DETERMINING THE PRICE FOR YOUR PROPERTY

(Advocates, Property advocates in Bangalore, Property lawyers in Bangalore)

Deciding to sell your property is the first step in a real estate transaction. After this, there are certain other factors which require to be considered by you to get the best price for your property.

In the real estate market, as the potential buyers find a large number of similarly placed properties, they do make heavy bargain to get the property at the lowest possible price. In case you quote a fancy price for your property, your property will remain unsold.Therefore, you, as a seller, should set the price for your property at a scientifically arrived at figure keeping in mind the prevailing market conditions for similarly situated properties and other relevant factors.Thus, there is a need for you to know the sources and the method for determining the right price of your property.

The appraising process is time consuming since there are lot of factors to be considered. Since this is a technical job, it is better to engage the services of a licensed/government approved appraiser to do the appraisal of your house in whom the buyer also has confidence.The appraisers may be members of the local Board of Realtors.The fee and other charges to be incurred in obtaining appraisal report would vary and depend upon the value of the property, location, etc.Both the seller and the buyer must be prepared to wait till the appraising process is completed since both the buyer and the vendor would benefit from this. The appraisal report would give details as to how the value shown therein in respect of the property under consideration is arrived at.

Thus, on the basis of appraisal report, the price for the property may be fixed. Since the value shown in the appraisal report is fixed is by an expert in the field, there would be no scope for suspecting the value as shown therein and therefore, marketability of such property is high.

Similarly, you may utilize the services of real estate agents since Competitive Market Analysis [CMA] is carried out by the real estate agents systematically to determine the correct selling price for the property. Real estate agents have access to multiple listing service computers, which they can use to fix your property properly. Since real estate agents do this service for their livelihood, you can rely upon them and be sure that they know of what they are doing and they have the capacity to get the deal finalized satisfactorily. Therefore, seeking the advice of an experienced real estate agent would help you in arriving at the fair selling price for your property.

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UNION GOVERNMENT TO RE-DEVELOP PROPERTIES

(Advocates, Property advocates in Bangalore, Property lawyers in Bangalore)

With the Union government planning to redevelop existing properties prime

locations in the two metros Mumbai and Delhi, the real estate firms here are set to experience another boom.

In partnership with private realty firms, the centre proposes to overcome shortage in office and residential spaces in these metros.It plans to demolish the existing single or two-storey buildings.In commercial and residential areas to build multistorey structures and optimize the use of prime real estate in its possession. Real estate firms will gain from residential flats or commercial space in the redeveloped properties. They may also gain, from annuities, rental payments being considered by the government in lieu of undertaking construction, financing and risks involved with these projects.

The move will address to a great extent the problem of steep property prices in the urban centers.The problems of unaffordable housing prices can be effectively addressed by public-private partnership.With this, the government would be able to add one crore sq ft office space and 61,000 houses or flats in Mumbai. Another 43,000 flats would be made available for the Mumbai police. Similarly, 25 lakh sq ft office space and 34,000 houses would be developed in New Delhi to overcome shortage of residential space for the government officials, ever expanding list of former ministers, members of parliament and retired government personnel. Another 20,000 houses required for the Delhi Police would be constructed on the existing real estate held by the government agencies. The postal department also needs residential space.

The planning panel and ministries of urban development, railways, defense and finance are being consulted on this initiative. The ministries of defense and railways may not be part of the move to redevelop government properties. Though the three services army, air force and navy are in need of residential and office spaces, the ministry will execute its own plans, Excess land in cantonments would be utilized for this purpose.

Once the policy to redevelop the government properties is finalized, a biding process will be put in place to select the partners for the projects. A model concession agreement would set the normal and commercial terms under which the real estate majors will participate in these projects. The government will extend the re-development of its property in Chennai, Bangalore, Hyderabad, Kolkata, Ahmadabad and Pune.

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LOCK-IN-PERIOD CLAUSE TO PREVENT SPECULATION

(Advocates, Property advocates in Bangalore, Property lawyers in Bangalore)

The property developers in the country are to incorporate a new clause known as "lock-in-period" clause in the agreement to sell to prevent speculations in property dealings.

