Advisory

Tenants – Rights and Obligations

If you are renting a home, make sure you are clear about your rights and obligations.

By: Sangeeta Sinha

Conflicts relating to landlord and tenant are very common and therefore it is important to learn about the respective rights and obligations. This can help in preventing any future problems. Make sure that all rights and obligations are clearly listed in the lease agreement.

Society Rules

Often people are refused rental accommodation by owners of housing societies on the basis of caste, religion, meal preference or marital status. This is a common problem shared mostly by bachelors. Even if the owner has no objections, the housing society objects.

Now the question is that can societies frame their own rules restricting the tenants on the basis of caste, religion, meal preference or marital status? According to Pratap Shankar, an advocate from Delhi, societies cannot make such bye-laws/rules as they are contrary to the mandate of the Constitution of India, 1950.

In fact, housing societies can make laws for their own smooth functioning, but they should be in conformity with other existing law. By-laws can be challenged before the registrar or deputy registrar of the society and even their orders can be challenged.

Societies can’t arbitrarily frame rules which go against the laws of the country or the state laws. For example in Maharashtra and Delhi the governmentshave issued model by-laws which every housing society must follow while making their own, adds Pratap Shankar.

Also if any rule challenges the fundamental rights of an individual then it can be challenged in the court of law. It is our fundamental right not to be discriminated on the basis of sex, caste, religion, eating habits or marital status.

Tenants with pets

Many tenants with pets often face the problem of being denied a house. Many landlords and even societies don’t allow tenants to keep pets. However, the factis that no Resident Welfare Association (RWA) can deny such rights as the same is against article 51 (g) of the Constitution of India,

and the provisions of the Prevention of Cruelty to Animal Act, 1960. Therefore, housing societies cannot form laws regarding pets.

The Animal Welfare Board of India’s (AWBI) latest guidelines say that no housing society or apartment complex can come up with any such rules or laws.While this can be good news for pet lovers, many societies are still not sensitive to this issue and often don’t allow pets in the lift or in the park.

According to experts there is no law enacted by Parliament or any state legislature that ‘bans’ companion animals so pet-owners can stand up to such harassment. But this right of a tenant also comes with certain duties. Pet owners need to keep the area clean and must keep their pets on leash while in common areas. Also make sure that their vaccinations are always up to date.

Points to check before you sign a lease agreement

1. Visit the flat and check out all the fittings, plumbings etc.
2. Be clear about maintenance charges.
3. If a broker is involved be clear on the brokerage to be paid
4. Check out all the facilities offered by the society including parking slots.
5. Make sure to include the lock-in period (minimum stay) and rental increase clause in the agreement
6. Lastly, don’t forget to check the flat documents, to know who is the actual owner.

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Your rights as a flat buyer

Time to know your rights and assert them as a real estate consumer

Sukumar Pattjoshi, a senior advocate in the Supreme Court of India and an expert in consumer laws gives an overview.

By: Sangeeta Sinha

Buying a home is usually a one-time purchase for most of us. A lot of planning, both social as well as financial, happens around the time of possession. There are worries: What if the builder falters in delivering as per agreement or what if the builder changes the house plan?

It is a huge investment which you need to protect. Before you sign the agreement understand in details the implication of each clause. Get everything in writing and talk to other buyers and lawyers. Be aware of your rights so that you stand on a strong footing. And most important, always approach builder as a group; it will help. Even when you approach a consumer court with disputes it will strengthen your cause and position if you are in a group.

Possession Time

This is a common problem with many projects. Builders often don’t deliver as per the agreement. Though sometimes they may give the choice to buyers to cancel their booking and get their payment back, it may not always be a great idea. The buyer has already lost the opportunity of investing somewhere else. So the compensation offered by the builder must cover such issues also.

Project completion is an important part of any agreement

and it usually specifies the penalty clause too, in case of delays. Consult an advocate for proper legal advice before you sign the agreement for the purposes of due diligence of the property.

