Real Estate Management PDF

Study Material
on the subject
Real Estate Management
PRACTISING VALUERS ASSOCIATION INDIA
www.pvai.org
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CONTENT
Gr.A – FUNDAMENTAL OF REAL STATE MANAGEMENT
1. CHAPTER I CONCEPT OF REAL ESTATE
2. CHAPTER II REAL PROPERTY ECONOMICS
3. CHAPTER III LEGAL INTEREST IN REAL ESTATE MANAGEMENT
4. CHAPTER IV FINANCIAL ASPECT IN REAL ESTATE MANAGEMENT
5. CHAPTER V CHARACTERISTICS OF REAL ESTATE AS

AN INVESTMENT
6. CHAPTER VI PROMOTER- CODE OF CONDUCT
7. CHAPTER VII JOINT VENTURE DEVELOPMENT OF THE PROPERTY
8. CHAPTER VIII MUNICIPAL BUILDING RULES IN REAL ESTATE

MANAGEMENT & VALAUATION
9. CHAPTER IX ENCUMBRANCES, EASEMENT AND OTHER

RESTRICTIONS IN REAL ESTATE DEVELOPMENT
10. CHAPTER X CAREER IN REAL ESTATE
Gr. B HOUSING ESTATE MANAGEMENT
11. CHAPTER XI MANAGEMENT OF A HIGH–RISE BUILDING WITH

MULTIPLE TENEMENTS
12. CHAPTER XII MANAGEMENT OF OWNERSHIP APARTMENT
13. CHAPTER XIII MANAGEMENT OF CO-OPERATIVE HOUSING
14. CHAPTER XIV MANAGEMENT OF COMMERCIAL PROPERTY
15. CHAPTER XV INDUSTRIAL PROPERTY – DISINVESTMENT OF

ONGOING INDUSTRY
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16. CHAPTER XVI ENVIRONMENT NORMS IN HOUSING ESTATE

DEVELOPMENT
17. CHAPTER XVII CONSTRUCTION PRACTICE OF HOUSING ESTATE – THE

OWNER,THE CONSULTANT, THE CONTRACTOR.
18 CHAPTER XVIII ENGINEERING CONTRACTS AND TENDER
19. CHAPTER XIX CONTROLLING OF A HOUSING PROJECT
20. CHAPTER XX ELECTRICAL INSTALLATION
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CHAPTER I
CONCEPT OF REAL ESTATE
For the purpose of classification, the properties may broadly be divided into
two categories, namely, immovable properties or real properties and movable
properties or personal property.
Land and everything firmly fixed to the land e.g. building, trees etc. are
immovable or real property. But things, which can easily be, moved e.g.
ornaments, furniture etc. are movable properties or personal property.
Thus building materials scattered at site are personal property but when the
materials are incorporated in the building standing firmly on the land, it
becomes real property. Similarly, Coal, Oil etc. are real property till they are
hidden in the earth. But they become personal property when they are
brought to the surface of earth.
Now we are coming to the „Concept of real estate‟. The word „estate‟ is derived from
a Latin word, meaning „status‟. In those days and even to day in village area or in
Countryside, the status of a person is rotate around the land he belongs.
Land by nature is indestructible and immovable. The properties other than

Land and structure fixed on land are movable properties.
For these two types of properties, the Law grants different remedies. In the
first Case, if the owner is wrongfully dispossessed of his land, he can
approach the Court of Law for recovering the possession of his land. This is
„real action‟ because the litigation process is directly aimed at the thing itself and
the object of such real action is to restore the thing in dispute.
In the second case, if the Ornaments or other goods are stolen, it is not
known whether such stolen articles can be restored. In such case, the Law
grants personal action. Law takes action not against the thing in dispute,
but against the wrong doar.
The 1st category is normally under Civil Law and the 2nd category under
Criminal Law.
The real estate is the subject of tenure i.e. real property passes to the Legal
heirs of successive generations.
The transfer of Real Estate can take place through registered deeds or
documents, whereas the personal properties are freely transferable by mere
delivery of possession.
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The words „land‟, „real estate‟ and „ real property‟ are often used interchangeably.
To most people they mean the same thing, however the terms refer to
different aspects of the same thing.
Land :
It is defined as the earth‟s surface extending downward to center of the earth
andupward to infinity including permanent natural objects such as trees
and water.
Real Estate :
It is defined as land at above and below the earth‟s surface plus all things
permanently attached to it whether natural or artificial.
Real property:
It is defined as the interests, benefits and rights that are automatically
included in the ownership of land and real estate.
In practice when people talk about buying or selling homes, office space or
land, they usually call these things as real estate. Thus in everyday usage
real estate includes the legal rights of ownership specified in the definition of
real property. People also use the term realty instead.
Types of real properties can be classified as :-
1. Residential
2. Commercial
3. Industrial
4. Agricultural
5. Special-purpose
Residential – All property used for bungalows or apartments, whether in urban/suburban

or rural areas developed for the purpose of residence.
Commercial - Business property including office space, shopping centers, stores,

theatres, hotels, parking facilities etc.
Industrial – Warehouses, factories, land in industrial areas, power plants etc.
Agricultural- Farms, agricultural land used for agriculture.
Special-purpose – Churches, temples, schools, government held land etc.
The market for each of these types of properties can be sub-divided into the
sales market, which involves the transfer of title and ownership rights and
rental market, in which space is used temporarily by lease / rent.
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CHAPTER II
REAL PROPERTY ECONOMICS

