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Bhanu Sahu

Bhanu Sahu
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https://www.ipropunited.com
Talks about real estate and finance. Besides this, he is an eternal optimist , he loves to explore new heights and worships nature.
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Types of Encumbrance their definitions and examples

By
Bhanu Sahu
-

What is an Encumbrance?

A claim made against a piece of property by the party who isn’t the owner is called an encumbrance. An encumbrance may limit the property’s ability to be transferred and its free use until it is removed. Mortgages, easements, and property tax liens are the three most typical types of encumbrances that affect real estate. Easements are an example of a non-financial encumbrance. Not all types of encumbrances are financial. In addition to real property, personal property can also be subject to encumbrances.

The phrase is used in accounting to refer to funds that are restricted and set aside in an account for a specific liability.

POINTS TO NOTE

  • An encumbrance is a claim made against real estate by a party other than the titleholder at the time.
  • Certain claims have no impact on the property’s value. This is frequently seen in commercial cases.
  • Leases, liens, easements, and mortgages are a few examples of common claims.

Understanding Encumbrance

Encumbrances include a variety of financial and non-financial claims made against real estate by parties other than the title holder. Some restrictions may prevent property owners from exercising full, unrestricted control over their assets. A creditor or the government may seize the property in some circumstances.

The marketability of a security may be impacted by certain encumbrances. For example, an easement or lien may render a title immovable. The buyer may be able to back out of the deal despite having signed a contract, and in some jurisdictions, even seek damages. This does not necessarily mean that the title cannot be bought and sold. 

The marketability of a property is unaffected by other encumbrances like zoning rules and environmental regulations, but they do restrict the use of the land and prevent certain improvements. 

For instance, to prevent issues later on in the sales process, the seller of a property in Hong Kong is legally required to disclose to the real estate agent any encumbrances against the property. The buyer will receive a land search document from the real estate agent that includes a list of any encumbrances.

Types of Encumbrances

Encumbrance has many different types when it comes to real estate, due to its many applications. Each type is intended to both protect parties and define precisely what each claim entails and is entitled to.

Easement

An easement is a right that one party has over another party’s property to use or improve specific areas of the property or to restrict the owner from using or improving the property in a particular manner. The first category is known as an affirmative easement. For instance, a utility company might be allowed to run a gas line through someone’s property, or a footpath might be allowed to pass through that property and be used by pedestrians. 

An easement in gross benefits a person rather than a property owner, so Jennifer might be able to use her neighbor’s well, but that right would not transfer to someone who bought Jennifer’s property. For instance, a negative easement prevents the title holder from building a structure that would block a neighbor’s light.

Encroachment

Encroachment happens when someone who is not the owner of the property enters or tampers with it, such as by erecting a fence that crosses the lot line (which is trespassing) or planting a tree whose branches obstruct the view of another neighbor’s property (which is a nuisance). Since the owner of the encroaching improvement does not have title to the land it is built on, the encroachment encumbers both properties until the problem is resolved. 

Lease

A lease is a contract that specifies the terms and price at which a portion of property will be rented out. It is a type of encumbrance because the lessor retains ownership of the property, but the lease agreement severely restricts how one may use the property.  

Lien

A lien is a specific kind of security interest and an encumbrance that impairs the title to real estate. It gives the creditor authority to seize the property as security for an unjustified obligation, usually an unpaid debt. The lender can then sell the property to at least partially recoup their loan.

The government may place a tax lien on a property or other asset when an owner is behind on their taxes. Municipalities may sell tax liens to investors, who receive the right to collect the tax due plus interest from property owners in return for paying the tax bill.

If you ignore a federal tax lien, a tax levy might come as a result. A tax levy is the ultimate asset confiscation to cover unpaid taxes. Tax levy examples include garnishing your paycheck, seizing your property, and freezing your bank accounts.

Mortgage

As a type of security interest, a mortgage is one of the most prevalent. In essence, it is a lien placed against real estate. Until the mortgage is paid off, the lender, who is typically a bank, retains a title interest in the property. In the event that the borrower is unable to make mortgage payments, the lender may foreclose, seizing the home as collateral and evicting the occupants.

Restrictive Covenant

Restrictive covenants are clauses that a seller inserts into a buyer’s property deed to limit the buyer’s use of the property. For instance, there might be a clause stating that the buyer must leave the building’s original facade. Restriction covenants can be as specific and arbitrary as the parties are willing to agree to, as long as they do not violate the law.

Special Consideration: Use in Accounting

Specific assets are set aside in encumbrance accounting to cover expected liabilities. For instance, a business might set aside some cash to pay off its accounts payable. An encumbrance can create the impression that an account has more money available than is actually available for use. There is no way to spend or conduct any other transactions with the money that has been set aside. Therefore, encumbrance accounting ensures that a company does not go over its budget.

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Gifted Property and Tax Implications 

By
Bhanu Sahu
-

Gifted property entails when someone willingly gives their property to someone else without getting paid for it. But here’s the catch – if the recipient sells the property, they might have to pay some taxes and duties on the profit they make. 

Now, if you’re thinking of gifting your property to someone, here’s what you need to know. It’s important to have a gift deed that has all the details of the donor and the recipient. You also need to register this deed with the sub-registrar and pay the stamp duty and registration charges.

But why do you need to register it, you ask? Well, it’s because only after registration can the new owner apply for mutation, which is essential for transferring utility connections or even selling the property in the future. So, make sure you’ve got everything in order before you gift your property away!

Taxes levied on a gifted property

Stamp duty and registration charges

When you transfer ownership of your property to someone else, you need to pay some fees and taxes. This is called stamp duty and registration charges. Usually, the amount of money you need to pay is the same as when you sell your property to someone else. However, in some states, you can get a discount if you’re transferring the property to a close family member.

For example, in Delhi, if you’re a woman, you need to pay 4% of the property value as stamp duty, while men need to pay 6%. You also need to pay 1% of the property value as registration fee, plus Rs 100 as pasting charges. Similarly, in West Bengal, if you’re selling your property, you need to pay 5% of the property value as stamp duty in rural areas and 6% in cities. However, if you’re gifting your property to someone who is not a family member, you need to pay the same amount of stamp duty as when you’re selling it. But if you’re gifting it to a family member, you only need to pay 0.5% of the market value as stamp duty.

