ICCPL PROPERTY NEWS

UP Apartment Act enacted: Consumers celebrate, Realtors wary

Following Maharashtra’s footsteps, the Noida and Greater Noidaauthorities finally adopted the UP Apartment Act of 2010. Until now, these two cities were governed by the UP Industrial Act of 1976. Thus, in addition to extending substantial rights and privileges to apartment owners, it will also ensure much-needed transparency in the system.

The UP Act 2010 aims to provide the ownership of an individual apartment in a building of an undivided interest in the common areas and facilities appurtenant to such apartment and to make such apartment and interest heritable and transferable and for matters connected therewith or incidental thereto. The act is applicable to all projects having four or more apartments. It extends to the whole of State of Uttar Pradesh, and has been welcomed by the real estate fraternity as well as consumers.

So, will the Uttar Pradesh Apartment Act 2010 really help the sector? Or are there any drawbacks? LetCommonFloor unfold the provisions of the Act, in hindsight of the Maharashtra Act No II of 2014, which recently received the Presidential assent.

Benefits to the end-users

-Due to the clandestine practices resorted to by developers, the end-users had to bear the brunt. In this, hiding several details regarding the apartment tops the ladder. But not anymore. Clause 4, sub-section (1) clearly states that a developer has to make a full and true disclosure in writing to the purchaser and the Competent Authority about the property. These include details concerning to rights and title of the land, all encumbrances, plans and specifications approved by the local authority, nature of fixtures and amenities, to name a few.

Further, sub-section (2) of the same clause highlights that a developer should also specify the date of completion in written, along with the penalty for the delay and also in the event of non-payment of installment by the purchaser.

Though good in intent as it empower the buyers to question the builders, the clause lacks certain clarity. Unlike Maharashtra Act where in the case of delay, buyers are entitled to receive the amount paid by him with the interest cap of 15 per cent , however UP Act does not throw any light on the matter.

-Constructing the building as opposed to the approved plan has become a common practice these days. Fortunately, this has found the place in Clause 3. As per the Clause, if the developer proceeds with the construction contrary to the approved plan, the Uttar Pradesh Power Corporation Limited, with due notice, will disconnect the supply of water and electricity. However, certain deviations are permissible.

-Variations in the material used in the sample flat and in the actual building has become quite prominent these days. In order to prevent it, Clause 8 highlights that construction and structural defects noticed upto two years will be rectified by the developer without any extra cost. Maharashtra Act, on the other hand, addresses the defects upto five years.

-To bring in more transparency, after the commencement of this Act, no developer can give the possession without registering the property. Clause 13 has made it mandatory to have an appropriate transfer deed and the property should also be registered under the provisions of the Registration Act 1908.

-Last but certainly not the least, as per Clause 25, illegal use of areas demarcated for for the common use and facilities such as park, pathways, etc, can lead to imprisonment for three years, which may further extend to six years or fine not less than Rs 3-5 lakh. This is a good move as it will promote healthy lifestyle with ample of open and recreational spaces in a complex.

Obligations of buyers

With power comes great responsibilities. The UP Apartment Act also outlines several obligations.

-As per Clause 22, sub-section (1), if an apartment owner violates the bye-laws mentioned in the Deed of Apartment, or make changes in the property that is detrimental to the safety of the apartment without the consent of all the apartment owners, or fails to pay the common expenses, then the Association of Apartment Owners may (after the notice of not less than 7 days) curtail the services enjoyed by such apartment owners.

-As per the Clause 25, sub-section (3), if an apartment owner violates the use of common areas and facilities in accordance with the purposes for which they are meant, or make any changes apart from the provisions of this Act, then the owner may be fined anywhere between Rs 10,000-50,000. Further, if the violation continues, Rs 1000 will be charged on a daily basis.

All said and done, the Act will surely bring in much-needed transparency in the sector as there will be anAssociation of Apartment Owners to attend the grievances and redressals. But certain amendments in the Act are definitely required. For instance, if a project is in different phases, then after completion of the first phase, developers are expected to take permission for the next phases. This does not sound feasible and might only end up delaying the possession.

Also, nowhere in the Act there is a mention of advance payment and deposits, which also is a major bone of contention between a buyer and a developer.

Further, as per Clause 28, clauses (25 and 26 ), which mainly talks about the offenses by developers and companies does not come under the purview of this act if the promoter is a local authority, statuary body constituted for the development of housing or is a company controlled by the government. As UP has several government bodies such as Noida Municipal Corporation, Greater Noida Industrial Development Authority and many more building several housing projects, there are very high chances of corruption here.

What developers say?

While home buyers have a reason to celebrate, developers on the other hand have a different opinion. Some are even seeking a review. Let’s have a look.

R K Arora, CMD, Supertech Ltd

“We are of the view that the projects should be allowed to be executed, completion certificate obtained and delivered phase-wise. Further,the UP Act should be applied prospectively only as it is difficult to comply with various provisions in respect of old and completed projects now.To this extent, we seek review of the Act after inviting objections and suggestions from the Real Estate Associations.”

Kushagr Ansal, director, Ansal Housing

”The inculcation of apartment act is a good news for the customers but it looks pretty impractical from a developers point of view. It is important that customers must know all the information about a project, builder, construction, etc. and it is the duty of every builder to provide necessary intel to the customers whenever demanded. However, if a project is to be built in different phases then after completion of one phase, taking permission for the consequent ones makes no sense.”

Deepak Kapoor, director, Gulshan Homz

“It is nice to see that authorities and government are taking steps to promote power and right of the customers in real estate sector. But the authorities need to understand that not all clauses will work properly. It is fine that compensation will be provided if delays occur in anytime and already most developers pay compensation money in such cases. But intimating the buyers every time in advance about any form of plan or construction work will be much more tedious and this in turn will affect the construction negatively.”

Arvind Singh, MD, KRasa Group

“There is still a lot of work that needs to be done in the apartment act. This act can work for small projects where there are less units and towers. The task of asking every customer about the next development is only feasible in smaller projects. You just cannot expect a developer to go on and ask several thousand customers if a hundred acres township or city is been planned. This will be a haywire situation for a builder and might even push them to commit mistakes and delays. However, the point for compensating and being transparent with the customers is gladly appreciated and accepted by the sector.”

 

SOURCE: commonfloor.com (http://www.commonfloor.com/guide/up-apartment-act-enacted-consumers-celebrate-realtors-wary-43612.html)

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