Module- 2 [Registration and Stamp Duty]

Registration-
The Real Estate (Regulation and Development) Act, 2016, commonly known as
RERA, has transformed the Indian real estate sector by bringing transparency,
accountability, and consumer protection to the forefront.
One of the key provisions of RERA is the mandatory registration of-
i. Real estate projects and
ii. Agents.

REGISTRATION OF REAL ESTATE PROJECT

Section-3: Prior registration of real estate project with Real Estate
Regulatory Authority-
Section-3(1)
 No promoter shall advertise, market, book, sell, or offer for sale any plot,
apartment, or building in a real estate project without registering it with the
appropriate Real Estate Regulatory Authority (RERA) established by each state
and union territory.

 However, the promoter shall make an application to the Authority for

registration of the project that is ongoing on the date of commencement of this
Act and for which completion certificate has not been issued within a period of
three months from the date of commencement of this Act.
 If the Authority thinks necessary, in the interest of allottees, for projects which
are developed beyond the planning area but with the requisite permission of the
local authority, it may, by order, direct the promoter of such project to register
with the Authority.

Section- 3(2): Exemption

This Section further provides that no registration of the real estate project shall be
required-
(a) where the area of land proposed to be developed does not exceed 500 square
meters or the number of apartments proposed to be developed does not exceed
eight inclusive of all phases;
However, if the appropriate Government if considers it necessary, it may reduce
the threshold below 500 square meters or eight apartments, as the case may be,
inclusive of all phases, for exemption from registration under this Act;
(b) where the promoter has received completion certificate for a real estate project
prior to commencement of this act;
(c) for the purpose of renovation or repair or re-development which does not
involve marketing, advertising selling or new allotment of any apartment, plot or
building, as the case may be, under the real estate project.

Section- 14: Application for registration of real estate projects-

Section- 14(1)
Every promoter shall make an application to the Authority
- for registration of the real estate project
- in such form, manner,
- within such time and
- accompanied by such fee as may be prescribed.

Section- 14(2)
Documents required for Registration in case of new project
The promoter shall submit the following documents along with application
registration:
i. Brief details of his enterprise including its:
o Name;
o Registered Address;
o Type of enterprise (Sole Proprietorship, Partnership, Company, Society or
any competent Govt. authority)
o Particulars of Registration;
o Names and photographs of the promoters

ii. Brief details of the projects launched by him in the last 5 years:
o Whether completed or being developed;
o Current status of projects being developed;
o Any delay in its completion;
o Details of cases pending;
o Details of types of land and payment pending

iii. An authenticated copy of the approvals & commencement certificate

from the competent authority obtained in accordance with the laws as
applicable for the Real Estate Project mentioned in the application.
If the Project is proposed to be developed in phases, an authenticated copy
of the approvals & commencement certificate from the competent authority
for each of the phases.

iv. Sanctioned Plan, Layout Plan & specifications of the proposed project or
the phase & the whole project as approved by competent authority.

v. The plan of development works to be executed in the proposed project & the
proposed facilities to be provided including:
o fire-fighting facilities,
o drinking water facilities,
o emergency evacuation services,
o use of renewable energy
vi. The location details of the project, with clear demarcation of land dedicated
for the project development along with its boundaries including the latitude
& longitude of end-points of the project.
vii. Pro forma of the allotment letter, agreement for sale and the conveyance
deed proposed to be signed with the allottees.

viii. The number, type & carpet area of the apartments for sale in the project
along with the area of the exclusive balcony or veranda areas & the
exclusive open terrace areas apartment with the apartment (if any).

ix. Number & areas of garage (covered parking) for sale in the project.

x. Number of open parking areas available in the said Real Estate Projects.

xi. Names & addresses of the Real Estate Agents (if any), for the proposed
projects.

xii. Names & addresses of contractors, architect, structural engineer (if any)
& other persons concerned with the development of proposed project.

xiii. Declaration in “Form B – Declaration, supported by an Affidavit, which

will be signed by the Promoter or any person authorized by the Promoter”
to be submitted by the Promoter that they will not discriminate against any
allottees on the grounds of caste or creed or community or any other grounds
at the time of allotment of any apartment, plot or building.

xiv. Authenticated copy of PAN Card of the firm/ company etc. when Type of
applicant is Firm/ Company etc.

xv. Annual report, Audited Profit & Loss Account, Balance Sheet, Auditors
Report, and Income Tax Returns of the promoter for 3 preceding financial
years.