Income tax

Income tax is only applicable when a gifted property is sold, and the seller earns some income or profit from the sale. According to the Income Tax Act, close relatives such as parents, spouses, siblings, siblings of the spouse, lineal descendants, and ascendants are fully exempted from tax.

When calculating income tax for a gifted property, the purchase price paid by the property’s previous owner is considered as the cost. However, the tax imposed will depend on the capital gain or loss derived from the property sale. Capital gain or loss is defined as the difference between the purchase price and the selling price of the property.

A legal expert named T Kalaiselvan, based in Chennai, explains that if the property is held for less than 24 months, it is treated as a Short Term Capital Asset (STCA). On the other hand, if the property is held for more than 24 months, it is treated as a Long Term Capital Asset (LTCA), and would attract Long Term Capital Gain Tax. According to the Union Budget 2017-18, the holding period for Long-Term Capital Gain (LTCG) for all immovable properties has been reduced from three years to two years, effective from the Financial Year 2017-18 or Assessment Year 2018-19.

In LTCA, the seller can benefit from indexation on the property cost and an exemption of 20 percent from LTCG Tax if the amount from the sale is invested in a residential house or in capital gains bonds of Rural Electrification Corporation (REC) or National Highway Authority of India (NHAI).

Overall, the gifted property also comes with its share of expenses, which may vary across states. Therefore, it is advisable to understand the tax impositions in the state where the property is located and plan expenses accordingly.

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What is Society Registration Act?

By
Bhanu Sahu
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The Societies Registration Act of 1860 was created to offer societies promoting literature, art, science, and charitable events legal status.  However, the formation of RWAs is enabled under the act by the Union Territory and State-specific amendments and guidelines.

The Societies Registration Act, imposed on May 21, 1860, establishes the rules governing the formation, registration, organization structure, functioning, and legal status of societies constituted for specifically defined purposes. Although the SRA is a central law. However, the States and Union Territories (UTs) have accepted it with modifications and amendments that are specific to their geographical conditions. 

Let’s look into the definition of society before moving forward with the rules and regulations of society’s formation. 

Society is a grouping of multiple individuals who come together cordially to plan, manage, and act toward mutual goals. 

The Societies Registration Act was initially established to enhance the legal status of societies that are formed for artistic, charitable, literary, or scientific purposes. Additionally, the act is now commonly focused on the welfare of the local population and is generally referred to as the Resident Welfare Association (RWA). 

RWA is stated in a few governmental guidelines and rules for creating societies under the said act, while the Societies Registration Act 1860 does not specify it. For instance, the Office of the Commissioner of Industries, Delhi government, published the ‘Guidelines and Procedure for Seeking Registration of a Society for Art, Culture, and Social Welfare under the Societies Registration Act, 1860’ which highlights the types of societies that can be registered under the act, including the ‘Resident Welfare Society’.

“RWAs are stated under the Societies Registration Act, 1860, and their role is to conduct the upkeep of the common areas of a certain geographical area and other associated activities for the well-being of the residents. The Apartment Owners Association (AOA) and the Co-operative Housing Society are two other similar types of societies or associations established for the benefit of the neighborhood of a specific apartment complex or area. However, these two non-governmental bodies have more power in contrast to RWA and have more influence over the dealings and behavior of their members”, says Tanvi Jain, Advocate-Lucknow Bench, Allahabad High Court. 

Legal procedure to establish a Society 

According to Section (11) (4) (E) of the Real Estate (Regulation and Development) Act, 2016 (RERA), the project’s promoter has to accelerate the establishment of a society, an association, or a cooperative society comprising the project allottees under applicable laws.

It is advisable to be aware of the State or Union Territory (UT)-specific apartment ownership acts before selecting between the non-governmental bodies (association, co-operative housing society, society). The reason for this is that the ownership act necessitates forming an association for the apartment owners and getting it registered with the relevant governmental authority. While the other cooperative society acts and society registration acts (state and UT amendments) are not needed.

Hence, checking the applicability of the Apartment Ownership Act will be the initial step in identifying the relevant law. For instance, structures with more than five or more flats or three or more floors are subject to the Tamil Nadu Apartment Ownership Act, 1994. Further, a competent government authority should be properly approved for the construction of such buildings. 

Residential property owners who are not covered under such apartment ownership legislation can choose to establish a welfare society or a cooperative housing society to take care of their daily maintenance needs and find solutions to other mutual issues. Unauthorized housing colonies and illegal construction frequently decide to form an RWA as well. 

Establishing Welfare Society under the Societies Registration Act, 1860

Establishing a society under the Societies Registration Act, of 1860 requires a minimum of seven persons. In case of disputes with members or another person, society, or organization, any unregistered society may not have legal status. 

The task of registration of the society under the studied act is managed by the authority referred to as the ‘Registrar of Societies’, established by the respective state or UT government. Therefore, the documentation and the registration application should be to the requirements of such authority. 

However, the fundamentals of society’s registration remain the same despite any variations. A Memorandum of Association would have to be prepared by the establishing members and form the rule that will regulate the activities of the society. Afterward, they must file any other required documents with these and prescribe fees to the concerned Registrar of Societies. The fees could be varied across states and UTs. 

Memorandum of Association (MoA)

The memorandum of association comprises the name, title, and objectives of the society, in addition to the names, addresses, and occupations of the committee members or other body members with whom the society’s activities and affairs are being regulated. 

Note: According to the societies’ registration acts, the name of the society should be distinctive from the existing registered societies. The proposed name must not imply favoring the part of the relevant state government or the federal government, nor should it be associated with any legal authority under any law that is still in effect. Additionally, the name of the society must not be subject to the provisions of the Emblem and Names (Prevention of Improper Use) Act, 1950.

Certain documents that might be required for society registration include:

An affidavit indicates the originality of the society’s name. 

Copies of legal identification documents (Adhar cards and driver’s licenses) of the founders of the society. 

