Staff Reporter
Panaji
In a move aimed at protecting the interest of homebuyers, the Goa Real Estate Regulatory Authority (Goa RERA) has asked realty developers in the state not to mortgage a property after executing the agreement for sale with buyers.
“Even if a mortgage is created, it will not affect the right or interest of the allottee,” said the regulatory authority in a circular issued to builders.
The circular notes that there have been few instances of promoters mortgaging or creating a charge on an apartment, plot or building after executing the agreement for sale.
Drawing attention to provisions under section (11) (4) (h) of the Real Estate (Regulation and Development) Act, 2016, which mandates upon the promoter after he executes an agreement for sale not to mortgage or create a charge on the property, the circular says that henceforth promoters must not mortgage or create charge over a property that is in the process of being sold.
Moreover, if a mortgage or charge is created then “notwithstanding anything contained in any other law for the time being in force, it shall not affect the right and
interests of the allottee who has agreed to purchase the apartment, plot or building,” says the circular signed by deputy town planner (RERA), Sampurna Bhagat.
It says that the promoter has to inform all existing allottees immediately regarding the mortgage as well as appraise them about their rights under the RERA Act, 2016.
Further, the promoter should also reveal the fact of the mortgage to prospective buyers by incorporating a clause under the agreement of sale. It is also obligatory for promoters to inform the competent authority (Goa RERA) about the said mortgage.
Meanwhile, Credai-Goa said the latest circular from Goa RERA although “logical and welcome, would need certain clarifications,” as it would affect developers who avail of project finance from banks.
“We welcome the new rule on mortgage, as it will increase customer confidence and ensure that homebuyers do not lose their hard-earned money if the project is mortgaged with a bank and for some reason it fails,” said Credai-Goa secretary Avez Shaikh.
“Builders sometimes raise funds on unsold inventory by mortgaging it with banks. They also take project finance loans from banks at the time of commencing work. It is the standard procedure that is followed in the real estate industry,” said Shaikh.
He added that the only clarification the builders’ body needs is “promoters be allowed to release the apartment, plot or building from the bank mortgage before entering into an agreement for sale with buyers.”