The western stretch of Mumbai has seen huge infrastructural development and is considered to be quite a profitable location to invest in a property
Mumbai is known for its fast pace and momentum of development and growth. The city, which offers good connectivity, is witnessing colossal residential and commercial projects, which are going on in every nook and corner of the western line.
Once, the only areas considered prime for housing purposes included south Mumbai, Bandra and Juhu. However today, areas like Andheri, Malad, Kandivali and Borivali on the western stretch, have seen huge infrastructure development and are quite popular locations for owning a personal abode. These locations have become extremely popular due to many reasons, such as availability of homes in a wide range to suit both, the high income group (HIG) and the mid-income group (MIG); good infrastructure, roads and convenient accessibility to transport (railway and airport); relatively low crime rate and social comfort; no disturbance from industrialisation; lesser slum areas; low pollution; sea view and developed areas with good amenities.
People are often unaware of the many factors they have to take into account while investing in properties. Before putting money in a property, investors need to ensure that they keep a checklist for evaluating a particular property. Buyers assume that the search for a property is always a complicated process and needs research in terms of permissions and location. Buyers in Mumbai probably have to struggle through the property maze in the city a bit more than those in other cities. Here are a few parameters for investors who are thinking of buying a flat in Mumbai, on the western line.
While buyers are looking at a property, they need to have clarity on whether the land has a verified clear title; whether the chosen developer has the ability of completing underconstruction projects; whether the location has the suitability and potential to be a profitable bet and whether the project typology is correct.
Conversion/approval of land for residential development:
Ensure that the list of essential permissions and approvals required for the project is known - importantly from the point of view of urban/town planning, municipal corporation, environment and forests, airports, etc. Find out if any of these are obtained and which are the ones that are pending.
The municipal corporation of Greater Mumbai and Thane issues certificates called Intimation of Disapproval (IOD) and then the Commencement Certificate (CC) for construction of buildings. “Establish whether the builder has free and clear ownership of the land on which the project is being built. The project needs to have an IOD. This is a set of instructions that a developer needs to comply with, so that he can legally construct the project. The IOD is valid for one year and needs to be reissued if the project has not been completed in a year's time. The project also needs to have a CC in place, since development cannot commence before this certiicate is obtained. Buyers must verify this without fail," explains Om Ahuja, CEO - residential services, Jones Lang LaSalle India.
Computation of area:
In Mumbai, several terms like built-up, super built-up, saleable, carpet area, etc., are used to define the floor space being made available to the buyer. "The difference between the carpet area (the actual area between walls in a flat) and the area sold (saleable area) is called the loading factor. Maharashtra laws make it mandatory to sell flats on carpet area basis. The carpet area does not include the area of terraces, flower beds, balconies and car parks, which are granted free from FSI computation to each building. It is hence, important to understand the stated vs the actual carpet area and the loading factor being applied. Loading factor = saleable area carpet area/saleable area. This factor should generally not exceed 30 per cent. Hence, lower the loading factor, the better it is for the buyer. The term built-up area is used for the entire floor area, including the wall thickness, whereas the super built-up includes the common areas like lift, lobby, staircase, etc.," says Sarita Mantri, key-person, Mantri Realty.
List of promised features:
Buildings, projects and flats are often marketed with several features. It is important to get minute details of such features and ensure that they are mentioned in the agreements. Buyers should also question the penalties related to non-performance. "Approved construction plans are available and they must match with the design being promised. Such approved plans must be displayed on the project site at all times," opines Dhaval Ajmera, director, Ajmera Realty & Infra India Ltd.
Developers usually take the lump-sum amount and recurring maintenance charges till such time that the building has been fully handed over to the society of owners. "It is important to understand the reasons and elements of such charges and the responsibility of the developer. Also, buyers should understand the total recurring costs they need to bear towards property taxes and maintenance each year," points out Mantri. Developers with a good reputation and experience are likely to have a professional approach with proper systems and processes in place.
THE PROJECT NEEDS TO HAVE AN IOD AND CC SINCE DEVELOPMENT CANNOT COMMENCE BEFORE HAVING THESE IN PLACE.
TODAY, AREAS LIKE ANDHERI, MALAD, KANDIVALI AND BORIVALI ON THE WESTERN STRETCH, HAVE SEEN HUGE INFRASTRUCTURE DEVELOPMENT AND ARE QUITE POPULAR LOCATIONS FOR OWNING A PERSONAL ABODE.