Proof of the ownership of the society’s proposed registered office in addition to a no-objection certificate from the officer confirming their consent to use the property. 

Conclusion 

The Societies Registration Act 1860 regulates the foundation and functions of RWAs. Therefore, it is advised to check the state or UT-specific apartment ownership legislation and the modifications of the Societies Act before establishing an RWA under the Societies Act. 

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Rights and Responsibilities of Property Seller in India

By
Bhanu Sahu
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The Transfer of Property Act is applicable to immovable property in India. As per the norm, the buyer and the seller of the immovable property are bestowed certain rights and responsibilities, to carefully execute the transaction involving the sale or purchase of immovable properties. Following these norms and key points will help to avoid a lot of heartache and drainage of investment for both the buyer and seller. Buying a property can be confusing especially for homeowners, as it comprises many complex steps and the language used in the legal documents is full of jargon and legalese.

Responsibilities of Seller

Make clear of any Material Defect in Property Title

As per the Act, the seller must disclose to the buyer any known material defect in the property or in the seller’s title, that the buyer is not aware of and could not discover with ordinary care. A material defect is an issue within a part or system of a residential property that could negatively impact the value of the concerned property, or that poses an unreasonable risk to the resident, such as a temporarily concealed seepage problem, the unstable foundation of the building, etc.

Provide Complete Documents & Information for Examination

The seller is required to provide all documents of title at the buyer’s request, relating to the property for examination, which is in the seller’s possession or power. Additionally, the seller is required to answer to the best of his information all relevant questions put to him by the buyer related to the property or its title.

Execute proper property transfer documents

The seller is required to execute a proper conveyance of the property at a proper time and place on payment or tender of the consideration for the property. Further, the buyer must take care of the property and all documents of title between the date of the contract for the sale and delivery of the property.

Give Possession to Property

During the execution of conveyance, the buyer shall deliver to the seller or to any person directed by the seller, prior to selling, settle all Dues. 

All accumulated rent and public charges for the property up to the time of the transaction must be paid by the seller. Further, the seller is responsible for paying all interest payable on encumbrances on the property due on a such date unless the property is sold subject to encumbrances.

Seller’s Interest in the Property

When a seller and a buyer enter into a contract for the sale of the property, it is considered that the seller has the authority to transfer the property and that the buyer might actually receive the interest that the seller claims to be transferring.

Transfer of Property Documents

The seller is required to deliver all documents of title to the buyer relating to the property which is in the seller’s possession or power once the full payment for acquisition is received. The seller is entitled to retain the property documents If in case, the seller retains any part of the property. The buyer of a lot of the greatest value is entitled to the original property documents, in case the property is being sold to multiple buyers. 

Property Sellers Rights

The property seller enjoys the following rights as per the Transfer of Property Act:

Rents and Profits

Unless the transfer of property ownership to the buyer, the seller is entitled to the rents and profits of the property.

Charge on Property

The seller has a right to a charge upon the property in the hands of the buyer in case ownership of the property has been transferred to the buyer before receiving the full payment. From the date of the possession of the property by the buyer, the seller has the right to the total payable amount or unpaid part of the consideration and for interest on such amount or part of it. 

Final thoughts 

Apart from these duties and rights of the seller, which are usually reflected in the ‘Sale Agreement’ to enter into with the buyer, it is advised to add a penalty clause in the agreement. According to this clause, any deposit or token money paid to the seller by the buyer is non-refundable in case the buyer fails to pay the remaining amount on time or back out of the deal. 

It is advisable to research and study the duties and rights of a seller so that one is informed and aware of his duties and rights and what is expected from him during the selling process. 

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Different types of financial markets and their respective roles

By
Bhanu Sahu
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Financial Market

Financial markets, which include the stock market, bond market, currency market, and derivative market, among others, are any marketplace where trading in securities takes place.

These markets allocate resources and give businesses and entrepreneurs access to liquidity, both of which are critical for the effective running of economies. The markets make trading financial holdings uncomplicated for both buyers and sellers. Financial markets design securities as a way to reward investors and lenders who have extra money (Lenders/Investors) while also making that funds available to those who require it (Borrowers).

Stock exchange/market is just one type of financial market. The financial markets are created via the buying and selling of many types of financial assets, including equities, debt instruments, currency, and commodities. These markets primarily rely on instructive lucidity to ensure that pricing is both effective and appropriate. Due to macroeconomic factors like taxation, the market prices for securities may not reflect their true value.

Types of Financial Markets

Capital Market

The term capital market is a generic one that describes both real-world and online marketplaces where numerous entities trade different types of financial items. These venues could include the stock exchange, debt market, currency, and, forex markets, amongst many others.

Capital markets are composed of both buyers and sellers of funds. Households, as well as organizations like retirement and pension funds, life insurance firms, charity foundations, and non-financial businesses that have surplus income, are suppliers (through the accounts they hold with banks). Purchasers of homes and automobiles, non-financial businesses, and governments funding infrastructure investment and operational costs are some of the users of the cash allocated on capital markets.

Capital markets are typically used for the sale of financial products like equities and debt securities. Shares or stock resembles the ownership of an individual in a firm. IOUs that bear interest include bonds and other debt instruments.

There are two distinct groups into which these markets fall-

Primary Markets: Where investors can purchase fresh equity stock and bond issues.

In the primary capital market, a corporation offers new shares or bonds for the very first time to the general public, as in an IPO. The new issues market is another name for this marketplace. When investors buy shares on the primary market, the company that issues the securities hires an underwriting company to analyze it and create a prospectus outlining the price and other characteristics of the shares to be issued.

Secondary Markets: For existing securities trading.

The previously issued stocks are traded between investors in the secondary market, which consists of places governed by regulatory bodies like the SEBI.  Companies that issue securities have no involvement in the secondary market.

Derivative Market

A derivative is a contractual commitment between two or more parties, the value of which is determined by an accepted underlying financial asset (such as a securities) or collection of assets (like an index). The value of derivatives, which are secondary securities, is wholly based on the value of the underlying security to which they are tied. A derivative has no value by itself. A derivatives market trades complex financial products like options and futures contracts, which draw their value from underlying securities such as bonds, commodities, commodities, interest rates, market indices, and stocks, as opposed to trading equities directly.