Economics can be defined as a scientific study of various problems arising
out of economic activities which are taken up to satisfy human wants with
the available resources of the World. The subject of economics has been
divided into several fields such as public finance, international trade, labour
economics, land economics etc. the application of the theory of economics to
the use of land is covered up in land economics. It may however be noted
that the boundaries of various fields of economics are overlapping each
other and there is no sharp dividing line between each of them. The
intensive study of land and building economics will invariably involve the
understanding of the economics of real property. Real property consists of
lands and buildings are one of the form of investment.
Characteristics of Real Property i.e. Land or Land with building
(i) Land is the gift of nature in the sense that no human efforts are
required to produce land. In other words, it has no cost of
production.
(ii) It is limited in supply and it is not possible by any human effort to

increase its supply. Property cannot be relocated to satisfy demand
where supply is low. However, the use of land for human needs can
be increased, decreased or modified.
(iii) Land is the basic factor of all production and all the basic needs of
human life, namely, food, shelter and clothing, all are satisfied by
land.
(iv) It is not possible to hand over land and buildings physically in the
same way as other movable articles. Hence, it becomes necessary
to have a written document for transfer of real property or more
correctly, for transfer of legal rights in real property. The written
instrument defines and records the legal rights which are
transferred from he transferor to the transferee.
(v) Land is heterogeneous by its very nature because it varies in

respect of location, shape, direction etc. As a matter of fact, no two
real properties are identical in all respects just as no two human
faces are exactly similar.
Man‟s endeavor for the highest return from the use-capacity of land and of real
property has urged him to develop the same for various purposes according
to the demand of time and locality. Thus ware-hoses in the Strand Road in
........... are now being changed to offices and other commercial
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purposes, import being restricted primarily from foreign countries. So a land

may be developed and re-developed according to the necessity to suit owner‟s
return on investment. Or, it may be that a big piece of bare land after being
developed may be sold in small plots at a profit discounting for the cost of
development and other incidentals.
For a successful return, zoning of land is also necessary ad each one for a
particular use, such as agricultural land and pasture should be zoned
together or near each other, poultry and dairy farms should be in a zone
preferably near a town but not within the town to cut transport and
management costs and expenses for land value and rent and to avoid
restrictive municipal laws of the town. Industry should be separated from
residential quarters by a commercial building belt and then the residential
belt surrounded with parks, gardens and recreation places.
There are huge effects of laws of the country and political and religious
influence on real property economy. American saying that “The government, which
governs the least, governs the best” may be applicable in the field of real property
economics. Actually various sorts of Government restrictions by means of
legislation and ordinance may be for the good of some individuals but in the
long run such restrictions or act affects the use-capacity of land .Premises
Tenancy Act., or Urban Land Ceiling act are such restrictions which have
seriously affected use-capacity and value of the property.
Often it is found that religious institutions sitting in the heart of a town and
occupying the most valuable portions of land without paying any rates and
taxes affect the use-capacity in most cases. Same observation also holds
good for educational or political institutions for the benefit of the individual
or of special class instead of the mass.
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CHAPTER III
LEGAL INTEREST IN REAL ESTATE MANAGEMENT.
It is possible to create many different interests in the same piece of property,

each interest being owned by a different person. Same piece of property may
be owned by someone as freeholder, by some other as leaseholder, by third
one as sub-lessee, by fourth one as tenant / licensee, by other one as
mortgagee and so on. When asked for address, all the above different
persons excluding the mortgagee may give the same address, say, 20B, S. P.
Mukherjee Road, ...........- 700 020 as they stay there and enjoy some
interest on the property. When there are several interests in one property at
one time, each interest will almost certainly have different value. It is
necessary for the Estate Manager / Valuer of a real estate to examine the
relevant documents creating interests in property because he will be able to
notice the details which are of vital importance as far as the management /
valuation of property is concerned, but which might not be thought
important by a solicitor or an advocate who is trained to notice only legal
details.
Two principal interest or rights in land or land and buildings are as follows –
(i) Freehold interest.