Mumbai: A builder will haveto pay a compensation of Rs65,000 to a Santa Cruz-based couple for not providing civic water supply, not forming a cooperative housing society and not procuring the occupation certificate from the civic body.
A district forum on Wednesday directed M/s Chauhan and Builders to look into the matter within three months. The forum said that by not providing these essentials, M/s Chauhan and Builderswas guilty of deficiency in service.
Defence official Anil and his wife Cheryl Periera purchasedtheflatfrom thebuilder on August30,2005for Rs25lakh. While they had made a down payment of Rs 2 lakh, the rest was procured through a bank loan. The couple said they received possession of the flat in August 2006. The Pererias said they brought the problems to the notice of the builder, but to no avail. They sent a notice to the builder in November 2007, but got no response.
In November 2006, a notice was pasted on the building stating that the civic body had refused to give the occupation certificate asthebuilder hadconstructedillegal floors beyond the seven storeys that were sanctioned, the couple alleged.
Thecouplefiled a complaint in the Mumbai Suburban District Consumer Disputes RedressalForum in January 2008. The forum passed an ex parte order in the builder’s absence as the latter had refused to accept noticessentby theforum.
More than a dozen people who booked apartments in a controversial tower on 16th Road, Khar (West), are in a bind after large-scale building violations were detected by the Slum Rehabilitation Authority (SRA). They could lose up to 40% of their apartment areas. Also, possession of the flats will remain uncertain for a long time, though many buyers have made a substantial chunk of the payments.
On Tuesday, August 6, TOI did a searing exposé on how the developer, K Mordani Realty, used a little-known provision of the development control regulations (DCRs) to secure more floor space index (FSI) from the slum authority.
Buyers of flats in the tower, which is near Khar Gymkhana, are unsure of their course of action. “We will meet and decide what to do now. The builder has told us we have nothing to worry about because he complied with SRA policy,” said Jagdish Rohera, a buyer. But another buyer said there was not much the buyers could do.
What are the legal remedies before the buyers? Advocate Parimal Shroff said they could write to the SRA, furnishing them with all correspondence with the developer. “They should be allowed to participate in the SRA hearing, along with the builder. They can even drag the developer to the consumer court and the competition commission.”
The builder sold every flat with a super built-up area of over 3,000 sq ft, keeping the carpet area at barely 800 sq ft. The market rate of each flat is around Rs 10 crore, at Rs 60,000 a sq ft.
The tower was cleared for only 12 floors by the BMC. But halfway into construction, the developer approached the SRA with a fresh plan and succeeded in getting the height increased to 20 storeys. An SRA inspection team found certain areas of the building illegally amalgamated into the flats. SRA CEO Nirmalkumar Deshmukh has directed the developer to rectify the illegalities within six months and threatened to withhold the tower’s occupation certificate.
Building violations include merging the lift lobby area into adjacent rooms, illegally covering elevation features, making toilets and prayer rooms out of ducts and amalgamating the fitness centre and the meter room. The illegal features are shown in the tower’s sale drawing.
“In every such case of violation, it is flat buyers who stand to lose the most,” said a property consultant.
Recently, residents of Worli’s Campa Cola society fought a losing battle to save their apartments from demolition. More than two decades ago, the builder violated FSI and constructed way beyond what was legally permissible.
Another case pertains to people who bought spacious flats, each worth over Rs 10 crore, in a luxury building in JVPD. They are caught in a bind after the BMC found large-scale violations by the builder. The case is in the Supreme Court; the BMC is still to give the building an occupation certificate.
