Conveyance Problems

v     Issues & Replies

      Are conveyance and registration of the property are accompanied by huge amount of stamp duty?

A.  The stamp duty payable on the conveyance of building and the land thereunder in favor of a co-operative society by the builder and/or the owner of the land shall be paid on the true market value of each unit.  All non-resident units will attract stamp duty at the concessional rate as provided under Article 25(d) of Schedule-I to the Bombay Stamp Act, 1958. The Stamp Duty already paid on purchases of units by the members will be adjusted towards total stamp duty leviable on the conveyance as per explanation -1 to the Article 25 of Bombay Stamp Act, 1958. Provided further that, where subsequently a conveyance is executed in pursuance of such agreement of sale, the stamp duty, if any, already paid and recovered on the agreement of sale which is deemed to be a conveyance, shall be adjusted towards the total duty leviable on the conveyance.

It is economical to pay stamp duty on the individual agreements and get it registered, rather than the payment of stamp duty on conveyance deed at the future date as per then market value of the whole property.

      What remedies are available to a society if the builder refuses to execute the conveyance in favor of a society?

A.  According to Rule 9 of MOF Rule, it is mandatory to take necessary steps to execute the conveyance within a period of four months of registration of the society or limited company. If builder does not comply with these provisions

(1)    He can be prosecuted u/s 13 of MOF Act.

(2)    If builder is found guilty, the criminal court may punish the builder.

(3)    If builder is still adamant a civil suit under the Specific Relief Act can be executed.

      What are the consequences of non-execution of conveyance in the form of the society?

A.  The consequences of non-execution of conveyance can be disastrous in the long run. If conveyance is not executed, it means that the society does not have legal rights or ownership of the land on which the society’s building stands.

If the Society does not have ownership of land, it may not be possible to reconstruct the building. Even for using additional F.S.I. or for carrying out major repairs, municipal authorities will insist on NOC from the land-owner. In such cases, losses to the members will be huge.

      What are the legal provisions in the existing laws to enable housing   Society to obtain the conveyance?

A.  Section-11 of MOF Act casts a statutory obligation on the promoters to execute a deed of conveyance in favour of housing societies within the prescribed period if the promoter fails to comply with the provision, the Society can file a suit in the civil court and obtain a decree against the promoter.

Usually, when a civil suit is filed, the party who files the suit has to pay court fees on the basis of valuation of property. However, in a judgement which is very beneficial to housing societies, Bombay High Court held that in a suit filed by a Co-operative Society against the promoters for conveyance, it is not necessary to calculate the value of property for the purpose of court fees. (Reported in 1982 Maharashtra Law Journal, page 607)

In view, the housing societies can file suits against the promoters for conveyance by paying a nominal amount of court fees, which otherwise would have been in lakhs.

Secondly under chapter-II of the Specific Relief Act, the purchaser of the flat can file suit for specific performance of the contract.  The housing society can apply to the court for directions to the promoter/landowner to executive the deed of conveyance in favour of the society.

The provision of Rules 21 and 34 of the Civil Procedure Code provides the remedy to face a situation when a landowner/promoter does not execute the conveyance even after a decree is passed by a court. In such a situation the Society which filed the suit should prepare a draft of conveyance and submit it to court. The court will issue a notice to a landowner/promoter along with a copy of the conveyance deed. After considering the objection if any raised by the landowner/promoter, the court will finalise the conveyance deed. If the land owner/promoter still fails to execute the document, the court will authorise an officer of the court to execute the deed of conveyance in favour of the society.

It may be noted that civil suits are likely to take few years to conclude but delay is better than never.

      What about the conveyance in case of a society more than 20 years old and the building firm as well as the builder are no more existing/traceable?

A.  The society can file a case in the Consumer Court or in the Civil Court and obtain ex-parte decree in favour of the Society. The same decree can be registered with Sub-registrar as conveyance and the property card can be changed in the name of the society thereafter.

      In a project of 8 buildings, 4 buildings are completed and their 4 societies are registered. The builder when asked about conveyance says that it will be hand over only when all the 8 buildings are completed and their respective society are registered. What is the correct position?

A.  The builder can give the conveyance to individual societies and need not to wait for the project’s to complete.

      If a member is not having any documents regarding his flat i.e., agreement, stamp duty, registration fee receipt etc. then what is the solution if the society is going for conveyance?

A.  At the time of conveyance the concerned member will have to pay Stamp duty at the market value and the rate applicable on the date of executing the conveyance.