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Legal Remedies available to a Homebuyer if the Builder is Refusing the Registration of Property

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Legal Remedies available to a Homebuyer if the Builder is Refusing the Registration of Property

The Real estate sector is jam-packed with legal obligations that are imposed on the builders and promoters. When a homebuyer purchases a flat or an apartment from a builder, the main aim behind such purchase is to acquire the legal title and ownership of the property from the builder so that the said property is truly theirs. One of the most important aspects of any execution of a sale/conveyance deed is its registration. A buyer must always get the sale/conveyance deed registered under his/her name in order to avoid future conflicts regarding the title of the flat. There are many legal remedies that a buyer can opt for if the buyer refuses or delays the registration of the flat.

What is a Sale Deed/Conveyance Deed and why it’s important to Register?
A conveyance/sale deed is a legal document that establishes a buyer’s title (ownership) to the flat/apartment. It depicts that the builder has transferred all his rights regarding the said property to the home buyer. A sale deed further gives the home buyer a right to sell, mortgage or give the property on lease in the future.

Section 17 of the Indian Registration Act, 1908 states that it is mandatory to register the documents regarding the transfer of immovable property. Thus, a person is considered a lawful owner of an immovable property (flat/apartment) when the conveyance/sale deed of the said immovable property is registered in that person’s name.

There have been instances where the builder convinces the homebuyers to avoid registration of the apartment in order to save stamp duty and registration fee costs. When a person agrees with the builder and takes possession of the flat without getting it registered under his/her name, it portrays that the true and lawful owner of the flat is the builder and not the buyer.

According to section 55(1)(d) of the Transfer of Property Act, 1882, it is the responsibility of the seller to execute a proper conveyance deed of the immovable property. Indian courts have always stressed on the registration of any immovable property. In the year 2012, the Hon’ble Supreme Court in Suraj Lamp and Industries vs. State of Haryana [Special Leave Petition (C) No. 13917 of 2009], made the following observations:

  1. that a transfer of immovable property can only be by a conveyance deed. Such a deed must be duly stamped and registered as required by the law.
  2. that in absence of such registered deed, no right, interest or title can be transferred to the buyer.
  3. that an agreement to sale which is not followed by a registered conveyance deed does not confer any title nor transfer any interest in an immovable property to the buyer.

Transfer of Title under RERA
When a builder constructs a building, the title of all the flats/apartments vests with the builder. When a buyer purchases a flat or apartment in a building, the builder transfers the title of that flat under the name of the buyer. This is called the transfer of title. It is well established in section 17(1) of the Real Estate (Regulations and Development) Act, 2016 that the promoter/ builder is under the obligation to execute and register the conveyance/sale deed in the favour of the allottee or association of allottees. Such execution of the conveyance deed is carried out by the promoter within three months from the date of the issue of occupancy certificate (OC). In addition to that, the builder is also under the obligation to provide the transfer of the undivided proportionate title of the common areas to the association of allottees.
Without the transfer of title, the buyer is not considered as the lawful owner of the flat/apartment even if he has the possession of the said property.

Legal Remedies under RERA
Builders may refuse the registration of the real estate property if the construction is pending even after crossing the date of completion or due to some mala fide intention. In such a case, where the builder is delaying or refusing to register the flat, the home buyer has the following legal remedies:

  1. Sending a legal notice
    The buyer shall send a legal notice to the builder, asking him to register the property under the name of the buyer. This is a strategic move that will establish that the builder is intentionally refusing or delaying the registration of the flat in case the matter is brought to the notice of the Real Estate Authorities, Consumer Forums, or Civil courts, as the case may be.
  2. Filing a formal complaint under Real Estate Regulatory Authority
    For the State of Uttar Pradesh, the Act enables the aggrieved home buyers to file a complaint under section 31 of the Act in case the builder/promoter fails to perform his obligations listed under the Act.

Under section 17(1) the promoter must execute a registered conveyance deed of the property and in the failure of doing so, the aggrieved home buyer can approach the U.P Real Estate Regulatory Authority and file a complaint by submitting ‘FORM M’ along with a fee of rupees one thousand in the form of a demand draft (DD). The buyer can further seek interim order to restrain the builder/promoter from forming any third party right over the said flat.

According to section 13(1) of the Real Estate (Regulation and Development) Act 2016, it is the obligation and duty of the promoter/builder to register the agreement of sale if the buyer has paid an amount greater than ten percent of the total cost of the apartment. If the buyer does not comply with this provision, a buyer can file a case under the Regulatory Authority of the state in which the project is situated in the same manner as described above.

Legal Remedies under the Consumer Protection Act, 1986
The Hon’ble Supreme Court in Pioneer Urban Land & Infrastructure Limited vs. Govindan Raghavan [Civil Appeal No. 12238 OF 2018] cited judgement of Lucknow Development Authority vv. M.K Gupta [Civil Appeal No. 6237 of 1990] and held that when a person avails the services of a builder for the construction of an apartment or a house and pays consideration for the same, it is a “service” as defined under section 2(o) of the Consumer Protection Act, 1986. Thus, a homebuyer also has an alternative option of filing a consumer case before the various Consumer forums established under the Consumer Protection Act, 1986 as non-registration of sale/conveyance deed amounts to deficiency of service under the Act.

A home buyer shall file a consumer complaint under the provisions of the Consumer Protection Act, 1986 praying for the registration of the property. The buyer can further seek interim order to restrain the builder/promoter from forming any third party right over the said flat. Lastly, the buyer can also seek compensation for the mental harassment and torture undergone by the buyer.

A buyer must always ensure that the purchased flat is registered in his name to ensure that he is the true owner of the flat. A builder may refuse the registration to a home buyer in order to save the registration costs/fee or for any other reason. Getting the required documents registered is the right and duty of the buyer, an in case a buyer denies doing so, a buyer should approach the Regulatory Authority or the Consumer forum to seek performance of the same.
Authored By: Adv. Anant Sharma & Vaishnavi Srivastava

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