Often a buyer withholds payment if he/she anticipates delay in project completion. But before you do that make sure that the agreement does not have any penalty clause from the builder. Most agreements state a high interest rate of over 15 per cent for payment delays from the buyer. It is a good idea to link payments schedules to progress in construction.

Common Amenities

It is not only about the flat which you purchase; buying a flat also includes a lot of other things like parking, club house, play area and other common facilities. Once the agreement has been signed builders cannot change the plan or amenities. The undivided shared land, parking area or other promised amenities cannot be reduced to accommodate any more floors. In case a builder does that you can always challenge the same in an appropriate court of law. There are laws according to which a builder is supposed to set aside certain percentage of plot as open space. Consult a lawyer and get clarity on these issues before you sign the agreement.

National Building Code of India

The National Building Code of India (NBC), is a comprehensive building code. It is a national instrument providing guidelines for regulating building construction activities across the country. It serves as a model code for adoption by all agencies involved in building construction including the Public Works Departments, government construction departments, local bodies or private construction agencies.

The code contains administrative regulations, development control rules and general building requirements; fire safety requirements; stipulations regarding materials, structural design and construction (including safety); and building and plumbing services.

Green Projects

Such projects are either certified by the Indian Green Building Council or rated by Green Buildings Rating System India (GRIHA), a TERI University initiative. The focus areas of all such certification for a building are energy, water and waste management. Though other ratings are also there, GRIHA is the most popular and has standardised norms

Pecuniary jurisdiction to approach consumer courts

– District Consumer Forum – matters valued up to Rs2 million
– State Consumer Dispute Redressal Commission – matters valued up to Rs10 million
– National Consumer Dispute Redressal Commission – matters valued more than Rs10 million

Documents to check while buying a flat

Land Record – Get a copy of the title deed from the builder and also cross check with the land record office. It gives details about ownership and other important details

Construction Clearances – Check for the certificate of commencement to ensure that the builder has obtained the required licenses, sanctions and permissions.

Approved Planning – Check that the building plan and layout has been approved; especially the floor where you book your flat.

Land Use Certificate – The property you plan to purchase should be in a residential zone. Check the certificate to ensure that the property is not on a commercial, industrial zone, agriculture or green zone.

Master Plan Of The Area – With the help of the area’s master plan you can easily find out the future development planning of the area. Don’t go by the words of builder always; check on your own. These plans are available with the town planning department.

No Objection Certificates (NOCs) – Get a copy of the urban land ceiling NOC (if applicable), an environment clearance NOC as well as NOCs from the electricity, water and lift authorities.

Home Loan

How to get the best deal.

Choosing the best deal when buying or refinancing your home is a big challenge. So what is the best way to do it? Lets read expert views of Swetank Shantanu, co-founder and partner of New Delhi-based law firm Legal Consultus

By: Sangeeta Sinha

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The choices are many when it comes to lenders, but getting the best deal on mortgage does not end with just comparison or your credit score. Even the mortgage industry looks into many factors to decide whether you qualify for a home loan or not.

You certainly should not close your deal with the first lender that comes your way. Scout around before deciding on the best deal for your needs. Comparison is the key to finding the perfect deal for your home and payment options suitable to your need.

Options are aplenty, long-term, shortterm, fixed rate and adjustable; make sure you understand the implications of all before taking a plunge.

In a fixed rate mortgage you pay the same interest rate for the life of the loan. Most fixed-rate mortgages are long term where the principal and interest never change even if the market interest rate rises. However, you may have the option of refinancing your mortgage in case of significant drop in interest rate.

The other option of adjustable-rate mortgage (ARM) though may look more affordable as the interest rate fixed for initial period is often below market rate but your monthly payments may fluctuate with

market rates. It is unpredictable in the sense that your payment may increase or decrease with the fluctuation in interest rates.