FLAT PURCHASE CHECKLIST 1 Check if property is freehold (ownership rights are available for life) or leasehold (ownership rights remain with party leasing out property)
In leasehold, a) monthly outgoings are high; b) lease is for fixed period; c) lessee has to pay a premium and contribute to annual rent; d) every flat sale requires an NOC from the leaser (like in BKC); and e) leases have to be renewed at a premium 2 Do a background check on developer
Find out if developer is a sole proprietorship, a private limited company, a private firm or a private partnership firm
Know the developer’s past performance, past projects, credibility and so on 3 If developer is operating with a power-of-attorney (POA), make sure the POA is registered. Find out if a developer with a POA has full power to execute an agreement for sale of a flat 4 Check if title of the property is clear and marketable. Ensure that a solicitor has issued the title certificate 5 When finalizing a deal, see if you are executing an agreement for sale or the developer is just handing you a letter of allotment. A letter of allotment leaves the buyer at risk till the agreement for sale has been executed and registered 6 Make sure the developer has not taken a loan against the land and then issued a letter of allotment. This amounts to a dubious double sale till the agreement for sale is registered 7 Check in the title if the land is mortgaged with any financial institution
If it is mortgaged, an NOC is required from the financial institution before an agreement for sale is registered 8 The approved plan with commencement certificate has to be issued by the authorities concerned
If these documents are not in place, it means you are booking a flat even before the project is officially launched
There are cases where the developer’s plans don’t get approval, but he has already collected a substantial amount as advance from buyers. If the plan is not approved, the developer can issue only a letter of allotment and not an agreement for sale 9 Confirm the carpet area of flat being purchased Check cost of carpet area, floor rise, car parking, etc 10Take into account the additional burden in pricing. Stamp duty, VAT and service tax add almost 10% to the cost 11 Avoid buying on top two floors. In case of an FSI or other violation, which leads to the authorities calling for demolition, the top floors are the first to go LEGAL REMEDIES FOR BUYERS
Write to the slum authority, furnishing them with all correspondence with the builder
File a case against the developer in the consumer court and the competition commission CAMPA COLA BUILDING CASE
The Supreme Court ruled on February 27 that all floors above the fifth in seven buildings in Worli’s Campa Cola compound will have to be razed
The residents filed a review petition on April 1
The BMC issued a 48-hour eviction notice on April 26
The top court granted a stay on demolition, giving flat owners five months to vacate
The BMC is set to start demolition from October 2. The estimated cost of Rs 1.9 crore is to be recovered from residents
Consent of all flat buyers needed to increase floors, reiterates HC
Mumbai: Irrevocable blanket consent taken from flat buyers will not help builders who want to construct additional floors that were not mentioned in original plans at the time of sale, the Bombay high court (HC) has said.
“No such irrevocable consent can be imputed or taken since express previous consent is required to be obtained for all additions and alterations after the plans and specifications (of the building) are disclosed,” said Justice Roshan Dalvi. “No such consent can be expressly given and every (developer) would be required to take express previous consent of all the flat purchasers for all such additional construction… not incorporated in the approved plans.”
The HC upheld a civil court order restraining city-based builder Shah and Modi Developers from adding more floors to Swapnalok building in Malad. Advocate S C Naidu, counsel for the developer, said there was express consent given by the flat buyers at the time of purchase that no permission would be required from them if the developer wanted to make any additional construction and they would not raise any objection.
The judge said that such a clause was “wholly inconsistent with and contrary to legislative mandate” of section 7 of the Maharashtra Ownership of Flats Act. The provision says that a builder has to take the consent of all flat buyers for making any alterations in or additions to the structure of the flats or of the building after plans and specifications are disclosed at the time of sale.
Shah and Modi cited another clause in the agreement which mentioned that the developer can acquire additional construction rights in the form of TDR (transfer of development rights) to add floors. They also pointed to the foundation plan of the building, which showed that it was capable of bearing up to six floors.
But the HC said this did not constitute express consent and the approved plan disclosed at the time of purchase was admittedly up to four floors.
“Upon seeing the lack of consent… a prima facie case for restraint on further construction is made out,” said the HC while dismissing the builder’s plea to vacate a stay on construction from the sixth floor onwards.
The dispute relates to a suit filed by Alka Shah, who had bought premises in the building. The plans disclosed at the time of sale in 1988 were for ground plus four floors. Construction commenced in 1996. From 2007 onwards, the developer bought additional TDR to construct more floors. The civil court, on a petition by Shah, restrained the builder from constructing the sixth floor. According to her lawyer, the builder had said the building could rise up to 15 floors.
THE LAW Section 7 of the Maharashtra Ownership of Flats Act says a developer has to take the consent of all flat buyers for making any alterations in or additions to the structure of the flats or of the building after plans and specifications are disclosed at the time of sale
The HC has said blanket consent will not do and there has to be express consent about the altered plans, which have to be disclosed right at the time of sale
Lottery winners from LIG, MIG and HIG category who rent out their flats will be asked to shell out Rs 3,000, Rs 4,000 and Rs 5,000 respectively to the housing body as annual retainer
Days after relaxing the rules by permitting lottery winners to rent out their flats, the Maharashtra Housing and Area Development Authority (MHADA) has dropped a bombshell on flat owners looking to rent out their flats by demanding an annual fee.
