The Uttar Pradesh Real Estate Regulatory Authority (UPRERA) has mandated that developers can only issue possession letters to buyers after acquiring occupancy certificates from the appropriate development authorities. This directive aims to safeguard homebuyers' interests while curbing any arbitrary decisions that developers may make regarding possession offers.
However, this model format for offering possession has faced rejection from both real estate developers and prospective homebuyers. The deemed approval clause under RERA states that if the authority fails to respond to a request for an occupancy or completion certificate within a specified timeline, such approval is automatically considered granted. Builders are urging the authority to take this clause into account when making rulings.
Homebuyers express concern that any financial failures on the builders’ part could lead to them being the ones to bear the brunt of potential disputes between the government and developers. Such scenarios might lead to further delays in the transfer of properties.
Directive Details by UPRERA
According to the recent order from UPRERA, developers are prohibited from including demand notices in possession letters.
UP RERA Chairman Sanjay Bhoosreddy noted, "The promoters utilize the term 'offer of possession', which can confuse allottees and comes with binding conditions in their final demand letters and notices. An 'offer of possession' should simply allow the allottees to take possession without conditions." He added that a sample 'Offer of Possession' has been made available on the portal to mitigate any misconceptions and assist in conflict resolution.
Upon receiving the project’s occupancy and completion certificates, the promoter is obliged to send a written offer of possession to the registered email and physical addresses of allottees, complemented by an SMS notification. Furthermore, RERA instructs that information should be displayed at both the project site and the project head office.
Bhoosreddy emphasized, "The Regulatory Authority has released a model format for the Offer of Possession to ensure there is consistency in the language and intent of this crucial communication, particularly given the various complaints concerning the possession letters provided by promoters."
The primary aim of the 'offer of possession' is to extend an invitation to allottees for the transfer of ownership of their units. If there are still unfinished tasks within the unit, the promoter is required to specify these and give an estimated time for completion.
"Any obligations of the allottee, if applicable, should be outlined in the Agreement for Sale and supported by documentation," Bhoosreddy remarked.
Homebuyers' Concerns
Homeowners are raising alarms about their financial burdens, as many are simultaneously paying both rent and EMIs for legacy projects where builders are delinquent in their dues or negligent in obtaining the necessary occupancy certificates.
Critics argue that the UP RERA has failed to address the possession concerns effectively. Abhay Upadhyay, president of the Forum for People’s Collective Efforts, expressed, "This is merely a superficial notice. The core problem lies in the fact that promoters compel allottees to sign legal documents—declarations or indemnity bonds—before possession is granted, ensuring that they forfeit any further claims against the builder."
He further points out that an allottee refusing to sign such agreements would be denied possession if they find faults in their apartments, communal areas, or existing amenities.
Upadhyay continued, criticizing the unclear rationale behind this notification, "RERA states that promoters can only offer possession after securing OC/CC. Instead of merely issuing a notice, proactive measures should have been employed against promoters offering possession prematurely without these certifications. Expecting builders to comply with this notice while ignoring the legal framework is unreasonable."
Additionally, he noted that the customary practice dictates that the final payment is due at the time of possession. Therefore, should there still be outstanding dues owed to the builder, the distinction of whether a demand notice is part of the possession letter or a separate communication is inconsequential to the allottees. He emphasized that the notice ultimately seems to address an unnecessary issue; the primary outcome of this new directive is simply that demand notices must be sent separately. If promoters begin to issue final demand notices ahead of schedule, it could put allottees at a disadvantage, leading them to pay the entire consideration without having secured their properties.