Published On: Fri, May 20th, 2016

Deemed Conveyance as per the provisions of MOFA

KK-Ramani

By Accommodation Times News Service

By K K Ramani, (Advocate)

The Section 92 of Central Act has repealed the Maharashtra Housing Act.  The Maharashtra Housing Act 2014 itself having been repealed, MOFA will continue to operate. State Act MOFA and Central Real Estate Act both will be enforceable simultaneously in the State of Maharashtra and might open up an area of judicial intervention in reconciling the provisions of the two Acts. There are some provisions in the Central Act, which are not found in MOFA. Similarly, there are certain provisions in MOFA which do not exist in Central Act. Both the Acts may have provisions dealing with a particular matter but their approach may not be similar. As per section 89 of Real Estate Act, if there is inconsistency between the two Acts, the provision of Central Act shall prevail.

Introduction:

Title of the property is very basic to all activities of development. Section 3 of MOFA which casts duty on a promoter to disclose certain vital information to the prospective buyers of flat, requires under clause (a) not only to make full and true disclosure of the nature of his title to the land but require such title to be duly certified by an Attorney at Law, or by an Advocate of not less than three years standing. The title is to be duly entered in the Property card or extract of Village Forms VI or VII and XII or any other relevant revenue record. Disclosure is required about any encumbrance on such land including any right title, interest or claim of any party in or over such land. These are essential disclosures enabling the purchaser to purchase with eyes open and with full knowledge of facts affecting his title in the property he is going to buy. The contravention of these provisions visit the promoter with imprisonment up to three years or with fine or both in addition to the disqualification he may incur for a period of five years in undertaking construction of flats.

Conveyance of Title:

A person who does not have valid title cannot pass on a valid title to the purchaser. Section 11 of MOFA, therefore, requires him to complete his title before conveying the same to the society/ company. After perfecting his title, the promoter is required to convey the title in land and building to the society or the company or the association of flat takers and also to deliver all documents of title relating to property which may be in his possession.

Even though the obligation of the Developer under the provisions of Section 11 to convey the title of the property to the organization of flat buyer is also contained in the agreement for sale executed between the buyer and the developer/promoter, the obligation basically flows from the provision of the statute and any action to enforce the same is primarily action to enforce the statutory obligation rather than a contractual obligation. The issue regarding the nature of the suit filed for enforcing the obligation by way of prayer for direction to convey the land and building came for consideration by the Bombay High Court in Brindavan (Borivli) C.H.S. Ltd.Vs. Karmarkar Brothers and Others in the context of the valuation for court fee purposes. The argument that the suit is governed by the provisions of Sections 6(xi) of the Bombay Court Fee Act which provides for valuation in a suit for enforcement of contract of sale was rejected by the court and the court fee of Rs.300/- paid on the basis that no monetary valuation is possible in the nature of suit was held justified on the ground that the principal relief which the plaintiff is claiming relates to the performance of obligation under the statute and not to the specific performance of a contractual obligation. By making reference to the provisions of Section 12 and 13, the court held that MOFA is a self contained legislation laying down the duties of the promoter and the consequences for non-compliance with such obligations.

The provision aforesaid was in a large number of cases observed more in breach than compliance. The unscrupulous promoters who did not have perfect title over the land or who dishonestly wanted not to part with ownership rights, avoided forming a cooperative society etc. or having formed such society/company avoided conveying the title in favour of such organizations as long as possible so that the benefits to the land like increase in FSI, if any, in future and that of additional TDR FSI as per the Development Control Regulations can be enjoyed by them.

When such maladies became rampant, the Government came with an Amending Act viz. Maharashtra Act No. 4 of 2008 whereby the promoter was obligated to file with the Competent Authority, within the prescribed time a copy of the conveyance executed by him. The Amendment Rules of 2010 prescribed such time as a period of two months from the date of execution.(Rule 9)

Deemed Conveyance:

The Act of 2008 also introduced the concept of deemed conveyance to take care of the situation in which the recalcitrant promoter fails to execute the conveyance even at the risk of prosecution and other consequences. This was done by inserting sub-section (3) (4) and (5) to Section 11 of MOFA. Sub-section (3) provides that if the promoter fails to execute the conveyance in favour of the society or the company or the association, the members of such organisation may make an application in writing to the Competent Authority (CA) accompanied by the true copies of the agreement for sale executed by each individual member or the occupation certificate, if any, for issuing a certificates that such society/ company/ association is entitled to have an unilateral conveyance executed in its favour and to have it registered.