New rules: MHADA officials revoked the ban that did not allow people to give their apartments out on rent. File pic
Flat owners from the Low Income Group (LIG), Middle Income Group (MIG) and Higher Income Group (HIG) looking to rent out their homes will be asked to pay Rs 3,000, Rs 4,000 and Rs 5,000 respectively as an annual retainer fee for leasing out their flats.
According to senior MHADA officials, they expect nearly 10 per cent of the total MHADA homes in the city to be rented. A rough estimate means that nearly two lakh homes would be leased, which would rake in approximately Rs 60 crore annually for the housing body from the rented flats.
Earlier this week, MHADA had decided to allow lottery winners to lease out their flats, which was earlier banned.
And to lease a MHADA flat, the owner had to wait for at least five years before putting it on the market.
After the recent policy change, however, one can lease their flat within 10 days of possession.
D K Jagdale, Joint CEO, MHADA, Mumbai Board, said, “We would charge the owners an annual fees. There are nearly 10 per cent homes that we expect will be rented after the recent change in policy.”
According to a senior MHADA official, earlier flat owners would rent their homes and MHADA used to get nothing, as the deals were done clandestinely because of the law not permitting people to lease out their flats.
“With this new policy, we expect to earn revenue from people who rent their homes,” said the MHADA official.
According to MHADA officials, every flat owner renting their flat will have to notify officials and if someone does not, then the transaction would be termed illegal and appropriate action would be taken against the person.
Windfall for MHADA
MHADA officials expect nearly 10 per cent of the total MHADA homes in the city to be rented. A rough estimate means that nearly 2 lakh homes would be leased. This would rake in approximately Rs 60 crore annually for the housing body
With average realty prices going up by five per cent this year, builders rue 'unproductive' rates stalling sales, as homebuyers dare not tread on 146 million sq ft unsold space
Before lamenting the space constraints in Mumbai metropolitan region, hear the analysts who will tell you that some 1.35 lakh homes here are lying unsold.
According to real estate research and ratings firm Liases Foras, the area of unsold properties on sale in the metropolitan market currently expands to 146 million sq ft. These properties are in various stages of construction: from ready possession to under construction to the newly launched.
Incidentally, the average real estate prices have gone up by five per cent in the last one year.
The report categorically mentions that based on the first quarter of 2013-14, of the total 155 million square foot of total residential area available for sale in MMR, a whopping 146 million sq ft remained unsold.
Why? The metro’s famously unfriendly realty prices have proven to be unproductive for builders too.
According to Pankaj Kapoor, MD, Liases Foras, there’s a huge chunk of stock lying unsold in MMR because builders are holding back on prices. “The rates are unproductive for builders and unaffordable for the buyers. There are hardly any sales and it’s not even generating enough money for builders to pay the interest on the loans they borrowed.”
Behind the curtains, builders concur that units are not exactly selling like hot cakes but rather tying them down like dead weight. But no one is willing to get on record with the cold facts.
A top builder from South Mumbai said, “We have a lot of property lying with us, but these assets have turned dead assets and we have nothing to do but stay with them. Our sales are super low and we hardly see a buyer. There’s a need of correction, but no one wants to initiate it.”
He added, “The total unsold area of marketable residential space is 146 million sq ft, which would come to nearly 1.35 lakh units. This is among the worst in the last few quarters and years.”
Realtors in MMR managed to sell not more than 9.17 million sq ft in the first quarter this year, which was down from 10.45 million sq ft sold in the last quarter of the previous fiscal. The sales did not exceed 9.17 million sq ft in Q1, even though the fresh stock comprised 13 million sq ft of the total 155 million sq ft of residential space in the region.
With the need for course correction wrapped in whispers, even as sales are down by six per cent, realty prices in MMR have increased by five per cent on an yearly basis.
On quarterly basis, the sales have dropped by 12 per cent and prices have risen by 1 per cent.
