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Legalities of Buying a House in Maharashtra

Blox Social
Posted on
Jan 10, 2023

Maharashtra continues to be India’s best performer and the wealthiest province, with its no.1 ranking based on fiscal, economic, social, financial, environmental, and government factors. The GDP for the country’s most prosperous state is expected to be ₹35.81 lakh crores in the year 2022-23, making it one of the largest commercial and industrial sectors.

Located in the western peninsular region of India, Maharashtra is the 3rd most populated state, with a population of over 11 crores and ten major cities.

  • Mumbai
  • Pune
  • Nagpur
  • Nashik
  • Aurangabad 
  • Solapur
  • Amravati
  • Jalgaon
  • Nanded
  • Kolhapur 

Another significant contributing sector to Maharashtra’s GDP is real estate, with Mumbai leading the pack, expecting an average 13% increase in property rates across MMR. Therefore, buying a house in the country's financial capital requires due diligence and a plan of action, requiring key documents and legalities. Purchasing a home for a common man involves a lifetime of savings, forming a crucial stage in his life. 

Real estate laws in Maharashtra need not necessarily be uniform across the state. For example, the stamp duty and registration charges in Navi Mumbai could be different from other cities in the state.

Thus, one needs to avoid all those hurdles that could derail this process, especially regarding the law of the land. Let's educate ourselves on some of the legalities of buying a house in Maharashtra. Anyone planning to purchase a home in the state should know his legal rights as listed below.

1. Full Disclosure by Developers

  • Title to the land
  • Encumbrances
  • Taxes
  • Nature of construction
  • Materials used, carpet area, price of the flat

2. Cap Deposit

During the time of sale, the developer cannot charge any sorts of payment which is 20% more than the unit sale price. 

3. Change in the Landscape 

After approval of the specifications and floor planning by the local authorities and disclosure to the potential buyer, any change made needs to be seconded by the latter party. In case of any unsanctioned changes noticed by the buyer within the first three months of possession, the builder needs to rectify or compensate.

4. Failure to Hand Possession 

Suppose the developer fails to hand over possession on the decided date. In that case, the developer must reimburse the buyer's amount and interest, dating from which the former received the money.

5.  Stringent Penalties on Breach of MOFA

MOFA can levy strict action against developers breaching their code of conduct, including heavy fines and imprisonment of up to 3 years. For those who don’t know, MOFA was enacted in 1963, reviewing the ownership and sale management of flats in Mumbai. The act gives equal rights to both the buyer and developer in Maharashtra. 

6. Protocol Post the Formation of a Society 

Once the minimum number of people in a cooperative housing society has occupied flats, the developer must apply to the registrar for registration. Once registered, there needs to be a transfer of the rights, title, and interest. 

7. Agreement of Sale

The agreement is required to be registered under section 32 of the registration act. Nevertheless, the agreement can still be produced as evidence if not recorded.

The process of documentation can be a strenuous one if not done systematically. Here is a list of ten documents that should be primary tools for the potential buyer.

  • The Mother Deed
  • Completion and Occupation Certificates (CC and OC)
  • Encumbrance certificate
  • The Sale Deed
  • The Sale and Purchase Agreement 
  • The Building Approval Plan
  • The Possession Letter 
  • The Allotment Letter
  • Stamp Duty 

Any lapse in the above steps could backtrack you, leading to a waste of time and resources.
Thus it is necessary to study real estate and governing bodies before entering any kind of transaction. 

Finance & Legal
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