(ii) Leasehold interest.
I. Freehold interests:
A freehold property implies that the owner of such property is either in

absolute and perpetual possession of such property or in receipt of rents
arising from leases or tenancies which have been created out of the freehold
interest. It is thus the highest form of ownership and the owner of a freehold
property can do whatever he likes with such property. A freeholder may
either use the property for the personal use or may create interest by giving
it to others for use. A freeholder may grant leases or tenancies for a short
period or any definite period of years. In any case, at the expiry of such
period or unfulfilment of provisions of leases or tenancies, the freeholder
regains the physical possession of the property. It is technically known as
revension.
The statement that the owner of a freehold property can do anything with
his property only means that he can sell or develop or create lease/ rent
without the consent of other persons. However, the powers of the freeholder
are mainly restricted by the following two factors:
(i) Law of the land
(ii) Right of others.
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(i) Law of the land:
While developing or carrying out the modifications in the freehold

property, the owner has to respect the prevailing planning laws of the
land. Various town planning Acts, laws or restrictions, municipal acts
have come into existence and the freeholder is required to obtain the
necessary permission from the concerned authorities before he starts
to develop or modify his property.
Also, in case of emergency or by the application of some Acts of

Parliament, the government may force the freeholder to sell or to let
his land or property to local authorities or to some other persons for
some public or semi-public purposes. In India, the property can be
acquired under the provisions of 'The Land Acquisition Act, 1894‟.
(ii) Right of others:
The freeholder should develop or modify his property without

interfering with the natural rights of the owners of the neighbouring
properties. The natural rights of owners of neighbouring properties
may be in the form of use of common well, common passage, entry of
sufficient light and air, etc.
For a freehold property, the owner gets the income-flow more or less in
perpetuity and if other things remain the same, the freeholder will
always retain his asset and his capital will remain in tact. This
privilege of a freeholder is in sharp contrast with the position of a
leaseholder.
II. Leasehold interests:
The freeholder may give permission to any other person to use his
property for a certain number of years. This is known as granting
property on lease and it is subject to some annual payment and other
conditions mentioned in the lease document. The person who takes
the lease is called the lessee or the leaseholder and the owner who
grants such lease is known as the lessor.
Reasons for creating leasehold interest:
The above arrangement is adopted by the lessor under the following

circumstances:
(1) He is in possession of a large piece of valuable land and it is not

possible to find out a suitable purchaser for the same.
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(2) The owner is in possession of the property for a pretty long time and
he is not sentimentally prepared to transfer the ownership to
somebody else.
(3) The sale of the property bas been made virtually legally impossible
due to various reasons such as restrictions imposed by the will of the
deceased.
(4) The tax planning may encourage the owner to enter into a lease
contract. The owner has either to pay capital gains tax (to be worked
out on the basis of sale price) or huge income tax. In some cases, the
capital gains tax proves to be substantial or prohibitive in quantum.
On the other hand, the above arrangement proves beneficial to both lessor
and lessee for the following reasons:
(1) As the property develops or the locality gains more importance

because of economic growth, the leaseholder's interest goes on
increasing with the advancement of lease period.
(2) He is the owner of the land for all practical considerations. But
instead of paying the entire price of land in cash, he has to pay only
the agreed lease rent. He is thus able to save substantial capital
investment in land and the same can either be used by him to develop
the land itself or elsewhere for getting better economic benefits.
Nature of leasehold interest:
It is quite evident that the leaseholder has got restricted powers to use the
property. In certain cases, the leaseholder is required to maintain the
property in good condition and redecorate it at regular intervals. Also, the
leaseholder is required to obtain the consent of the lessor before carrying out
any alterations or additions or modifications in the property. Hence, owing
to such restrictions on the part of the lessee and due to the restricted period
of use of the property by lessee, the leaseholds are found to be less
appealing or less attractive than freeholds from the investment point of view
and therefore investors in leasehold properties require higher yields on their
investments.
It is also quite evident that the period of lease plays an important role in
determining the value of leasehold properties. As the unexpired term of a
lease gets shortened with the passage of time, the value of leasehold interest
will decrease progressively until no value remains at the end of the lease.
Hence, it becomes difficult to sublet or assign the leasehold property at the
fag-end of lease period because most of the would-be occupiers will require a
reasonably long period of undisturbed occupation. Thus a leasehold
property becomes virtually unsaleable as the lease is coming to an end and
in some cases, a leaseholder is left with a property for which he has to pay
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rent even though he is unable to dispose it off or take any advantage

otherwise.
Lessor and lessee:
The liabilities of lessor, the rights of lessee and the liabilities of lessee can
briefly be summarised as follows:
Liabilities of lessor.
Following are the liabilities of a lessor:
(1) He is bound to disclose the material defects with reference to the

intended use of the property which he only knows but which a lessee
with ordinary care could not find out.
(2) He should hand over the possession of the property to the lessee,
when so demanded by him.
(3) He should be clear in his mind that so long as the lessee goes on
paying the rent and performs the conditions of lease document, the
lessee is entitled to enjoy the property peacefully without any
interruption from him. This right shall move with the lessee and shall
be enforceable by everyone who happens to possess it.
Rights of lessee.
Following are the rights of a lessee:
(1) During the period of lease, if there is extension in the property, this
extension shall be deemed to be comprised in the lease.
(2) In case the lessor fails to pay the local taxes for the leased property
which he is supposed to pay under the terms of lease document, the
lessee can recover the same from the lessor.
(3) If repairs are not carried out to the leased property by the lessor in a
reasonable time, the lessee can give notice to the lessor to this effect
and if the lessor fails to comply the same, the lessee can carry out the
repairs at lessor's cost and recover the amount by deducting from the
rent or by filing a suit in the court of law.
(4) If the property, which is leased, is destroyed or becomes permanently