On futures markets, the contracts of futures are listed and traded. The futures markets, which use standardized contract conditions, are well-regulated, and use financial institutions to settle and confirm trades, in contrast to OTC forward markets. Options markets list and oversee options contracts in a similar manner. On F&O exchanges, contracts on a diverse range of asset classes, such as shares, fixed-income securities, commodities/derivatives, and others, may be listed.

Forex Market

The market where participants can purchase, resell, protect, and gamble on the exchange rates between currency pairings is known as the forex (foreign exchange) market. The FX market is the world’s most liquid market as cash serves as the most liquid among every asset. Daily transactions on the currency market exceed $6.6 trillion, which is greater than on the futures and stock markets put together.
The forex market is decentralized and made up of a global computer network and brokers from all over the world, just like the OTC markets. The forex market is composed of corporations, central banks, hedge funds, AMCs, and small-scale currency traders and investors.

Debt Market

In a bond, an owner lends money at a fixed rate of interest for a specified period of time. A bond can be thought of as an agreement between the borrower and the lender describing the conditions of the loan and the payments. To finance operations and projects, corporations, along with localities, jurisdictions, and other sovereign organizations, issue bonds. Securities like notes and bills issued by the Treasury, for instance, are sold on the bond market.

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Kerala RERA: Updated Rules and Application Form

By
Bhanu Sahu
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The implementation of RERA in Kerala has encouraged real estate investment. The Kerala Real Estate Regulatory Authority brings transparency to the real estate sector by eliminating fraudulent activities. 

The RERA Act 2016 was introduced with the objective of bringing transparency and discipline across the real estate sector. An increase in fraudulent activities in real estate practices led to the introduction of a regulatory framework. RERA made it mandatory for each state to establish its own state regulators in order to sustain the volatile real estate market.  RERA Kerala was implemented in 2018 in accordance with the RERA guidelines.

Kerala RERA sets up rules for developers, promoters, and agents to aid the home-buying process and provide assured security to investors. The RERA Act in Kerala came into existence in 2018, and it was reintroduced in January 2020. Before making a property purchase, look for RERA-registered projects in Kerala.

What is Kerala RERA Act 

Kerala’s real estate market has seen a significant expansion in recent years. Additionally, it has been revealed that there have been few regulations regarding consumer protection. Lack of professionalism and standardization has severely limited the real estate industry’s potential for growth. After much speculation about its future, the RERA Kerala was implemented on June 18th, 2018. This is because the State government repealed the bill because it was thought to favor the developer and builder community. The fully operational RERA Kerala website was nevertheless released in 2020, despite the delay.

The following are the objectives associated with RERA Kerala:

  • To provide accountability to allottees and safeguard their interests
  • To introduce transparency, while ensuring efficiency and reducing fraudulent activities in the real estate sector
  • Identify areas where the information provided by the allotter and the allottee is equal.
  • establishing guidelines and obligations for both buyers and promoters
  • Establish a regulatory oversight system to ensure contract compliance.
  • Introduce a quick dispute resolution procedure.
  • Improve real estate sector governance to build investor trust

Objectives and Vision of RERA Kerala

RERA Kerala was established with the objective of creating a regulatory body that can bring stability and trustworthiness to the real estate industry. Kerala RERA launched the official portal in 2018 to protect homebuyers from fraudulent activities. The regulators are successfully eliminating unfair practices by primarily regulating the real estate industry in Kerala. In addition, projects that didn’t follow the revised RERA guidelines were blacklisted.

The Kerala Real Estate Regulatory Authority is working to meet its objectives and provide timely updates. In order to accomplish this, the Kerala RERA authority updated the RERA Kerala Act in 2020. So, regardless of the type of property you’re interested in—residential or commercial—visit the Kerala RERA website and browse the RERA-registered projects because they are the safest for investments. 

  • The RERA Kerala was established with the vision to standardize and regulate the dealing practices of the real estate sector along with the transactions
  • prevalence of notable problems like construction quality problems, price changes, and completion delays. The main factor that led to the establishment of RERA Kerala was the failure of projects to be completed on time. 
  • elimination of fraudulent situations where builders defrauded homebuyers. 
  • to propose a mechanism for grievance resolution.
  • preventing money from being spent on other projects. 

 Check Registered Projects under Kerala RERA 

Avoid investing in unregistered projects, as doing so may lead to uncertain circumstances. It is advisable to get familiar with the RERA registered projects in Kerala. 

Follow these steps to check for registered projects in Kerala:

  • Visit the official website of RERA at rera.kerala.gov.in
  • Navigate to “Older Registration” and select “Registration of Projects”
  • This will redirect you to another page comprising all registered projects of Kerala real estate sector

You will get all the details related to the project such as project name, address of the project, RERA registration number of the project, status of project along with completion date. Moreover, you can download the project certificate for further details. 

Process for project registration  

In order to register projects with RERA Kerala, the Kerala real estate regulatory authority does not provide an online RERA registration mechanism. You have to fill out a RERA Kerala application form to register your project and submit it to the designated RERA regulators. The necessary forms are available on the official website; simply download them, attach a photocopy of the required documents, and post them to the specified postal address.  

Follow the given steps to register the project with Kerala RERA:

  • Download the relevant form Form A or Form A-1 as applicable.
  • Fill out the form with the mandatory details. It comprises specific details including details of the promoter, Project details, Cost of the real estate project, Registration fee, Permits & approvals, and Declarations
  • After filling the form attach all necessary documents such as PAN Card, Aadhaar Card, Residence Proof, VAT and TIN Registration number, Contact details, Information regarding the Board of Directors, Passport size photographs, Annual report and auditor’s report, Layout plans, Legal Title Deeds, Details of the  projects like amenities, number of units, parking spaces, etc, and Joint development agreement
  • Send all these documents to the postal address of the real estate regulatory authority in Kerala:  

TC 25/1379, CRA D-112

Nearby to the Pentecostal Church Plamoodu on Charachira Road

Thiruvananthapuram-695003

The documents are evaluated after the submission and post-evaluation, verification, and project number are provided to the builder. 

