Homebuyers will now be aware if the land on which their building stands is clear of outside claims. This transparency comes as a result of a recent circular issued by the Reserve Bank of India (RBI). The circular mandates that builders who mortgage the land to raise funds must disclose this information in all advertisements and brochures.
RBI Directive Highlights
The RBI has instructed lenders to ensure that any publicity material related to the sale of real estate includes a mention of the bank's lien on the property. This ensures that homebuyers are not left uninformed.
The aim of this directive is to prevent prospective buyers from being misled into believing that the flats they are purchasing are on 'free-hold' land.
Mumbai Specifics
In Mumbai, flat owners obtain rights over their houses through membership in a cooperative housing society. However, the land is not owned by the society unless it is specifically transferred through a conveyance.
Key Implications
Enhanced Transparency: Buyers will have full disclosure about any liens on the property, leading to more informed decisions.
Legal Clarity: The directive helps in avoiding potential legal disputes by providing clear information about the mortgage status of the land.
Quotes
"RBI aims to prevent prospective buyers from being lulled into the belief that the flats they own are on ‘free-hold’ land through this move."
This move by the RBI is set to bring greater transparency and trust in the real estate sector, providing homebuyers with crucial information before making significant investments.