Transfer of Title from Promoter to Allottees under RERA – Execution of conveyance deed by promoter.
Section 17 RERA
Updated on 06.08.2024
With the enactment of the Real Estate (Regulation & Development) Act, 1016 ( in short RERA) the question of transfer of title from promoter to the allottees developed a new debate on the local law which is to be followed in case of execution of conveyance deed. Plain and simple question now is the procedure to be followed for the purpose of transfer of title from promoter to the allottees under RERA? To begin with, even the Maharashtra rules framed under RERA along with MOFA & MAOA are local laws. RERA without defining ‘local law’ requires transfer of title as per local law in the first place (which raises the question of the local law which is to be followed), and in the absence of local law, the procedure prescribed by it in the proviso of section 17(1) of RERA is to be followed. On a plain reading of section 17(1) of RERA, the local laws shall prevail in the case of Transfer of title, and the procedures prescribed therein should be followed in all cases whether prior to RERA coming into force or thereafter. However, as per the Orders issued by the Authority under RERA, which are discussed below (unless challenged and set aside), the provisions of MOFA are to be followed in case of all agreements for sale which are executed prior to RERA coming into force and in case of all agreements executed after RERA coming into force i.e. 1st May 2017 the promoters are required to transfer the title within three months from the date of issue of the Occupancy Certificate.
The Maharashtra Ownership Flats Act (MOFA ) & The Maharashtra Apartment Owners Act (MAOA) are the local laws in the state of Maharashtra which were in existence at the time of RERA coming into force and are not yet repealed. These local laws allow the promoters and allottees to agree upon the time frame for the transfer of title from promoters to allottees. Further, in the absence of an agreement between the Promoter and allottees, these local laws prescribe their respective timelines which are to be followed. Therefore, in the state of Maharashtra if a mutual agreement is executed, prior to RERA coming into force i.e. before 1st May 2017, between the promoters and allottees prescribing the time period for the conveyance of title then the time period as stipulated in the agreement for sale will have to be followed (so long as the agreement is not unconscionable), and in the absence of such an agreement, the time limit as prescribed by the respective local law should be followed.
However, the Maharashtra Real Estate (Regulation and Development) (Registration of real estate projects, registration of real estate agents, rates of interest and disclosures on website) Rules, 2017 ( In short the ‘Maha. Rules’ ) framed by the appropriate government i.e. Govt. Of Maharashtra under RERA do not provide for an agreement between the promoters and allottees as per recent amendments. Further, as the transfer of title from Promoter to allottees is governed by other enactments in Maharashtra apart from RERA, it makes things slightly complicated when it comes to the procedure to be followed. Therefore an analysis of the provisions of RERA and local laws is necessary to reach a consensus on the procedure to be followed in case of transfer of title from the promoter to the allottees.
RERA – Section 17 of RERA – provides that the promoter shall execute a registered conveyance deed in favour of the allottee with the undivided proportional title in the common areas to the association of allottees or competent authority and hand over the possession to the allottees and the common areas to the association of allottees within specified period, as per sanctioned plan as per local laws.
The proviso to sec. 17 prescribes that in the absence of local laws, the promoter shall execute the conveyance deed in favour of the allottee or the association of allottees or the competent authority within three months from the date of issue of the occupancy certificate.
Thus, as per 17 if there is any local law existing at the time when RERA came into force, then the promoter should execute the conveyance deed as prescribed in the local law. Further, in case there is no such local law prevailing, then the promoter shall execute the conveyance deed within three months from the date of issuance of the occupancy certificate.
Now when RERA came into force in the state of Maharashtra, the local laws prevailing at the relevant time were MOFA , MAOA and Maharashtra regional development Act.2012 which was repealed by RERA. All these local laws prescribed timelines and the procedure to be followed for execution of conveyance deed. Let us briefly examine the relevant provisions of these local laws with reference to the execution of the conveyance deed.
Local Laws – timelines and procedures for the conveyance of title
- MOFA – As per section 11 of MOFA the promoter has to take all the steps to complete his title and convey his right, title and interest in the land and building to the organisation of flat takers which can be a cooperative housing society, a company or association of flat takers, in accordance to the agreement entered into with them, and if no period for execution of conveyance is agreed upon, then the promoter shall execute the conveyance within the prescribed period. Rule 9 of MOFA prescribes that the the promoter has to convey his title to the organisation of flat purchasers within four months from the date of registration of organisation of flat purchasers.