Steps for agent registration  

To register as an agent, you need to download and fill out the RERA Kerala application form (Form G) and post it to the postal address along with the required documents. 

The form includes specific information such as: 

  • Project and Promoter details
  • Details of the paid registration fee
  • Details of attached documents
  • Declaration form

Required documents for project registration 

You will need the below-mentioned set of documents:  

  • A genuine photocopy of the PAN card
  • An audited balance sheet from the previous year  
  • Income Tax Returns for the previous three fiscal years
  • Documents listing the total number of parking spaces included in the real estate project.
  • The promoter’s title to the land is specified by an undisputed and attested legal copy of the title deed. 
  • Details about the land on which the real estate project will be built. It contains information such as title details, interest amount, past dues, litigations, and much more.
  • A declaration affirming that there should be no discrimination against allottees, particularly during property allotment. 
  • Every detail about the current project, such as its current status, total built-up area, and so on.

Documents required for agent registration 

Prepare the following documents beforehand in order to register as an agent under RERA Kerala: 

  • PAN card copy
  • Copy of address proof document for involved parties including agent, directors, and partners
  • Two passport-size photographs of the involved parties including agent; partners; directors; 
  • Income tax returns of previous three years 
  • A copy of the registration certificate specifically in the event you belong to a venture
  • A copy business address proof 

Procedure of filing complaint under RERA 

The Kerala Real Estate Regulatory Authority has rules allowing complainants to file with the RERA Authority and the Adjudicating Officer. A complaint is typically lodged in accordance with Section 31 of the RERA Kerala act against a buyer, agent, or promoter.

How to file a complain

  • In order to file complaints with the Kerala real estate authority, use Form M.
  • Deposit registration fee of Rs 1000 through demand draft in favor of designated authority personnel.
  • Prepare three sets of lodged complaints and further sent them to the involved parties and respondents via post or in person at the authority address.  
  • The complainant must personally present his grievance. If the complainant is opting for legal help, it should be done in accordance with the rules laid down within Section- 56 of the RERA Act. Also, the complainant will need to file an attested Vakalatnama. 
  • An authorized person (not to be confused with an advocate) must provide the authorization along with the necessary information. Basic information like a contact’s information, name, address, and email address should be included in the authorization.

Bottom line 

Learn about the state RERA regulations before making any real estate investments. You are prepared to invest in real estate throughout Kerala once you have read the RERA Kerala rules. To obtain a seamless registration under the Kerala RERA Act, an agent or developer must be aware of the registration procedure. Visit the official website to download the PDF of the RERA rules for the most recent information. 

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RERA Madhya Pradesh: Provisions & Benefits

By
Bhanu Sahu
-

Despite rapid growth in the Indian real estate sector’s compound annual growth rate (CAGR), investors faced issues relating to pricing, quality, and delivery of projects due to the unregulated sector. This required government intervention in the form of stricter laws and improved regulation. The government addressed this concern via RERA in 2016.

What is RERA MP?

To eliminate unethical behavior by real estate developers, promoters, or agents, the Government of India implemented the Real Estate (Regulation and Development) Act (RERA) in 2016. Every state and union territory in India is required to establish a Real Estate Regulatory Authority to oversee the real estate sector within its boundaries and protect homebuyers’ interests. 

Accordingly, just like the other states, the government of Madhya Pradesh introduced the RERA Act in the state. The Madhya Pradesh Real Estate Regulatory Authority was established on May 1, 2017, to bring transparency and accountability to the state’s real estate dealings.

Functions of the RERA Madhya Pradesh

Here are the functions that RERA MP performs: 

  • Determined in ensuring full disclosure related to real estate projects by promoters and developers
  • Creates a productive environment to provide speedy resolution of real estate disputes
  • Extends support and guidance to the state government on matters relating development and promotion of the real estate sector

The Real Estate Regulatory Authority safeguards homebuyers’ interests. The act came into existence on 10th May 2017. The RERA Act significantly brought transparency to the real estate sector. 

The RERA act is intended to assure, providing fair treatment to buyers and developers, and induce transparency in the system. Contrary to other state authorities, RERA Madhya Pradesh is implementing the RERA rules with extreme effort. 

Impact of RERA on Real Estate

However, its implementation was fairly recent, the RERA Act has already been able to regulate and introduce many changes throughout the sector in India. RERA has made it mandatory for real estate agents to register them with the state RERA  prior to facilitating any project and transaction. During the project registration, the promoters are required to list the agents associated with a project. Without registering with RERA, the agent is not allowed to carry out tasks associated with real estate projects. Asking agents to get them registered to bring transparency among the existing projects. 

An agent is liable for a penalty of Rs 10,000 on the failure of registration. This may extend upto five percent of the project cost on continuity of violation depending upon the related sale or purchase. 

Benefits of RERA implementation

MP RERA offers various advantages to the real estate sector. Whether if you are a developer, promoter, agent, or buyer, RERA MP has a lot to offer along with satisfaction and secure investment. Here are the benefits associated with the infusion of RERA Madhya Pradesh. 

On-time delivery of projects:  As per the provisions under the RERA Act, the proposed project should be completed within the given time frame as mentioned in the signed agreement. Late deliveries are liable for penalties. It further helps to avoid unnecessary delays and prevent cost escalations. 

Guarantee: Projects registered with RERA are bound to a 5-year guarantee. With registered projects, buyers get top-notch construction quality. 

No gimmick advertisements: This act ensures no misleading marketing strategies and false advertisements take place. 

Fees and Charges of RERA MP

All promoters, real estate agents, and developers are required to get them registered with RERA Madhya Pradesh, by paying a fee depending on their profile and project eligibility. Stakeholder can pay the fee via demand draft or an online transfer. 

These are the charges you will have to pay: 

Fee for project registration

  • Residential projects

Rs.10 per sq.mt. for land with an area of upto 1,000 sq.mt.

Rs.20 per sq.mt. for land that exceeds 1,000 sq.mt.

  • Commercial or any other projects

Rs.50 per sq.mt. for land that is less than or equal to 1,000 sq.mt.

Rs.100 per sq.mt. for land that exceeds 1,000 sq.mt.