injured by flood, fire, irresistible force, violence of army or mob, etc.,
the option is given to lessee to avoid the lease provided that the
property is not destroyed by the lessee's own acts or misdeeds.
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(5) On the termination of tenancy, the lessee has a right to remove the
fixtures before handing over the possession of leased property.
(6) The lessee has a right to mortgage, transfer or assign his right to
other person.
Liabilities of lessee:
Following are the liabilities of a lessee:
(1) He is bound to disclose the extent or nature of interest which he is

going to take in the leased property and which the lessor does not
know or could not know with ordinary care.
(2) He is bound to keep and restore the property, as it was when lease
was granted except a reasonable wear and tear and also allow the
lessor to enter into the premises for the purpose of inspection. If lessor
finds out the defects and serves a notice to that effect to him, he
should carry out the repairs in a reasonable time.
(3) He must pay the agreed rent at proper time and place.
(4) He must use the leased property as a prudent man would use his own
property.
(5) He shall not do any act which causes a permanent injury to the
property.
(6) He should deliver the possession of the leased property when the lease
comes to an end.
(7) He will not use nor allow another one to use the leased property other
than the purpose for which it was let.
(8) If any encroachment is made on the property by a third party or

anybody claiming title, the lessee should very immediately inform the
lessor for the same.
Forms of lease:
Following are the five principal forms of lease:
(1) Building lease
(2) Occupation lease
(3) Sublease
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(4) Life lease
(5) Perpetual lease.
Each of the above form of lease will now be briefly described.
(1) Building lease:
If the owner of a freehold plot of land commanding a good site for the
construction of a building is unable to develop his land, he gives the plot of
land on lease to somebody who is eager to construct a suitable building on
that particular piece of land. In such cases, the leaseholder pays yearly
ground rent to the freeholder. The leaseholder then proceeds to erect the
building and after the construction work is completed, he maintains it in
good condition and he also bears all the expenses in connection with the
building. The ground rent is the amount of rental value of the open plot of
land at the time of granting the lease. After the construction of the building,
the leaseholder will, if rented, get some return from the property. The
difference between the available rent from the property and the ground rent
paid by the leaseholder represents the leaseholder's net income or profit.
It is clear that the leaseholder will have to invest a good amount in the
construction of the building over the plot of land and hence, such leases will
not become popular, if sufficient time is not given to the leaseholder to enjoy
the fruits of such investment. The building lease, therefore, is normally
granted for 99 or 999 years. However, it is interesting to note that, unless
contrary is provided, the lessor at the end of lease period has not only right
on his land, but also on the building constructed and maintained by the
leaseholder during the tenure of the lease. It is technically known as
reversion and the reversion value of the property includes the land and the
depreciated cost of the building on the land.
The characteristics of the long-term building lease can be enumerated as
follows:
(i) In practice, it is observed that the lessor has to face lengthy litigation
process and incur heavy cost for reversion to property after the expiry
of the lease.
(ii) Normally the ground rent is fixed at a constant figure for the period of
duration of lease and hence, the impact of inflation on account of
declining purchasing power of rupee can be experienced. To avoid
this drawback, the leases with rent review clause after specified
duration say after 5 years or 10 years are becoming more popular.
(iii) The ground rent is well secured because of the improvement on

the land by way of construction of permanent structures.
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(iv) The lessee possesses the land without payment of capital value
except when premium has to be paid at the start of lease.
(v) The lessor can take advantage of tax planning.
(vi) The lessor is deprived of the benefit of incremental value of the

property as time passes and the locality develops.
A typical “Building Lease Deed” is enclosed and marked as Annexure-I.

(2) Occupation lease:
In case of an occupation lease, the owner constructs a suitable structure on

the land and together with land, he grants lease for certain occupation such
as residential, factory, shop, office, etc. It is nothing but renting of a
accommodation for certain purpose with certain terms and conditions.
Following points are to be noted in case of the occupation lease:
(a) Period of lease:
The period of the occupation lease will depend on the use of the structure.
For instance, if considerable amount is to be spent on the decoration at the
start of the lease, as in case of a show room, the lease period will be quite
long, say 20 to 30 years. In case of residential buildings, the lease period is
about 2 to 5 years or so. .
(b) Rack rent and head rent:
If the rent agreed in an occupation lease is very nearly equal to the