Avg price rise per sq ft in first quarters of last 3 years:
Q1 2011-12 -- Rs 9,711
Q1 2012-13 -- Rs 11,178
Q1 2013-14 -- Rs 11,765
Total stock: 155 mn sq ft
Unsold stock: 146 mn sq ft
Fresh stock: 13 mn sq ft
>> On an annual basis: realty sales are down 6% this fiscal, but prices rose 5%
>> On quarterly basis: sales plunged 12% last quarter, but prices soared by 1%
Slum residents will be saved from paying tax for at least a year, residents, activists fume
MUMBAI: Even as many residents have complained of having to pay an increased property tax under the new system, a large section of the citizenry – Mumbai’s slum dwellers – will be exempt from the tax for at least another year.
The civic body has no format for taxing citizens living in slums at present, and the one it finalises on will take at least a year to implement.
The Brihanmumbai Municipal Corporation (BMC) has asked the Mumbai University to study different tax modules that can be used to levy property tax in slums. The university is expected to submit a report within 15 days.
“There is a long procedure to put the system into effect. After the university submits a report, we will consider the methodology to be used,” said Rajiv Jalota, additional municipal commissioner, BMC.
More than 60 lakh city residents live in slums, and residents are not happy they have been left out of the tax calculation.
This year, the civic body implemented the capital value-based property tax system, which met with great opposition from residents and some activists. The new system takes into account several factors, such as the age of the property, the ready reckoner rate, built-up area etc while calculating tax, and replaces the rateable tax system, which only took into account the rent a property fetches. Many citizens were unhappy at the prospect of having to pay an increased tax amount.
“The tax calculation itself is unfair, what’s worse is that a huge number of residents have been left out of the system. When an RTI application was filed questioning why the BMC is not considering slum residents, I received seven to eight replies, in which each department kept passing the buck,” said Godfrey Pimenta, RTI activist who alleged vote bank politics as the main reason for exemption.
Residents now plan to start an online petition demanding slum residents be taxed at the same rate as other citizens, but civic officials said they are yet to take a call on this too.
“The rate of tax for slum dwellers will be decided in the coming months, and will be based on the facilities they get and the amount we spend on them.”
“All slum residents are ready to pay property tax provided they are given the rights to their property,” said Jameel Shaikh, an activist working for slum residents.
BMC issues stop-work notice to luxury residential project
MUMBAI: Acting on complaints alleging violation of environmental norms in the development of a prime, sea-facing plot in Worli, the Brihanmumbai Municipal Corporation (BMC) has issued a letter ordering the Piramal Group of Companies to stop demolition of the Gulita training centre building for construction of its proposed luxury residential project at the plot.
The Gulita training centre that stands on the plot admeasuring about 3,762 sq m was acquired last year by Nival Developers, Gerbe Developers, and Float Developers — all part of the Piramal Group — from Hindustan Unilever Limited that ran the training centre.
On August 7, activist Santosh Daundkar and former IPS officer YP Singh lodged complaints against the demolition of the building with the civic body, citing violations of provisions of the Maharashtra Regional Town Planning Act (MRTP), 1966, the Environment Protection Act, 1986, and the Coastal Regulatory Zone (CRZ) notification of 2011. They contended that the demolition could not be undertaken without a commencement certificate (CC) for development on the plot as the definition of development according to the MRTP Act includes demolition of the existing building. They also claimed that the demolition was started in violation of CRZ norms which state that reconstruction of a building on CRZ land cannot be permitted without a change in present use, which in this case would amount to a change from educational to residential.
The civic body, however, said that the stop work order was given because of lack of necessary clearance required to be taken from the BMC since the plot was leased out by it. “A no-objection certificate from the (civic) estates department is required in case of BMCowned plots before demolition can be carried out. Demolition had started without this NOC,” said an official from the BMC’s building proposals department on condition of anonymity.
The official added that a CC would be given only after environmental clearance is granted by the coastal body.
An official statement from the Piramal Group said: “The companies have received instructions from the BMC to stop demolition of the premises until compliance of certain conditions mentioned in the IOD, which the companies are in the process of completing.”
However, Singh said: “Our contention is that the plot be used for educational purposes.”
Over two dozen 23-storey buildings in three locations are now the tallest skyscrapers reserved for slum dwellers eligible under the state government’s controversial rehabilitation scheme.
While the average Mumbaikar has been edged out due to the outrageously high property prices, the slum families will receive their apartments free of cost. But can slum dwellers, used to living at the ground level, adjust to life in a highrise?
Housing experts said this is a “sophisticated displacement plan and a highly unsustainable urban development model that will lead to further slumification of the city”. But developers re-housing the families said they are training the slum dwellers for this “cultural transformation”.
