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Real Estate sector is one of the largest industries in India estimated to be worth US $20 billion. The real estate sector includes construction of commercial, residential and industrial buildings, redevelopment of the existing old structures, development on a vacant plot of land. Before undertaking the work of construction, it is pertinent for the developer/builder to strategize the plan thoroughly and make all the efforts to confirm the title of the land on which he shall initiate the construction work.
Role of a lawyer
The role of a lawyer in this industry is very challenging and exciting. The lawyer needs to go through various acts and rules and guidelines while dealing with one project. For example, if a builder is willing to undertake a redevelopment project of a housing society in Mumbai, then a lawyer has to refer to Development Control Regulations, The Maharashtra Co-operative Housing Societies Act, MHADA Act, Regional Town planning, timely guidelines issued by the authorities, Maharashtra Rent Control Act, if the building is owned by a landlord, etc.
From the above, it is clear that a lawyer working in a real estate industry has an opportunity to explore various aspects of laws.
Role of an in-house lawyer
Many real estate companies have their own legal department. The objective of having this department is to manage the legal work of the company. The role of an in-house lawyer is to:
- maintain data of various ongoing litigations;
- comply with the orders from the court of law;
- comply with the obligations specified in the agreement, contracts entered by the company on or before deadlines;
- ensure that the work is progressing in accordance with the guidelines issued by the authorities;
- brief counsel about the litigation, coordinate with the lawyers/counsellors hired to appear before the court of law/tribunal on behalf of the company;
- apprise the management of the company regarding the position of the company in legal matters;
- strategize with the lawyers appearing in the court of law;
- negotiating with the tenants/residents/occupiers on behalf of the company;
- drafting, vetting contracts, various documents, notices for the company;
- liaison with various authorities, etc.
It is evident that the role of an in-house lawyer is very challenging. But, what will you achieve, if you will not challenge yourself?
Role of a lawyer practising in a court of law
The lawyers who are practising in court of law have humongous work to accomplish. For anyone who is willing to set up practise in the real estate sector must be always on toes as the practitioner needs to deal with various statutory acts simultaneously. The biggest challenge that a lawyer faces is to select the best mode of litigation that can benefit the client. For example, A has booked a flat in an under construction residential building from the Developer. According to the Agreement for Sale, A was supposed to receive possession somewhere in December 2019. However, till date A has not received possession of the flat. Here, A can avail remedy under various provisions of law i.e.
- A can approach RERA authority for delay in receipt of possession; or
- A can approach consumer forum; or
- A with other aggrieved purchasers approach NCLT under IBC Act or
- A can approach all the forums simultaneously.
In the given situation, the lawyer needs to understand the position of the purchaser and a suitable strategy needs to be adopted so that the purchaser can pursue the litigation.
Various litigation in real estate sector
- Landlord and tenant and developer;
- Co-operative Housing Society and Developer;
- Purchaser and Developer;
- Authorities and Developer;
- Authorities and Tenants/Residents/Occupiers;
- Labour and Developer.
Various forums where a lawyer is required are: Here also you can elaborate on the role of a lawyer under each fora
- RERA Authority
- Consumer Forum
- City Civil Court for suits
- Co-operative Courts for dispute between Cooperative Housing Society and developer
- High Court
- Small Causes Court for tenant related issues;
- Various state authorities
At all the above forums, a lawyer needs to be aware about the various procedures which are required to be followed for filing of matters, appearing before judges, magistrate and representing clients before such forums and thereby making an effort to get a favourable outcome for clients.
A lawyer can either specialize in one or few of the forums or can practice at each of the forums.
What should you do to set up your own practice
After understanding the ocean of work that needs to be undertaken while practising in a real estate sector, here are few guideline for you to set up your own practise:
- It is important for a real estate practitioner to regularly acquaint himself/herself with the various laws related to this sector;
Example: If a client is purchasing a plot of land and visits you for your services, what you need to do is:
- understand the terms and conditions that are agreed between buyer and seller;
- advice client to conduct due diligence to check whether the title of the land is marketable and free from any encumbrances, lien or charges;
- accordingly draft Agreement for Sale; Sale Deed recording all the terms and conditions agreed between the purchaser and seller;
- Once the documents are executed, the document needs to be stamped duly and registered at the office of the Sub-registrar;
Here, you need to be aware about the stamp duty and registration charges in your state. Some clients may also expect to understand the income tax implications. If you can briefly guide them on tax implications, it is good. However, if you are unaware about the tax implications, then you should very politely inform the client to approach Chartered Account for the same. Honesty is the best Policy. When you inform clients honestly about something that you are unaware of, the Client’s trust increases in your services.
