Publicly Disclose the Apartment Sales: MahaRERA

Due to the increasing number of complaints regarding developers engaging in the illicit practice of transferring the same apartment to multiple buyers, the Maharashtra Real Estate Regulatory Authority (MahaRERA) has directed developers to publicly disclose the status of apartments as sold or reserved.

Mandatory Disclosure of Apartment Sales

To prevent multiple transactions involving the same apartment or plot, it is now imperative for developers to provide immediate information upon booking or selling a unit. Real estate market experts highlight instances where builders issue only an allotment letter to the buyer, which serves as a confirmation of the booking, while subsequently reselling or even mortgaging the same apartment to other parties without the knowledge of the initial buyer. This ultimately results in the developer illegally obtaining funds from multiple unsuspecting buyers and financial institutions for a single property.

Challenges for Lenders and Consumers

Pankaj Kapoor, an official from the real estate firm Liases Foras, stated, "the main purpose of RERA was to suppress such threats and actions. The law stipulates that developers upload information about mortgaged and sold properties on the RERA website." He further points out that similar deceptive practices previously observed in projects within the National Capital Region (NCR) and Mumbai Metropolitan Region (MMR) caused significant difficulties for lenders and consumers. Kapoor emphasizes the need for stringent penalties against such builders to maintain consumer trust and uphold the industry's credibility. "Previously, it was noticed that many builders’ projects were stuck in the NCR and MMR trap and practiced similar approaches. It had caused several difficulties to lenders and consumers. These builders need to severely be punished as this undermines consumer confidence and discredits the entire industry."

Shop Sold Multiple Times

Manohar Shroff, a Navi Mumbai-based builder, expressed his concern over the increase in fraudulent activities, remarking that Navi Mumbai has become "a villain’s port." He highlighted a case where a developer defrauded investors and absconded to Pune. Shroff further elaborated on other cases, including one where a builder fled with Rs 100 crore and another involving the multiple sales of a single shop in Belapur’s Central Business District (CBD). To mitigate such risks, Shroff advises buyers to register their documents promptly. "The whole industry suffers from some dishonest brokers and builders. In one case, a developer cheated or misled several investors and fled to Pune. In another case, a builder fled with Rs 100 crore, and a third sold a shop several times in Belapur’s CBD and misled buyers. So, to avoid these kinds of fraud, buyers should register their documents as soon as possible."

Importance of Registering Sales Agreements

Legal expert Anil Harish observes that some developers continue to issue multiple allotment letters for the same property even after the implementation of RERA, a practice he deems illegal. He advises buyers to verify project registration and building permits on the MahaRERA website and conduct sub-registrar searches to ascertain ownership and mortgage details. "it appears that even after the arrival of RERA, some developers continue to issue more than one allotment letter for a single property. This is obviously wrong in both civil and criminal law. Buyers should also check the MahaRERA website to see if the project registered and if building permits have been received. Also search sub-registrar registrations to check ownership and mortgages."

Experts recommend registering an agreement upon payment of more than 10% of the apartment price. To incentivize early registration, they suggest a nominal 1% stamp duty on preliminary documents such as letters of employment, letters of intent, or memorandums of understanding (MOUs), which can be later adjusted against the final stamp duty of the sales agreement.