NOIDA: Signing a tripartite ‘sale agreement’ at the time of purchase will be mandatory for builders and homebuyers in all new housing projects in the city. The Noida Authority board on Saturday made a basic change in the way real estate transactions are conducted in the city, through which it will know who a flat has been sold to at the time the first payment is made and not at the time of completion, like it is now.
The decision, announced by CEO Lokesh M after the board meeting chaired by the chief secretary Manoj Kumar Singh concluded, will remove opacity at the transaction stage and will help stop dubious sales in a city whose real estate sector is the most troubled and marred by some of the most high-profile malpractices in the country. It will, said officials, protect homebuyers’ interests, boost govt’s stamp duty revenue, and ensure better oversight of project development.
The ‘sale agreement’, in essence a registry before the actual registry, will be drawn up in line with Section 13 of RERA, which mandates that a promoter cannot accept more than 10% of an apartment, plot, or building’s cost as advance payment or application fee without first entering into a written agreement for sale.
“In light of this, a decision has been taken that a tripartite agreement between the buyer, builder and Noida Authority will be executed in the registry department once the homebuyer pays 10% of a property’s amount,” Lokesh M said. During this agreement, 2% of the stamp duty will be paid upfront, with the remaining amount to be paid at the time of possession and final registry.
While the govt-certified agreement will give buyers concrete proof at the time of the first payment about them being authentic buyers of the property with their name going into tamp and registry department records, it will prevent developers from reselling the same unit to multiple buyers or cancelling the sale on arbitrary grounds like payment delays, missed project timelines, industry watchers said. In the past, there have been cases where developers have fraudulently sold the same flat to multiple buyers, the issue only coming to light when buyers tried to take possession.
Transactions under the radar can also happen the other way – a buyer may sell a unit back to a builder or another entity before taking possession without paying stamp duty, allowing the same unit to be resold without the govt receiving taxes. This, said an official, will also not be possible to do once a tripartite agreement is signed.
Sale agreements once a deal is struck are signed even now, but those are between a builder and a buyer. What buyers and developers typically do now is enter into an initial agreement on a Rs 100 stamp paper. Govt’s involvement in the registration process, through Noida Authority, only begins after the developer has obtained an occupancy certificate (OC) and completion certificate (CC) for the property. A ‘sale agreement’, besides being legal proof of the transaction to purchase the property, includes important details such as property specifications, total cost, payment terms and possession date.
PPS Nagar, an advocate specialising in real estate, said the new rule would bring a layer of transparency that will benefit legitimate buyers the most while preventing tax evasion. “There have been instances where developers would allot the same flat to multiple buyers, especially if the initial buyer withdrew their investment due to some reasons. Without checks, this practice went unnoticed. Under the new rule, developers will have to notify Noida Authority each time a property is transferred,” he said.
BS Verma, assistant inspector general (stamp and registry), said, ‘This move aims to benefit buyers as builders will not be able to change the sale agreement unilaterally.”
The state govt rolled out a rehabilitation package last year based on recommendations of the expert committee led by bureaucrat Amitabh Kant. But it has delivered a mixed bag with 29 out of 57 defaulting projects in Noida signing up for it. Between Feb 26 and Oct 18, this year, the stamp department managed to register just 5,925 flats in Greater Noida and 1,643 in Noida under this scheme. The board discussed additional issues, such as dues yet to be recovered from various stakeholders. It decided to allocate two plots measuring more than 14,000 sqm each in Sector 154 to IT/ITeS firms. Earlier, these plots were planned for data centres.
