Real estate developers are now required to declare any security interests they have created for projects registered with the relevant authorities. This decision aims to enhance transparency and ensure that potential home buyers are well-informed about any mortgages or loans taken by the developer, thereby avoiding potential legal complications.
Central Registry for Securitization and Asset Reconstruction and Securities of India (CERSAI)
CERSAI functions as the central authority that processes and stores data concerning security interests. Established under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI Act), CERSAI plays a pivotal role in preventing credit fraud. It possesses collateral data created from January 22, 2016, for registered commercial banks, and from July 1, 2016, for other entities registered with the authority. Furthermore, CERSAI began the process of registering data on security interests in residential and commercial properties under construction from June 2017.
Importance for Home Buyers
MahaRERA has emphasized the importance of home buyers and winning bidders being aware of the security interests tied to real estate projects and apartments they intend to buy. Often, home buyers purchase properties without knowing their mortgage or loan status, leading to subsequent lawsuits and legal complications.
In the event that a developer takes out a loan by mortgaging inventory or some apartments and fails to repay, banks can seize the property to recover their contingent, impacting the home buyer. However, with the new regulation, this risk can be mitigated as CERSAI maintains records of all properties sanctioned for loans.
New Requirements for Developers
Real estate developers are now mandated to submit a report to CERSAI detailing the security interests created for the property project, along with an encumbrance certificate when the project is registered with the authority. In the absence of security interests, the developer must provide a supporting commitment or undertaking. Additionally, developers must file reports with CERSAI regarding any changes in property security interests, which must be generated within 10 days of the submission date.
