Content of an agreement for the sale

Know about the elements need to be included in the agreement for the sale of a residential apartment:

The following particulars should be included in such an agreement:

* The liability of the promoter to construct the flat according to the plans and specifications, approved by the local authority if the building is to be constructed,
* The date by which the possession of the flat is to be handed over to the purchaser;
* 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 purchaser of the flat; and the intervals at which installments may be paid;
* The nature, extent and description of the limited common areas and facilities;
* The percentage of undivided interests in the common areas and facilities, appertaining to the flat that is agreed to be sold;
* The statement, pertaining to the permitted use of the flat and restriction of its use, if any;

Every agreement for the sale of a flat should contain these minimum particulars. Such agreement should be accompanied with the true copy of the

* Title Certificate by an Attorney-at-law or Advocate;
* the Property Card or extract of Village or any other relevant revenue record, showing the nature of the title of the promoter to the land on which the flats are constructed or, are to be constructed;
* the plans and specifications of the flat, as approved by the Municipal Commissioner.
* The agreement for sale is required to be registered.

Supreme Court Eyes on False Advertisements Given by Real Estate Developers

Every day you can see so many advertisements of pre-launch offers and schemes by real estate developers in the newspapers. Now, the Supreme Court has started looking onto the matter to restrict the developers to cheat the customers by providing false information and offers about the plots and buildings. The SC has directed the state governments to take action on the petition for the amendment in laws to protect people from being cheated by ambiguous and forged advertisements given by real estate developers.

The Supreme Court Bench, headed by Chief Justice K G Balakrishnan and comprising Justices P K Balasubramanyan and R V Raveendran, was hearing a Public Interest Litigation (PIL) on that matter. Sarankshak, an NGO, had filed the PIL on the eye catchy and false advertisements given by the builders. The SC Bench has directed all Union Territories (UTs) also to deliver their response on such matter and further they may ask the Centre to reply on the similar kind of matter too.
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The petition clearly said that several builders defrauded the people of their hard earned money through many false and bogus advertisements. In many cases, several advertisements issued by builders and in reality they did not even own any land.

K S Rana and Anil Karnwal, advocates from the petitioners’ side, have sought an amendment in the existing provision under Section 420 (cheating) of the Indian Penal Code. They told to the bench further that the Law Commission of India, on a previous occasion, had suggested in a report that there should be a sub-section as 420 (b) under IPC 420. This may be an important development for stop making false advertisements and its publication as well.

In its petition, the NGO has sought court’s direction to frame new guidelines at national level for real estate developers and builders in issuing false public advertisements. It said further that the court should ask the developers and property dealers to submit all property-related papers and the name of publications. That would be helpful for the property buyers to cross check the claims made by the developers in the advertisements.


Source: indiadaily.org

NRI Taxes in Budget 2007

India's latest budget has little to offer to NRI investors. If anything, the tax burden on them has only gone up.

More Indians are paying more taxes, the economy is growing at over nine percent, exports are booming and foreign reserves have touched a new record of $180 billion. So Finance Minister P. Chidambaram focused on the poor to lower prices, provide better education and healthcare, offer selected insurance cover and improve infrastructure.

However, NRIs, like all Indians, will pay less income tax but also get lower returns on Indian stocks.

NRIs who file income tax returns in India will benefit marginally as the tax exemption has been raised by Rs.10,000 to Rs.110,000; to Rs 145,000 for women and Rs.195,000 for senior citizens. However, the education cess has increased from two percent to three percent on all direct and indirect taxes to finance higher education.

NRI tenants occupying any property for commercial use will now have to pay service tax of 12.5 percent. This increases their cost of doing business in India. NRI landlords will not be affected, as they will collect this service tax from their tenants.

The budget did not make any provisions for greater individual real estate investment. To attract NRIs to invest in real estate, the stamp duty should be uniform across the country and reduced considerably. NRIs remit funds through legitimate banking channels and so they are at a disadvantage when the seller demands the majority of the price in cash as the sale price is a fraction of the total price paid for a property. This will bring down, if not stop, cash changing hands when buying and selling property that is commanding steep prices in India today. Since this is not strictly a budgetary provision, the finance minister can issue guidelines to the state governments on this matter.

NRI promoters can enjoy a five-year tax holiday if they invest in economy hotels and convention centres in and around Delhi provided that these facilities are completed before March 2010 in time for the Commonwealth Games in the capital.

NRI promoters may also be taxed depending on their country of residence and its tax treaties with India. If an NRI takes over an infrastructure company through merger or acquisition, he/she will lose the exemption benefit granted earlier.

NRIs can heave a sigh of relief that their cash withdrawals under Rs.50,000 will not be notified to the authorities. To keep track of cash transactions and 'black money', a banking cash transaction tax was introduced last year for all cash withdrawals above Rs.25,000 and these transactions were reported to the Financial Intelligence Unit. This led the Income Tax Department to many money-laundering and 'hawala' transactions. This year, the limit of withdrawals has been raised to Rs.50,000.

The budget follows the old saying, "If it's working, don't fix it". India is progressing well so the poor should benefit. And NRIs are welcome to contribute - without VIP treatment.



Source: mangalorean.com

Budget burdens builders, buyers - Legal Aspect

Budget 2007 is largely unfavourable for the real estate and construction sectors and it could push up costs for the eventual consumers who are already reeling from rising housing loan rates.