Initially, the scheme mandated seven-storey buildings for rehabilitation. Over the past few years, the Slum Rehabilitation Authority (SRA) allowed buildings twice the height. More recently, it cleared 26 skyscrapers, each 23 floors high, in Malad, Worli and Bhoiwada.
About 6,600 slum families will be relocated into these towers by private developer Omkar and construction firm L&T. Each eligible family is entitled to a free 269 sq ft (carpet) flat. Close to 25,000 slum dwellers will be trained to use the lift, bath rooms and other amenities. “They will have to learn to adapt to these socioeconomic changes,” said a spokesperson for Omkar.
Under the cross-subsidy SRA scheme, the developer can utilize a portion of the slum plot to build apartments and sell them at market rate. Development plans of the 23-floor rehabilitation projects show the slum families will be accommodated on less than one-third of the land they earlier occupied. The larger chunk is reserved for apartments and public amenities like recreation grounds.
Austrian-born social worker Adolf Tragler, who settled down in Mumbai five decades ago to help the poor get decent accommodation, said he is not sure if slum dwellers can afford the high maintenance of living in a skyscraper. “The cost of maintenance will shoot up and families will find it difficult to survive. The natural tendency is to sell and move to a low-cost area,’’ he said.
But the Omkar official said each family will receive Rs 20,000 as corpus and the developer will pay to maintain the lift and other facilities for 10 years. SRA chief Nirmalkumar Deshmukh said he has suggested that the mandatory corpus of Rs 20,000 per tenement be doubled.
Tragler estimates 25-30% slum dwellers sell their free houses — despite a rule forbidding sale within 10 years — and move out. In some prime areas of central Mumbai, a rehab flat could fetch anywhere from Rs 60 lakh to Rs 80 lakh. “It’s a jackpot for them,” said a slum redeveloper.
Housing activist and architect P K Das, who has worked on several slum rehab projects, said slum dwellers are being further squeezed under the guise of redevelopment. “The built-up area for the rehab component and the sale component is equal, but the division of land is highly and unreasonably disproportionate. The smallest ratio of land is allocated for rehabilitation. This had led to higher and higher buildings for slum dwellers,” he said.
Das added that such trading of land in real estate business interest under the guise of slum redevelopment is a “blatant bluff ”. “It pushes thousands to worse living conditions, including danger to their lives arising out of deteriorating highrises and unaffordable management costs,” he said.
The much-awaited Real Estate (Regulation and Development) Bill has got the home buyers as well as the real industry excited. People are hoping that the Bill will radically change the way real estate projects are developed and sold in the country. The Bill is likely to be presented in the parliament soon. In the mean time, it is pertinent to note that a similar legislation is already in place in Maharashtra for nearly 50 years now. The Maharashtra Ownership of Flats Act, 1963 (MOFA) was enacted in 1963, with the view to regulate the promotion, construction, sale, management and transfer of flats taken on ownership basis in the state. Under the Act, responsibilities are cast upon the promoters with respect to the flats constructed and sold by them and rights are conferred upon flat buyers. Here's a look at some of the key provisions of this Act, many of which are similar to those proposed in the new Bill and which safeguard the interests of the buyers.
Under Section 4 of the MOFA Act, the developer cannot take any advance payment, earnest money or deposit from the flat purchase, equal to or exceeding 20 per cent of the sale value of the flat, without first executing a written agreement (in the format prescribed under the Act) and getting the same registered.
Section 4 of the Act further states that such an agreement should inter alia contain:
The date by which the possession of the flat will be handed over to the purchaser.
The extent of the carpet area of the flat, with the area of the balcony shown separately.
The price of the flat, including the proportionate price of the common areas and facilities (which should be shown separately), to be paid by the flat purchaser and the intervals at which installments are to be paid.
The nature of the organisation (cooperative society, company, condominium, etc.) of the flat purchasers to be formed.
The nature, extent and description of the common areas and facilities.
Property card or extract or any other document showing the nature of the title of the developer to the land on which the flats are to be constructed.
Plans and specifications of the flat as approved by the concerned local authority.
Section 3, which deals with the general liabilities of a promoter (developer) states that when flats are advertised for sale, the developer shall disclose, inter alia, in the advertisement the following particulars:
The extent of the carpet area of the flat, including the area of the balconies, which should be shown separately.