xvi. Authenticated copy of the legal title deed and other relevant documents
reflecting the title / legal rights of the promoter to the land on which the
project is proposed to be developed;
xvii. Non-encumbrance certificate from a revenue authority not below the rank
of Tehsildar.

xviii. Details of encumbrances on the land on which development is proposed

including any rights, title, interest or name of any party in or over such land
along with its details

xix. If Promoter is not the owner of the land on which development is

proposed, then:
o Details of the consent of the owner of the land;
o Copy of the collaboration agreement,
o Development agreement, joint development agreement or any other
agreement, as the case may be, entered into between the promoter and such
owner; and
o Copies of title and other documents reflecting the title of such owner to the
land on which the project is proposed to be developed.

xx. Details of all promoters including:

o Name;
o Photograph;
o Contact;
o Address;
o Aadhar card;
o PAN card;

Section- 5: Grant of registration-

 Provide Registration number including a Login
Authority shall within ID and password to the applicant for accessing
30 days, grant the website of the authority and to create his
registration and webpage and to fill therein the details of the
proposed project,

Authority shall within Provide reasons to be recorded in writing.

30 days reject the Opportunity of being heard to the applicant
application and before passing such order.

If the Authority, fails Project shall be deemed to have been registered

Authority shall within 7 days of the expiry of
to grant the said 30 days, provide Registration number and
registration or reject Login Id and Password to the applicant for
the application within accessing the website of the authority and
30 days create his webpage.

Section-6: Extension of registration-

 The registration granted under section 5 may be extended by the Authority on
an application made by the promoter, due to force majeure,
- in such form and on payment of such fee as may be prescribed.
 The expression “force majeure” shall mean a case of war, flood, drought, fire, cyclone,
earthquake or any other calamity caused by nature affecting the regular development of the
real estate project.

 Authority may in reasonable circumstances, without default on the part of the

promoter, based on the facts of each case, and for reasons to be recorded in
writing, extend the registration granted to a project for such time as it considers
necessary, which shall, in aggregate, not exceed a period of one year

 No application for extension of registration shall be rejected unless the

applicant has been given an opportunity of being heard in the matter.
Section-7: Revocation of registration
The Authority may revoke a registration on the basis of
- a complaint received o
- suo motu by the Authority
- by giving 30 days' notice in writing to the Promoter of such real estate project
- stating grounds of proposed revocation and instructing him to show cause as to
why the registration should not be revoked.
- On the basis of the Promoter's reply to the show cause notice, the Authority
may allow the real estate project to be registered or alternatively, may cancel
the registration.

Grounds of Revocation-
1. If the Promotor defaults in doing anything required under RERA;
2. If the Promotor violates any terms and conditions of the approval granted by
the Authority;
3. If the Promotor is involved in any kind of unfair practice or irregularities
such as any misrepresentation or false representation and / or publication of
any advertisement / prospects of services that are not intended to be offered;
and / or
4. If the Promoter indulges in any fraudulent practices.

Consequences of Non- registration of Real Estate Projects-

In case of non-registration of the real estate project,
 Section 59 stipulates a penalty of up to 10% of the estimated project cost and in
case of continued default, an additional fine up to 10% of the estimated project
cost or imprisonment up to 3 years or both.

 In terms of the provisions of Section 31 of the RERA legislation, any aggrieved

person may file a complaint with the Authority against the Promoter for
violation of the provisions.
 The Authority has been entrusted with very wide powers under RERA in
relation to any non-compliance on the part of the Promoter including levy of
penalty as well as taking such other remedial measures or safeguards as may be
deemed fit by the Authority.
 The same may include granting of interim order(s), refund of consideration
amount received by the Promoter from various allottee(s), change in the
developer / Promoter, etc., on a case to case basis.

REGISTRATION OF AGENTS
Agents/ property dealers/ brokers play a major role in the Real estate sector, they
are the ones who help the homebuyers in choosing the right kind of builder. They
are the middlemen between Builders and Homebuyers.
As per the RERA Act 2016, it is mandatory for all the agents to be registered with
Real Estate Agent RERA to work in the real estate sector, which means only
registered agents can facilitate sale and purchase of real estate properties registered
under section 3 of the act.
Section 2(zm) of the act defines “Real Estate Agent“– “Any person who
negotiates or acts on behalf of one person in a transaction of transfer of his plot,
apartment or building, as the case may be, in a real estate project, by way of sale,
with another person or transfer of plot, apartment or building, as the case may be,
of any other person to him and receives remuneration or fees or any other charges
for his services whether as commission or otherwise and includes a person who
introduces, through any medium, prospective buyers and sellers to each other for
negotiation for sale or purchase of plot, apartment or building, as the case may be
and includes property dealers, brokers, middlemen by whatever name called.”