prevailing rent for such similar land and structure, it is known as rack rent.
But if the agreed rent is less than the prevailing rent for such similar land
and structure, it is known as head rent. Head rent has also been defined as
the rent paid by the 1st. lessee or the head lease to the freeholder in case
there are more than one lease in a property. However, in practice head rent
often refers as a rent which is less than the rack rent but greater than the
ground rent. Consequently, the difference between rack rent and head rent
will represent the leaseholder's interest. Following are the three important
factors which are responsible for developing a wide gap between rack rent
and head rent:
(1) The leaseholder might have, carried out certain additions, alterations
or improvements to the structure resulting in the increase in the
rental value of the property as a whole.
(2) At the start of the lease, the leaseholder might have given to the
lessor, some premium or advance amount against some reduction in
the rent of the property.
(3) Due to the development of the adjoining areas, the rental value of the
property might have gone up.
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The usual practice is to pay premium at the start of lease by the tenant. The
tenant pays a lump sum amount as premium and in return, the landlord
grants him relief in rent. The 1andlord is interested in getting premium for
the following reasons:
(1) He receives premium which might help him to meet an immediate

expense or to make investment in other lucrative opportunity.
(2) The premium may grant some tax relief in one form or the other to the
landlord.
(3) The security of income of landlord is increased. The tenant has paid
the premium at the start of lease and he is more likely to remain in
occupation of the premises.
(4) The receipt of premium reduces the diminishing effect which inflation
has on the value of future income in real terms.
By paying premium, the tenant gets the following advantages.
(1) He may claim premium paid as loss and thus get deduction from
profits resulting in less tax to be paid.
(2) He may be in a position to part with some capital for the payment of
premium because of his sound financial position and thereby, he may
reduce his future recurring expenses.
It may, however, be noted that premium will be paid when there is a seller's
market i.e. when there is competition among prospective tenants to secure
an agreement of lease with the prospective landlord or in other words, when
the property in question attracts many prospective tenants.
(c) Rising rents:
Sometimes in order to take the advantage of the future development of the

nearby areas, the owner grants the occupation lease on a rising rent basis.
For instance, a canteen may be granted on a lease period of 15 years with
the condition that the rent for first 5 years will be Rs. 3000/- per month, for
the next 5 years it will be Rs. 4000/- per month and for the remaining 5
years it will be Rs. 5000/- per month.
It may be noted that at places where the Rent Control Act is in force, the
lessee may claim protection as a tenant and in that case, the lessor has to
face a lengthy litigation process at heavy cost to bring the occupation lease
to an end. It is also likely that the lessee may then apply the court of law for
fixing standard rent and in all probability, the lessee may not only retain the
possession of the leased property, but also get substantial relief in. the lease
rent.
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(3) Sublease:
Depending on the terms and conditions mentioned in the original lease, the
leaseholder may grant a sublease to other persons. In all such cases, the
original leaseholder becomes the lessor for the subleaseholder. It should be
noted that the sublease can be granted only for a period which is less than
the original lease period. Usually a gap of a few days is kept between the
periods of the original lease and the sublease so as to facilitate the reversion
of the property.
(4) Life lease:
In case of a life lease, the lease is granted for the duration of the life or lives
of one or more persons. The lease comes to an end on the death of such
person or persons.
(5) Perpetual lease:
In case of a perpetual lease, the lease is granted for a year or a number of

years. But it is renewable from time to time at the discretion or will or desire
of the leaseholder in perpetuity. The lessee is however required to respect
the provisions of the lease document and as long as there is no violation of
lease conditions, the lessor cannot terminate the lease.
The lease documents framed to form any type of the lease described above
are unique by themselves and it is absolutely necessary to examine critically
each and every lease document thoroughly so as to find out the impact of its
contents on the value of the property. In all types of leases, the lessor is relieved of
the burden of management, repairs, payment of taxes, etc. and the lessee does all
such jobs. The lessor simply collects or receives monthly or annual rent as agreed
in the lease document.
Leave and license:
In order to get relief from the Rent Control Act and to avoid complications in
tenancy rights, the properties are sometimes given on leave and license
basis. In the Leave and License system, only the right of entry to the
premises is given to the Licensee and not possession. Hence the word rent is
to be replaced by license fee in the agreement. Leave and license is
applicable to residential premises only and for eleven months in one term
and number of such terms are not to exceed three.
Following are the points of distinction between a lease and a license:
(1) A lease is a transferable right while a license is a non-transferable

right.
(2) A lease is heritable while a license is not heritable.
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(3) A lease is not revocable, but a license is revocable.
(4) A lease requires registration as per the Transfer of Property Act while a
grant of license need not be registered.
(5) A lessee can maintain a suit for possession, while a licensee cannot.
(6) A license comes to an end on the death of the licensee, but such is not
the case with a lessee in a lease.
(7) In a lease, the lessee exclusively possesses the property, but in a

license, there is no exclusive possession of the property by the
licensee.
(8) In case of trespass, whether the property is leased or licensed, a

licensee has no right to take an action against the trespasser while a
lessee can take such action.
A typical “License Agreement” is enclosed and marked as Annexure-II.
Mortgage:
When the owner of freehold or leasehold property grants an interest in his

property to other person against the security of a loan advanced by that
person, he is said to perform a mortgage deed. The person who grants such
interest is known as the mortgagor and the person who advances loan for
such interest is known as the mortgagee. Thus mortgage is nothing but a
simple pledging of the property as a security for debt. The person who needs
money (Borrower) will approach the person who can lend the money (Lender)
to the borrower. The Lender (Mortgagee) can be an individual or a Bank or
Company or may be a Trust or Financial Institution. Property, is offered by
the Barrower (Mortgagor ) as security.
In the mortgage deed, the mortgagor agrees to repay the loan and when the
loan is fully repaid, he has got a power to recover his property from the
mortgagee. This is termed as equity of redemption.
Following points should be noted in this connection:
1. Third party Collateral Security:

