Hyderabad: The Confederation of Real Estate Developers Association of India (Credai) Hyderabad initiated a campaign to caution the customers purchasing the undivided share of land, calling it a highly risky transaction. The industry body emphasised that a RERA-approved purchase of apartment/commercial space is the best and safe way.
In the purchase of Undivided Share of Land (UDSL) for an apartment or commercial use, Credai Hyderabad states, typically the builder enters into an MoU with the purchaser with conditions of the purchase, the time for delivery of the property and other aspects. The agreement is done as a group of buyers for the undivided share of land or purchased by the buyer. After this, the sale consideration is paid to the owner of the land. After the execution of the sale deed, the purchaser executes a development agreement–cum-general power of attorney in favour of the builder. The purchaser then entrusts the UDSL purchased by him pursuant to the sale deed in favour of the builder.
Builder agrees to construct the project and allot the apartment or commercial space which was originally agreed to be sold by the builder to the purchaser. In this kind of a transaction, the property is sold much below the market price. Such amounts may not be enough to construct and deliver the building – putting the investor’s money at high risk.
Other risks include that the transaction exposes the purchaser (of UDSL) to the builder’s performance risk of completing the project (since the tenure of the project is approximately 3-4 years). If the builder fails to complete the project during the stipulated period, the purchaser would not be able to transfer his UDSL or the apartment or commercial space to any other party. Another important aspect is that in the purchase of UDSL, the purchaser is deemed to be a ‘promoter’ under RERA and be liable to financial risks and other liabilities laid down by the Act, regarding builder default in project delivery.
P Ramakrishna Rao, president, Credai Hyderabad, said, “All real estate under-construction or new projects, whose building permissions are approved on or after January 1, 2017, and is constructed on more than 500 sq mt of land including more than six units are liable to follow Telangana RERA rules. Buyers should be alert and ensure they purchase the TSRERA registered projects. This will safeguard the hard-earned finances of the home buyers. They should avoid getting into a USDL unless they have done thorough due diligence and are sure of the safety of their investment. If buyers are cautious, insist on TS RERA registration details for all projects approved after 1st January 2017.”
Adding to this, V Rajashekar Reddy, general secretary, Credai Hyderabad, said, “Hyderabad is primarily an end-user market. Majority of buyers are first time buyers with fixed resources and little knowledge of the process involved. In this situation, it is important that the buyer evaluates the builder profile, experience and track-record for project delivery before selecting the property. They should mandatorily verify if the identified project is registered with TS-RERA and has a unique number. A RERA-approved Sale Process will provide full validity of land values for buying and have approval from relevant government bodies like GHMC/HMDA/DTCP, which can be easily verified. For RERA registered projects sale is solicited properly in a structured process and protected under different clauses of RERA.”