It is important to understand the rate of interest and other processing fees. According to Prasad Rao Apkari, vicepresident – legal, home loan division, Kotak Mahindra Bank, any lender that charges lower processing fee, has a low margin and rate of interest would be most suitable. A word of caution here; many banks offer a ‘low’ rate of interest but also charge a flat ‘carrying’ or‘documentation’ or some such fee.

The danger here is that while interest payable reduces with repayments, these fees continue to be charged on the original amount. Similarly one should also find out if any prepayment penalty is levied. If the markets change over a period of time one should have the flexibility of changing to another lender without having to pay a penalty, he adds.

Keep the records clear
The mortgage industry also looks into many aspects before giving you a loan. It is important that you keep your records clean. The first thing bank looks into is your Cibil (Credit Information Bureau India Ltd) report to assess your home loan eligibility and your ability to pay interest; so keep it in order. Next is your debt to income ratio which banks usually assess. Make an attempt to boost your ratio by paying off long standing loans. And finally make sure you submit a complete application with all papers such as salary slips, IT returns, bank statements etc.

Types of Mortgages

Simple mortgage – Even though the borrower’s property is not delivered to the lender, the lender has the right to sell the property if there is no timely return of the loaned money.

Mortgage by conditional sale – On certain conditions like failure to repay money before the set date will make the sale absolute. If the money is returned on time, then the sale may be considered invalid and such repayments will entitle to transfer of property.

Usufructuary mortgage – This allows transfer of the property, possession to the lender. The mortgagee retains the possession until repayment of the money and also receives rents and profits or part thereof in lieu of interest, or in payment of the mortgage money, or partly in lieu of interest and partly in payment of the mortgage money.

English mortgage – A date is fixed by the borrower for the repayment of the debt and transfers the property entirely to the mortgagee or the lender. But on conditions that ensure the lender transfers it back on the borrower’s name at the time of repayment.

Mortgage by deposit of title deeds – Mortgage by deposit of title deeds, delivers the title document of the property in question to the lender to create security as well as surety. Anomalous mortgage – This is a combination of the different types of mortgages available in the market

Abolition of Wealth Tax

By replacing the Wealth Tax with a surcharge, the finance minister has not only cut down on unnecessary paper work for the tax-payer, but the government stands to gain substantially.

The abolition of Wealth Tax and increase in surcharge for the superrich has implications for all.

The first budget of the Narendra Modi government saw the abolition of the Wealth Tax, even as it raised the surcharge for the rich by two per cent. This change will benefit/affect all: the government, the middle-class as well the superrich.

The Wealth-Tax Act, 1957, extended to the whole of India till it got abolished in 2015. It was a direct tax, which was charged on the net wealth of the assessee. It was a tax on the benefits derived from ownership of property. The tax was to be paid annually on the same property on its market value, whether or not such property yielded any income.

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Till now, an individual, a Hindu Undivided Family (HUF) or a company had to pay a wealth tax of one per cent on net wealth (i.e assets minus liabilities) over and above `3 million. After continuing for more than 50 years, the government finally decided to scrap this act.

Wealth tax was replaced by increasing the surcharge on the superrich. A surcharge of 10 per cent was announced in 2013 and in 2015 it has been revised to 12 per cent. The surcharge would be applicable on individuals, HUFs, firms, cooperative societies and local authorities having income exceeding `10 million.

1. The surcharge on all individuals with a taxable income of `10 million and above per annum increases by two per cent

2. Such individuals will have to pay 12 per cent surcharge instead of 10%

3. Firms with annual income of `100 million and above will also pay 12 per cent surcharge

4. Companies with incomes between `10 million and `100 million would be paying a surcharge of seven per cent

With the abolition of Wealth Tax tracking of wealth held by individuals will be done through income tax returns. Information regarding assets that are currently required to be furnished while filing wealth-tax returns will be required to be given while filing income tax. This will ensure that the abolition of wealth tax does not lead to escape of any income from the tax net.

