Mandatory registration of agreements between landowners and builders in Delhi may soon be introduced. The Delhi government is preparing to amend the rules governing property registration. Under the proposed system, it will be mandatory to register the agreement between the builder and the property owner at the Sub-Registrar’s office. Officials state that the aim of this change is to minimize disputes regarding property allocation and ownership rights. The government believes that officially registering the agreement will clearly define the rights and responsibilities of both parties.
1% Fee for the Agreement
A fee of one percent may be charged for registering the agreement between the builder and the property owner under the proposed system. Currently, such agreements are often executed merely on stamp paper; however, once the proposed changes are implemented, relying solely on stamp paper will no longer suffice. According to officials, the proposed amendment to the Registration Act will make it compulsory to register these agreements at the Sub-Registrar’s office. The objective is to make the agreement legally more robust and part of the official record.
The Delhi government is preparing to make significant changes to property registration rules to reduce legal disputes concerning property allocation and ownership rights in the capital. Once the proposed system is implemented, registering the agreement between the landowner and the builder at the Sub-Registrar’s office could become mandatory. A proposal has been made to levy a one percent fee based on the agreement value. The government believes this system will create an official record of agreements between builders and property owners, potentially reducing future disputes over property shares or ownership rights.
Builder-Owner Agreements Common on Small Plots
In Delhi, there is a prevalent trend of landowners and builders collaborating to construct 3-4 storey houses or flats, particularly on small plots ranging from 80 to 100 square yards. In such cases, both parties determine the division of the property through mutual consent. In many instances, agreements between builders and landowners are executed merely on stamp paper worth ₹50 or ₹100. Some agreements even include terms such as cash payments in exchange for a specific floor of the property.
Agreements solely on stamp paper lead to disputes
According to officials, the lack of adequate official records for such agreements can lead to future disputes regarding property shares, payments, or ownership rights. Often, disagreements arise between the parties concerning the terms of the contract, escalating the matter into a legal dispute. Under the proposed rule, executing such an agreement merely on stamp paper will no longer suffice; registration at the Sub-Registrar’s office will be mandatory.
Government to gain additional revenue
This system is expected not only to help curb property disputes but also to boost government revenue. Under the current system, the government fails to realize expected revenue from agreements executed on low-value stamp paper. If the proposed system is implemented, a one percent fee could be levied upon the registration of the agreement. This would create an official government record of these transactions and clearly document the rights of the involved parties.
Impact on buyers’ pockets
Officials state that once the proposed amendments to the Registration Act are implemented, agreements executed solely on stamp paper will not be legally sufficient. Failure to register the agreement between the builder and the property owner in a timely manner could cause complications during the future sale of the flat. In such cases, registration fees for the pending agreement might be levied, and the additional one percent financial burden is likely to fall on the buyer. In other words, if the original agreement was not registered at the time of purchase, the buyer could become liable for the registration fees later.
Stricter norms for property transfer via GPA
The Delhi government is also adopting a stricter stance regarding property transfers via General Power of Attorney (GPA). Under the proposed system, stamp duty could be levied on property transfers made via GPA to individuals outside of one’s immediate family (blood relations). The Collector of Stamps can determine the applicable stamp duty, basing the decision on factors such as the nature of the property and the transaction. Under proposed amendments to the Registration Act, the Delhi government is also considering imposing a 4% stamp duty on property transfers executed via General Power of Attorney (GPA). However, a final decision regarding the specific rates and regulations is yet to be taken by the government.