Such collateral security should not be considered for awarding loan unless it
is from blood relations like father, mother, brother etc.
2. Amount of loan:
The amount of the loan which the mortgagee will advance to the mortgagor
will depend on the capitalised value of the property. Usually, about 70 to 80
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per cent of such value is advanced while 50 to 60 per cent will be a safe
limit for such purpose. It should be seen that the net income of the property
is just sufficient to cover up the interest of the loan.
3. Insurance:
It is desirable to have an insurance of the property in the name of both - the

mortgagor and the mortgagee. The insurance policy is kept with the
mortgagee and the mortgagor is required to pay the premium regularly and
to show the receipts of such payments to the mortgagee. Home Loan
Insurance product or Mortgage Guarantee Scheme introduced in March,
2007 budget by the Finance Minister, Govt. of India.
4. Leasehold property:
It is possible to have a mortgage deed for a leasehold property. But in such

cases, care should be taken to revalue the property periodically so as to see
that the amount of the remaining loan does not exceed the value of the
property.
5. Period of loan:
The period of repayment of loan is generally more and hence, the property
must stand as security for the loan over a longer period of time. The
valuation of the property is so framed that it serves as a sound lendable
basis accommodating the future benefits and services as well as the
detriments and disservices that will flow from the ownership of the property
over that period of time for which the loan is made. Thus the value for
mortgage purpose must reflect, in so far as possible, the. risks involved in
the secured property over a long period of time into the future.
6. Remedies to recover loan:
If the mortgagor regularly pays the instalments of the loan and interest on
the loan, this question does not arise. However, , when the mortgagor fails to
do so, the mortgagee can take the possession of the property and sell it so as
to get the amount of the loan and the interest. The surplus, if any, is given
to the mortgagor. In other cases, the mortgagee may take the possession of
the property himself and after paying the usual outgoings, he may apply the
net income as interest on the remaining loan and then, if there is any
surplus, he may return it to the mortgagor or credit this amount against the
outstanding debt.
7. Subsequent mortgages:
A property can be mortgaged more than once. In such cases, the first
registered mortgage deed will have first claim than the subsequent mortgage
deeds. Hence, the mortgagee of the subsequent mortgages should be careful
in deciding the amount of the loan against the property.
18
8. Third party guarantee:

Normally, the mortgagee is more interested in the recovery of his loan
rather than the possession of the mortgagor's property. Hence,
sometimes, a personal guarantee from a reputable party is included in
the mortgage deed so that in case of emergency, the mortgagee may
request such party to repay the loan advanced to the mortgagor.
9. Types of mortgage lenders:

The institutional lenders include banks, financial organizations, L.I.C.,
government agencies, etc. The non-institutional lenders include
individuals, estate developers, real estate brokers, semi-public
institutions, etc.
10. Valuation:
The principles to be applied for the valuation of the mortgage

properties are the same. The net income should be carefully worked
out so as to see that it at least covers the interest of the loan that is
granted. Also, the value of the materials which can be easily removed
by the mortgagor without the notice of the mortgagee should not be
included in the valuation.
Equitable mortgage and legal mortgage:
When the money is advanced by depositing the title deeds of property with
the mortgagee, as a security for the repayment of loan and interest, it is
known as equitable mortgage. In case of failure of repayment of. loan by the
mortgagor, the mortgagee will have to move the court of law for the recovery
of debt, if the mortgagor refuses to execute the legal mortgage though agreed
previously.
In addition to the depositing of the title deeds of property, a regular legal

deed is sometimes prepared on the requisite amount of stamp paper for the
advancement of loan. This is known as legal mortgage and it will naturally
be quite expensive. When legal mortgage is executed, the mortgagee can
proceed to sell the property in question, as soon as the period of repayment
of loan is over. If the mortgagor, however, wants to extend the period of
repayment of loan, he has to move the court of law and obtain the necessary
orders.
Conversion of Property Interest from Leasehold to Freehold
Policy decision of the Government of India for conversion of lease-hold

property into free-hold was adopted long back in February, 1992 but the
full-proof procedure acceptable both by lessor and lessee has not been
drawn up as yet. Recently Govt. of West Bengal and all statutory bodies
under this government like K.I.T., K.M.D.A., H.I.T., K.M.C. etc. are thinking
on this line and a proposal to convert residential plots and residential flats
of Salt Lake authorities from leasehold into free-hold is now under active
19
consideration of the government. Controversy rotates around the fixation of
“Conversion fee” to be paid by lessee to the lessor.
Freeholder of a real properties may give permission to any other person to