  • Fee for the registration of real estate agents

Rs.25,000 for an individual

Rs.2 lakh for an agent other than an individual

How to Register with RERA Madhya Pradesh?

Below is the step-by-step procedure through which you can register your real estate project with RERA Madhya Pradesh. 

  • Log on to the official website of RERA Madhya Pradesh
  • Now, click on the ‘Registration’ tab on the menu and click on ‘Project Registration’ from the resulting pop-up menu, this will redirect to the project registration page. 
  • Choose the promoter type and enter the required details like promoter details, bank details, and details about the project. Upload a scanned copy of all the required documents and click on ‘save’. 
  • Now you will be redirected to the payment gateway where you have to make payment for the registration. 
  • After paying the registration fee click on the ‘confirm’ tab to complete your registration. 

Required documents for Registration

Here is the list of all the required documents that you should keep handy while registering to RERA MP:

  • Details of registration
  • Passport size photographs
  • Memorandum of Association
  • Articles of Association
  • Copy of Aadhaar card/PAN card of the promoter
  • Passport-size photos of chairman, director, and all the other members if the promoter is an organization
  • Copy of Aadhaar card/PAN card of the promoter, chairman, director, and all the other members if the promoter is an organization
  • In case the proposed project is planned to be developed in phases, you will need a copy of commencement certificate and approvals for each planned phase
  • Details and layout plans for the project as sanctioned by a concerned authority
  • Address details of the project along with the geo-location
  • Details of the apartments in the proposed projects like number of flats, carpet area, balcony area, etc
  • Layout plan and specifications of the proposed project, as issued by an concerned authority
  • A copy of the consent of plot owner is to be furnished along with the joint development agreement if the promoter is not the legal owner of the land
  • Copies of commencement certificates and approvals as issued by the concerned authority
  • Audited P&L account, Balance Sheet, IT returns, of the promoter for the last 3 years
  • Copy of the deed title and other legal documents stating promoter’s legal claim to the property
  • Non-encumbrance certificate issued by a revenue authority
  • Details on any encumbrances on the property
  • Copies of the commencement certificate and approvals as provided by the concerned authority
  • Copy of the allotment letter
  • Sale Agreement
  • Conveyance deed
  • Number of garage areas for sale in the proposed project
  • Open parking areas available in the proposed project
  • Name and address of agents, architects, contractors, and engineers associated with the development of the proposed project
  • Form B along with an affidavit

How to register a project with RERA MP 

Registering a project with RERA Madhya Pradesh is quite simple, all you have to do is to follow the below process:

  • Firstly, log on to the official website of RERA Madhya Pradesh and click on the ‘registrations’ tab to proceed
  • This will redirect you to another page including a set of essential guidelines. Follow the guidelines carefully and fill up the basic details. 

How to file a complaint on RERA MP? 

Following is the step-by-step procedure to file a complaint on RERA MP. 

  • Log on to MP RERA’s official website.
  • Click on the ‘complaints’ tab on the home page. 
  • Now, select the form either Form M or Form N, based on the nature of your complaint.
  • You will be redirected to the payment portal after submitting the form.  Here you will require to make payment for complaint registration, which is usually Rs 1000. Your complaint will be successfully registered and keep handy the complaint reference number for future reference.

You can easily check the complaint status by referring to the RERA MP website. 

In addition, to file a complaint under MP RERA, you will have to lodge a complaint by filling out Form M. Meanwhile, to file an appeal with the adjudicating officer, you have to fill out and submit Form N. 

 

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What Are Consolidated Financial Statements?

By
Bhanu Sahu
-

Financial statements of an entity with numerous divisions or subsidiaries are called consolidated financial statements. Companies frequently refer to the aggregated reporting of their entire business collectively when using the term “consolidated” in financial statement reporting. However, the Financial Accounting Standards Board defines consolidated financial statement reporting as the reporting of an entity with a parent company and subsidiaries.

Public companies must report financials in accordance with the Financial Accounting Standards Board’s Generally Accepted Accounting Principles (GAAP), while private companies have very few reporting requirements for financial statements. International Financial Reporting Standards (IFRS), established by the International Accounting Standards Board, must also be followed by companies that report on their financial performance internationally. Companies that choose to report consolidated financial statements with subsidiaries must follow certain specific requirements under both IFRS and GAAP. 

Consolidated Financial Statements: An Overview

In general, financial statement consolidation necessitates a company integrating and combining all of its financial accounting functions in order to produce consolidated financial statements that show results in standard balance sheet, income statement, and cash flow statement reporting. It is typically decided annually whether to file consolidated financial statements with subsidiaries, and this decision is frequently made due to potential tax or other benefits. The percentage of ownership the parent business holds in the subsidiary determines whether or not a consolidated financial statement with subsidiaries is required. A subsidiary is typically defined as a firm with 50% or more of the parent company’s shares, which enables the parent company to include the subsidiary in a consolidated financial statement. In rare circumstances, less than 50% ownership may be permitted if the parent company can show that the subsidiary’s management is closely aligned to the parent firm’s decision-making procedures.

The cost method or the equity method are typically used to account for a company’s ownership of subsidiaries when it opts not to include the subsidiary in complex consolidated financial statement reporting.

Private businesses typically choose whether to annually produce consolidated financial statements that include their subsidiaries. The tax advantages a company may receive from filing a consolidated versus an unconsolidated income statement for a tax year typically have an impact on this annual decision. Financial statements for a longer period of time are typically created either consolidated or unconsolidated by public companies. A public company may need to submit a change request if it wants to switch from consolidated to unconsolidated. Filing consolidated subsidiary financial statements is typically a long-term financial accounting decision because switching from consolidated to unconsolidated may also cause issues with auditors or investor concerns. However, there are some circumstances, such as a spinoff or acquisition, where a change in corporate structure may necessitate a change in the consolidated financials.

Reporting Requirements

Public companies must report financials in accordance with the Financial Accounting Standards Board’s Generally Accepted Accounting Principles (GAAP), whereas private companies have very few reporting requirements for financial statements. A company that reports financial information on a global scale must also follow the International Financial Reporting Standards (IFRS) established by the International Accounting Standards Board. For entities that choose to report consolidated financial statements with subsidiaries, both GAAP and IFRS have some specific guidelines.