- MAOA – Similarly MAOA lays down the transfer from the owner of the property to the apartment owner shall be as per the deed of the apartment, without providing the time frame for transfer from the owner. However Rule 9 of MOFA provides that when the promoter has submitted his property to the provisions of MAOA…. and no period of conveying the title of the promoter to each apartment taker is agreed upon, the promoter shall execute the conveyance or deed of the apartment within four months from the date the apartment taker enters into possession of his apartment. So in case of MOFA & MAOA, the time frame prescribed for the transfer of promoters title to the allottees by the respective enactments is to be followed only if no period of conveying the title is agreed upon between the promoters and allottees.
We are not dealing with Maharashtra Housing ( Regulation & development) Act.2012 separately as it was repealed by RERA.
- RERA Rules – And finally we have the Maha. Rules –
Prior to amendments in 2019 Rule 9 (2) of Maha.Rules, as it then stood, provided that ‘only if no period of conveying the title to the legal entity of allottees was agreed upon, the conveyance was to be executed as per the period stipulated in the rules :
I) In case of Plots – Within three months from the date the allottees in such a plot have paid full consideration to the promoter,
ii) In case of single building project – Within three months from the date of issue of occupancy certificate or fifty one percent of the total number of allottees in such a building or a wing, have paid the full consideration to the promoter, whichever is earlier,
iii) In case of layout –
(a) in respect of a building or a wing of a building in a layout, within one month from the date on which the cooperative society or the company is registered or, as the case may, the association of allottees is duly constituted or within three months from the date of issue of occupancy certificate, whichever is earlier,
(b) in respect of the entire undivided or inseparable land underneath all buildings / wings along with the structures of basements and podiums constructed in a layout, the promoter shall execute the conveyance within three months from the date on which the Apex Body or Federation or Holding company is registered or, as the case may be, the association of the allottees is duly constituted or within three months from the date of issue of occupancy certificate to the last of the building or wing in the layout, whichever is earlier.
So as per the local laws in Maharashtra, the promoters and allottees could mutually decide the time period for transfer of title from promoter to allottees and in the absence of such an agreement the time limits provided by respective local laws were required to be followed..
Orders issued by the Authority in respect of timeline to be followed –
The time limits prescribed for the conveyance of title by the local laws in the absence of an agreement for transfer of title from promoter to allottees were not the same. This created considerable uncertainty. In fact, the Regulatory Authority, in order to bring clarity on the subject regarding the period within which conveyance is to be made to the legal entity of allottees’ issued an Order bearing No. MahRERA/Secy/Order/ 106/ 2017 dated 27/06/2017.
The Authority has clarified in the above-referred Order dated 27/06/2017 that ‘all agreements executed post 1st May 2017 (RERA coming into for) shall be governed by section 17 of RERA and the conveyance should be executed within three months from the date of issue of occupancy certificate’.
Later, from what seems to be in support of the Authorities Order dated 27/06/2017 the Maha. Rules were amended through a notification dated 6th June 2019.
Amendments to RERA Rules – The government of Maharashtra recently notified through notification dated 6th June 2019 amendments to Rule 9 (2) the Maha. Rules to the following effect :
In Rule 9 of principle Rules, in Sub Rule 2 –
(a) for clause (ii), the following clause shall be substituted, namely :-
“(ii) Period for conveyance of title, by promoter, to legal entity of allottees in case of single building project .– The Promoter shall (subject to his right to dispose of the remaining apartments, if any) execute the conveyance of title within three months from the date of issue of occupancy certificate.”;
(b) for clause (iii) the following clause shall be substituted, namely :-
“(iii) Period for conveyance of title, by Promoter, to organization of allottees in case of Layout.–
(a) In the case of a building or a wing of a building in a Layout, the Promoter shall (subject to his right to dispose of the remaining apartments, if any) execute the conveyance of the structure of that building or wing of that building (excluding basements and podiums) within three months from the date of issue of occupancy certificate.”;
(b) In the case of a layout, the Promoter shall execute the conveyance of the entire undivided or inseparable land underneath all buildings jointly or otherwise, within three months from the date of issue of occupancy certificate to the last of the building or wing in the layout.”