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Why was Wealth Tax abolished?
The Wealth Tax was abolished to simplify and widen the tax base. The Act had many issues; for instance, many were not even aware of such a tax and getting assets valued was also a difficult task. Also assets like, jewellery, unaccounted cash and cars are not easy to be tracked.

Collection was also a problem and the tax collected does not form a significant part of the total collection of direct taxes in India. According to Finance Minister Arun Jaitley, there was no point continuing with wealth tax as the cost of collection was very high and the yield low.

The change is expected to fetch a surcharge of Rs90 billion against the sacrifice of Rs10.08 billion. And so the smart move of swapping Wealth Tax with a higher tax on the superrich.

For Hassle Free Immigration

Whether it is for study or work or any other reason, it is important to understand the process well for a smooth stay in the country.

By Sangeeta Sinha

With Prime Minister Narendra Modi fulfilling his promise of merging Persons of Indian Origin (PIO) and Overseas Citizenship of India (OCI) cards the diaspora can look forward to hassle free travel and assistance from Indian missions around the world. With further promise of introducing electronic authorization for online correspondence with Indian missions, the future looks positive for the economy as well as the pravasis.

Now whether you are an Indian or a foreigner, immigration check is common for all. Make sure that you don’t miss out on any paper work.

IF YOU ARE INDIAN
Though Indian government does not allow dual citizenship, persons of Indian origin can apply for either Person of Indian Origin (POI) card or Overseas Citizenship of India (OCI) card. POI scheme was launched much before OCI and both have their own benefits and eligibility. However, with effect from January 2015 POI card notification has been withdrawn and all existing POI card holders have been merged with OCI card holders. Now there is only one OCI card with enhanced benefits.

Foreign Nationals
Foreigners require genuine and valid national passport or any other internationally recognized travel document establishing their nationalities and identities, when they visit India.

Nepal and Bhutan nationals do not need passports to enter India; they need authorized identity proofs. But if they happen to enter India from a place other than their own countries then passport is a must. Pakistan nationals would need visa application forms in addition to regular visa on their passports by the Indian Mission concerned.

EMIGRATION
As per Emigration Act, Emigration means leaving of India by an Indian citizen with the intent of taking employment in the foreign country.

All Indian passports are divided into two categories –
1. ECR – Emigration Check Required

2. ECNR – Emigration Check Not Required

As per the Emigration Act, 1983, Emigration Check Required (ECR) categories of Indian passport holders, require to obtain ‘Emigration Clearance’ from the office of Protector of Emigrants (POE), Ministry of Overseas Indian Affairs, for going to following 18 countries -United Arab Emirates (UAE), The Kingdom of Saudi Arabia (KSA), Qatar, Oman, Kuwait, Bahrain, Malaysia, Libya, Jordan, Yemen, Sudan, Brunei, Afghanistan, Indonesia, Syria, Lebanon, Thailand, Iraq (emigration banned).

However effective from 1st October 2007 if you are traveling to any of the above mentioned countries for purposes other than employment, you don’t require emigration clearance.

For passports issued before January 2007 no notation in the passport means ECR while for passports issued after January 2007 no notation in the passport means ECNR. If emigration check is required it will be endorsed in the passport.

Workers going abroad for employment are required get Emigration Check Stamp before leaving India.

The basic idea for ECR is to ensure the safety of Indian citizens with respect to social and legal conditions of some countries.

IMMIGRATION CHECKS
Immigration check is conducted for all passengers, Indians or foreigners, both at the time of arrival and departure. The passports are duly stamped at the time of arrival as well as departure. Passengers should be careful that their passports are duly stamped before leaving the immigration counter. Foreigners arriving in India are required to fill Arrival Cards while Indians have to fill Departure Cards at the time of Departure.

