Private-Consultant

As a part of new initiative “Ease of Doing Business”, BMC is planning to reduce the building permissions from over more than 150 buildings to 70 buildings. However; according to the reports of construction industry, it is“Eyewash” stating that there is need of proper building approvals system in all civic bodies which are dominated by the rampant corruption and delayed process to knock out money from real estate builders. But engineers and officials are calling it hot shot. Now architects are summoning to the real estate building proposals office at late night to process the relevant files.

On last Friday, Ajoy Mehta, Civic Body Chief informed that there are many civic group leaders who are not approving building permissions within the 90 days. However; in other cities of the world such as; Dubai and New York it takes only 90 days to get all kinds construction approvals for residential and commercial buildings. To sort all these kinds of issues now BMC has decided to bring down the number on building approvals and permission which is expected to drop by 150 buildings to 70 buildings. However; real estate builders are skeptical if move will work to get the solution which known as rampant corruption in BMC and it is the main reason of delay and getting approval for proposals.

Private consultants will help the real estate builders to get NOCs:

Now Civic Body is allowing real estate builders to take the help of private consultants to get the  no-objection certificates (NOCs), however; earlier real estate builders were sued to take the help of civic officials in exchange of money. In present, real estate developers have to procure no-objection certificates from different departments such as; traffic, fire brigade, hospitals and more. Cooperators said to Chief Minister, Devendra Fadnavis and Shiv Sena Chief Uddhav Thackeray will be requested to release the new building proposals booklets which were including commercial and residential buildings. These leaders were representing different political parties and to stop the corporation in civic body they try to sabotage the new rules because there are few corrupt officials which are used to create hurdles to get NOCs. The development plan (DP) and building proposals (BP) departments are directing reporting to the municipal commissioner.

Effect on Civic Body:

According to the Rais Shaikh, Group Leader of Samajwadi Party, “It is very nice initiative to bring in transparency in all civic departments. The building proposals department is one of the most corrupted units in civic corporation”. In present, it can take more than years to complete the all the procures for building permissions. Now administration wants to fix the time duration to complete all the procedure. Earlier, real estate builders were used to get the different NOCs at different stages, now they are deciding to not to hold back one NOC for others. And civic body is planning to make the procedure faster by issuing all permissions in 90 days, as per the statement of Yashodhar Phanse, Shiv Sena Corporator and Standing Committee Chairman. It is expected that this new rule will bring more transparency and provide an opportunity to do more friendly business. As per the statement of Manoj Kotak, BJP Group Leader, “Less time duration and fewer windows for clearances will mean reduce the chance of corruption”.

Construction industry have many other issues which needs to be sorted out and now BMC is planning to reduce the number of permissions as the best possible solution, but while claiming other issues it still needs to be addressed. However; the good thing that civic body has not reduced the tiers of approvals as well as of officers a real estate builder has to go to get the permissions. But for instance, the number of files and documents required just submitting a building proposal is 34.

“Ease of Doing Business” new initiative of BMC:

According to architects, the other major hurdle is the software of BMC which is not more than junk and every time civic officials are used to force it to get the desired result. According to real estate builders, we are welcoming the new initiative of BMC which is “Ease of Doing Business” because it is expected that it will not reduce corruption. Architects are called at midnight to the building proposal department by some engineers. But at some corner the industry is upset because to get freedom from corruption now civic body is decreasing the number of approvals. According to recent study, suburban developer had to pay security as well as premium fees more than 86 times at 14 different places within the BMC for a single project.

Distressed Property

What is a distressed property?

Although rare, a distressed property is one where the owner has borrowed against property to acquire the asset and has not been able to repay his debt obligations. If the borrower fails to service the loan for 4-5 consecutive cycles, the property is seized by the bank as collateral. The lender bank then sells the property to recover its outstanding interest and unpaid principal amount. Such a property is sold through a bank auction and can be acquired at prices which are often well below market value.

