Agreement to sell

Murari Chaturvedi, Editor, Accommodation Times

The sale and purchase of flats requires considerable time for completion of process and compliance of various legalities. As there is no rental housing availability, people are forced to purchase flats on ownership basis by shelling out their life’s savings and further committing to pay monthly installments to the housing finance companies for almost all their working life. Under the circumstances the Agreement to sell acquires greatest importance. The ownership contemplates, exclusive right of occupation in respect of a part of a building, right as to way, natural and modern amenities and easements, covenants relating to maintenance and service, and lastly, ownership of land remains joint and undivided. The agreement to sell covers all these plus other conditions. A peculiar situation exists here because of two aspects in apartment legislation. One is about regulation of construction and sale of flat / apartment by builder or promoter and the second is about ownership enjoyment and maintenance of flat with transferable and heritable interest generally known as Apartment Ownership Act. Maharashtra, Gujarat, Karnataka, West Bengal and Punjab have separate statute on both these aspects. The states of Andhra Pradesh and Delhi have only one statute, covering partly both the aspects. Bihar, H.P., Kerala, M.P. Orissa, Tamil nadu and U.P. Have statute on the second only. Rajasthan have no such law. When the sale and purchase of property
is governed all over the country by the provisions of the Indian Contract Act 1872 and the Transfer of Property Act 1872, why should there by two sets of legislations for the single purpose. It creates confusion and legal problems. In Mumbai in all new constructions, the sale of flat is on ownership basis and the purchaser thinks he is the owners of the flat. But whether in reality it is so? The answer is both yes and no. Maharashtra took the lead to legislate Apartments Laws. The Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act 1963 and Maharashtra Apartment Ownership Act 1970 are modeled on American pattern. In Maharashtra, the builder/promoter has a clear choice either to float a co-operative society or company and sell the flats on “dual ownership” under the 1963 Act or to make a declaration and sell the flat under 1970 Act and pass free and absolute title to each individual flat purchaser. The 1963 Act does not give title to the flat purchasers and hence there are certain difficulties in raising loan over them. This has resulted in the emergence of “dual ownership” where all the rights are vested in the society or company. Under 1963 Act the right of occupation subject to bye-laws being vested in the member (flat purchaser) but it restricts the member to induct any third person except with permission of the society. The right of transfer of his interest in his flat exclusively
preserved by the society and the member is called tenant, though he has purchased a flat on ownership basis. This anamoly has given rise to lot of litigations in co-operative societies. This state of affairs must end. The flat purchaser who pays the full cost of the construction of the flat and his share of land is definitely entitled to get free and obsolete title of his flat, without any strings attached. It is desirable that a uniform law for the ownership of flats be enacted for the whole country just as the model rent control legislation brought by the centre for the whole country.