Foreigners may ensure that they enter India ONLY AFTER an immigration stamp with the correct date is affixed on their passport by the Immigration Officer. Foreigners carrying a valid PIO (Person of Indian Origin) card or OCI (Overseas Citizen of India) card along with their valid national passports are authorized to enter India without obtaining Indian visas separately. It is compulsory for foreigners who are OCIs to also carry the passport bearing the OCI ‘U’ visa sticker.

Lease Agreement

A lease agreement does not just document the rules that the landlords and tenants agree to follow in their rental relationship, it works as your address proof and also comes handy in case of any disputes. Make sure that you have not missed out any crucial point.

By Sangeeta Sinha

Whether you need to rent a place or you need to rent out your place, in both scenarios you need to be sure about the terms. So don’t forget to sign the lease agreement.

A lease or rental agreement sets out the rules landlords and tenants agree to follow in their rental relationship. There is no set format for it; it could be handwritten or printed, one page or multiple pages but it should cover the all the basic points of tenancy.

A LEASE AGREEMENT MUST INCLUDE THE FOLLOWING:
1. Name – The names of both the landlord and the tenant should be mentioned in the agreement.

2. Duration – Duration of the lease must be specified.

3. Rent – The agreement should specify the amount of rent, payment mode and date.

OTHER IMPORTANT POINTS
A lease agreement can have terms and conditions mutually agreeable to both the landlord and the tenant. The parties can mutually insert terms and conditions as may be desired by either of the parties to protect their own interest and to prevent them from any future misunderstanding that could potentially lead to disputes, financial losses or litigation.

Repair cost - There should be clarity as to who would be responsible for the expenses incurred during the significant repair work carried out inside the property during the period of the tenant’s stay. This often leads to lot of conflict between the two parties. There could be a clause saying that the tenant will have to return the property to the landlord in the same condition in which the tenant first received it.

Rent Increase - The lease agreement must specifically mention the rent increase clause which would restrict the landlord to increase the rent vaguely; this is in the interest of the tenant. As per the rental legislations, the standard increase in the rent may be 10 per cent every three years or as mutually agreed between the landlord and the tenant. There has to be a notice period mentioned in the agreement which both the landlord as well as the tenant need to follow.

Termination clause - It is essential to specify the termination clause in the lease agreement. The agreement has to clearly specify the circumstances under which the agreement can be terminated. Along with the termination clause it is vital to specify the notice period and the manner in which the termination notice shall be served and the duration of the notice period.

Sub-letting clause - This clause prohibits the tenant from sub-letting the property to a third person. The parties can mutually agree to add this clause.

Security Deposit - The amount that needs to be deposited with the landlord by the tenant as security must be mentioned. The amount of the security deposit is refundable at the time of the termination of the lease agreement. Upon mutually agreed terms and specifying the same in the agreement, the tenant may incur an interest on the deposit in the possession of the landlord.

Other facilities – The terms for usage of other facilities like parking, gym, club house etc. and also if any extra maintenance charges have to be paid should be clearly mentioned. Any other points like restriction on pets etc. may also be mentioned in the agreement.

LOCK-IN PERIOD
Lock-in period means neither the landlord nor the tenant can terminate the agreement before the expiry of a certain period. It works for both the parties. The landlord is assured of fixed income for a definite period and the tenant can also have a peaceful possession for a definite time.

LEASE VS LICENSE AGREEMENT

There are two kinds of agreements – a lease agreement and a license agreement.

Lease Agreement Leave and License Agreement
The lessee generally gets interest in the property. The licensee does not get any interest in the property.
Lease is an inheritable right. License is not an inheritable right. It is personal and exclusive to the licensee and on death it automatically comes to an end.
Lease holder/lessee can sub-let the premises to a third party, unless the rental agreement has a clause, not allowing such practice. A licensee cannot give the premises on rent to a third party under any circumstances
Lease agreement is not easily terminable and the same requires notice of termination. A license agreement is easier to terminate and the same can be done without serving the notice.
A lease agreement for 12 months or more has to be registered In many states a license agreement needs no registration