The price of the flat, including the proportionate price of the common areas and facilities (which should be shown separately), to be paid by the flat purchaser and the intervals at which the installments thereof may be paid.
The nature, extent and description of common areas and facilities.
SEPARATE BANK ACCOUNT
Under Section 5 of the Act, the developer is required to maintain a separate bank account for sums taken as advance or deposit from the flat buyer, including the amount taken towards share capital for the formation of the cooperative socie t y as well as towards outgoings (advance maintenance, taxes, etc.) and needs to utilise the same for the purpose for which it was collected.
NO ALTERATIONS IN PLANS AND RECTIFICATION OF DEFECTS
After the plans and specifications of the building, as approved by the concerned local authority are disclosed or furnished to the flat buyer, the developer shall not make:
Any alterations in the structure of the flat(s) which are agreed upon, without the previous consent of the buyer.
Any alterations or additions in the structure of the building without the previous consent of all the persons who have agreed to take flats in such a building.
Further, if there is any defect in the building or material used or, if there is any unauthorised change in construction and the same is brought to the notice of the developer, within three years from the date of handing over the possession, the developer must rectify the same at his own cost or compensate for the same.
NO MORTGAGE TO BE CREATED
Under Section 10, no developer shall, after he executes any agreement to sell any flat, mortgage or create a charge on the flat or the land without the previous consent of the flat buyer. If any such mortgage or charge is created, it shall not affect the right or interest of the flat buyer.
Under Section 10 of the Act, once the minimum number of persons required for forming the cooperative society (60 per cent of the total flats) has purchased the flats, the developer is required to make an application to the registrar for the registration of the society. If the developer fails to make the application within the prescribed time period, the flat owners themselves may directly apply to the registrar for such registration.
Under Section 11, the developer has to take all the necessary steps to convey to the organisation of flat owners (society, company, etc.), his right, title and interest in the land and building within the time specified in the purchase agreement. If no time is specified in the purchase agreement, the same shall be done within the prescribed time. If the developer fails to execute the conveyance in favour of the cooperative society (or company or association, as the case may be) within the prescribed time, the cooperative society may directly apply to the competent authority for unilateral deemed conveyance to be executed in their favour.
PENALTY ON THE DEVELOPER
Any promoter who, without reasonable excuse, fails to comply with or contravenes the provisions of Section 3 (general liabilities of the promoter), Section 4 (disclosure), Section 5 (separate bank account), Section 10 (formation of the society) or Section 11 (conveyance), shall on conviction, be punished with an imprisonment of upto three years or fine or both. The penalty for contravening any other provisions of the Act, on conviction, is imprisonment of upto one year and/or fine of upto Rs 50,000. Further, when any promoter is convicted of any offence under this Act, such a promoter shall be disqualified from undertaking the construction of any new project for a period of five years. The competent authority, may direct the local authority not to give any permission to the convicted promoter, for the construction of any flat during such period. As can be seen from the above, MOFA is a very powerful Act which contains many stringent provisions for safeguarding the interest of the flat buyers. However, despite this, it has been seen that its implementation has not been effective. This is mainly because of the fact that there is not much awareness among flat buyers about their rights and developers’ duties under the MOFA. Another reason why MOFA has failed in its objectives is the legal and administrative hurdles in implementing the various provisions. For example, while MOFA empowers the property buyers to bypass the developer and directly apply for deemed conveyance in case the developer fails to do so within the prescribed time, in reality it has been observed that it is nearly impossible to get deemed conveyance. Let us hope that the proposed Real Estate Bill has more teeth and does not end up merely as lip service to the flat buyers.
THE MAHARASHTRA OWNERSHIP OF FLATS ACT, 1963 (MOFA), WAS ENACTED IN 1963 WITH THE VIEW TO REGULATE THE PROMOTION, CONSTRUCTION , SALE, MANAGEMENT AND TRANSFER OF FLATS TAKEN ON OWNERSHIP BASIS IN MAHARASHTRA. UNDER SECTION 4 OF THE MOFA, THE DEVELOPER CANNOT TAKE ANY ADVANCE PAYMENT, EARNEST MONEY OR DEPOSIT FROM THE FLAT PURCHASE EQUAL TO OR EXCEEDING 20 PER CENT OF THE SALE VALUE OF THE FLAT, WITHOUT FIRST EXECUTING A WRITTEN AGREEMENT AND GETTING THE SAME REGISTERED.