Section- 9: Registration of real estate agents-

(1) No real estate agent can facilitate the sale/purchase of properties in real
estate projects registered u/s 3 of the Act without obtaining registration.
(2) Every real estate agent shall make an application to the Authority
- for registration in such form, manner
- within such time and
- accompanied by such fee and documents as may be prescribed in respective
State’ s rules.

(3) The Authority shall, within such period, in such manner and upon satisfying
itself of the fulfilment of such conditions-
a. grant a single registration to the real estate agent for the entire State or
Union territory, as the case may be;
b. reject the application for reasons to be recorded in writing, if such
application does not conform to the provisions of the Act or this rules or
regulations made thereunder.
However no application shall be rejected unless the applicant has been given an
opportunity of being heard in the matter.

(4) Whereon the completion of the period specified under sub-section (3), if the
applicant does not receive any communication about the deficiencies in his
application or the rejection of his application, he shall be deemed to have
been registered.

(5) Every real estate agent who is registered shall be granted a registration
number by the Authority, which shall be quoted by the real estate agent in
every sale facilitated by him under this Act.

(6) Every registration shall be valid for such period as may be prescribed, and
shall be renewable for a period in such manner and on payment of such fee
as may be prescribed.

(7) Where any real estate agent who has been granted registration under this Act
commits breach of
- any of the conditions thereof or
- any other terms and conditions specified under this Act or
- any rules or regulations made thereunder, or
- where the Authority is satisfied that such registration has been secured by
the real estate agent through misrepresentation or fraud,
 the Authority may, without prejudice to any other provisions under this Act,
revoke the registration or suspend the same for such period as it thinks fit.
 However, no such revocation or suspension shall be made by the Authority
unless an opportunity of being heard has been given to the real estate agent.

Procedure of Registration of Agents-

The Application procedure differs from state to state according to their respective
rules, but the mandatory documents to be submitted are
o Details of the Applicant (Name, address, contact details and the photograph)
o Copy of PAN card;
o Brief details of his enterprise (name, registered address, type of enterprises);
o Particulars of registration as a proprietorship, society, partnership, company etc.
o Including bye-laws, MOA, AOA etc.;
o Plus any other information as may be specified by the Act, rules or regulation
made thereunder.

Section- 10: Functions of the Real estate agent-

Every real estate agent registered u/s 9 shall-
a) Not facilitate the sale or purchase of any plot, apartment or building, in a real
estate project or part of it, being sold by the promoter in any planning area,
which is not registered with the Authority,
b) maintain and preserve such books of account, records, and documents as may
be prescribed,
c) not involve himself in any unfair trade practices,
d) facilitate the possession of all the information and documents, as the allottee, is
entitled to, at the time of booking of any plot, apartment or building,
e) Discharge such other functions as may be prescribed.

Consequences for non-registration of Agents-

The Act states that any unregistered broker, if found dealing in a registered
property, will have to pay a penalty of Rs 10,000 per day for the entire period
during which such default continues or a penalty of upto 5% of the value of the
deal.

Stamp Duty
Stamp duty/ ad valorem tax is a charge imposed by governments on legal papers,
which are often used in the transfer of assets or property. Stamp duties, often
known as stamp taxes, are levied by governments on papers that are required to
legally record certain sorts of transactions.
 Stamp duties must be paid on papers that impact property rights and titles in
general.
 Under the Indian Stamp Act of 1899, the central government mandates the
payment of stamp duty on a variety of transaction instruments, principally
securities.
 In addition, depending on state-specific legislation, the state government may
levy stamp duty on other transactions.
For example- The Maharashtra Stamp Act, 1958, governs the state of Maharashtra’s stamp
duty laws (Bombay Act LX of 1958 ).\

 In general, stamp duty is a government-imposed levy on real estate

transactions. Simply having physical ownership of a real estate property, such
as a house, is insufficient. You must also have proof of legal ownership of the
property, for which stamp duty and registration fees must be paid.

 The state government is responsible for levying and collecting stamp duty,
which differs from state to state due to the constitutional framework.