A parent company and its subsidiaries will typically prepare separate and consolidated financial accounting systems. Due to the accounting integrations required to produce final consolidated financial reports, businesses that wish to produce consolidated financial statements with subsidiaries must make a large investment in financial accounting infrastructure. 

Companies adopting consolidated subsidiary financial statements must adhere ti a few important temporary requirements. The primary one prohibits the parent firm or any of its subsidiaries from transferring money, revenue, assets, or liabilities between businesses to unfairly enhance performance or reduce taxes due. Standards for the level of ownership necessary to include a company in consolidated subsidiary financial statements may vary depending on the accounting principles used. 

The aggregate reporting results of distinct legal entities are reported in consolidated financial statements. The balance sheet, income statement, and cash flow statement are the final financial reporting statements that are unchanged. Each distinct legal entity develops its own financial accounting procedures. The parent business then thoroughly combines these figures to create the final consolidated reports of the cash flow statement, income statement, and balance sheet. Consolidated financial statements are useful to investors, regulators, and consumers in assessing the overall situation of the entire entity because the main company and its subsidiaries constitute one economic entity. 

Cost and equity methods for ownership accounting 

To report ownership interest between corporations, there are essentially three options. Consolidating subsidiary financial statements is the first option. Companies may also account for an ownership interest in their financial reporting using the cost and equity approaches. Generally speaking, ownership is determined by the total quantity held. A corporation would often adopt the cost method of financial reporting if it owns less than 20% of the stock of another company. A corporation will often employ the equity method if it owns more than 20% but less than 50%. 

Company Example 

Coca-Cola (KO) and Berkshire Hathaway Inc. (BRK.A, BRK.B) are two instances of corporations. Berkshire Hathaway, a holding firm, has ownership stakes in numerous businesses. The financials of Berkshire Hathaway show that the company employs hybrid consolidated financial statements. The company segments its businesses into Railroad, Utilities, and Energy, followed by Insurance and Other. It accounts for its ownership interest in publicly traded firm Kraft Heinz (KHC) using the equity method. 

A multinational corporation with numerous subsidiaries, Coca-Cola. It supports its global presence in a variety of ways thanks to its subsidiaries spread out over the globe. With subsidiaries in the fields of bottling, beverages, brands, and more, each of its companies helps it achieve its aims for food retail.

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What is a Financial System?

By
Bhanu Sahu
-

A financial system is a collection of institutions that allow the exchange of funds, such as banks, insurance companies, and stock exchanges. Financial systems exist at the firm, regional, and global levels. In order to finance projects for either personal consumption or productive investments and to seek a return on their financial assets, borrowers, lenders, and investors exchange current funds. In order to determine which projects are financed, who finances projects, and the terms of financial agreements, borrowers and lenders use a variety of rules and practices that make up the financial system.

Understanding the Financial System

Like any other industry, it can be organized using markets, central planning, or a combination of the two. 

Financial markets involve loan negotiations between borrowers, lenders, and investors. The economic good exchanged in these markets is typically some form of money, whether it be a claim on current money (cash), a claim on future money (credit), or a claim on the possible future income potential or value of real assets (equity). Derivative instruments are also included in these. Financial instruments known as “derivatives” depend on the performance of an underlying real or financial asset, such as commodities futures or stock options. These are all traded on financial markets between investors, lenders, and borrowers in accordance with the standard laws of supply and demand. 

The financing of consumption and investment plans is directly decided by a manager or central planner in a system where finance is centrally managed (such as in a single firm or a command economy). The planner, be it a company manager or party boss, decides which projects get funding, which projects get funding, and who funds them. 

Give and take markets and top-down central planning can both be found in most financial system. A business firm, for instance, is a centrally planned financial decisions it makes internally, but it often operates in a larger market and engages in interactions with outside lenders and investors to carry out its long-term ambitions. 

At the same time, every modern financial market operates within a framework of government regulation that places restrictions on the kinds of transactions that are permitted. Financial systems are frequently subject to strict regulation since they hace a direct impact on decisions regarding actual assets, economic performance, and consumer protection.  

Components of the financial market

The financial system is made up of numerous elements on various levels. The set of applied processes used by the organization to monitor its financial activities is known as the financial system. The financial system of a company includes all facets of finances, such as accounting metrics, revenue and spending forecasts, salaries, and balance sheet validation. 

The regional financial system facilitates the exchange of money between lenders and borrowers. Banks and other organizations, like securities exchanges and financial clearinghouses, are part of regional financial systems. 

The global financial system, which includes all financial institution, borrowers, and lenders in the globall economy, is essentially a more extensive regional system. The World Bank, large private international banks, central banks, government treasuries and monetary agencies, and the international Monetary Fund are all part of the global financial system. 

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Understanding the Significance of Structural Stability Certificates for Buildings

By
Bhanu Sahu
-

Do you intend to buy an existing house, or are you worried about the stability of your current structure? In this blog, we will explain the significance of structural stability certificates and the conditions for getting them.

What is a Structural Stability Certificate?

A structural stability certificate is a crucial document confirming the integrity of a building’s construction. It is a crucial need for the acquisition, sale, and remodeling of real estate. The certificate attests to the stability, security, and occupant safety of the building’s structural components.

The owner of the building must hire a licensed structural engineer or architect to conduct a structural assessment in order to receive a certificate of structural stability. The assessment is done to determine the building’s general stability, structural strength, and ability to support loads.

After that, the engineer or architect creates a structural stability certificate that contains information about the structure’s age, location, and building materials. Also, it summarizes the conclusions from the structural examination and, if applicable, recommendations for repairs and maintenance.

Advantages of Structure Stability Certificates 

A Structure Stability Certificate can help guarantee that your structure is secure for habitation.

The assurance of safety that a structure stability certificate offers is one of the main advantages. Any potential problems or hazards can be found and dealt with by evaluating the structural stability of a building before they endanger the residents.

It can assist in ensuring that your structure complies with all applicable laws.

