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FACT FILE

• Deal with various statutory authorities, departments, government agencies and local bodies for the purpose of obtaining permissions, clearances, sanctions and licences.

• Enter into agreements of transfer with the prospective buyers coupled with payment of advance money.

• To finally execute and register deeds of transfer in favour of such prospective buyers.

• The developer has to complete the development and construction of the agreed built-up area, the possession of which has to be delivered to the owners in a formal and legal manner together with occupancy / completion certificates, if any, issued by the statutory authorities.

For the above purposes, the legal documentation should be manifold consisting of the following:

• Development agreements which grants development rights to the developer.

• The nature of extent of owners’ built-up area to be handed over to the owners on a particular date together with proper occupancy /completion certificates.

The nature and extent of built-up area available to the developer with a right to effect the transfer of the same to prospective buyers and right to appropriate the proceeds of the same by the developer as his own.

• A separate Power of Attorney in favour of the developer granting powers to deal with Government and statutory authorities relating to the project.

• A separate Power of Attorney to enter into agreements for transfer only and to receive only advance amounts and payment instalments from the prospective buyers.

• A third General Power of Attorney which is conditional and restricted in nature in such a manner that only on the developer handing over the legal and physical possession of the owners built-up area together with occupancy/completion certificates duly acknowledged by the owner, the developer shall have the right to execute and register the deeds of transfer in favour of the prospective buyers (and not at any time before) in respect of the developers’ built-up area.

The above precautions and different types of General Power of Attorney have to be separately obtained in a careful manner so that the owner is not forced to face any tax liability at any time before he gets the legal and physical possession of the built-up area due to him as per the development agreement. signed.

It has come to our notice that without taking such precautions as mentioned above, the owners in many cases have been forced to face tax liabilities even before getting any consideration whatsoever either in terms of money or built-up area under development agreements.

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