Relative Dependence of NRI’s

Relative Dependence of NRI’s
By Vimal Punmiya LLB (Gen), FCA

Due to falling off geographical barriers and limitations, many investors are exploring into investment options like real estate in for away places. Many multinationals are investing in properties in India for good reasons. The laws (FERA has become FEMA) have become simplified to facilitate entry of foreigners and NRIs of course are returning to their bases. Also property prices have stabilized, RBI has done away with complicated rules. The returns on property are the highest in Mumbai compared to any other city in the world.
How much should one depend on relatives and friends ? Can wrong deals spoil relationships or fruitful deals ? Attorney Vimal Punmiya takes time off “the courts’ to address an issue which anyone of us may face.
Q. Many NRIs put rust on relatives and friends when dealing with properties in India. Sometimes due to unfortunate or unforeseen reasons create problems especially when the deal does not come through or it comes through with plenty of hurdles. Should one entrust relatives with the problem of jeopardizing the relationship or deal ?
A. NRIs in general tend to get intimated by laws in India. Money related matters ideally should not be co-related with relationships / friendships. But sadly this is not always done. This may lead to jeopardizing the relationship. In my opinion it is better not to entrust relatives / friends to deal with. One can directly deal with builders who are more accessible and one can deal on a one to one basis.
Q. Is it not better to approach an agent who will be neutral and will be professional in dealings ?
A. Yes, most definitely it is better of engage an agent who is duly qualified, as he will be neutral and professional in his dealings.
Q. Should relatives with some knowledge of real estate only be allowed to do deals on one’s behalf ?
A. If one has to deals through relatives then only relatives who have a fair knowledge of the real estate should be allowed to do the deals but with requisite professional assistance.

Q. Have there been any cases when NRI’s dependent on relatives have been cheated ?
A. Yes, quite a few NRI’s have been cheated by their own relatives. In one such instance a friend who had the power of attorney is his in his favour transferred the flat in his own name. In another case a friend purchased a flat from NRI at Rs. 75 lakhs when the market value was two crores. The NRI was kept in dark about the actual market value and when he went on blind faith and sold the flat to his friend.

Q. What if the relative is a broker, should one stick to professional ethics and do all proper documentation no matter how dependable they are ?
A. As stated earlier money related matters should be kept separate from relationships. Thus even if the relative is a broker one should do all requisite documentation no matter how dependable he may be to avoid misunderstandings and better feelings.

Q. At what level should dealings be taken over personally to avoid misunderstandings ?
A. Deals in properties have a lot of formalities. However once the sale price id fixed, the finalisation of the entire transaction should be done by the NRI personally. All documents should be signed by NRI’s.

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