For structures of a specific size or age, obtaining a certificate of structural stability is frequently a legal necessity. Building owners can make sure they are in conformity with local laws and stay out of trouble by obtaining this certificate.

A construction stability certificate can increase the resale value of your building.

Especially when it comes time to sell, a certificate of structural stability can increase the value of a house. Properties with structural stability assessments are probably more appealing to potential purchasers because they give another layer of assurance to the home’s security and upkeep.

Requirements for obtaining a structural stability certificate

The building owner must engage a licensed structural engineer or architect to do a structural assessment in order to receive a certificate of structural stability. A complete analysis of the building’s foundation, walls, beams, columns, and other structural elements is part of the assessment.

After that, the engineer or architect creates a thorough report of the assessment results that includes information about the building’s age, construction materials, and load-bearing capacity. The report also specifies any upkeep or repairs necessary to guarantee the stability of the building’s structure.

The engineer or architect issues the structural stability certificate once the report is finished. For the building to continue to be structurally sound, the certificate must be updated on a regular basis.

Documents needed to obtain structure stability certificate 

The following paperwork is typically required in order to acquire a structural stability certificate: 

  • Structural drawings and building plans 
  • Architect’s or engineer’s certificate 
  • Building completion certificate 
  • Soil test report
  • Occupancy certificate 
  • Building inspection report 

The certified structural engineer or architect who has examined the building and determined that it is safe and stable structurally issues the Structural Stability Certificate. The structural components of the building will be carefully inspected by the engineer for safety and stability standards.

It is significant to note that depending on the regional building standards and laws in the location where the structure is located, the particular requirements for getting a structural stability certificate may change. In order to make sure that all required documents are presented for obtaining the certificate, it is best to speak with a certified engineer or architect who is knowledgeable about the regional building regulations and requirements. 

Cost of obtaining a structural stability certificate

The cost of a structural stability certificate varies according to the building’s size, location, and complexity. The qualifications and experience of the engineer or architect chosen to conduct the assessment also play a role. 

In contrast to the possible expenses of property damage, injuries, and even fatalities brought on by structural failures, acquiring a structural stability certificate is a tiny amount to pay. It is an essential investment in the security and safety of your building. 

Cost-relating factors for structure stability certificate 

Complexity and size

The price for obtaining a structural stability certificate could vary depending on the size and complexity of the building. Probably, the assessment for larger buildings will cost more and require more time to complete. 

Age and condition

A building’s age and condition might have an impact on how much it costs to get its structural stability certificate. More expenses may result from the need for more costly repairs or improvements to bring older or poorly maintained structures up to code. 

Location

The cost of getting a certificate of structural stability can also be impacted by a building’s location. Structures located in regions with higher labor or material prices would need more costly inspections or repairs, which would raise overall expenses. Buildings in places with stricter safety rules might also need more thorough examinations, which would increase prices. 

Structural stability certificate format

The location, age, and building materials are all included in the structure of the structural stability certificate. The structural evaluation findings are also included, along with any repairs or upkeep tasks required to guarantee the building’s structural stability. 

The engineer’s or architect’s credentials, expertise, and contact information must all be listed on the certificate. Verifying that the certificate complies with the applicable construction norms and regulations is crucial. 

Format of structural stability certificate for existing buildings

A certificate stating that a building’s structural stability meets the necessary safety standards is known as a structural stability certificate format for existing structures. It is necessary if a structure has undergone significant remodeling, when its function or occupancy changes, or when it reaches a certain age. 

The certificate provides details on the structural layout, building materials, and safety considerations.  

A structural engineer or other qualified expert must evaluate the structure and conduct a thorough assessment of all of its structural elements, including the foundation, framing, walls, and roof, as part of the certification procedure. The certification guarantees that the structure is safe for use and can survive any potential natural disasters or unforeseen events that can endanger the building’s structural stability.

Requirements for obtaining a certificate for an existing building 

What conditions must be met to receive a certificate for an existing structure?

A structural engineer or a qualified architect must be hired in order to obtain a structural stability certificate for an existing structure. The building will be inspected by an engineer or architect who will evaluate its structural soundness.

They will create a thorough report based on their findings that includes suggestions for any repairs or enhancements required to guarantee the building’s structural stability. Calculations and diagrams that show the building’s structural soundness must also be included in the report.

Difference between structural stability certificate for existing building and new construction 

A structural stability certificate for an existing building has a different format than a certificate for new construction since it takes into account the state of the existing structure. 

An existing building certificate evaluates the structure’s current state and points out any flaws in the structural integrity. A new construction certificate certifies that a building was built under approved plans and complies with safety standards.

A building’s current structure, any necessary repairs or enhancements, and the engineer’s or architect’s suggestions for guaranteeing the building’s structural stability are all included in the certificate format for an existing building.

What are the details mentioned in structural stability certificate for existing buildings? The structural stability certificate for the building.

In addition to suggestions for any repairs or modifications required to ensure the stability of the building, the certificate often includes a thorough report with calculations and drawings that illustrate the building’s structural soundness.

The certificate also contains any other pertinent details regarding the inspection and assessment procedure. Additionally, it gives information about the engineer or architect who wrote the report, their educational background, and their professional experience. The certificate must include the date it was issued, the address of the building, and any other pertinent information.

Certificate format for building structural stability certificate 

It is essential to make sure that the format is proper when it comes to a building’s structural stability certificate. The certificate must include all pertinent details, including the address of the building, the owner’s name, the title of the structural engineer who conducted the inspection, the date of the inspection, and the inspection’s results. To be considered official, it must also bear the engineer’s seal and signature. 

One must use a standardized template for building structure stability certificates to ensure that all pertinent details are included. This can assist in preventing any future misconceptions or confusion. 

Structural Stability Certificate vs. Building Stability Certificate  

Structural stability certificates and building stability certificates are sometimes confused. Both certificates pertain to the stability of a building, but they are not the same.

A building stability certificate is a document stating that a building was built under approved designs and building laws. A structural stability certificate, on the other hand, attests to a building’s soundness and compliance with safety regulations.

To guarantee that a building is secure and complies with all regulations, both certificates must be obtained.

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