Budget 2007 will be remembered by the real estate and construction industry for the wrong reasons. It is a budget that has pushed up cement prices thanks to increased levies; it is a budget that has made renting or leasing of commercial property more expensive; and it is a budget that offers little salve to the thousands of middle class housing loan borrowers who are facing an increase in their liabilities following the rising interest rate environment.

The only positive announcement is that the National Housing Bank will soon introduce a reverse mortgage product designed to help senior citizens without a secure source of income in the twilight of their lives. Institutions such as Dewan Housing Finance already offer reverse mortgage products and the proposal is not novel anyway. Let's examine each of these proposals individually.

Higher levy on cement

It is a curious case of the solution aggravating the problem. The Finance Minister, P. Chidambaram, in an effort to control the inexorable rise in cement prices, came up with the idea of a two-tier excise duty structure designed to reward those cement manufacturers selling at Rs. 190 per 50 kg bag with a reduction in excise duty to Rs. 350 from Rs. 400 per tonne. He then proceeded to increase the excise duty to Rs. 600 per tonne on those selling above Rs. 190 per 50 kg bag.

But cement manufacturers refused to take the bait and have increased their retail prices after the Budget to reflect the increase in excise duty. Post-budget, cement prices are up by Rs. 12 per 50 kg bag and till the time of going to press, the Government has not succeeded in getting cement companies to reverse the decision. They are already facing an increase in the cost of critical inputs such as steel and cement and with the increased levy now, cement is costlier.According to M.K. Sundaram of Chozha Foundation, cement price (per 50 kg bag) had risen from Rs.180 to Rs.190 to Rs.210 recently. "An increase of Rs.10-15 in per square feet cost ... it is inevitable," he says following the increase in duty. V. Sathya Kumar of LIC Housing Finance, agrees: "It will affect the affordability of the consumers ... per square feet cost will go up."

Service tax on commercial rentals

The Budget has extended service tax to those leasing and renting out commercial property and earning more than Rs. 8 lakh per annum from the same. The proposal has already generated opposition, as it will increase rental costs by 12.36 per cent across the board. The move is likely to affect those developing commercial property with the idea of renting or leasing them out, especially to IT/BPO outfits. Investment in commercial space to earn rental incomes, especially by venture capital funds and private funds, is just taking off in the country and their plans could suffer from this provision.

Consequently, investment in developing commercial space by those other than the users themselves is likely to slow down, especially if there is resistance from the tenants/lessees to pay the service tax.

"Rentals will go up significantly due to the proposed levy ... the lease rentals will go up by 12.36 per cent," explains Ramesh Nair, Director and South India Head of Markets-Corporate Solutions, Jones Lang LaSalle India, international property consultants. With developers and owners unlikely to absorb this tax burden, many of the occupants would be required to re-work their cost and expenditure strategy. Mr. Nair points out: "It [levy] would be an extra burden for the occupiers, who have already seen rentals go up by 10-20 per cent last year due to increase in land prices and construction costs."

Reverse mortgage

The Budget gives a welcome leg-up to a wonderful product called reverse mortgage that is designed to help senior citizens. Roughly, this is how it works. If you are above 60 years of age and own a property with a clear title you can mortgage it to a housing finance company in return for either a lump sum payment or monthly annuity payments for a given period of time, which is generally 15 years.

At the end of the period if both you and your spouse are alive, you can continue to live in the property but you will not receive any annuity payments. The spouse can continue to live in the property even after the death of the owner/mortgager. The mortgage payments can be settled on the death of both spouses in two ways.

One, the legal heirs can opt to repay the housing finance company the loan amount along with a pre-determined interest and secure ownership of the property from the housing finance company or the latter can sell the property and redeem the loan granted by it. Any value secured in excess of the loan amount will be paid to the legal heirs.

To be sure, it could be some time before the product is introduced by the major housing finance companies as a number of legal and taxation aspects need to be clarified by the Government, especially on the capital gains tax liability for the transaction.


Source: The Hindu

Real Estate and Laws in India

Dear readers as You all are aware that recently union government has announced the budget 2007. This budget definitly has some points for real eatate sector in the country.

Here are some excerpts from an interview of CNBC TV clarifying the present scenario of Indian real estate laws


What is the biggest challenge before the real estate?

Ashok Batra, service tax expert: The real estate industry has to bear the load of three types of taxes. The union government levies service tax. The government should withdraw service tax if it wants to give a fillip to this sector. The effective rate of tax should be reduced.

The real estate sector gives service tax at two stages. When the builder builds a house, he pays service tax on the bills of architects and those involved in the construction. Now he has to take service tax from those who buy his flats. The builder is treated as a contractor if the customer is buying a house during the period of construction.


Besides service tax, the industry pays two types of tax -- VAT and stamp duty -- levied by the state government. So the industry has to bear the load of three types of taxes.


What are buyers expecting from this budget?

Hitesh Oberoi, Director, 99acres.com: My site gets around 15 lakh hits from buyers each month. The market can’t satisfy their demand. They are primarily looking for low-cost housing in the range of Rs 15 to 25 lakh. It is hard to get a house in that price range.

These are major factors because of which the buyer is not willing to repose faith in the market. High stamp duty rates, absence of regulator and business professionals are some of the major factors why people are wary to enter the market. Buyers are not sure whether or not they will get the house for which they are paying.