By AdminOctober 2, 2020

Real Estate in Bangalore- A ready reference before purchase

Tags: Bangalore real estate,checklist for Bangalore property,legal dispute in real estate,real estate,Residential Real estate lawyer

Author-Devajyoti Barman, Advocate, High Court, Calcutta/Supreme Court of India and Managing Partner of Ace Legal ; SanjuktaBasuMallick , Advocate, High Court, Calcutta and Senior Legal Associate of Ace Legal.  (www.acelegalfirm.com) Introduction- Real estate sector is one of the most globally recognized sectors. It comprises of four sub sectors - housing, retail, hospitality, and commercial. The growth of this sector is well complemented by the growth in the corporate environment and the demand for office space as well as urban and semi-urban accommodations. The construction industry ranks third among the 14 major sectors in terms of direct, indirect and induced effects in all sectors of the economy. By 2040, real estate market will grow to Rs 65,000 crore (US$ 9.30 billion) from Rs 12,000 crore (US$ 1.72 billion) in 2019. Real estate sector in India is expected to reach a market size of US$ 1 trillion by 2030 from US$ 120 billion in 2017 and contribute 13 per cent to the country’s GDP by 2025. Retail, hospitality, and commercial real estate are also growing significantly, providing the much-needed infrastructure for India's growing needs. Indian real estate increased by 19.5 per cent CAGR from 2017 to 2028..( SourceMedia Reports, Press releases, Knight Frank India, VCCEdge, JLL Research, CREDAI-JL, Union Budget 2019-20). Therefore Government of India along with the governments of respective States has taken several initiatives to encourage development in the sector. The Smart City Project, with a plan to build 100 smart cities, is a prime opportunity for real estate companies. Below are some of the other major Government initiatives:

• In order to revive around 1,600 stalled housing projects across top cities in the country, the Union Cabinet has approved the setting up of Rs 25,000 crore (US$ 3.58 billion) alternative investment fund (AIF).
• Under Pradhan MantriAwasYojana (Urban) (PMAY (U)), 1.12 crore houses have been sanctioned in urban areas, creating 1.20 crore jobs.
• Government has created an Affordable Housing Fund (AHF) in the National Housing Bank (NHB) with an initial corpus of Rs 10,000 crore (US$ 1.43 billion) using priority sector lending short fall of banks/financial institutions for micro financing of the HFCs.
• On February 29, 2020, India formally approved 417 special economic zones (SEZs), of which 238 were already in operation. Majority of the SEZs are in the IT/ ITeS sector..

Uniqueness of real estate in Bangalore- The Khata concept came into being after the BBMP was formed in 2007 to simplify the collection of property taxes from the residents of Bangalore. Before 2007, the collection of property taxes was a big hassle for the authorities as there were 3 different bodies that collected and had a stake in collection of taxes. To reform the process of tax collection and reduce redundancy, the concept of A Khata was introduced by the BBMP. The first register, called A Khata listed the fully legal properties in Bangalore, while a separate register called b Register was maintained by the BBMP listing the illegal/semi legal properties in the city. This came to be known as B Khata by authorities. A Khata Type- The A Khata came into being to streamline Property Tax collection by the local authorities. The A Khata denotes a document that certifies that the property owner has duly paid relevant property taxes to the BBMP and is in ownership of a legal property. With an A Khata in hand, property owners can apply for trade licenses, building licenses or avail loans on the property. Your property is effectively legal if you have the A Khata documents, which will be required when you go for any other financial transaction related to your property in Bangalore. B Khata Type- The B Khata is a separate register maintained by the BBMP that lists the illegal properties (as per Karnataka High Court order in December 2014) that have ownership in the city of Bangalore, even when the civic charges for the property have been paid by the owner. The B Khata pertains to the Section 108A of the Karnataka Municipal Act, 1976 that was amended in 2009. This register enables the BBMP to collect taxes from buildings constructed illegally, which include properties in violations of bylaws, constructions in revenue land or unauthorized layouts, or properties without completion or issuance certificates. The B Khata properties can be upgraded to A Khata properties by fulfilling a few criteria such as payment of all property taxes till date, DC converted property and payment of Betterment Charges as levied by the BBMP.   The major differences between A Khata and B Khata Properties are as follows:

• A Khata properties are legal in the eyes of the law while B Khata properties are effectively illegal even if the ownership documents for the property are in order.
• A Khata property holders can easily resell or transfer ownership of their property while this is not possible for people holding only the B Khata documents.
• A Khata properties can have trade licenses while B Khata property holders are barred from having trade licenses.
• A Khata properties have construction permits and can expand the properties while B Khata properties are restricted from doing this.
• Loans can be availed on and for A Khata properties while B Khata properties cannot avail loans.
• A Khata is the final document certifying that your property is completely legal and available for trade while B Khata is the temporary document that needs to be upgraded to A Khata to avail the complete set of services associated with owning a property in Bangalore.
• B Khata properties have to satisfy various criteria such as DC converted property, payment of all property taxes till date and betterment charges to be paid to BBMP to convert them to A Khata properties.