- The variety of clients that will land to you are developers, individuals, co-operative housing societies, tenants, landlords, authorities. Your role and understanding keeps changing with each of the clients. Therefore, it is important for you to understand the broader aspect of this industry and do intense research before suggesting any solution to the client.
Example: A developer’s project is on hold because he has not received approval from the Ministry of Environment. It is mandatory to obtain environment clearance in the state of Maharashtra from the Ministry of Environment. In this scenario, if the developer is denied environmental clearance without any of his fault, then the developer can file a Writ Petition at the High Court.
Here, you need to have sufficient knowledge about the various approvals required for commencement of the construction project and the appropriate body that needs to be approached in case there is delay or rejection in obtaining clearance.
- In the real estate sector, both litigation and non-litigation work are essential. From the start of the project till its completion, each and every piece of paper related to the project is important. Now, if you are representing a developer, you need to:
- check whether all the approvals are in place;
- check if the project is progressing as per the guidelines issued by the authority
- prepare joint development agreement if the owner of the land is not the developer;
- draft contracts with various suppliers, service providers, agreement to sale;
- if it is redevelopment project, then draft development agreement, permanent alternate accommodation agreement, consent letter, affidavits, indemnities, bank guarantees;
- if the project is financed, you need to run through various finance drafts, mortgage deeds, loan agreement, investor agreement;
- If you are representing individuals, groups of members of society or tenants, then your approach shall be different. Your perspective will be from a consumer’s angle.
Example: If a member of the Society approaches you stating that the developer has obtained the work of redevelopment from the society illegally than you need to:
- Check if Society has followed the directives of the State Government for re-development of a Co-operative Housing Society under section 79A of The Maharashtra Co-operative Societies Act, 1960. The purpose of following these directives is for better implementation of redevelopment proposal;
- Was the general meeting and/or special meeting called appropriately as per provisions of the Maharashtra Co-operative Societies Act, 1960;
- Was there transparency in tender process;
- Was there violation of any provisions of Co-operative Societies Act, any rules and byelaws;
- Are all the members are taken into confidence before appointment of a builder/developer;
- Is there consent of more than 70% members of the Society.
Impact of Real Estate Regulatory Authority Act
Before application of this Act, the Real Estate sector was like a wild horse. The industry was dominated by the builders/developers suppressing rights of the consumer. After implementation of this Act, the consumers have sensed the ray of hope. For you, it is very important to know RERA thoroughly as the entire sector revolves around this Act. Most of the problems of developers as well as consumers are addressed in this Act. If the Act is practised successfully, the benefits shall be reaped for clients.
The list of Acts that you need to apprise regularly are:
- Transfer of Property Act
- RERA (Real Estate Regulatory Authority Act, 2016)
- The Registration Act, 1908
- Rent Control Act
- Co-operative Housing Societies Act
- Consumer Protection Act
- Land Acquisition Act, 2013
- Labour Laws
- Development Control Regulations
The above list is not exhaustive. But these are the major acts in the real estate sector. Every State has their own laws however, the crux of the matter remains the same.
There is a wide scope being a real estate lawyer. However, it is important to understand that with huge work comes big responsibilities. The practise in the real estate sector is a package deal. With one problem, you have to look around various laws, guidelines to prepare a proper strategy which can work for your client. I would suggest you partner with someone on a contract basis, whom you can trust whenever you are getting involved in huge work. One cannot reach out to many places at the same time. Therefore, more heads to work, more productive work will be. Never hesitate to partner with someone whom you can trust and work with.
There is a lot of clarity awaiting under RERA Act. The scope of work is good if you are ready to give your 100%. There are a lot of twists and turns in this sector. Day in and day out the culture of operation keeps changing. All those who love change, shall love working in this challenging sector.
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