Narasimha (Analytics Associate) 20 October 2010

Registering Flat-CHENNAI- Bultup area or UndividedShareArea

I already posted this question earlier but did not get much information. Here I am simplifying my question.

In Chennai and TamilNadu when a buyer registers a flat should the registration document be on a) Undivided Share Area only or b) actual flat built up area or c) on UDS but mention the Flat number and such details.

I have been informed that if a promoter is selling the flats for the first time, he/she is eligible to register only UDS. So the total transaction in such "first Buy" would be Registration Doc for UDS + Building (Sale?) Aggrement which would clearly lay out the actual builtup area and the actual cost that is negotiated for. I am not sure if this is a norm only in Chennai/TamilNadu or in other states as well. Can someone please clarify if this is a valid process.

Can you give some guidance regarding how the registration document (Flat) must be (in Chennai) to avoid malpractices by the seller?

Thanks

Narasimha

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2 Replies

Prakash Yedhula (Lawyer) 20 October 2010

Normally, the UDS of the land in registered in the case of new construction as the idea is to convey the land to the purchaser first. The purchaser enters into a separate construction agreement with the promoter/builder for construction of a flat. This is just like building a house on a vacant land. This way, the stamp duty is paid only for the cost of the land and not to cost of the entire flat.

But of late, after the service tax came to be levied for the new flat constructed by the promoter, the promoters have started to purchase the UDS in their name first and construct the flat and sell it to you (UDS + building) in their personal name and not in the name of the promoter company/firm. This is to avoid payment of service tax. By this method instead of paying the service tax @ 10.5 %, they only pay 8 % stamp duty on the entire flat cost.

Narasimha (Analytics Associate) 22 October 2010

Thank you Mr. Prakash.

I understand the new norm, but I have two more questions. As I search for apartments in Chennai, many promoters are still saying that they will register only the UDS. Based on your feedback I believe this method is fine to do. But 2 promoters mentioned that they will not even mention the flat number on the registration document. They insist that they would mention flat details (no, floorplan etc) only in building/construction aggrement. Are there any potential legal issues that I may face in future, if the flat no is not mentioned in the registration document? Please advice

2. The second question I have is, I would like to get the property documents verified independent of the bank which would process home loan. Since I am based in Chennai can you give some contacts who can do such verification? Prior to that do you indeed recommend to do a independent document verification, although banks would do that before approving the loan?

It is really great to have such a forum where a layman like me can discuss with the experts..

Thanks a lot for your help.

Narasimha