Understanding - Deemed Conveyance

INTRODUCTION:

Deemed Conveyance is a hot issue today, as most of the flat-owners of the newly constructed apartments do not have their sale deeds or conveyance deeds or even names in the 7/12. Mostly in the newly constructed buildings the builders provide for making a housing co-operative society to which they shall transfer their interest in the property. Then the builders make the society but do not pass on the title of the property (read ownership) to the flat-owners or the society till he has sold all the flats in the building. Thus the builders are benefiting from the buyers lack of awareness and information.

To curb this practice amendments were carried out in the Maharashtra Ownership Flats Act, 1963, in 2008 to appoint a Competent Authority (Registrar of Co-operative Housing Societies) to hear the grievances of such apartment owners and to safeguard the interest of such societies.

MEANING OF DEEMED CONVEYANCE:

Conveyance means to transfer or convey anything to another person. In the legal sense "Conveyance" refers to the transfer of ownership or other interest in the property to the other party. Conveyance Deed is a document executed to transfer the title of land and building in favour of Society or Association of Persons (AOP). A deemed conveyance means when the builder/ promoter/ developer of the project refuses to sign the conveyance deed the court can sign the same on behalf of the builder and record the same in the government records.

WHEN IS THERE A NEED FOR DEEMED CONVEYANCE:

In a situation when a promoter or owner of residential premises/ buildings does not transfer/convey the ownership of the flats to the housing society or association of persons (AOP), the society or AOP can make an application to Registrar of Co-operative Housing Societies, to transfer the ownership of the said flats to them. This process is carried on through Deemed Conveyance of the title of the buildings and land in favour of the Society or AOP without the need of the builder to do so.

IMPORTANCE AND PROVISION OF LAW ON CONVEYANCE:

As per the Housing Society bye-laws, the main objective of formation of the Society is to obtain the Conveyance; and if Conveyance is not given by the Builder within four months from the date of registration of the Society, a case can be filed against the Builder to obtain the Conveyance. As per Section 13 of Maharashtra Ownership Flats Act, 1963, failure to give Conveyance is an offence and the Builder can be imprisoned upto 3 years or fined or both.

ADVANTAGES OF CONVEYANCE:

1. Getting a proper and legal title in the name of the Society.

2. Retaining the additional FSI as per the Government announcements.

3. Property will be free and marketable.

4. Society can raise the loans for repairs and reconstruction by   mortgage.

5. Permission from planning authorities is possible if the building has to be reconstructed at a later date due to dilapidation of the structure due to age or by earthquake.

6. Society can take the benefit of TDR.

7. Members can receive compensation from Builder on redevelopment of the building.

DISADVANTAGES OF NOT HAVING CONVEYANCE DEED

1. Even though you have purchased ownership flat, you are not the owner of the land and building.

2. In the event of a building collapse or damage to the building, you cannot reconstruct the building without the permission of the Builder / Land owner.

3. The Builder /Developer may mortgage the property purchased by you as he is the legal owner and holding the Title Deeds of the Property.

4. The Builder / Developer may transfer the FSI / TDR to his other projects and enjoy the commercial benefits, depriving the flat purchasers / Society of its legal entitlement.

5. The Builder may make profit by sale of open spaces, gardens, terrace, parking space belonging to the Society.

6. The Builder may demand a huge amount from the Society, if Conveyance is sought by the Society after a lapse of many years.

7. The Builder may sell the entire Development Rights and the Legal Rights on the land to third party and create a third party interest in the Property and the Society will have to incur a huge amount to clear the same

CONDITIONS PRECEDENT FOR GETTING A DEEMED CONVEYANCE:

There are certain important conditions which need to be fulfilled to go ahead for deemed conveyance, some of them are:

1. Atleast 60 % of the flats in that scheme should be sold.

2. A Co-operative Society or Association of Persons should have been formed of the flat-owners and atleast 3-4 months should have been passed since then.

3. There should be communication between the builder and the society or AOP regarding Deemed Conveyance wherein the builder should have made a promise of completion of conveyance or refused to do the same.

PROCEDURE FOR FILING AN APPLICATION FOR DEEMED CONVEYANCE:

After the above mentioned conditions are fulfilled, the following steps shall be taken:

Write a letter /email to builder/ promoter requesting him to provide a draft of the SALE DEED/ CONVEYANCE DEED or providing the draft to him and requesting him to sign the same.

If the Builder rejects or postpones the same, send him a legal notice through an advocate requesting for the same.

Even then if the builder refuses, File an application with the Registrar of Co-operative Societies together with all the relevant documents and 2000 Rs. Court stamp fees.

Self-attestation all the copies enclosed (by the society)

The Competent Authority will assess the application and if any documents are missing he will ask the applicant to correct the mistake within fifteen days.

Thereafter, notice would be sent to the promoter and the land owners.

After receipt of the notice by the land owners and the promoters, the authority will hear both parties in the first hearing and ask both parties to produce further evidences in next hearing.

Thereafter, second hearing would be held and if the builder or landowners do not attend both first and second hearing then the authority will pass an exparte order.

Thereafter, the third and final hearing would be held and the authority would be held and order would be passed unless a legal question is raised.

Normally the whole process is completed within a period of 6 months.

DOCUMENTS REQUIRED:

Further, the application required to be made with the Registrar shall be accompanied by copies of certain 20 odd documents which the society shall have to prepare or get prepared. The following are some of the documents required :-

1. 7/12 Extract

2. City Survey Map

3. N.A Order

4. Certificate under Urban Land Ceiling Act, 1976

5. Draft of sale deed  etc.

After, the Application is heard by the Registrar he may grant an order for deemed conveyance which shall then be produced before a court for execution and hence the conveyance may be done by a court order.

Alkesh Agrawal

Partner, ARP Associates

Email: alkesh@arpfirm.com