The Uttar Pradesh Real Estate Regulatory Authority has said that developers can issue possession letters to homebuyers only after they have received the occupancy certificates from the development authorities. The regulatory authority has said that the model format has been prepared to protect homebuyers and to prevent arbitrariness on the part of developers through the offer of possession.
Real estate developers and homebuyers have objected to the model format of offering possession. Builders want the Authority to reconsider its decision and emphasis on the deemed approval clause in RERA that lays down that if the request for an occupancy or a completion certificate is not responded to by the authority within a stipulated time, the approval is automatically deemed to have been granted.
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Homebuyers are of the view that following this decision, they would have to bear the brunt of any tussle between the authority and the builders in the event of the builders not paying their dues. This would further delay handover of the flats.
What does the UPRERA order say?
UPRERA has directed real estate developers not to send demand notices as part of possession letters.
“The promoters send ‘final demand letter’ and ‘final demand notice’ using the name and language of ‘Offer of Possession’, which creates confusion among the allottees, and it carries some binding conditions. ‘Offer of Possession’ should be meant only for the purpose of taking possession,” UP RERA Chairman Sanjay Bhoosreddy said.
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“Hence, we have made available a model ‘Offer of Possession’ on the portal and any other format of letter will not be valid. This will remove confusion among the stakeholders and help in disposal of disputes related to it,” Bhoosreddy added.
After receiving the OC/CC (occupancy certificate/completion certificate) of the project, the offer of possession letters will be sent to the allottees by the promoter in writing to their registered email and residential address by post and they will also be informed by SMS on their respective mobile numbers and phone number, the UP RERA said.
“In this regard, the promoter should also display information at the project site and its head office,” RERA said.
“Keeping in mind the complaints received regarding the Offer of Possession letter issued to the allottees by the promoters and the variety of formats of the letter, the Regulatory Authority has uploaded a model format of Offer of Possession so that uniformity can be achieved in the language and purpose of this letter,” it added.
The core intention of the letter related to ‘offer of possession’ should be that the allottee is being invited to hand over the possession of his/her unit. If any construction work is still remaining in the unit, the promoter will have to clearly mention the remaining finishing work of the unit and the duration required for completion, it noted.
“If the allottee has any liability, then it should not be outside the scope of the Agreement for Sale and its legal justification should be proved.”
Letters sent using demand notice, final demand notice and offer of possession or similar language will not be considered as Offer of Possession letter,” the UP RERA said.
It said the offer of possession letters should be sent within two months of receiving OC/CC and at the time of possession, a copy of OC/CC certificate issued by the development authority will also have to be given to the allottees.
Real estate developers against RERA’s move of issuing the model format of offering possession
The Confederation of Real Estate Developers Association of India NCR (CREDAI-NCR) reiterates the long-standing regulation in the real estate industry, which states that if a request for an Occupation Certificate (OC) or Completion Certificate (CC) is not responded to by the authority within a stipulated time, then the OC/CC is deemed to be accepted. Hence, on this clause, the developer can proceed with offering possession to its customers and deliver the project promptly.
The clause has been instrumental in addressing delays associated with OC/CC approvals, thus preventing project hold-ups and financial strain on both developers and homebuyers, it said.
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The RERA provision allows builders to proceed with the offer of possession to the buyers. The developers currently offer the possession in housing projects where there is a deemed occupancy certificate (OC) as per the old rules. In 2017, RERA had allowed possession of a housing project having four key no objection certificates (NOCs) including fire, finance, lift and others.
Commenting on the order, Manoj Gaur, president of CREDAI-NCR, said that “We emphasize the importance of this regulation and remain committed to adhering to it. It is imperative for us to understand every aspect of the authority’s guidelines, and this clause, where the OC/CC is ‘deemed to be accepted’ if not responded to within the specified period, is no exception.”
Homebuyers against the order
Homebuyers point out that in some of the legacy projects where the builder is not paying land cost dues nor coming forward to obtain the occupancy certificate, homebuyers continue to suffer and are paying both rent and EMIs.
“The UP RERA Authority has not bothered to dive deep into the possession aspect. This notification is merely an eyewash. The real problem with regard to possession is that promoters compel allottees to sign a declaration/indemnity bond or any such document in which they have to declare that they are taking possession after satisfying themselves that everything is fine and that they will have no claims against the promoter later,” said said Abhay Upadhyay, president, Forum for People’s Collective Efforts set up to raise home buyers’ issues, especially relating to RERA.
Further, if any allottee refuses to sign such a document in case he observes faults in the apartment or the common areas or incomplete facilities and amenities, then possession is denied to him, he said.
He points that it is difficult to understand the rationale behind this notification since the Act itself has provision that possession can be offered by the promoters only after getting OC/CC.
“If the UP RERA Authority is receiving any complaint from allottees that promoters are offering possession without obtaining OC/CC, then action should have been taken against such promoters rather than issuing a notification. If builders are not obeying the provisions of the Act, then how can it be expected that they will obey this notification,” he asks
Secondly, it is normal practice that the last installment is payable at the time of taking possession. So if any amount is due and payable by the allottee to the builder, then how does it matter to allottees if the demand notice comes along with the possession letter or separately. The moot question is whether the demand, if it comes with a possession letter or separately, is a valid demand or not which has not been addressed in the notification, he points out.
This notification’s only condition is that demand notice should be sent separately which in fact could create problems if promoters start sending last and final demand notices first as per this notification as they can’t combine it with the possession letter. In that scenario, the allottee would end up paying 100% of the consideration amount without getting possession, he added.