"Lock-in-period" clause means that the buyers cannot sell their properties within a certain period after booking the property or have to pay a penalty if they do so.The lock-in-period are expected to be introduced mostly for mid-income projects, that offer prices 20 to 30 percent below the market price and, therefore, attract more undercutting from bulk discount buyers. Margins on mid income housing projects are 20 to 25 per cent compared with 50 to 70 per cent for premium housing. In the boom years of2006 and 2007,30 to 50 per cent of housing projects were sold on bulk discounts.

Now, companies such as Tata Housing will not issue no-objection certificates to property buyer for the first six months after allotment while DLF Ltd., India's largest listed realtor, would not transfer the title of the property in the name of the buyer for a year after a property is booked. According to the chairman of Omaxe, a Delhi based organization that Omaxe will introduce similar clauses in all their future affordable housing projects. The companies do not want short-term investors to compete with the company later in the market, as the margins in affordable housing are very low. Omaxe is launching 10 mid-income projects this year.

DLF Ltd., claims it is the first developer to introduce the clause for both premium and mid-income projects. According to the Executive Director, the company has decided to discourage speculation in property dealings since the same buyer used to buy five to six flats in their projects and sell them within a month in the open market for premium.Hence, this lock-in-period clause. Several other companies have imposed a steep transfer charge Rs.100 to Rs.1000 a square foot if the first time buyer sells the property within a specified period to prevent speculation in property dealings.

This approach of the developers has attracted criticism from analysts. According to Chairman, Knight Frank India, developers want the best of both worlds.They want to delay registration and charge of transfer fee because once a property is registered it is binding on developers.

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PROPERTY POSSESSION RIGHTS

(Advocates, Property advocates in Bangalore, Property lawyers in Bangalore)

Possession In essence means holding an immovable property in possession with or without title of ownership. It is a continuous act of claiming exclusive use of the property as if the holder owns the property to which he may or may not be having right of ownership. Possessions are of various types. Adverse possession,symbolic possession, possession under an irrevocable power of attorney, possession under lien and possession under part-performance of a contract are a few important ones.

A person inactual possession of an immovable property has certain right and interest in the property he is holding. The possessor has such a strong control over the immovable property that he can keep others out from occupying it. Unless otherwise proved, possession may be taken as title of ownership. Mere possession of an immovable property does not mean that the person is the real owner of the property.

Holding a property after a decree is passed for vacating it, even after enough time is given for vacating the premises, is illegal and cannot be termed as permissive possession, ownership are not one and the same. Possession means not only physical possession (or constructive possession) of a property but also full control over it.Occupation means the right to hold and occupy a property. Ownership means lawful possession of a property which may not come with actual physical possession of property.

A landlord gives his agricultural land to a tenant for cultivation. Though the property is the same, the rights enforced are different. The landlord possesses the land without occupation and the tenant cultivates the land without possession. The mere right to cultivate does not confer the right of possession on the tenant.

Similarly,In a mortgage, the tenant as the mortgagee is in actual physical possession of an immovable property and the landlord as the Mortgagor is the true owner of the property.Here the mortgagee possesses the property without ownership and the Mortgagor owns the property without occupation. Possession is temporary.Ownership is permanent.

Adverse Possession means a person possessing an immovable property which is unfavorable, unhelpful or harmful to the interest of the rightful owner. Adverse possession is possession of a property by a person on his behalf or on behalf of some other person on which the true owner has a right of immediate possession. If, however, the true owner does not enforce his right within the time limit stipulated under Law of possession of the property becomes adverse to the true owner.The result is that the true owner not only loses his right, title and interest in the property but also cannot maintain a suit in a court of law.

Possession must be hostile in total denial of the title of the true owner. The Possessor must be in actual possession of the property under a claim of right. The property must be in his continuous possession and the people in the neighborhood must know that he has been staying on the premises peacefully and continuously for a long period of time and paying taxes in his name so as to show that the title of property is adverse to the true owner. It must be open and hostile enough for the interested parties to come to know of it.

A person,who exclusively holds an immovable property physically,openly, peacefully and without interruption by the true owner for a period of 12 years or more, is considered to have acquired the ownership and title of the immovable property by adverse possession.The expression adverse possession indicates a hostile or unfriendly possession, which is either expressed or implied by open denial of the title of the true owner.

