When your home is not your own

Residents such as Prakash PVS, a software engineer, say when they made the final payment of 5% on possession, they expected a sub-lease deed to be executed in their favour for ownership of the apartments.

“However, we were shocked when the developer directed us to furnish an affidavit declaring that we were taking temporary possession for nine months to carry out interior fit-outs/furnishing work etc. When we refused and insisted on a sub-lease (all land in Noida is leasehold which the developer gets on lease from the Noida Authority), we were told that we would not be allowed to enter our homes,” alleges Prakash. When possession is given, buyers have to make the final payment for the flat before the developer executes a sub-lease/sale deed to give legal ownership of the flat.

Since they wanted to move into their homes as they were paying EMIs and renting properties elsewhere, Prakash and other buyers signed the affidavit. They then filed RTI applications and petitions in the Allahabad High Court to find out the reason for the ‘temporary’ possession.

“We found out that Omaxe had defaulted on payment of around Rs 165 crore to the Noida Authority for the cost of land in various instalments by 2010, even though payment for the flats had been collected,” says Ashish Kaul, a buyer who refused to sign the affidavit.

According to the terms of the lease agreement between Noida Authority and the developer, until the latter clears all its dues with the former, the process for sub-lease deed execution cannot be initiated. Noida Authority is the land-owning agency while Omaxe is the lessee. So, it is the land owning agency which has to give the permission to the lessee to execute a sub-lease in favour of the home buyer.”

When contacted, Omaxe dismissed all allegations, saying that the delay in the execution of the sub-lease deed was not due to any default in payment.

“Due to several reasons such as the model code of conduct before UP elections, shuffling of officers in Noida
Authority after elections and land acquisition agitation by farmers in Noida Extension, the Noida Authority was virtually not working or was not ready to take any assignment. Therefore, the matter lingered for quite some time. All required due payments to the Authority have also been made. Now we are expecting that the Authority will give its consent for the sub-lease,” says Avneet Soni, president, Omaxe.

On the temporary affidavit, Soni clarified that no buyer was forced to give one and that it was “only a formality to be completed.”

“Omaxe has made all due payments to the Authority. At present there are no dues as per the installment plan approved by the authority. Since this project comprises two sub-projects, namely Forest Spa and Grand Omaxe, we have taken partial completion certificate, ie only for 22 towers of Grand Omaxe. We have already requested for proportionate sub-lease, which is permissible as per the government order released in 2009.”

The residents also said that the Noida Authority has rescheduled the dues and extended the payment period till 2016. “This means that Omaxe will get a breather and the time to make the payment, but for us buyers life won’t be easy as we won’t get ownership of our homes till the full payment is made. Today I feel like a trespasser in my own home. I have physical possession of the apartment, but I don’t own it legally. Isn’t it very surprising?” asks Prakash.

Besides the residents' ownership woes, the non-execution of sub-lease is also causing a huge loss to even the state revenue department. According to a reliable source in the Noida revenue department, "Once the flat owners get the legal title by way of a sub-lease deed, the revenue department will also earn money through stamp duty. The approximate revenue loss to the department is around Rs. 70 crore."

Noida authority can just issue notices

On the role the Noida Authority can play in redressing buyers’ grievances, CEO Rama Raman says that the only thing they can do is force builders to pay their dues by issuing notices. A notice has been issued by the Authority to Omaxe.

“At the most, we can cancel the lease deed and take over the project but that will lead to further complications for the homebuyers, so we are trying to compel the developers to pay their dues on time,” says Raman.

He adds, “It’s not that until they make the full payment, we won’t allow them to execute the sub-lease. If they are paying their instalments on time, we will give them the permission for sub-lease for any construction which is complete till that time.”

Many residents argue that some drastic steps need to be taken to restore the end-users’ confidence in the housing sector. “The state is under obligation to ensure that its citizens do not suffer due to lack of due diligence and project monitoring by authorities. It is important to ensure that the housing projects are completed on time, even if any promoter falters,” suggests Sudhir Sood, another flat buyer of Omaxe Grandwoods.

Authority can put consumers first

The Noida Authority isn't as helpless as projected when it comes to protecting the rights of consumers, says SK Pal, a Supreme Court lawyer. "Once the allottees have moved into an apartment after making 100% payment to the promoter, the competent authority/development authority – the original owner of the land – is not as helpless as is often portrayed," he says.

While legal experts suggest that there are some options for the Noida Authority to help the consumers get , the Authority’s response is that these measures are impractical/ legally untenable. Expers suggest:

Option 1: The Authority can cancel the allotment of the land and give it to a more solvent promoter at open market rates with strict completion clause. The total difference in cost of land and at least 20% of the refund made to the original promoter can be deducted as penalty and distributed amongst original allottees as compensation.

Option 2: Can directly execute the sub-lease in favour of the allottees, who have possession letter or proof of payment of 100% or are ready to deposit the remaining amount in an escrow account with the Authority as the original owner of the land on which the buildings stand after giving 30 days notice to the promoter.

Option 3: Can divide the total land cost against the saleable built-up area on pro-rata basis and directly execute the sublease/sale deed in favour of the allottee after collecting the proportional land cost from the promoter (in case of forced possession) and from the remaining allottees directly and penalise the promoter.

Option 4: Can carve out the plot with the buildings (under forced possession) to adjust the payment and auction the remaining land with partially completed buildings to solvent promoters at market rate and distribute the difference of cost as compensation to the allottees as value of their undivided share in the auctioned land and incomplete building.

"These options are both in sync with the provisions of UP Apartment Act 2010 and the principle and ratio set by the Delhi High Court recently wherein it was pleased to direct DDA and L&DO to execute and register the deed itself if promoters / builders default," says Pal.