use his property for a certain number of years. This is known as granting
property on lease and it is subjected to the payment of lease rent, lease
premium and to mutually agreed terms and conditions. The lease period of
lands in ........... Municipal Corporation area is generally 99 years with
option for renewal for a further period of 99 years, but for shops, flats and
office spaces it is variable from 5 years to 25 years. In Salt Lake Municipal
area, lease period is 999 years.
Owner of a freehold property can sell or develop or let out of his property
without the consent of others, only he is to respect the prevailing planning
laws of the land. For a freehold property, the owner gets the income – flow
more or less in perpetuity and if other things remain the same the freeholder
will always retain the assets and his capital will remain in tact.
On the other hand, the leaseholder is required to obtain the consent of the
freeholder before carrying out any alterations or additions or modifications
in the property. Owing to such restrictions on the part of the lessee, the
leaseholds are found to be less appealing or less attractive than freeholds
particularly from the investment point of view. Leasehold properties are also
subject to ground rents in addition to the premium and this ground rent is
subject to periodic revision and may become burden on the lessee. In case of
freehold there is nothing to pay as ground rent and one escapes the
recurring expense in perpetuity.
Considering the above aspects it has been found that the marketability of
freehold property is much more easy and fetches higher value than
leasehold property. There have been increasing demands from lessees for
conversion of leasehold right into freehold. This is for better utilization of the
same. It is a fact that in a sale there is an absolute transfer of all rights to
the properties sold. But in a lease there is a partial transfer that is a transfer
of a right of enjoyment for a certain period and the right left with the lessor
is the reversionary right. At the expiry of lease period, the lessor regains the
physical possession of the property with the additional works, if any taken
up by lessee during lease period.
The Delhi Development Authority has taken up the conversion of residential

flats and residential built –up plots irrespective of the size from lease-hold
into freehold on payment of conversation charges. But the lessees are not so
responsive due to cumbersome procedure of DDA in all stages of conversion.
DDA has calculated the conversion fee on percentage basis on latest notified
land rate per sqm. It has allowed higher percentage for bigger plots.
According to DDA, no conversion charge for plot area upto 0.75 K., 7.5% of
notified land rate for plot area upto 2.25 K. and the percentage will go upto
50% of land rate for higher plot area.
20
As stated before, Govt. of West Bengal is now actively considering the

conversion of leasehold right into freehold of Salt Lake plots/ flats by levying
a conversion charge.
The question now arises about the modality of conversion procedure and
calculation of conversion charges. In this connection, the following
parameters may be considered.
(1) Procedure for conversion should not be cumbersome, rather it should

be as simple as possible. Too much of restrictions in procedural
technicalities invite corruption and harassment to the public.
(2) The conversion shall also be allowed in the cases where original lessee
/ allotee has parted with the possession of the property In such cases,
the conversion fee will be higher than the normal charges.
(3) One time conversion fee is payable along with application or the fee
may be paid in equated annual instalments spread over a period not
exceeding three years with some interest. The conversion shall be
allowed only after all the installments have been duly paid.
(4) Conversion fee shall be some percentage of land value, land rate shall
be fixed by the Government on the basis of prevailing market rate of
the area. Percentage shall be higher for bigger plots.
(5) In case of flat, the same principle is applicable. But here, plot area
would be deemed to be 1.2 times of plinth area of the flat.
(6) The conversion from leasehold to freehold will not mean that the
unauthorized construction, if any, will continue and the conversion to
freehold in respect of any demised land should be without prejudice to
the right of Bidhannagar Municipality, ........... Municipal Corporation
or any local Authority to take action in regard to misuse with reference
to the master plan, zonal regulation & building rules etc.
Reverse Mortgage
The Government announced the Reverse Mortgage Loan (RML) scheme in its
budget of 2007-08 in February, 2007.
There are persons who built a house or a flat after spending of all his life
savings. They are not enjoying the benefit of pension nor have any child to
support them. Either they are alone or there children chose to settle
elsewhere and maintain no link with them. Such persons wish that their
houses will earn something for them. But renting them out is also trouble
some. This is where the concept of “Reverse Mortgage” comes in.
21
In a regular mortgage, one takes a loan form Bank or Housing Finance

