Tuesday, October 20, 2009

Man can claim house bought in wife's name: HC Assetventures

More than 20 years after a Ratnagiri couple got divorced, the Bombay high court has given the man the right to claim the property he had bought for his former wife in happier times.

"The husband had purchased the property in the name of his wife with his own money and, therefore, she was only [the] benamidar, or the ostensible owner, while the husband is the real owner," justice JH Bhatia observed in his order last week. Since the husband bought the house in 1981, the transaction was not barred by the Benami Transactions (Prohibition) Act, which came into existence in 1988.

Family court advocate Kranti Sathe said the ruling would affect many couples who buy property jointly. "The court has tried to strike a balance -- the wife is entitled to maintenance after divorce, but even the husband has not been denied the property that he purchased with his hard-earned money," Sathe said.

This means if a spouse cannot prove to have bought the property with his or her own money, he or she may lose the right to claim it, Sathe said.

In this case, Jayant and Sonali (names changed) were married in 1979. In January 1981, Jayant said he bought the property worth Rs5,000 in Ratnagiri in Sonali's name out of "love and affection". He said he had paid for it after securing a bank loan of Rs1,500 and using savings from his salary, which was Rs350 per month at the time.

In 1984, after their relationship soured, Sonali moved out of Jayant's home and started living separately with her parents in Kolhapur. In 1993, the trial court held that Jayant had paid for the property and it was not bought for the benefit of his wife.

Sonali challenged the decision before the high court, claiming she had paid for the property from the money her "rich" father had given her and the scholarship she earned as a student of biochemistry.

Justice Bhatia, however, observed that there is "no material to show" that Sonali had received "any funds, either from her father or any scholarship", to purchase the property.
The court said it was "logical and reasonable" for Jayant to buy the property in Sonali's name when they were married and living cordially. But after their separation, when Jayant's first claim was allowed by the court in 1989, Sonali made no attempt to claim the property.

The court dismissed Sonali's appeal and permitted Jayant to claim the property that was rightfully his.

Neelofar Akhtar, member of the family court bar association, said the ruling assumes importance as there are not enough provisions in law to deal with property disputes arising out of divorces.

"The woman has the right to alimony after divorce but if she claims property also, what remains with the man?"

Family court lawyer said sometimes men may buy property in the wife's name for tax benefits and sometimes women may end marriages too soon to get a "back-door claim" to the man's property.

Sathe said the length of marriage is also crucial while deciding such cases.

But divorce cases are very delicate and tricky as they differ from couple to couple and it is difficult to apply anything as a blanket rule, Sathe added.

NRIs to get immediate property possession in Chandigarh Assetventures

Non Resident Indians (NRIs) having property in the union territory of Chandigarh can now gain immediate possession of both resedentian and non-residential property, officials said here Monday.

"We have received a notification from the union government regarding the extension of the East Punjab Urban Rent Restriction (Amendment) Act 2001 in the city. Now NRIs can have immediate possession of their property by just applying to the relevant authority," said the official spokesperson of the union territory here Monday.

He added: "Chandigarh administration had been for long urging the centre to make provisions or to devise a mechanism for safeguarding the properties of the NRIs having roots in Chandigarh."

Chandigarh already has an NRI cell, which was established Aug 15, to deal expeditiously with various representations and complaints received from NRIs.

Real estate payment plans Assetventures

Do you understand the nuances of your payment plan to your developer? When you buy property and pay by installments, soon after the initial payment you make at the time of booking, you will be expected to make recurring payments to the developer.

Here we explain the process of how this works and what you stand to gain or lose under each option.

Time-Linked Payment Plan

Time-linked plans require you to pay installments to the developer based on a pre-determined time schedule, independent of the rate at which the project’s construction progresses. This is a contractual commitment you are signing up for, and is non-negotiable.

If your payments are late or if you miss an installment, you can be liable for penalty interest or anything that you might have contractually agreed to as a penalty.

A typical time-linked plan conceptually looks like the following:

- 10% of basic selling price (BSP) at time of booking

- 10% of BSP every quarter thereafter for next 8 quarters

- 10% BSP at time of possession + other dues (such as club membership, development charges if any, parking fees)

The disadvantage with time-linked plans is that you are at the mercy of the developer - even if the project is delayed you are contractually bound to pay your installments.

