The transfer of title means the act of transferring ownership of the property from one person to another. The promoters and the allottees must be aware of the RERA laws regarding the transfer of title. While purchasing a property from a developer, it usually requires a check the terms mentioned in the agreement to verify the ‘chain of title transfer,’ which is a crucial document.
Section 17 of RERA Act about Transfer of title
- Section 17 of the RERA Act, 2016 provides that a promoter of a project must-
- He must execute the registered conveyance deed in favor of an allottee along with the undivided proportionate title in the common areas to the association and,
- He must hand over possession of the same to the allottees and common areas to the association of the allottees, in the real estate project, and other title documents pertaining thereto – within a specified period as per sanctioned plans as provided under the local laws.
- The proviso to Section 17 states that in the absence of any local law, conveyance deed in favor of the allottee or association or competent authority, as the case may be, shall be carried out by the Promoter within 3 months from date of issue of occupancy certificate.
- After obtaining an occupancy certificate and handing over physical possession to the allottees in terms of sub-section (1), it must be the responsibility of the Promoter to handover the necessary documents and plans, including common areas, to an association of the allottees or the competent authority as per the local laws.
- The proviso says in the absence of any local law, the Promoter shall handover the necessary documents and plans, including common areas, the association of the allottees or the competent authority, within thirty days after obtaining the occupancy certificate.
Title insurance for protection
Even if the buyer manages to conduct detailed due diligence, there is always a chance of an error or not identifying a defect in the property title after RERA registration, which can jeopardize the interest of home buyers and lenders.
Read our article:What is Phase-wise RERA Registration?
Maharashtra Rules as notified under RERA
Rule 9(2) of the Maharashtra Rules as notified under RERA deals with the transfer of title under Section 17 of RERA.
In case of the single building project, in terms of Rule 9(2)(ii), only if no period for conveying the title to a legal entity of the allottees is agreed upon, the Promoter is bound to execute a conveyance.
- Within 3 months of the date of issue of the occupancy certificate or
- Payment of full consideration by 51% of the total allottees, whichever is earlier.
In case of the larger layout consisting of more than one buildings, in relation to conveyance of title of a building or wing, only if no period for conveying such title to the legal entity of the allottees is agreed upon. The Promoter is to execute the conveyance of the structure of that building or wing, either.
- Within 1 month from a date on which the Co-operative society or the company is registered, the allottees’ association is duly constituted.
- Within 3 months from the date of issue of the occupancy certificate, whichever is earlier
Similarly, only in the cases where there is no agreement on the period for conveying the title of a Promoter in respect of the entire undivided or inseparable land underneath all buildings along with structures of basements & podiums constructed in the layout, the Promoters are bound to execute the conveyance of an entire undivided or inseparable land underneath all buildings jointly or otherwise.
- Within 3 months from a date on which an Apex Body or the association of the allottees is duly constituted
- Within 3 months from the date of issue of the occupancy certificate to the last of the building or wing in the layout, whichever is earlier.
It is therefore clear that &It is only failing such an agreement that a timeframe is statutorily prescribed.
Title insurance and RERA
RERA mandates the developers to get title insurance for their projects. Hence, all the new projects and on-going projects when the law came into force are required to be covered by the title insurance. Developers are required to buy the title insurance before handing over any project to the housing society or association. The title insurance must be then transferred to a housing society before the developer exits the project after its completion.
However, till now, there is no clarity in the process of transferring such title insurance to the society, and only recently has IRDA indicated that it would soon come out with guidelines on the transfer process and ensure uniformity in the title insurance products available in the market.
The Promoter can agree on the time limit within which he conveys title to the association allottees of the building and the underlying land. Title insurance enables homebuyers to protect their interest in the project’s land, which constitutes a big portion of the total cost of the property that they acquire from the developer. At Corpbiz, we help our clients in obtaining licenses without any problem and unnecessary effort.
Read our article:Disclosure by promoter on RERA website