The Yamuna Expressway Industrial Development Authority (YEIDA) is planning to require that all property sales by real estate developers must be conducted through registered agreements. According to a news report by Hindustan Times, this decision, made on September 27, 2024, aims to protect homebuyers and bring more transparency to real estate transactions. The authorities in Noida and Greater Noida are expected to follow this policy soon.
While this change is a positive step for homebuyers, investors from other cities may not be able to invest if they are unable to visit the registry office in person to complete property purchases.
The Problem with Unregistered Agreements
In the current process, when buyers purchase a property from a developer, they pay 10% of the cost and sign an unregistered agreement (Builder-Buyer Agreement) with the builder. This document outlines the details of the deal, such as delivery dates and payment plans. Since this document is executed without any monitoring, some dishonest developers have taken advantage of this system, selling the same property to multiple buyers, causing legal disputes and financial losses.
The new policy aims to stop these fraudulent practices by requiring property agreements between developers and its buyers to be registered, which would prevent illegal sale of any property to more than one buyer. This rule will regulate the real estate market and protect homebuyers’ interests.
The New Rule: Registered Agreements
Under the new rule, buyers and property developers must sign a registered agreement after paying 10% of the property’s cost. This agreement will be legally binding and must be registered with the local stamp and registration office. Both parties are also required to pay stamp duty on the transaction.
The Uttar Pradesh Real Estate Regulatory Authority (UP RERA) already requires registered agreements for property sales under Section 13 of the RERA Act.
Challenges for Remote Investors
While the new rule benefits local homebuyers, it presents difficulties for investors living in other cities or countries. To register the agreement, both the buyer and the realtor must be physically present at the local registry office. This can be a major challenge for remote investors who may not be able to travel to the region for this purpose.
Previously, investors could purchase properties without visiting the registry office, using unregistered agreements that did not require their physical presence. Now, without the option to sign the agreement remotely, they may face difficulties completing property purchases.
Possible Solutions for Remote Buyers
There are a few potential solutions for investors who cannot visit the registry office in person:
- Power of Attorney (PoA): Investors can grant PoA to a trusted representative or legal advisor to sign the agreement on their behalf, although this adds extra steps to the process.
- Digital Registration: If the government introduces an online registration system in the future, remote investors could sign agreements electronically. However, this option is not currently available.
- Flexible Registration Options: The government may want to offer flexible registration options. Eg: A network of offices allowing the requirement of physical presence and verification to be completed from locations other than the local registry office.
Benefits for Local Buyers
For local buyers, the mandatory registered agreement is a huge advantage. It gives legal protection to their property transactions and ensures that developers cannot sell the same property to multiple buyers. Buyers will have greater security and legal recourse in case of disputes, while the government benefits from increased revenue through stamp duty payments.