So, effectively you are funding the developer for no noticeable progress, which clearly is not a fair deal to you. The question to ask is what the developer is doing with your money if it is not going towards the construction or related activities.

Construction-Linked Payment Plan

Construction-linked plans require you to pay installments to the developer based on a pre-determined rate of progress of the project, usually related to construction related milestones.

The advantage of such a payment plan is that you pay only when the milestones are being achieved – you can see visible signs of progress, and there is a noticeable correlation between what you are paying for and the development of the project.

Like in time-linked plans, if your payments are late or if you miss an installment, you can be liable for penalty interest or anything that you might have contractually agreed to as a penalty.

A typical construction-linked plan conceptually looks like the following:

- 10% of BSP at time of booking

- 10% of BSP at time of excavation

- 10% of BSP at casting of the ground floor slab….and so on

- Final installment at completion of the roof + other dues (such as club membership, development charges if any, parking fees)

The advantage of a construction-linked plan, as you might have guessed, is that you pay for progress, and are not uselessly funding the developer to do what it pleases with your money.

What if you choose the Down Payment Plan?

The Down Payment Plan requires you to pay the entire price of the property at the time of booking. One possible advantage of this is that you can expect to get a 10%-12% discount on the property by paying the entire amount in full.

However, depending upon the project and the builder, you might be able to negotiate a higher discount.

The disadvantage of these plans is that once you have paid the entire money, you are at the mercy of the developer if the project is delayed or postponed.

What happens if you cancel your booking?

Irrespective of which payment plan you choose, the outcome depends upon how helpful the developer wants to be in dealing with your cancellation request. You will likely have to put in your request in writing and then just wait for the developer to respond.

However, don’t expect the developer to act quickly. It is not in their interest to do so, because now they have to find a new buyer for the unit that you are exiting.

As far as getting a refund is concerned, you must understand what contractual penalties you might be obligated to pay.

In any case, don’t expect the developer to pay the pending amount back to you immediately. Chances are you will be made to run around a lot to get anything back from the developer, and the process can take up to a few months.

Festive real estate and loan offers Assetventures

Festive real estate and loan offers

Diwali is a time for festive offers. But, real estate and housing loans aren’t consumer goods and the advertised festive offers are usually just a marketing gimmick.

There is very little similarity between buying a domestic items like a kettle, on which one can get genuine deals, and getting a big ticket item like a house or a housing loan. Here we tell you why you should not fall into the trap of a so-called festive offers on real estate and related loans.

Why the marketing spin?

Marketers recognize that during festive seasons, whether its Diwali in India or Christmas in the western world, consumers are looking for good deals.

In India, Diwali is also seen as an auspicious time to make financial decisions. So, marketers play on this pre-existing momentum in the minds of consumers looking to make a house purchase decision during the festive season.

However, the deals are usually no different than what you would get before Diwali, or just after the festival season.

Don’t rush the big decisions!

Buying a house and getting a housing loan against it are the probably the biggest financial decision that any family will make. We aren't talking of a toaster oven here, that costs just a few thousand rupees at most. We are talking of at least Rs 20-40 lakhs, and a loan that will likely keep you indebted for up to a decade.

Such decisions cannot be rushed, because you will have to live with its consequences for a long time. And, the risk of getting it wrong is very high if you rush through your decision.

What drives real estate and housing loans? The economic cycle

Real estate companies and housing lenders are at the mercy of the financial markets. The prevailing interest rates, that are set by the market or policy makers, are one of the key drivers of real estate and housing loan prices.

To stimulate demand, a company might offer what appears to be a discount, but realistically speaking the pricing criteria for these products is no different around Diwali from the weeks just before or after the festive season. If the economic situation is good or bad that has a bigger influence on the pricing of real estate and housing loans.

So what deals are genuine?

At best, you might be in position where the developer reduces a modest fee to stimulate demand, or a housing lender reduces their processing fee.

However, its unlikely that the monetary benefit of these reductions will be any more than say Rs 10,000 – Rs 20,000 maximum, and if you tried hard enough you could get these reductions at other times of the year as well.

For instance, some developers in North India were offering a Navratra discount of up to Rs 100 on the booking amount. However, this was no different from the inaugural discounts usually offered. Similarly, some lenders might waive the loan processing fee during the festive season. But such waivers are no different from what you can get during the rest of the year if you negotiate with your lender.