The concept of unilateral deemed conveyance remained an almost dormant provision mainly for want of notification of Rules laying down the procedure and essential contents of the application to the Competent Authority. This has now been made good by notification of the amending Rules under MOFA vide Notification No. FOB 2008/CR 170/PR II dated 27th September, 2010.

Procedure for Deemed Conveyance:

Rule 12 introduced vide notification dated 27th September, 2010 has prescribed Form VII in which application under Sub-Section (3) of Section 11 is to be made for issue of a certificate that such society/company/AOP is entitled to have unilateral deemed conveyance in its favour. References to Form VII bring out the following essential facts/ information to be furnished in the application.

Following documents which are desired by the competent authority for this purpose may be enclosed with the application for certificate of entitlement for unilateral deemed conveyance and having it registered:

i.       The application should be in Form VII prescribed in Maharashtra Ownership Flats (Regulation of the Promotion of Constructions, Sale, Management and Transfer) Rules, 2010.

ii.      The prescribed court fee stamp of Rs.2000/- should be affixed.

iii.    The application should be notarized.

iv.    The certified copy of the resolution for the application for deemed conveyance.

v.     True copy of the one registered agreement for sale executed with the Promoter by the Flat Purchaser.

vi.    The authority letter on stamp paper of Rs.100/0 in case of authorized person or Vakalatnama.

vii.   The latest property Card

viii. The building / structure plan with area statement approved by local authority + tenement statement / IOD Certificate / Commencement Certificate / Occupation Certificate (if any) / Completion Certificate.

ix.    The actual list of flat and/or shops and/or garages etc. and the details of payment of stamp duty and registration with the proof of stamp duty and registration.

x.     The Architect’s Certificate (wherever necessary) regarding the plan approval and use of FSI

xi.    The list of buildings / societies and their addresses in the complex (if applicable)

xii.   Copy of legal notice sent to the promoter and interested parties to execute the conveyance deed in favour of the applicant.

xiii. The affidavit from the authorized representative / the secretary of the society that all the documents submitted are true, and the affidavit by the secretary of the society or otherwise stating that the applicant has not approached any other forum for Deemed conveyance.

On receipt of such application, if the CA after making such enquiries as it considers necessary, after verifying the authenticity of the documents submitted and after giving the promoter a reasonable opportunity of being heard feels satisfied that it is a fit case, he will, within a reasonable time not exceeding six months, issue a certificate to the Sub-Registrar or any other appropriate Registration Officer under the Registration Act 1908 certifying that it is a fit case for enforcing unilateral execution of conveyance deed conveying the right, title and interest of the promoter in the land and building in favour of the applicant as deemed conveyance.

Execution of Conveyance Deed:

A draft conveyance deed/Declaration which is proposed to be executed in favour of the applicants is required to be drawn up and submitted. The conveyance deed needs to be properly drafted giving complete details of property, agreements, payment of stamp duty, registration and all other details of FSI utilized in the building, utilized outside and brought from outside. The Rules have not prescribed any specimen conveyance deed.

When such certificate of fitness of the case along with unilateral instrument of conveyance is produced before the Sub-Registrar or the concerned appropriate Registration Officer, he will issue summons to the promoter to show cause why such unilateral instrument should not be registered as deemed conveyance. Opportunity of being heard will be provided to the promoter as well as the applicants and on being satisfied about the case being fit for unilateral deemed conveyance, the Authority will register the instrument as deemed conveyance.

Levy of Stamp Duty on the Deemed Conveyance Deed:

The Circular issued by the Inspector General of Registration and Controller of Stamps, Maharashtra State dated 12.4.2012 directs -

2.1)     The matters of adjudication of Deemed Conveyance should be done on priority basis by the Collector of Stamps and if necessary, he can form a separate group of officers and employees for the same.

2.2)      After the Deemed Conveyance is submitted for Adjudication, the Collectors of Stamps will make an enquiry of the last members included in the Deemed Conveyance with a view to charge stamp duty and will consider following two procedures:-

2.2.1)  If the last member purchased the Flat / Shop / Tenement before the issuance of this Circular, then whether such last member has paid the proper stamp duty or not will be considered and accordingly decision will be taken. 

