The promoter regulation acts of various States attempted to deal with what could be considered as excesses by the real estate sector i.e., (i) collecting huge amounts even prior to the approval of construction proposals, (ii) creating a mortgage on the property before or after entering into an agreement of sale with third parties, without letting them know of the mortgage, (iii) not delivering apartments in time, (iv) changing approved plans midway, (v) not transferring apartments to individual flat purchasers or to housing societies, with the fond hope that the FAR / FSI in the area would increase and they could benefit, (vi) collecting huge maintenance fees and siphoning it off through inflated charges, (vii) issuing misleading advertisements, etc. All these and other issues ought to be taken care of by the Law,and cannot be left to market forces, since the hard- earned lifetime savings of citizens are involved. Despite some States bringing laws, there is no denying that the Real Estate sector is still one of the most unregulated, in so far as relations between the developer / promoter / builder and the purchaser are concerned. As such, there is an imperative need for a model Real Estate ( Regulation and Development ) Act.
The Central Government had announced a Model Real Estate (Regulation and Development) Act, which was put up for discussion before it was brought before Parliament. It envisages regulatory and appellate authorities to regulate, control and promote development by construction, sale, transfer and management of residential apartments. Though the model legislation is a welcome move to bring discipline to the sector, the proposed legislation is not binding on States, which have to enact separate legislations.
The regulatory authority proposed is in addition to existing authorities under different local, planning, revenue and tax establishments. There are dozens of licenses and approvals to be obtained prior to starting development and, taking into consideration the way our systems work, the new proposed authorities would only delay approvals, add to the cost and create additional structures that would only set the clock back.
This is the era of liberalization. The proposed legislation will only take the real estate industry back to the license raj era. Creation of additional authorities has always led to more corruption. Exorbitant demands by authorities invariably lead to delays and cost escalation, ultimately borne by the purchaser. Power to such authorities has traditionally led to its misuse, and no system to deal with this menace has yet been discovered. Especially in the Real Estate sector, promoters ought to be made responsible and liable, so that the excesses complained of by the citizens and investors are taken care of by Law administered through Courts.
Before drafting any kind of deed of transfer, it is very important to incorporate all the necessary requirements for an effective enforcement of such deeds apart from giving legal sanctity, which requires due diligence and a thorough scrutiny. The following are the essential requirements:
Nature of the Deed
The deed has to specify the description of the deed, such as "This Deed of Sale", "This Deed of Mortgage", "This Deed of Agreement to sell", etc, which may not necessarily be in Bold letters, but is preferable in order to highlight the nature of the deed.
Date of Execution
It is very important to mention the date of execution of the deed since the same is required for determining the limitation and also for registration of such conveyance in the revenue records of the concerned revenue departments. The date of execution of the document may vary from the date of registration, since the documents can be presented anytime within four months from the date of execution for registration.
All the necessary persons having interest in the property intended to be conveyed have to be mandatory made as parties to the deed in order to avoid any future legal disputes likely to be raised by the parties having interest over the property. It is also important to properly depict the status of each party to the deed.
Recitals
The deed shall contain the previous history pertaining to the property in a precise way, explaining the nature of the interest and motive behind the execution of such deed, which authenticates the title, which is called Recitals in legal parlance.
Habendum
This part of deed speaks about the interest in the property that the purchaser is being conveyed such phrases as "To Have and To Hold". This phrase can be seen in almost all the sale deeds.
Covenant
A covenant is an agreement wherein either or both the parties to the deed bind themselves to certain terms and conditions which create an interest over the property, which may be express or implied. In recent times, with the advent of Apartment culture, it is very necessary to incorporate covenants of various types besides those for maintenance of common areas and facilities in the deed.
Testimonium
This is the part of the deed which states that the parties have signed the deed. This is very important in order to prove authentication of the execution of the deed and the involvement of the proper parties having interest in the property in legally conveying the property to the parties of the other part.
Testatum
This IS the witnessing clause wherein the witnesses signing the deed are introduced, along with their names, addresses and signature. This clause is also very important for the reason that the witnesses also play an important role to prove execution of the document. However, it is advisable that both the witnesses are from purchaser/ transference's side
Operative Words
This part of the deed depends upon the nature of conveyance. However, operative words clearly depict the intention of the parties conveying the property in favour of the other party/ies, which IS necessary for passing of the title.
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