Adverse possession is a one- sided act.Therefore, it cannot be documented. A person holding a property for a long time does not mean that title of the property can be denied to the true owner.Possession turns adverse only when the rights of the possessor and the true owner do not match.The person holding possession of the land should hold the same on his own behalf or on behalf of some person other than the true owner, while the true owner all along has a right of immediate possession of the property.

Further possession to constitute adverse possession should be exclusive and actual physical possession. It is not at all necessary that the true owner should have actual knowledge of the adverse possession so long as it is open and the interested parties have knowledge of it. Also, it is not necessary that the person claiming the title of adverse Mr. A, who claimed to be a 'thika tenant' since 1966 was renting out the property to tenants. However, he had all along been claiming to be the attorney of Mr. B. It was only since 1975 that Mr. A started depositing rent in his own name. Mr. A filed a suit in 1982 for permanent injunction seeking to restrain the owner from taking over the property from him. The court heard Mr. A's case and held that Mr. A had been a trespasser on the property, but started asserting his rights only from 1975 and not earlier. The court held that the suit filed in 1982 was pre-mature, as at the time when the suit was filed, Mr. A. was not in adverse possession of the property for 12 years.

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YOUR HOME LOAN AND FINANCIER

(Advocates, Property advocates in Bangalore, Property lawyers in Bangalore)

Selecting a house to suit one's needs and taste is a difficult task. After moving into newly constructed or purchased house, residents complain of various shortcomings, and often feel that previous house was more convenient.

Choosing a suitable home financier is even more difficult, it requires lot of study of various schemes, interaction with the present borrowers. Market is flooded with financiers, offering different schemes supposed to suit borrowers' needs, glossy advertisement proclaiming to save a lot of interest as though financial institutions are charitable institutions doling out money for acquisition of house.The borrower needs to be very selective and careful while choosing the financier.

Your Banker

Generally every individual will have a bank account and have personal relations with the bank. The bank having dealt with the account for many years will have adequate knowledge of financial position of its client and many a times will be a family friend.

Housing finance is of a long duration, generally with a minimum of 15 years and a maximum of 25 years. It is but natural to have ups and downs during their long period with fluctuation in income, may be owing to illness, expenditure on marriages, mishaps in the family leading to temporary cessation of payment of equated monthly installments. Your banker should be able to understand your difficulties and co-operate with you during those difficult days.With the enactment of SRAFESI Act, the banker may take possession of your house with anotice of 60 days and there after may sell it. So it is always preferable to choose your long time banker, for financing of acquisition of house, who will not resort to aggressive measures in the event of default/delay in repayment of loan.

Amount of loan

Many new era bankers sell their products, home loans by adopting aggressive methods and also lure you to borrow big loans, which in future may become difficult to service. Borrower's failure to repay the loan as agreed would be a boon to such bankers, who may take possession of the property and sell it and add various expenses to borrower's liability.

One should not always anticipate that income will regularly increase until retirement. Inflation frequently erodes savings. Prepare cash flow statements by taking into consideration the probable expenditure on providing education of children, marriages, illness and unforeseen expenditure. Correctly arrive at your wise surplus funds, portion of which may be directed towards equated monthly installments, based on which the loan amount may be arrived. Please avoid directing entire surplus to repayment. It is advisable to seek the help of financial consultants.

Repayment period

Though the loans are available within repayment period of25 years or more it is viable to repay the loan in 10 to 15 years so that interest burden is not too much. Repayments in five years or less may be feasible for small loans for a couple of lakhs. EMI for one lakh of rupees alone at 7.5% will be Rs. 2000/-. Do not stretch the repayment until retirement, but ensure that loan is closed at least a couple years before retirement.One should not expect that his terminal benefits to take care of repayment.Terminal benefits are meant for future unencumbered happy living.Choose step-up or step-down repayment depending upon your needs.

Interest rates

There are two different types of interest rates viz., floating and fixed. Some institutions offer different types of fixed rates, semi fixed, fixed for certain period, a combination of fixed and floating.