However, less than 5% of Indian borrowers default on repayment of a loan for periods long enough to permit a bank auction. Moreover, there is limited scope for getting such properties at throwaway prices, as the base price for the auction is determined by the loan amount outstanding which means that if the owner is far ahead in the loan term, the lower the base price. Hence, owners who have only a few cycles left to settle off dues would prefer to restructure the loan rather than default on payment.

Sale of distressed property – how to know?

As a custom, banks release an advertisement in leading local newspapers when they propose to auction off a property or set of properties. So, this is the best source of information. A bank’s annual report always mentions a provision for bad debts, and the schedules/annexure reflect if and when any distressed properties will be coming up for auction.

You can also contact a property consultant with expertise in the location and enquire about distressed asset opportunities in the area. The property advisor can also represent investors in discussions with the original owner or directly with the bank.
Sale of distressed property – the process

When a property is positioned for auction, it is advisable to read the bid document vigilantly to understand the status of unpaid dues. The bid document is like a prospectus of an IPO where all the facts pertaining to legal, title and responsibility for pending dues are outlined. Most of the time, the property is sold on a ‘as is where is’ basis and till the date of auction, loan obligations are cleared.

Between purchasing a distressed asset through a real estate advisor or local enquiry and bank auction, the latter is a lengthier process as the bank will first release an advertisement, set a date for the auction, invite bids, collate the offers and then finalize whom to sell the property. It becomes more cumbersome if the buyer himself plans to acquire the property on loan. The bank conducts a thorough due diligence search on the incoming buyer and then draws up contracts to transfer the property along with a go-ahead from the owner and a society NOC making the process even more time-consuming.
The bank has to obtain an NOC from the society before conducting the auction. Many societies and their members have first right of refusal along with the right to match the highest bid to buy property. The society highlights any liabilities that the new owner will have to bear. These aspects are captured in the bid document by the legal council of the bank and the bidder can refer to them to assess the exact liability.

When the distressed property is being directly purchased from the owner, both parties (original owner & new owner) agree on the commercial terms, exchange a token deposit and then complete the bank process to proceed with the purchase. The entire process of releasing the property by the bank, granting the NOC and procuring NOC from the society in addition to clearing off the bank dues may take nearly 2–3 months. The price in this case is therefore usually higher than it would be in a bank auction, since the seller tries his best to recover as much of his initial investment.
To conclude, any buyer who wishes to purchase a distressed property must be fully aware of what he is getting in to. Exercise precaution by carefully reading the bid documents, understanding the history of the property under discussion and also get historical papers for title due diligence to avoid any legal challenges in future.

Managing Committee. Election / Eligibility etc.

Can a member who has already paid his dues of the society prior to the scrutiny of the nomination contest for election?

Yes, if a member paid dues of the society before the scrutiny of the nomination then that member is eligible for contesting the election.

What action can be taken against a member of the managing committee who hasn’t paid his dues of maintenance? Also, can he be expelled or disqualify?

In case a member of the managing committee is liable to pay his dues for maintenance, the right to stay as a member in the committee is withdrawn from him and with an application to the registrar, he can be expelled under section 78.

In case the Secretary of the outgoing Committee fails to convene the meeting what are the possible alternatives to it?

Subject to provisions of Bye-law No. 123(a), if the Secretary of the outgoing committee fails to issue a notice and convene the first meeting, then the Chairman of the committee or the Registering Authority can call for such meeting.

Who are the people ineligible to stand for the election of committee member?

According to provision under bye-laws No. 118, following people are not eligible for being elected as the member of the committee.
• A person who is convicted for offence of moral degeneration, then not until 6 years period lapse from the charge proved.
• If a person has defaulted in his payment of dues to the society within three months from the date of receiving notice is not eligible for election.
• In case an individual is held responsible under section 79 or 88 of the Act or held responsible for paying the enquiry cost under section 85 of the Act, he is not eligible for the election.
• If an individual has given his gala or part of it as subtenant or leased it or by other ways the possession is given to another person without a written consent from the society is ineligible for election.
• With respect to the co-member, if an individual has not submitted NOC and guarantee letter as prescribed in bye-laws of the original member he is not eligible for election.

