The next time you go on a property hunt, you can ask your real estate promoter whether the particular plot is capable of being loaded with additional FSI in the future. The promoter is legally bound to give you the answer.
In a major relief to flat buyers in Maharashtra, the Supreme Court on Thursday held that real estate promoters must not only give particulars of the land, amenities and facilities to potential customers, but also make full and true disclosure of any future development of the plot on which their apartments are to be constructed.
“In other words, at the time of execution of the agreement the promoter is obliged to place before the flat buyers the entire project/scheme, be it a one-building scheme or a
multiple-building scheme,” held a bench of Justices Arijit Pasayat and S H Kapadia.
As per the SC order, the comprehensive development plan for the entire plot must be disclosed to potential buyers. Any deviations from the original plan will require the consent of the flat buyers.
The order was passed by the SC while hearing a case relating to the obligations of promoters, where city-based M/s Jayantilal Investments had challenged a Bombay High Court order relating to the interpretation of the Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1963 (MOFA).
The court had sought the assistance of Solicitor General Goolam E Vahanvati, former advocate-general of Maharashtra, in the matter. Vahanvati opposed the stand taken by the promoter that he was under obligation to form a cooperative society of flat owners and sell them flats only after completion of the scheme. “It is misconceived, because when a builder enters into an agreement with the flat buyers he is required to form a cooperative society as soon as the minimum number of flat takers is reached. And, thereafter, the conveyance has to be executed in favour of the society within four months,” he added.
Vahanvati said that MOFA aims at “regulating the activities of the builders and not to confer benefits on them”. He said Section 7A of MOFA unambiguously removes doubts and says the builder cannot construct any additional structure without the consent of the flat purchasers. Agreeing with Vahanvati, the SC said the builder’s obligation remains unfettered because the concept of developability has to be harmoniously read with the concept of registration of society and conveyance of title. Once the entire project is placed before the flat takers at the time of the agreement, then the promoter is not required to obtain prior consent of the flat takers as long as the builder puts up any construction in accordance with the original plan, building rules and Development Control Regulations.
City builders welcome ruling
Sunil Mantri, developer: Section 7 of the MOFA clearly prohibits developers from making substantial changes from those stated in the original sale documents. But there have been many violations leading to court cases by the consumers relating to violations of building height, FSI, open spaces etc. The SC order correctly interprets MOFA and seeks to regularise the activities of developers, who need to become more transparent and need to take laws seriously.
Sunil Bajaj, real estate consultant: A developer has a right to extract maximum from his property. Buyers, on the other hand, are usually concerned about their unrestricted view, density of residents, open spaces etc. As long as developer builds with a holistic view, no one objects. May be this order will make developers to disclose their plans and create atmosphere of understanding right at the start.