Maharashtra builders now need to file mortgage status of project with state regulator

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In a move aimed at better transparency, Maharashtra’s Real Estate Regulatory Authority (MahaRERA) has asked developers to declare “security interests” they have created on projects.

This step will also help inform homebuyers whether the property they plan to buy has already been mortgaged or not, The Economic Times has reported.

The Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI), which is a central government agency, can also give this information, says the report. CERSAI has been set up with the objective of preventing instances of lending from different banks on the same property.

CERSAI has data of security interests created from January 22, 2016, for scheduled commercial banks and, with effect July 1, 2016, for all other entities registered with it.

Buyers beware

The Maharashtra regulator also wants homebuyers to be aware of the security interest created on apartments that intend to buy, according to the news report.

There have been many instances of homebuyers buying apartments without knowing the loan status on the property. This leads to litigations later.

Homebuyers need to know that if their flats have been mortgaged or not. In case the developer defaults on repayment, banks would take charge of the property they have bought.

With the new development, developers need to submit a report from CERSAI on security interests created in the project along with the encumbrances certificate while registering the project with the authority, says The Economic Times.

If no security interest has been created, the developer needs to provide an undertaking confirming the same.

The developer is also expected to submit the Cersai report when it makes changes to the security interests created. According to the MahaRERA, the Cersai reports submitted need to be generated within 10 days before the date of submission.