How does the new committee take over the responsibility from the outgoing Committee?

When the new Committee is elected, the Secretary and the chairman of the outgoing Committee prepares a list of papers and property of the Society in the custody of the new chairman and secretary, in accordance to the provisions contained in Section 160 of the MCS Act, 1960.

What is the provision for distrust raised against the office bearers and the employees of the office of the Housing society?

A No confidence resolution can be passed against the Chairman, secretary, and treasurer. Also, the concerned office bearer can be expelled by passing a resolution through voting of 2/3 members. But, once a no-confidence motion is rejected then it cannot be moved for the next six months from the date of resolution.

What do you mean by Committee?

The term Committee as defined under the Bye-law No. 3(iv) of the Model Bye-laws of the Society means, an association or group formed by the members of the Society or any other directing body to which the management of the affairs of the society is entrusted.
Can a committee pass a resolution for expelling a committee member?

No committee member can be expelled by passing a resolution.

What is the remedy in case of a meeting of the society is not called by the chairman/Secretary?

As per the provision in bye-laws No. 133, if federation was informed of such meeting then it can be called by the federation.

What is the tenure of an interim committee?

One year from that date of its establishment is the tenure of the interim committee.

What are the alternate options if polling officers denies nomination of election?

An Appeal can be made before the registrar within 3 days from the date of denial of nomination under section 152 A of the Maharashtra Co. Operative Society Act. 1960.

Can there be two managing committee for two separate building of the same housing society.
Only one managing committee can exist for a single housing society.

Who can accept the resignation of the chairman?

A secretary can accept the resignation of the chairman under provisions in bye-law No. 132 (1).

What is the remedy for an old committee that negates to give charge of the office to the new committee?

If the old committee disagrees to give charge of the office to the new committee then, with an application to the registrar under section 80 of the Maharashtra co. operative societies act of 1960, can take action against the old committee.

Can a member, held responsible under section 79 or 88 or 85 contest for an election?

A member held responsible under section 79, 88 or 85 is not eligible for a re- election, appointment or incorporation for the next 5 years from the date he was expelled.

Can a defaulted committee member after paying his dues be eligible to be a committee member?

A defaulted member of the committee, after paying his dues can be eligible for a re-election to be a member again in the committee

Are decisions taken after expiration of tenure and till the formation of a new committee legal?

As per section 77 of the Maharashtra Co. Operative societies Act of 1960, the decision taken during such period as mentioned above is legal.

How is a decision taken, in case of an equal positive or negative vote on any resolution in the managing committee?

In accordance to the provision under section 27(1) of the co. operative Act, if there is a tie in the voting of a resolution than, the chairman of the society has the right to cast his additional vote.

Dose the chairman enjoy the power to cast a vote?

As provided in bye-laws no. 135, the chairman enjoys the power of casting a vote in the election.
Is the decision taken by the old committee during the period of formation of new committee a valid decision or not?

Until the court announces such decisions as invalid, they are considered valid. However the new committee holds the discretionary power to modify it.

Can an ex-committee member contest for election?

If an Ex-committee member is eligible as under bye-laws No. 118, he can contest for the election.

Under what circumstance does the co. operative Housing society incorporate the member in the managing Committee?

Due to an unforeseen event of death, or events like resignation, disqualify, dismissal of a committee member, the members are incorporated in the vacant post.

After interim committee when does the committee came into existence?

This committee came into existence as per election rules after the election of committee. As per provisions under section 73 the Maharashtra Co-operative societies Act 1960

What is the tenure of an elected committee?

The tenure of an elected committee is 5 years as in bye-laws of the co-operative housing societies.

What actions are taken if elections are not held as per the prescribed time?

In a case the elections are not held as per the prescribed time, the registrar can be appointed as an administrator.

What measures are to be taken in case an existing committee tenor resigns?

In case an existing committee resigns, an application is put forth before the general meeting for approval, after which the charge of the office is entrusted to the previous managing committee until an ad-hoc committee is appointed. However it is obligatory that the important decisions pertaining to financial and policy matter should be taken by such committee.