More points-
o Indian Stamp Act of 1899 is enacted to proper collection of Stamp Duty.
o It gives legal recognition and validity. When a document or transaction was
stamped as per the Act's requirements, it was considered legally valid and
enforceable in a court of law. This helped ensure the authenticity and legality
of various agreements and contracts.
o It can be submitted as an evidence.
Calculation of Stamp Duty-
Because stamp duties are imposed by state governments, they differ from one state
to the next.
Stamp duty is calculated based on the property’s worth.
Property valuation, on the other hand, is done using the guideline value approach.
The guidance value (circular rate) is the property’s minimum value at which it
should be registered.
The responsible authority under the state government determines the circle rates.
Property value is determined by several factors, including the property’s location,
kind, and construction year.
 Stamp duty is calculated on the market value/circle rate of the property.
For example:
Circle rate in your area: Rs 5,000 per sq ft.
Size of the property: 1,000 sq ft
Property cost as per circle rate: Rs 50 lakh
Stamp duty rate: 6 percent
Stamp duty payable: 6 percent of Rs 50 lakh = Rs 3 lakh

Types of Stamp Duties-

1. Impressed Stamps
It is usually done by the process of embossing or engraving. Labels are affixed by
the officer concerned and in the banks by the franking machines.

2. Adhesive Stamps
It is usually stuck to the instruments by any form of adhesive and it is of two
types:
(a) Postal Stamps – Stamps used for transacting with the post office,
(b) Non-Postal Stamps – They usually have a wider application as they can be in
the form of court fee stamps, notarial stamps, revenue stamps, share transfer
stamps, etc.

Cancellation of Adhesive Stamp: [Section-12 of Indian Stamp Duty Act]

Section- 12(1)
a) Whoever affixes any adhesive stamp to any instrument chargeable with duty
which has been executed by any person shall, when affixing such stamp, cancel
the same so that it cannot be used again; and

b) whoever executes any instrument on any paper bearing an adhesive stamp

shall, at the time of execution, unless such stamp has been already cancelled in
manner aforesaid, cancel the same so that it cannot be used again.

Section- 12(2)- Any instrument bearing an adhesive stamp which has not been
cancelled so that it cannot be used again, shall, so far as such stamp is concerned,
be deemed to be unstamped.

Section- 12(3)- The person required by sub-section (1) to cancel an adhesive stamp
may cancel it by writing on or across the stamp his name or initials or the name or
initials of his firm with the true date of his so writing, or in any other effectual
manner.

Few Important provisions-

Section-14- No second instrument chargeable with duty shall be written upon a
piece of stamped paper upon which an instrument chargeable with duty has already
been written.
(On one stamped paper only one instrument to be written).
Section-18(1)- Every instrument chargeable with duty executed only out of India,
and not being a bill of exchange or promissory note, may be stamped within three
months after it has been first received in India.
(Instruments executed outside India to be stamped within 3 months of first receipt
in India.)

Section-29- Stamp duty is payable by persons drawing/making/executing such

documents.

Effect of Deficient Stamping/ Instruments Not Duly Stamped-

1. Instruments which are unduly stamped will get impounded (Section 33):
If an instrument is brought before an authority entrusted with the duty to
examine such documents and the instrument is found to be unduly stamped then
they are supposed to impound the instrument.
The word ‘impound’ means the seizing of documents which infringe law in some way.
Impounding is usually done by a person who has the authority to examine deeds under law.

2. Instruments not duly stamped are not admissible as evidence (Section 35):
Any instrument which is not duly stamped is not admissible as evidence. In
order to make such an instrument admissible as evidence, the duty which is
chargeable on the document will be levied or, in case of insufficient stamping, a
penalty of ten times the value of duty has to be paid.

3. After the agreement has been accepted as evidence, objection can’t be

raised as to its admissibility (Section 36):
After a document/instrument has been accepted as evidence, no objection can
be raised in a court proceeding questioning the insufficient stamping of the
instrument except under section 61.

4. State governments may make rules regarding ‘improperly’ stamped

contracts (Section 37):
The state governments have been given the power to make rules regarding
improperly stamped instruments under the Act. Any instrument which is
 “improperly” stamped (and not insufficiently stamped), after charging the
requisite duty, may be certified as a duly stamped instrument.

5. Inadequate stamping due to accident (section 41):

The gist of this section is that if you realize that your instrument is not
sufficiently stamped ‘by accident’ then you can approach the collector within 1
year from the date of stamping and try to pay the remaining duty for the
instrument. If the collector is convinced that it was an honest mistake, he shall
receive the remaining duty without impounding the instrument.
[‘Collector’ referred to here can be anybody from the district collector, Deputy
Commissioner or anyone the government appoints on this behalf.]

