. Can consult the appropriate Government to employ the West Bengal Real State Regulatory Authority to finish the project. The association of consumers have the first right to refuse any further developmental activities of the project


1Non Resident Indian?

An Indian citizen who stays abroad for employment/carrying on business or vocation outside India or stays abroad under circumstances indicating an intention for an uncertain duration of stay abroad is a non-resident. (Persons posted in U.N. organisations and officials deputed abroad by Central/State Governments and Public Sector undertakings on temporary assignments are also treated as non-temporary assignments are also treated as non-residents). Non-resident foreign citizens of Indian origin are treated on par with non- resident Indian citizens (NRIs).

2What is PIO?

A person of Indian origin means an individual (not being a citizen of Pakistan or Bangladesh or Sri Lanka or Afghanistan or China or Iran or Nepal or Bhutan) who:
• held an Indian Passport at any time, or
• who or whose father or paternal grand father was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955

3Facilities For Nris / Ocbs

NRIs/OCB's are granted the following facilities:
1. Maintenance of bank accounts in India
2. Investments in securities/shares of, and deposits with, Indian firms/companies
3. Investments in immovable properties in India

4Who Can Purchase Property In India

Under the general permission available, the following categories can freely purchase immovable property in India:

• Non-Resident Indian (NRI) - that is a citizen of India resident outside India

• Person of Indian Origin (PIO) - that is an individual (not being a citizen of Pakistan or Bangladesh or Sri Lanka or Afghanistan or China or Iran or Nepal or Bhutan), who
1. at any time, held Indian passport, or
2. who or either of whose father or grandfather was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955).

The general permission, however, covers only purchase of residential and commercial property.

5Can Nri Sell the Property Without Rbi Permission

Yes

6Can Nri's Acquire or Dispose Residential Property by Way of Gift

Yes, the Reserve Bank has granted general permission to NRIs to acquire or dispose of NRI India Properties by way of gift from or to a relative who may be an Indian citizen or a person of Indian origin (PIO) whether resident in India or not.

7Can Nri Acquire Commercial Property In India

Yes, under the general permission granted by the Reserve Bank, property other than agricultural land/farm house/plantation property can be acquired by NRIs provided the purchase consideration is met either out of inward remittances in foreign exchange through normal banking channels or out of funds from the purchaser's NRE/FCNR accounts maintained with banks in India and a declaration is submitted to the Central Office of Reserve Bank in form IPI 7 within a period of 90 days from the date of purchase of the property/final payment of purchase consideration.

8Can Nri Get Loan From Financial Institution

The Reserve Bank has granted some general permission to certain financial institutions providing housing finance e.g. HDFC, LIC Housing Finance Ltd., etc, and authorized dealers to grant housing loans to NRI nationals for acquisition of a NRI house/flat for self-occupation subject to certain conditions. Criteria regarding the purpose of the loan, margin money and the quantum of loan will be at par with those applicable to resident Indians. Repayment of the loan should be made within a period not exceeding 15 years, out of inward remittance through banking channels or out of funds held in the investors' NRE/FCNR/NRO accounts.

9What is PoweroOf Attorney (Poa)

A Power Of Attorney (POA) or letter of attorney is a written authorization to represent or act on anothers behalf in private affairs, business, or some other legal matter, sometimes against the wishes of the other. The person authorizing the other to act is the principal, grantor, or donor (of the power).

• A Power Of Attorney is not an instrument of transfer in regard to any right, title or interest in an immovable property.
• A Power Of Attorney, or letter of attorney, is a document that authorizes another person, known as the agent or attorney-in-fact—usually a legally competent relative or close friend over 18 years old—to handle any combination of financial, legal and health care decisions. A power of attorney is also referred to as a POA. Generally, one chooses a POA as a provision if he or she becomes incapacitated.

Types of Power of Attorney
• A Power Of Attorney (POA) is an instrument that is used by people to confer authority on somebody else to legally act on their behalf.

POA are of two types.
• Special Power of Attorney (SPA), while an SPA is used for transfer of a specific right to the person on whom it is conferred.
• General Power of Attorney (GPA), the GPA authorizes the holder to do whatever is necessary.

• There is no sale clause of immovable property mentioned in POA (notarized).
• Registered POA from registration office allows sale clause and POA to any one.

Following are the important things to be kept in mind while executing the POA
• Customer Prepares POA as per defined format. • Executants has to paste his/her photograph along with signature on each page.
• Authenticate/adjudicate the POA from Indian Embassy or local authority.
• Send authenticated/adjudicated POA in India.
• In India, the POA holder has to paste his/her photograph along with his/her left hand thumb impression and signature.
• Then this document will have to be stamped for Rs. 500/- (ESBTR, Franking, Stamp paper) and notarised from a Registered Notary. Please ensure that a stamp of “Before Me” is affixed on the document.
• POA holder and executants Photo ID attach before Notary.

10Loan Sanction Process & Documentation

The documentation required to be submitted by the NRIs are different from the Resident Indians as they are required to submit additional documents, like copy of the passport and a copy of the works contract, etc. and of course NRIs have to follow certain eligibility criteria in order to get Home Loans in India.

Another vital document required while processing an NRI home loan is the power of attorney (POA). The POA is important because, since the borrower is not based in India; the Home Finance Company would need a 'representative' 'in lieu of' the NRI to deal with and if needed.

Although not obligatory, the POA is usually drawn on the NRI's parents/wife/children/ close relatives or friends.

The documents needed for obtaining NRI home loans are Bank specific. General list of documents are as mentioned below:

• Passport and Visa • A copy of the appointment letter and contract from the company employing the applicant.
• The labour card/identity card (translated in English and countersigned by the consulate) if the person is employed in the Middle East Salary certificate (in English) specifying name, date of joining, designation and salary details.
• Bank Statements for the last six months

List of Classified documents required for Salaried and Self Employed NRI Applicants.

Banks may have specific requirements apart from the below listed documents.

Salaried NRI Applicants:

• Copy of valid passport showing VISA stamps
• Copy of valid visa / work permit / equivalent document supporting the NRI status of the proposed account holder
• Overseas Bank A/C for the last 3 months showing salary credits
• Latest contract copy evidencing Salary / Salary Certificate / Wage Slips.

Self-Employed NRI Applicants:

• Passport copy with valid visa stamp
• Brief profile of the applicant and business/ Trade license or equivalent document
• 6 months overseas bank account statement and NRE/ NRO account
• Computation of income, P&L account and B/Sheet for last 3 years certified by the C.A. / CPA or any other relevant authority as the case may be (or equivalent company accounts)

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