‘Wrongful methods adopted disturbing market dynamics’
Alarmed at the sale of residential/commercial units being sold on social media before requisite permissions, the Confederation of Real Estate Developers Association of India (CREDAI)-Hyderabad has appealed to the TS Stamps & Registration department not to take up registration of undivided share of property for real estate projects as it goes against its own established rules.
Undivided share of land
Association president P. Rama Krishna Rao and general secretary V. Rajashekar Reddy pointed out that various builders and individuals are offering mainly ‘undivided share’ (UDS) of land in projects to be launched/constructed at discounted prices by structuring the purchase of the apartment/unit in residential or commercial space as a purchase of the UDS of land over which the real estate project is being or is to be constructed.
Explaining the ‘modus-operandi’ in a memorandum submitted to the Commissioner and Inspector General of Stamps & Registration, they said a piece of land is identified for building a residential or a commercial project, money is raised by selling apartments at a discounted rate to buyers, the builder concerned enters into an agreement on time period for delivery of apartment but instead of executing an agreement of sale in relation for the sale of the apartment, all the apartment owners are pooled together to form a group of buyers for UDS.
Sale consideration for the apartment is shown as sale consideration for the UDS purchased by the customer and is paid to the owner of the land, following which the apartment buyer is made to execute a ‘Development agreement-cum-general power of attorney’ in favour of the builder to take up the project.
“The throw-away price at which the UDS of land is being sold is disturbing market dynamics because of wrongful methods being adopted as huge amounts of money is being diverted for other projects,” they claimed.
No legal remedy
Further, since the customers are ‘land owners’, they cannot approach any forum if the project is delayed or not launched at all as it is outside the TS-RERA purview.
Under C&I.G. Memo No.MV1/8541/96 dated: 15-09-1997, any sale of undivided share in any form before the project is commenced and without construction shall attract the appropriate stamp duty and registration fee. Hence, selling the UDS of land, directly or indirectly, through unregistered documents amounts to circumventing the existing laws. Appropriate steps should be taken as the process being adopted has no registration of documents under Stamps and Registration Act, and is also causing loss of revenue to the government, they added.
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