Deemed Conveyance without OC – Is it really a reason to rejoice?

Stuti's picMs Stuti Galiya,  (Solicitor & Advocate)

By Accommodation Times Bureau

 

Conveyance of land and its advantages

Conveyance is a document which is executed to transfer title of the land on which a particular building has been constructed in favour of the housing society or any legal body of the flat purchasers. Conveyance of land in favour of the society is important for the following amongst other reasons:

(a)           It enables the society to get valid and legal title to the land and the structures;

(b)          Society can utilize the additional floor space index (FSI) in case of possible change of development control regulations;

(c)           Society can redevelop the property by constructing new building using Transferable Development Rights (TDR) and members can get additional area in such a case.

Deemed conveyance and Circular dated 18 September 2017 issued by the Department of Housing, Government of Maharashtra

According to provisions of Section 11 of the Maharashtra Ownership Flats Act (MOFA), the promoter (builder/developer) is legally required to convey the land and the building within 4 (four) months of formation to the society or any legal body of the flat purchasers. Many builders, however, do not transfer the title of the properties to the societies in the hope of availing more floor space index (FSI) that may become available, or to explore opportunities to redevelop the flats. To stop misuse by builders, MOFA was amended in 2008 to enable societies to get deemed conveyance on their own (where the builder refuses to cooperate).

Till now, for obtaining deemed conveyance, one of the mandatory document, that was required to be submitted to the regulatory authorities amongst others, was an occupation certificate (OC). The Department of Housing, Government of Maharashtra has by its circular dated 18 September 2017 relaxed this requirement and clarified that it is now not necessary to obtain OC to apply for deemed conveyance.

The circular on the face of it appears to be a reason to rejoice, considering that obtaining conveyance of land in favour of the society has various benefits which have already been mentioned above. Conveyance is mandatory for society who intend to go for redevelopment. Without conveyance the society cannot acquire redevelopment. This move will particularly help residents of old buildings who are looking for redevelopment who will now be able to ensure conveyance of land without occupation certificate.

Possible issues with the Circular

There are certain technical nitty gritties in the circular which should not be overlooked. For example, the circular mentions that the society needs to submit an undertaking to the authority that all the liabilities related to the building regulations shall be the responsibility of the society. Further, where a society decides to apply for deemed conveyance, one of the document that is required to be submitted is to provide proof of having taken possession of the flats, such as proper tax paid receipt.

In this context, it may be pertinent to note that under Section 353A of the Mumbai Municipal Corporation Act, 1988, it is illegal to occupy or use any building or part thereof, unless and until an occupation certificate is received. This has also been affirmed by the Bombay High Court in various cases, including the latest case of Dar Al Mawadda buiding in Nagpada, in which case the Bombay High Court on 5 May 2017 had ordered 4 floors of the building (which did not have occupation certificate) to be taken over by court receiver.

In such a situation, where the Mumbai Municipal Corporation Act itself makes possession of flats without occupation certificate illegal, the regulations relating to deemed conveyance appear to go beyond law and requires societies to take possession and provide proof of such possession. Further, the circular requires to provide an undertaking to the authority that all the liabilities related to the building regulation shall be the responsibility of the society. In many cases, the occupation certificate is pending because of technical deficiencies on the part of the builder, which is impossible for the society to rectify. In such a case, if the society applies for deemed conveyance under this route, the housing society primarily takes on itself the obligation to obtain occupation certificate, thus providing an opportunity to the builders to escape from their primary obligation. In such situations, it is highly possible that the society will never be able to obtain occupation certificate (as the builder will shirk his responsibility) and the possession will always be illegal.

With all this, obtaining conveyance without occupation certificate may seem good on paper, however practically may not seem to make much sense (except in case of redevelopment of old buildings or in case where the building itself collapses). This is because where the possession of the building itself is illegal and questionable, one may really not be bothered about the FSI and TDR on the land.

Further, under the Real Estate (Regulation and Development) Act, 2016 (RERA), the promoter is under an obligation to execute conveyance in favour of the allottee/association of allottees within a period of 3 (three) months from the date of occupancy certificate. However, there is no corresponding provision for deemed conveyance under RERA. Accordingly, it is not clear as to how the residents would benefit of the Circular where there is no corresponding provision in RERA relating to deemed conveyance (unless where the state amends the law in this regard). In such case, there would hardly any benefit of the Circular to new projects registered under RERA.

A vicious circle is created because of contradictory laws and practices adopted at the regulatory authorities’ end. For example, when the possession is illegal without occupation certificate, then such illegal possession is itself encouraged by the regulatory authorities by providing electric supply, water supply, allowing such societies to be registered without occupation certificate, etc. On one hand, the Municipal Corporation issues notices to occupants regarding illegal occupation and on the other housing societies are allowed to be registered and deemed conveyances is granted to such societies, without occupation certificate. All these loopholes and contradictions provide an opportunity to defaulting builders from shirking their responsibility to obtain occupation certificate and leaving the residents in the lurch of ambiguities and constant threat of potential demolition.

Conclusion

The entire system needs to be blamed for the chaos, the builders who violate the norms; the Municipal Corporation for sitting on the files for so many years and the occupants who buy the flats despite knowing that they were unapproved. Having said this, in this entire game, finally it is the flat buyers who are ultimately penalized. These flat buyers sometimes may genuinely be not aware of the violations. In many cases, it is not possible for the flat buyers to understand the real reason for occupation certificate not being granted. Based on applications filed under the Right to Information Act, there have been several cases, where the BMC files do not show any record of refusal or rejection, even after years of completion of construction. The BMC is not able to provide information regarding status of occupation certificate.

 

The Government should ensure that in case where the occupancy certificate is refused or rejected, the reasons for refusal or rejection should be communicated to the owner in writing and should also be easily made available for inspection.

 

To protect the interest of the flat buyers, it is important if the Government consider putting a system in place to track the developers who violate rules and hand over possession to buyers without first procuring the mandatory occupation certificate. In many cases, builders hand over possession of flats on the pretext of fit outs. Such tactics by the builder should be discouraged. Government officials should be held accountable when buildings are occupied without occupancy Certificates. Further, periodic inspections of under construction buildings should be undertaken so that the builder can be held liable at the beginning of the construction itself instead of waiting till the end (where the flat owners would have parted with almost all the money). Government should ensure strict adherence to timelines for issue/rejection of occupancy certificate. Erring government officers should be made strictly accountable in this regard.

 

Stuti Galiya

Solicitor & Advocate

 





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One thought on “Deemed Conveyance without OC – Is it really a reason to rejoice?

  1. Hi, Ms Stuti, Very Good Article & information on deemed conveyance !!

    Have a Query on Parking space buying & selling in Resale in a Regd. Society among members. Is there someone who can guide on the same ?

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