Floating rates are related to market condition and may increase or decrease. Fixed rates are supposed to be fixed for entire period of loans, but loan agreements of many financial institutions have conditions where fixed rates are also revised under certain circumstances. Floating rates are preferable where the interest rates are going down and the repayment period is small.Fixed rates have to be opted where interest rates are going up and repayment period is long.At present interest rates are at lowest, fixed rates are preferable.

Card Rates

Though financial institutions advertise their lending rates, the advertised rates are called card rates. But actual lending rates depend on the income of the borrower and his negotiating skills. This also is related to risk involved, higher the risk, lower the income, interest rates will be more.Many banks reduce their card rates in case of borrowers with good income and lower risk.

Documentation

Borrowers have very little choice in documentation. Each financier has his own set of documents and will be made available to the borrower at the last minute. They are predominantly one sided in favor of financiers. But borrowers should study each and every clause, conditions, and seek clarification wherever required. They should obtain a copy of all documents executed.

Uninvited Borrowers

Every financial institution has its own list of category of people to whom finance is advanced.It is based on the experience of the institution, and category of people whose income is not assured, litigant minded people and the people who may influence the repayment. Politicians, advocates, film and TV,artists, Journalists, Police, are among a few who are on negative list. Such borrowers may approach their regular bankers.

Direct Selling Agents

Of recent times, direct selling agents are very active in the field. They are just agents of the financial institution to procure business. They have a sweet tongue, work for commission and will be in touch with you, until the loan is disbursed. You cannot get any service from them once your loan is sanctioned by the bank. The borrower should develop personal rapport with manager of the financial institution to have better after sales service.

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DEFINING NECESSITY OF AN APARTMENT SOCIETY

(Advocates, Property advocates in Bangalore, Property lawyers in Bangalore)

In Bangalore, rapid growth of the Apartment culture is seen for the last five years.Now-a-days the educated people generally opine that owning an Apartment is safer than an independent house.After the hectic day in office or business, one would like to socialize for some time. In such case, Apartment living offers excellent opportunities for group living with a diverse culture.

Object of the society:

The motto behind forming the society is to build harmonial relations with a bond of common habit and common usage and inculcate the fellow feelings, which itself transforms into a new community wherein they live as each is for all and all for each.Further such societies are also necessary for maintaining Electricity,Water Supply, maintenance of lift,Security, Cleaning of the premises, Parking,Collection of Garbage, preserving various statutory and accounting records. Apart from this, the society also looks after affairs, which includes economic betterment and social welfare.

Constitution of the society:

After completion of the construction of an Apartment,Owner of the flats/residents of such apartment, form an association, to take care of the needs of the residents and maintenance of common facilities. The society must consist of minimum of 7 members.In addition to the above, Managing Committee should consist of at least one or two lady members for effective governance of the society.

Mandatory registration of the society:

After formation of such societies, the same has to be mandatorily registered under the Karnataka Apartment Ownership Act or Societies Act. Since most of such societies are functioning without getting it registered, it is advisable to register in order to give legal sanctity and clarity for their activities.

Participation of the members:

The members of the society should actively and jointly participate in casting the vote for appointment of the members to the Managing Committee.  They should participate in every General Body meeting and appoint the Managing Committee members who are honest,disciplined,duty conscious,and hard working. Generally, retired officers are preferred to be employed as the Manager of the said committee, as the presence of the aforesaid aspects and qualities are essential to run the Society efficiently who can carry out their duties at the best of their abilities.

The members of the managing committee should not have the impression that they are the landlords of the Society.Further, they should also not dictate their own terms and conditions or their say in the Society but have to keep in mind that they are the respected persons duly appointed by the members of the Society to look after the interest of members of the Society.

The following points are required to be covered in their bye-laws in order to practically sort out issue, which may arise now and than such as:

1)  The administration of every property shall be governed by bye-laws, a true copy of which shall be annexed to the Declaration.No modification or amendment to the bye-laws are valid, unless set forth in an amendment to the Declaration and such amendment is duly recorded and a copy thereof is duly filed with the competent authority.