  How to convert B Khata to A Khata B khata properties that have very little deviation from the accepted building laws and regulations can be converted to Akhata. The owner of a B khata property can upgrade it to an A khata by fulfilling certain criteria and following a few steps, such as: Step 1: Convert the land from agricultural to non-agricultural use by applying for District Commissioner (DC) Conversion. Step 2: Clear all property taxes due on the property till date as per the government norms. Step 3: Obtain the khata form from the BBMP office and fill in the details as required in the form. Step 4: Gather all the required documents to be submitted along with the form. Step 5: Pay BBMP Betterment Charges, which is the fee levied for converting from B khata to Akhata and submit the filled-in form along with the tax receipts and the required documents to the Assistant Revenue Officer of the concerned area.   Due Diligence before buying property in Bnagalore- As the real estate market in Bangalore has become all the more dynamic due to the purchase, sale and resale of flats/apartments, it becomes all the more crucial for the buyer to handle the entire procedure very carefully. If you aspire to own a flat or an apartment in Bangalore and wondering where to start from then have a look at the following checklist and the information you must possess from the developer/promoter before you seal the purchase. A, Checklist for Purchasing a Residential Flat/Apartments:

• Mother deed/ Sale deed: This is the most important document for tracing the ownership of the land. It gives details of the property as to how it was acquired at the initial stage and the subsequent series of transactions it has undergone. You should also check for the original sale agreement showing the builder/developer duly registered.
• Khata certificate & up-to-date tax paid receipts:In case of a joint venture, the Khata should be in the landowner’s name. If you purchase the property directly from the developer the Khata should be in the name of the developer/promoter.
• Joint Development Agreement: The agreement should be examined thoroughly if it’s a joint development. You must clearly understand the ratio at which the build-up area is divided between the promoter and the landowner.
• Encumbrance Certificate:A latest Encumbrance certificate having the details of last 30 years should be checked. It can be obtained from the sub registrar.
• Approved Plan:Check for a copy of the approved building plan by the respective government authority and also for the portion of the apartment being purchased.
• Sanction Plan:Verify whether the building plan of the apartment is sanctioned and also check the validity of the sanction plan. You must also check the commencement certificate and take a confirmation from the Municipal authorities if the building adheres to the norms of the laws.
• NOCs:You should obtain NOCs under the provisions of Income-Tax Act and Urban Land Ceiling and Regulation Act if required.
• Occupancy certificate: This is issued to the developer by the apartment corporation/BDA/CMC. A buyer should insist for this.

Besides the above steps to be followed you should also ensure that the developer has obtained approvals from the Municipal Corporation, Electricity Boards, Area Development Authorities and Water Supply and Sewage Boards. It is advisable for the apartment owners to file a joint declaration under Karnataka Apartment Ownership Act, 1972, get duly registered and attain the rights and legal safeguards.

1. Checklist for Purchasing a Commercial Flat: Purchasing a flat in Bangalore for commercial purpose also includes more or less the same steps as in the case of a residential flat like deeds for absolute sale and conveyance. These offer a record for absolute and exclusive property rights of the commercial flat, confirms the usage rights, amenities and infrastructure.

Karnataka Ownership Flats (Regulations of the Promotion of Construction, Sale, Management and Transfer) Act, 1962 governs all the matters related to both residential and commercial flats. Legal Safety Net- Real Estate Regulatory Authority (RERA) has transformed the property scenario of India and is bringing new developments every step. Since the Real Estate (Regulation and Development) Act is very new, therefore it’s subject to amendments and modifications by each State Government.   In reference to Section 59 of RERA Act, Section 45 of RERA Karnataka prescribes the punishment against any act committed in violation of provision Section 3 of RERA Act which states about the Prior registration of real estate project with Real Estate Regulatory Authority.   The real estate regulation & development act, 2016 (RERA) was enacted with a view to achieving transparency in the sector along with balancing the interests of the parties. Though the act sought to bring accountability of actions, parties continued to evade the necessary provisions of law. Talking about Karnataka RERA makes us think twice about the legislation altogether, as compared to other states Karnataka RERA has been disappointing since the day it got enacted. Both the builders and homebuyers remained unhappy for some or other reasons. Homebuyers associated with Karnataka RERA accused developers of practices such as deviated plans, unauthorized constructions, advertising unregistered, intentionally causing a delay in completion, diversion of monies collected for one project into another without asking for permission, etc. Where the central legislation along with the rules and regulations made there under was to aid homebuyers by seeking clarity on the rights, liabilities and the overall functioning of the sector. Aggrieved homebuyers of Karnataka remained dissatisfied with the functioning of the existing legislation and how the authorities have failed to prove their existence valid in any manner. Where the act was centrally applicable, rules and regulations were specific according to the requirements of a particular state. Since RERA provides the scope of remedies against registered projects only authorities were of no use to the helpless buyers. Authorities cannot be really blamed as they had to function in accordance with the scope of rights given under the act to them.The Development Authority of Bengaluru (BDA) in the public interest has issued a notice stating the name of the projects being inquired by the authority due to their non-registration. The remedies available under Consumer Protection Act is stil available to the home buyers and they can opt for either RERA or Consumer Protection Act, 2019. Therefore like any industry the ral estate is also ailed by commercial greed and exploitation which thgugh can very well be averted if the buyers are made more aware of the optins they have to carry out before purchasing the property or mechanisms available to redress their grievances.