Delaying Property Registration? Trouble Awaits You!

It often starts sounding like a rhetorical exclamation when you are again and again told that you are not the legal owner of your property till you register the same in your name. Real estate developers in Noida and Ghaziabad, for instance, have been offering possession of units to buyers without registering the same. In hopes of postponing this expense, buyers are also willing to take possession of units without following the legal path laid in this regard. You are not going to refuse taking possession of the property only because it is not registered in your name yet, are you? Also, if you are being offered a good deal by a builder, you would lose no time and grab it even if the property is being sold to you only through an allotment letter. The registration can take place later, isn’t it?

Fact of the matter is, you are making a big mistake if you are doing it.  

A recent ruling by the Maharashtra Real Estate Regulatory Authority (MahaRERA) only further established that fact. While giving its ruling in a case, the sector regulator has ruled that producing a registered sale agreement is must if a buyer wants to claim interest from a builder in case the latter has delayed possession.

In the present case, the buyer had bought a flat from the builder in Mumbai’s Mira Road project in June 2013. At that time, the builder only issued an allotment letter to the seller. The possession of the flat was promised in 2017. In the meantime, a substantial amount of the transaction value was paid by the buyer to the builder. Citing delay, the buyer moved court, seeking compensation.

In such a scenario, the builder should have been made to pay interest for every month of the delay till the possession under the provisions of the Real Estate (Regulation & Development) Act, 2016. The law states that the rate of interest is two per cent above State Bank of India’s marginal cost of lending rate.

However, the authority did not extend relief to the buyers. Why? The buyer had relied on an allotment letter to make the purchase and the contract between the buyer and the seller was not registered.