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Why it is mandatory to register flat before resale

Saturday, May 19, 2018
By Ramesh S. Prabhu

Q.Technically, how do you differentiate- Investor/ Purchaser/ Allotee for the purpose of Promoter?
Any person who invests in the property before the same is registered with MahaRERA and causes the construction or redevelopment through the promoter, such investors are also called as promoters or investors and they do not receive the protection under RERA for any violation of RERA provisions.

Q.We have formed society in 2005. OC has not yet come. MHADA and developers have litigation about dummy tenancy created, that is why OC has not been given. Please guide.
Normally MCGM( Municipal Corporation of Greater Mumbai) does not give conveyance, if there is litigation on the land or if there are litigation between the MHADA or any government bodies. The MCGM is planning to bring out ascheme for regularising the structure and grant the OC by relaxing lot of conditions. You should try to get the OC whenever such schemes are announced or may apply for the OC after the litigation is resolved. You should insist the builder resolves such dispute and provides you the OC. You may simultaneously move before the consumer court against the developer to provide you the OC in time-bound manner.

Q.Can we release deed from daughter to son of mother and get it registered? Can 100% ownership be taken by son? Also, is it compulsory to issue public notice for legal heir in two newspapers?
As a legal process, to inherit any immovable property in Mumbai, if there is will, the executor has to obtain the probate of the will, and transfer the property to the beneficiary. When there is no will, the legal heirs have to obtain the letter of Administration. The probate or the Letter of Administration is issued by the Testamentary Department of the High Court, Mumbai. As per the bye-laws, to transfer the shares in the name of the legal heirs, where there is no nomination and when the probated will or letter of administrationis not submitted, the issue of public notice in two local newspapers by the society is compulsory.   

Q.The rent paid by redevelopment builder to old tenant is not used because tenant has another flat. Is it liable for Income Tax?
Yes, such rent which is not used for paying the rent is considered as income under other sources in the hands of the tenant and is liable for taxation as per the applicable slab of taxation of the tenant.

Q.When you buy residential land with an Intention to develop it later, at what stage do you need to register with RERA?
When the builder decides to sell, market, book or advertise the property for sale, he has to register the project with RERA.  If he decides to sell only after completing the project and after receiving the OC, he need not register the project.

Q.Allotment letter has been allotted before RERA. Allottee wants to transfer flat after successful payment of 100 % amount to builder. But, the builder wants allottee to register flat before transfer. Is the builder correct as per law?
Yes. Once the flat is booked by a person and he has paid the TDS and the service tax in his name, the agreement also needs to be executed in favour of him. If such agreements are not executed and new agreement is executed in the name of new person, the revenue department(StampDuty)may question the developer and recover the stamp duty with penalty up to 400%. The income Tax department may also take up the matter for scrutiny when the TDS is made, and still the agreement for sale is not shown in the books of account. The builder is right in insisting for registering the agreement for sale and then execute the resale agreement.

(Ramesh S. Prabhu is Chairman,  Maharashtra Societies Welfare Association)

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