2)  The bye-laws shall provide for the following matters, namely:-

a) The election for the  Board of Managers should be among the apartment owners and that the terms of atleast one-third of the members of such Board shall cease annually;the powers and duties of the Board, the compensation, if any, of the members of the Board, the method of removal of the elected  members from the office of the Board; and whether or not the Board may engage the services of a Secretary, a Manager or Managing Agent, and specifying which of the powers and duties granted to the Board by this Act or otherwise may be delegated by the Board to either or both of them;

b) Method of calling meetings of the apartment owners; what percentage, if other than a majority of Apartment owners, shall constitute a quorum;

c) Election of a President should be from among members of the Board of Managers and he/she shall preside over the meetings of such Board and of the Association of Apartment Owners;

d) Elected  Secretary should keep a minutes book where in resolutions shall be recorded;

e)   Elected Treasurer  should keep the financial records and books of accounts;

f) Maintenance, repair and replacement of the common areas and facilities and payment therefore;

g) Manner of collecting from the apartment owners their share of the common expenses;

h) Designation and removal of persons employed for the maintenance, repair and replacement of the common areas and facilities;

i) The method of adopting and of amending administrative rules and regulations governing the details of the operation and use of the common areas and facilities;

j)  Such restrictions on the requirements respecting the use and maintenance of the apartments and the use of the common areas and facilities not set forth in the Declaration, as are designed to prevent unreasonable interference with the use of their respective apartments and of the common areas and facilities by the several apartment owners; and

k)  The percentage of the votes required to amend the bye-laws.

3)   The bye-laws may also provide for the following matters, namely:-

a) Subject to the provisions of this Act, provision for regulating transfer or partition of any apartment and percentage of undivided interest in the common areas and facilities appurtenant to such apartment, subject to such terms and conditions as may be specified in the bye-laws;

b) Provisions enabling the Board of Managers to retain certain areas of the building and lease to non-residents for commercial purposes and for distribution of resulting proceeds to the apartment owners as income or application thereof in reduction of their common charges for maintaining the building; and

c) Any other provisions, not inconsistent with the provisions of this Act, relating to the audit and accounts and administration of the property and annual and special general meetings, annual report and the like.

These guide lines are the golden rules which are required to be followed for the smooth functioning of the apartment societies.The duty also lies on the co-owners of the apartment to duly co-operate and coordinate with the functioning of the society which in turn contributes for their peaceful enjoyment.

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TIPS FOR PROPERTY REDEVELOPMENT

(Advocates, Property advocates in Bangalore, Property lawyers in Bangalore)

Who will not jump at a deal in which the builder offers residents of old buildings a good amount to get a refurbished flat with additional space? This is what has been happening recently. Not only does the flat seller receive the cash but he gets a monthly rent for his temporary accommodation also. When the new property is prepared he gets a, refurbished, newly built flat in place of his old one.

This is done by builders for the purpose of redeveloping the property and adding extra floors to a certain building.By selling the extra flats they earn revenue.Depending on whether the resident is requested to move temporarily or permanently the builder will pay the money to the present residents.For a temporary shift the builder will give money for the other accommodation till reconstruction is complete.Builders sometimes also give post-dated cheques.These should be accepted only if the money paid in advance is enough for at least 18 months of the rent. You should calculate if the sum given would be adequate till you come into the refurbished home.

If you are vacating the flat permanently you would get a larger sum of money from the builder depending on how your property has been evaluated.You should ensure that the amount is enough for you to buy another flat after subtracting tax payable.You should request a bank guarantee in order to prevent you of being defrauded.The builder deposits this amount with the bank that would be given to a resident if the builder does not finish the project within the time promised.However a builder cannot redevelop a building or a society if 100% of the families residing therein do not agree for it.

Before you ultimately give the keys of your home to any builder you should ensure that your needs for the future are taken care of.You should know the way of entering into a redevelopment contract keeping in mind your needs. In these deals the resident has to decide the terms and conditions. Therefore, the flat owners or a housing society need the services of a professional lawyer and architect to guide them. The lawyer would make sure that present and future legal issues are tackled effectively.He helps to formulate the documents according to the law.

Before you give the project to any builder you should examine his track record. Your architect may be able to help you know if the chosen builder has finished his previous projects within the time promised and has paid the sum as promised in the contract.

An architect will assist you in knowing the worth of the property upon its valuation.This is a significant factor in deciding the amount offered by the builder. In the later reconstruction time the architect would be a watchdog to make sure that sub-standard materials are not used by the builder for construction

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