2.2.2)  If the last member purchased Flat/Shop/Tenement after issuance of this circular then with a view to avoid the misuse of the provision 2.2.1, as above, the Collectors of Stamps will make an enquiry of all transactions after the issuance of this Circular and ensure that they are properly valued and if necessary, shall recover the stamp duty with penalty.

It is further clarified that in respect of matters of 2.2.1, as above, though the Stamp Duty paid by the last member only is to be considered, the collector of stamp will make an entry in the separate register book of earlier transactions and if required, will make an enquiry of it. However, the adjudication of Deemed Conveyance will not be withheld.

2.3)     If the Agreements are executed prior to 10.12.1985 and the Deemed Conveyance is to be executed for the benefit of such members, then in such cases;

2.3.1)  those who have registered their agreements, with respect to them, the true market value at the time of execution will be considered.

2.3.2) those who have not registered agreements, in their cases,

2.3.2.1) If the consideration had been paid to the Developer by cheque on the date on which the document was executed, then the benefit of true market value of the time when the document was executed can be given on presenting authorized certified copy of the bank pass book / statement, as a proof of execution.

2.3.2.2) If the evidence regarding execution mentioned as above is not available, then the first government documentary evidence such as telephone bill, electricity bill, Municipal Assessment bill and list of the members submitted to the Registrar at the time of registration of the co-operative society, certified by him, whichever is available will be considered and the benefit of true market value of that time will be given in such matters.

2.3.2.3) However, if any evidence, as mentioned in 2.3.2.1 & 2.3.2.2 is not available, then true market value of the date on which the Deemed Conveyance is submitted for adjudication will be considered.  

2.3.2.4) If the agreements or similar documents of the members which are included in the Deemed Conveyance are pending with the Sub-Registrar, Assistant District Registrar and Collector of Stamps, for any reason, such agreements / documents should be compulsorily presented/submitted immediately on demand in the adjudication proceedings, so that the adjudication of the Deemed Conveyance is not hindered.  Similarly, if there is any balance FSI, then it is necessary to value the same as per current market rate and the stamp duty should be recovered accordingly.”

Registration of Deemed Conveyance -

After the adjudication and certification of stamp duty on Deemed Conveyance, the same shall be submitted to the Competent Authority for execution.

On submission of the Deemed Conveyance for execution, the Competent Authority shall himself or through the officer authorized by him execute the same for and on behalf of the Promoter / Builder.

The Deemed Conveyance shall be presented for registration with the office of concerned Sub-Registrar within the period of 4 months from the date of execution. If there is any delay in presenting the same, the penalty would be charged according to Rules.

On submission of such document for registration, the Registering Officer shall complete the procedure of registration as per Registration Act, 1908.

Registration Fee

If the Agreements of all the members in the Deemed Conveyance are already registered and the necessary registration fees have been paid on such agreements, the Deemed Conveyance shall be considered as Supplementary document to such agreements and the registration fee of Rs.100/- shall be charged.

If some of the members in the Deemed Conveyance have already registered their respective agreements by paying necessary registration fee, but, the documents of the remaining members are to be registered for the first time, in such cases if the Deemed Conveyance is for the benefit of such members, then the collectively true market value of the property to be transferred should be considered and accordingly registration fee should be charged at the rate of 1 % and the registration fee of Rs.100/- should be added by considering this as a supplementary document for those who have registered their agreements earlier. In any circumstances, the registration fee should not be charged more than the prescribed limit of maximum Rs.30, 000/-. It should be noted here that the stamp duty is charged on each tenement (unit) and registration fee is charged on every document.

Mutation in property card :

 Having registered the conveyance deed steps are required to be taken for mutation of name of the society in the property card for which application is to be made to the City Survey Officer/Talati. Under the prevailing practice the city survey officer was required to give a notice to the original owner of the land or the promoter or the developer whose name appears in the property card and hear him before effecting the mutation. The Government of Maharashtra has by circular No. 442/y 1 dated 23/11/2012 has dispensed with the requirement of giving such opportunity and accordingly mutation can be effected on the basis of conveyance deed without any further formality.

 

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