Accordingly prior to amendment of Rule 9(2) the promoters and purchasers of flats could agree upon the time period for transfer of title of promoters to the allottees under RERA, and after the recent amendments to Maha. Rules the same is not possible.
Thus the period of execution of the conveyance deed in all the amendments above is fixed more or less within three months from the date of issue of the occupancy certificate as per Maha. Rules.
It seems it was the appropriate government’s intention to put a cap of three months for the execution of the conveyance deed from the date of issue of the occupancy certificate and therefore amendments were finally made. It was a wise move as promoters were taking blanket consents from individual Flat purchasers and treating them as mutually agreed terms on the period for execution of conveyance deed and thereby frustrating the very provision of conveyance under section 11 of MOFA and section 17 of RERA. However, while doing so the appropriate government has certainly created confusion as the state legislature has not yet repealed the local law MOFA which also prescribes the period for execution of conveyance deed under MAOA.
In fact, from what seems to be an effort to put at rest any further discussions on the time period for transfer of title from promoter to allottees, the Authority issued an Order No. 20/2021 dated 28.07.2021 in respect of Execution of Registered conveyance deed of real estate project by the promoter. The Order along with other clarifications on execution of registered conveyance deed also refers to its earlier Order dated 27/06/2017 and reiterates that ‘as mandated by section 17 as well as Rule 9(2) of Maha. Rules (amended) the promoter has to execute a registered conveyance deed in respect of the real estate project within three months from the date of issue of occupancy certificate’.
In the Order dated 28/07/2021 the Authority also reiterates that agreements for sale executed post 1st May 2017 shall be governed by section 17 of the act., and directs that a registered conveyance deed in respect of such real estate project should be executed within three months from the date of issue of occupancy certificate. The Authority, in its Order dated 27.07.2021 and earlier Order referred therein has certainly misinterpreted Section 17 of RERA, by not considering the substantive provisions of Section 17, which refers to the execution of conveyance deed as per local law.
The first part of section 17 prescribes that the promoter shall execute the conveyance deed as provided under the local laws and thereafter the proviso to section 17 prescribes that ‘in the absence of local law …. the conveyance deed under this section shall be carried out by the promoter within three months from the date of issue of occupancy certificate’. The Regulatory Authority seems to have missed out on the plain language of section 17 which explicitly prescribes local law to be followed in case of transfer of title. There is no ambiguity in the language of section 17 suggesting any alternative interpretation.
Further in Order dated 27/06/2017 the Authority itself clarifies that “the Maha. Rules being subsidiary legislation, the substantive provisions of section 17 shall prevail and all agreements post 1st May 2017 shall be governed by section 17 of RERA, and conveyance should be executed within three months from date of issue of occupancy certificate”. Well, if in the said Order the Authority agrees that the substantive provisions of section 17 prevail over the Maha. Rules and rightly so, then why is the Authority ignoring the fact that the substantive provision of section 17 of RERA itself gives preference to local laws in the case of Transfer of title from promoter to allottees.
Further, there is no conflict between Section 11 of the state Act. (MOFA) and Section 17 of the Central Act. ( RERA ) whereby section 89 of RERA would give Section 17 an overriding effect as it is the Central Act. which itself prescribes following the local law.
There is certainly confusion on whether MOFA and the Rules framed under the act., would prevail or Maha. Rules under RERA would prevail as local law. This confusion can be removed by a ) defining the local law under RERA or by repealing MOFA or b) the Court decides whether for the purpose of transfer of title from prompter to allottees MOFA should be followed which allows agreement on the timeframe for the execution of conveyance deed or the Maha. Rules framed under RERA requiring execution of conveyance deed within three months should be followed.
However, till the issue is resolved finally, either way, the provisions of MOFA continue to be in force, and it cannot be said that an agreement between the promoter and allottees on the timeframe for the execution of conveyance deed by the promoter under MOFA is not valid.
The contents of this article are the views and opinions of the author on the subject matter. The readers are expected to take expert advice based on the facts and circumstances of their case.
Ⓒ – 2021 Ajit Powar