Is your Builder Transferring his Rights in the Project to Third Party, then read this
If a builder is transferring his rights in a project to a third party and you have booked an apartment, then you need to read this new circular issued by MahaRERA.
By Varun Singh
Under the RERA act, a builder can transfer his rights in the project to a third party. MahaRERA recently came out with a circular setting of several procedures. This is a detailed piece on the circular issued by MahaRERA on Monday.
Experts say that this circular will bring clarity to all stakeholders.
The chairperson, MahaRERA is vested with the powers of general superintendence and direction in the conduct of affairs of the authority under section 25 of the Real Estate (Regulation and Development) Act 2016.
In accordance with section 15 of RERA, the builder is not allowed to transfer or assign his majority rights and liabilities in respect of a real estate project to a third party without obtaining prior written consent from two-third of allottees, and without the prior written approval of the authority.
Procedures were prescribed for the purpose of transfer or signing promoter rights vide a MahaRERA circular in November 2017.
However, considering various types of litigations, MahaRERA thought it is necessary to revise the procedure for the purpose of transfer of promoter rights and liabilities to 3rd party in accordance with the provisions of section 15 of Rera act 2016.
For the purpose of this section changes in internal shareholding or constraints of a promoter’s organisation that doesn’t affect obligations and liabilities with respect to the allottees and the rights and liabilities of the promoter’s organisation, shall not require the approvals.
“Any conversion of the promoter of the entity under any statute of partnership firm into LLP/private limited company or Conversion of a private limited company or unlisted company to LLP or otherwise proprietorship change by succession to legal heirs,” the procedure mentioned in the circular issued by MahaRERA shall not be required for this approvals.
Cases where the transfer is initiated by the promoter: The promoter shall have to apply to MahaRERA with the consent of two-third allottees as on the date of application in the project under consideration, to seek permission to transfer its rights and liabilities to third-party. The third party or the intending purchaser shall also submit the documents to the authority.
The promoter shall have to write to the secretary, MahaRERA, in the prescribed format. On receipt of such application, the secretary shall initiate action through the legal wing who takes necessary steps to obtain approval of MahaRERA, which may include scheduling a hearing.
MahaRERA shall thereafter pass an order within one month of filing of such application of either granting approval to such application of transfer or reject such application of transfer.
After receipt of the approval for the transfer from MahaRERA and thereafter within seven days of completion of the transfer, the new promoter shall then apply for necessary corrections in the existing registration details. The new promoter shall also upload required supporting documents in its name like land title, building plan approval, etc, upon obtaining the same from time to time.
The new promoter shall upload on the website of Rera, registered undertaking that they shall comply with all the obligations under agreement of sale executed by the erstwhile promoter with respect to the allottees of the project and has assumed all the obligations of the erstwhile promoter under the act.
Amalgamation or merger of the companies in which amalgamating company has one or more of the project registered under Rera, and which is voluntarily initiated by the promoter after April 30, 2017, Shall be regarded as transfer initiated by the promoter, and the promoter shall have to follow the procedure prescribed.
However, if the amalgamation or merger or demerger of the companies, which is not regarded as transfer under section 47 of the income tax act, 1961 or where 75% of shareholders remain the same in the resultant company, the procedures shall not apply for them which includes approvals of allottees.
Cases where the transfer is initiated by a third party like financial institution/creditors, by operation of law or by way of enforcing of the security, When secured loan and/or the charge of the project is disclosed in the registration details of the project on the website of MahaRERA, then in such case, the promoter shall write to the secretary, MahaRERA in the prescribed format within seven days of being aware of the impending or potential transfer arising out of enforcement of security or mortgage.
The promoter shall also simultaneously inform each and every allottee of the project of the pending or potential transfer. Within seven days of the transfer being affected by the financial institution of creditors, such financial institution or creditor shall intimate to each of the allottee and secretary MahaRERA of enforcement of the security which has resulted in the transfer of the ownership of the promoter organisation or transfer of the project. The financial institution of creditors or the new promoter shall then apply for necessary correction in the existing registration details.
Procedure for updating details of the new promoter.
After receiving the application, the secretary shall initiate action through the legal wing for order of the authority. Next para MahaRERA order shall we mail to the applicant at the given email address. As per the order, the new promoter applying a correction model for change in promoter details and pass the order of the authority as a supporting document. The new promoter shall in the update module from time to time also upload required supporting documents and its name like amended land title, amended building plan approval, and others upon obtaining the same.
Adv Sunil Kewalramani, said, “The MahaRERA by considering the various type of litigations in the past, has issued this revised procedure for the purpose of transfer of promoters rights and liabilities to the third party in accordance with the provision of section 15 of RERA Act. The MahaRERA has given a comprehensive revised procedure which will give the required clarity to all stakeholders.”