6. Prosecution of people trying to evade payment of stamp duty (Section 43):

This section basically says that if it seems that a person wanted to evade the
payment of stamp duty, he shall be taken to court for offending the Stamp law.

Remedies-
i. Penalty shall be charged if you try to execute an inadequately stamped
document (Section 62):
In this section, a person who tries to execute a document/instrument which is
not duly stamped, shall be liable to pay a fine of upto 500 rupees.

ii. Penalty for trying to defraud the government (Section 64 & 27):
This section actually deals with penalty for not complying with section 27.
Section 27 says that the duty calculated from the value of the consideration in
the transaction has to be truly mentioned. Otherwise, it shall be considered an
attempt to defraud the government. So, even if a document is unduly stamped, it
can be charged with a penalty under section 64. A fine upto 5000 rupees is
payable under this section.

Development Agreement
Development agreements are also called Joint Development Agreements (JDA).
A development agreement is basically a contract between the land owner and a
developer, in which the land owner agrees to provide his land to a developer who
will in turn develop the land with his own investment.
It means that the land owner provides the land, and the developer builds on that
land. The land owner may either receive a lump-sum consideration, a certain
portion of the developed property, or a certain percentage of share in the profits
arising from the result of the development according to the terms agreed upon in
the development agreement.

Illustration: Mr. A purchased a piece of land in Kanyakumari. Pondering the best

way to use the land to get the optimum profit, he listed out the following options
before him:
 Firstly, to construct a residential or commercial building and then sell or rent
it;
 Secondly, to lease it; and
 Lastly, to wait for the golden opportunity for the price of the land to reach
considerably high and then sell it off.
However, none of the above options satisfies him, as he doesn’t have enough funds
for construction. Further, his lack of requisite expertise to get the required
approvals is hindering him from constructing residential or commercial buildings
on his land. Mr A also doesn’t want to go with the last option of waiting for the
peak of price-hike, as it’s highly uncertain and time-consuming.
Meanwhile, Mr B is a reputed industrial developer, who wants to develop a
residential property in Kanyakumari. He has the right expertise in getting
construction approvals and managing the construction activities. However,
considering the trend of the exorbitant prices of land in Kanyakumari, he only has
funds enough for the construction. He doesn’t want to buy a piece of land first and
then develop it.
So, Mr A and B come together and agree that Mr A will contribute his land and Mr
B will develop the land into a residential property. The deal is that while Mr B gets
the requisite approvals, pays for the construction, manages the construction
activities, and takes care of marketing the land, Mr A will have no responsibility
for the development. All that Mr A has to do is sign an agreement and give his land
to Mr B’s control, in return for a share of profits arising out of the constructed
property. This agreement is called a development agreement.

Why is a development agreement needed?

Development agreements are common in the Indian real estate industry. It helps in
situations where an owner of a potentially profitable land may not have enough
knowledge regarding construction and related formalities or has no sufficient funds
to start constructing on the land. Simultaneously, it helps the developers who may
have sufficient funds and expertise but no land at prime locations.
A development agreement creates a win-win situation for both the land owner and
the developer. Depending on the terms of the development agreement, the land
owner will effortlessly receive ready benefits from his land, while the developer
gets to develop land and make a profit out of it without actually purchasing the
land.

Execution of Real Estate Documents at Different Places:

 Section 32 of the Registration Act, 1908: This section lays down the
requirements for the execution of documents related to immovable property. It
mandates that such documents must be registered in the local jurisdiction where
the property is situated. This ensures that the document is legally binding and
provides clarity regarding the property's location.

 Power of Attorney: In cases where the property owner cannot be physically

present at the registration office, they can execute a Power of Attorney (PoA) in
favor of someone they trust. Section 33 of the Registration Act, 1908, allows
the authorized person to act on behalf of the property owner. However, the PoA
must also be registered within the jurisdiction of the property.

Place of Suing in Real Estate Disputes:

 Code of Civil Procedure, 1908 (CPC): The CPC is crucial in determining the
appropriate place of suing in real estate disputes. Section 16 of the CPC
 specifies that the court within whose jurisdiction the property is situated has
exclusive jurisdiction to hear disputes related to immovable property. This
ensures that disputes are dealt with by the court closest to the property in
question.

 Exception - Contractual Agreement: Parties involved in a real estate

transaction can mutually agree to a different place of suing through a
contractual agreement. However, this agreement must be explicit and clearly
mentioned in the contract.