Guide on legal checks before property purchase

Recently, in an Allahabad High Court ruling, the real estate giant Supertech was asked to demolish its 40-storey tower in Noida.  However the company will move the Supreme Court against the order claiming that all necessary approvals from appropriate authorities were in place. The tower was constructed against the mandatory building rules. While the permitted FAR should be 3.5, the builder followed only 2.75 FAR rendering the construction illegal.

In the current real estate scenario, most home buyers face litigations over their newly purchased apartments. It is therefore crucial to check if the property is legally clear before booking it. Even if it is a branded project by a reputed developer, inspection of the legal documents and construction approvals through legal consultants is becoming essential.

Besides property related litigations, such construction issues add to the load of home buyers who have purchased the property on loan since they end up paying EMIs and rentals till the construction is free from litigation. Most residential project cases running in courts stretch for years and even if the judgement is in favor of the home buyers, the builders will appeal again leading to a never-ending wait for the possession.

We present here, a quick guide to a litigation free real estate transaction. Examine these factors before purchasing a property:

Verification of Title Deed & Khata

Ensure that the Title Deed from the seller is clear from any encumbrance. The records related to the title deed of the property can be searched at the sub registrar’s office. The report will contain the owner of the property and the related changes in the title. Khata is a legal document that supports the title which will have an entry of the present owner and it can be verified with the local municipal records. Check whether the Khata is changed in the present owner’s name as it is necessary to obtain home loan, electricity approvals etc.

Project plan examination

In case of under construction projects, inspect whether the building plan is sanctioned & approved by appropriate authorities. This can be done by comparing the sanctioned plan with the actual built up area of the project to avoid buying property in an illegal construction. The layout approval can be verified with the concerned authorities. Examine the land survey report made at the time of buying the property to validate that there are no legal disputes over titles, boundaries etc.

Checking legal dues

To check whether the property has any legal dues, one can scrutinize the encumbrance certificate which is an evidence that the property is free from all legal dues and mortgages. If the property already has a registered society, then a no objection certificate (NOC) is also necessary to authenticate the legal status of the project.

Examine bank approvals

A simpler way to check whether the property is legally clear is to look at bank approvals. Banks approve only those properties which are legally clear and possess valid documents. Banks usually check the title clearance and all other important paper-work related to the project so one can rest assured that the property is fit to be purchased.

With legal issues concerning real estate developments increasing by the day, it is advisable to not only check the documents and the builder profile along with his previous construction track record but also take professional help if possible to perform thorough checks on legal clearances before booking a home.

At a time when ways to reduce bureaucratic hurdles are being debated across the country, the state government has planned to remove one crucial layer in registration of properties.

From now on, registration of property sale deeds will not require no-objection certificate from the local civic authority. Builders had been complaining that such NOCs delayed land deals and were tainted by corruption. This system had caused a major hurdle to the realty sector across the state.

The move is likely to revive the struggling realty sector in the state and also curb corruption in the civic departments, said a government official. “Many transactions were getting delayed in the already sluggish market because municipal authorities were able to delay sale deeds. In many cases, local officers would ask for bribe to give NOC,” said spokesperson of a leading real estate firm.

So far, the buyers or sellers were supposed to get NOC from the civic body or the department of town and country planning (DTCP) as no sale deed could be registered without this approval. This has led to the delay in the registration of residential and commercial properties and caused a great inconvenience to the buyers. Moreover, the officials caused deliberate delays to clear the files unless they were paid the bribe, this led to a lot of social tension and the government had received a plethora of complaints against the corrupt civic officials who were netted by the anti-corruption bureau sleuths from time to time.

Further the state government is forming a subcommittee to ascertain the possibilities of amending rules related to medium and small townships where too the resident will not have to seek permission from the municipality authorities to repair, rebuild or buy a new home. “The panel will submit its recommendations to the government in the due course of time so that the necessary action could be taken”, said the official.