Conveyance is a Transfer the Title of Land and Building by the Builder/Developer/Owner of the land in favour of Housing Society by execution of Conveyance Deed.
As per the Housing Society Bye-Laws, the main objective of formation of the Society is to obtain the Conveyance and if Conveyance is not executed by the Builder/Owner within four months from the date of Registration of the Society, a case can be filed against the Builder/Owner of the land to obtain the Conveyance. As per Section 13 of Maharashtra Ownership Flats Act, 1963, failure to give Conveyance is an offence and the Builder/Owner of the land can be imprisoned up to 3 years or fined or both.
Although the Society is governed by the MCS Act, Rules and the Bye-laws, a common situation most prevalent in a Cooperative Housing Societies is where the Members and sometimes even the Office Bearers are ignorant about the importance of the Conveyance Deed. Seldom do the people realize the advantages of obtaining the Conveyance Deed and the registering the name of the Society in Property Card as the next owner of the land that makes it one of the most important Documents that every Society should possess.
Considering the fact that the provisions of the Bye-laws distinctively mention the Conveyance issue right from Bye-law No: 5: The Object of the Society shall be to obtain Conveyance from the Owner/Promoter (Builder) in accordance with the provisions of the Ownership Flats Act and the Rules made there under, of the right, title and interest in the land with the building/buildings thereon.
Some of the main reasons prevailing in the matter of Conveyance at the Society level are the Ignorance regarding the subject matter, Lack of Knowledge/Information, No initiative from Promoter (Builder) due to vested interest, Non availability of Documents, Non-Cooperation from Promoter (Builder) & Land Owner, Non Cooperation from Society Members and Fear of Litigation and Expenditure
The Benefits of Conveyance are as under:
- Getting a legal title in the name of the Society.
- Conserve the additional FSI as per the Government announcements.
- Property shall be free and marketable.
- Society can raise the loans for repairs and reconstruction by mortgage.
- Permission from Planning Authorities is possible if the building has to be reconstructed at a later date due to dilapidation of the structure due to age or by earthquake.
- Society can take the benefit of TDR for redevelopment.
- Members can receive compensation from Builder on redevelopment of the property of the Society.
There are Drawbacks of Conveyance listed as under:
Authorised Committee to get Conveyance of Land & Building in the name of the Society to avoid following consequences
- Even though anyone has purchased ownership flat, he/she is not the owner of the land and building.
- In the event of a building collapses or damage sustained by the building, one cannot reconstruct the building without the permission of the Builder/Owner of the land.
- The Builder/Developer may mortgage the property purchased by anyone as the Builder/Developer is the legal owner and holding the Title Deeds of the Property.
- The Builder/Developer may transfer the FSI/TDR to his other projects and enjoy the commercial benefits, depriving the flat purchasers/Society of its legal entitlement.
- The Builder/Developer may make profit by sale of open spaces, gardens, terrace and parking space supposed to be belonged to the Society.
- The Builder may demand a huge amount from the Society, if Conveyance is sought by the Society after a lapse of many years.
The Builder/Developer may sell the entire Development Rights and the Legal Rights on the land to third party and create a third party interest in the Property and the Society will have to incur an exorbitant amount of expenses to clear the same which may be difficult for the Society to sustain.
The reasons which hinder the Builders/Promoters/Owners of Land for not executing conveyance are as under;
- The original owner of the land finds it difficult to get certificate under section 230 (A) of the IT Act, as he has not cleared his liabilities.
- Internal disputes between the members of the family, Board of Directors in case of limited companies, or among trustees in case of trust.
- Difficulty in getting a certificate under Urban Land (Ceiling & Regulation) Act, 1976 also creates difficulty in executing conveyance.
- The promoter delays or avoids the work of executing conveyance as he wants to retain control over ownership of land and building.
Directly or indirectly the Promoter is benefited if there is an additional FSI as well as Transfer of Development Right (TDR) due to change in Law from time to time for the purpose of construction. When the flats are transferred from one purchaser to the other he gets transfer money or a share in the second sale.
According to rule 9 of MOF Rule, it is mandatory to take necessary steps to execute the conveyance within a period of four months of registration of the society or limited company. If Builder does not comply with these provisions,
- He can be prosecuted u/s. 13 of MOF Act.
- If Builder is found guilty, the Criminal Court may punish the Builder.
- If the Builder is still adamant a civil suit under the Specific Relief Act can be executed.
The consequences of non-execution of Conveyance can be disastrous in the long run. If Conveyance is not executed, it means that the Society does not have legal rights or ownership of the land on which the society’s building stands.
Similarly, it may not be possible to redevelop the building. Even for using additional FSI or for carrying out major repairs, Municipal Authorities will insist on NOC from the Land-Owner. In such cases, losses to the Members will be huge.
It is a statutory obligation on the Builders/Developers/Owner of the land to execute a Deed of Conveyance in favour of Housing Society within the prescribe period and if he fails to comply with the provision, the Society can file a suit in the Civil Court and obtain a decree against the Promoter.
However, in a judgement which is very beneficial to Housing Societies, Bombay High Court held that in a suit filed by a Co-operative Society against the promoters for conveyance, it is not necessary to calculate the value of property for the purpose of court fees. (Reported in 1982 Maharashtra Law Journal, page 607) Hence, the Housing Societies can file suits against the Promoter for conveyance by paying a nominal amount of Court Fees which otherwise would have been in lakhs.
Secondly, under chapter-II of the Specific Relief Act, the purchaser of the flat can file suit for specific performance of the contract. The Housing Society can apply to the Court for directions to the Promoter/Landowner to executive the Deed of Conveyance in favour of the Society.
The Provision of Rules 21 and 34 of the Civil Procedure Code provides the remedy to face a situation when a Promoter/Landowner does not execute the conveyance even after a decree is passed by a Court. In such a situation the Society which filed the suit should prepare a Draft of Conveyance and submit it to Court. The Court will issue a notice to a Promoter/Landowner along with a copy of the Conveyance Deed.
After considering the objection if any raised by the Promoter/Landowner, the Court will finalise the Conveyance Deed. If the Promoter/Landowner still fails to executive the document, the Court will authorise and officer of the Court to executive the Deed of Conveyance in favour of the Society.
In case if the Promoter/Landowner does not exist or traceable, the Society can file a case in the Consumer Court or in the Civil Court and obtain ex-parte decree in favour of the Society. The same decree can be registered with Sub-registrar as Conveyance and the Property Card can be changed in the name of the Society thereafter.
In a project of multiple buildings being constructed and where half of them are completed and individual Society formed, the Builder can give the Conveyance to these individual Societies and need not to wait for the entire projects to complete.
If a Member of the Society, while buying the flat, has not got his Agreement registered with due Stamp Duty paid, at the time of process of execution of Conveyance being undertaken by the Society, the concerned Member will have to pay Stamp duty at the market value and the rate applicable on the date of executing the Conveyance.