Company (HFC)after mortgaging the property to them. He repaid the loan in
equated monthly installments (EMI) and recovered the property after full
payment. In a Reverse Mortgage, it is just opposite. Here Banks and HFCs
pay the E.M.I to a person against mortgage of residential property owned
and occupied by him and get the property after a certain period.
It is a loan from a Bank or H.F.C. against the mortgage of residential

properties (house or flat) that the owner does not have to pay back as long
as he or she lives there. Under the scheme, the loan can be obtained only by
those who are more than 60 years old and is applicable for residential
properties only. Owner and spouse will be allowed to stay in the house as
long as either is alive. After their death, the property will go to the Bank or
HFC. If both pass way within 15 years, the lender takes the property and
sells it. If the money from the sale is more than the loan amount including
the accrued interest, the heir gets the difference.
In the scheme, the borrower may take the payment in a lump sum or
periodically as agreed with the lender for a period of 15 years or till the
death of the borrower, whichever comes first. The borrower will also have
the right to repay the loan to end the mortgage.
The amount of loan, subject to maximum of one crore, depends on the

market value of the residential property as assessed by an approved valuer
and the age of the borrower and also on interest rate. The lender will also re-
value the mortgaged property at least once in five years and the loan amount
may be revised. National Housing Bank guidelines state that Citizens
between 60 to 70 years can obtain loans upto 45 per cent of the value of the
property. It can be upto 50 per cent for 70-75 age group, upto 55 per cent
for 76-80 and upto 60 per cent for those above 80.
To get the benefit of the scheme, the owner should have a clear title and the
property should be free from all encumbrances. In addition, the house or flat
should be the permanent primary residence of the prospective borrower.
The funds obtained under the scheme can be used for specific purposes like
maintenance of the house, medical expenditure for family, repayment of an
existing loan taken for the residential property to be mortgaged and for
meeting other genuine needs.
RML scheme is one of the most successful schemes aimed at the elderly in
various countries like U.S., U.K. Australia, Japan etc. In India, it is a social
security scheme for Senior Citizens which is as high as 13% of total
population. Now people would look at buying property not only for shelter
but also for financial security in the old age. It gives financial independence
to the aged if and when income dries up keeping the right of his residential
property in life time.
22
M/s. Dewan Housing Finance Corporation Ltd. of Maharashtra and Punjab

National Bank have come out with India‟s pioneer reverse mortgage products under
the names „Saksham‟ and „PNB Baghban‟ respectively.
Lending institutions such as S.B.I., ICICI, Bank of Boroda, Oriential Bank of
Commerce, LIC Housing Finance, HDFC and others plan to come out with
the scheme shortly.
23
CHAPTER IV
FINANCIAL ASPECT IN REAL ESTATE MANAGEMENT
The investment required in purchase of real property is relatively high. Even

the cost of a small property, say a flat with moderate fittings in ........... is
around Rs. 10.00 lakhs or so. Larger properties cost many times more and
sometime even require Crores of rupees to purchase. It is therefore evident
that the purchasers of such properties may not be in a position to provide
all the necessary money from their own fund and they will have to borrow
money from suitable sources.
Financial aspect of real estate management will be governed by the type of

property in which the money is to be invested. Type of property can be
grouped in the following two categories.
(i) For residential properties.
(ii) For Commercial and industrial properties.
For residential properties

The loan at subsidized rate of interest is available only if a residential house
is to be purchased by the borrower for his personal use. In addition to
subsidised rate of interest, the borrowers are able to obtain income tax relief
on the repayment of loan and also on the interest they pay on the loan. In
West Bengal, the following are the main sources of borrowing for purchase
of residential properties.
(a) Government
(b) Bank
(c) W. B. State co-op. Housing Federation (Apex) through co-op.
Housing Society.
(d) Housing Development Finance Corporation (H. D. F. C.)
(e) LIC Housing Finance Ltd.
Government, Bank and even the Semi – Govt. bodies provide house –
building loan to their employees at a subsidised rate of interest.
Amount of the loan admissible is equivalent to 60 months pay of the

employee. The principal amount of the loan is recoverable in 180 monthly
instalements and the interest is payable in 60 monthly instalments after
recovery of principal.
Now a day, for general public, the most popular source of borrowing is W. B.
State Co-op. Housing Societies. A group of house seeking persons (minm.- 8)
combine and form a legal body, known as housing society. The society works
within the rules and regulations imposed by the bye –laws of Co-op. Housing
24
society and its working is examined and supervised by the government.

Housing Co-op.. has now become more popular because of encouragement
at government level in getting land at reasonable price and also due to
exemption of stamp duty and registration charge.
H.D.F.C., L.I.C. Housing, different Banks grant individual loans secured by
an equitable mortgage to build houses or to acquire suitable completed
house, flat etc. Moreover, Home Extension loan to extend the built – up area
of an existing property, Home Improvement loan to carry out repairs or
renovation of an existing property, Stamp duty loan to defray the cost of
payment of stamp for registration of property are also available. The
quantum of loan is determined in a way that the estimated monthly
instalment is within 50% of the net take home pay to ensure that the
commitment towards loan repayment and other domestic expenses of the
borrower are well within his /her means.
Documents to be submitted with the application for Home loan :
(i) Passport size photo – one copy.
(ii) Voter I.D. Card / Electric bill / Telephone bill / Pan Card / Driving
Licence etc. – for self and address identification.
(iii) Bank statement of last 6 months.

(iv) Agreement for sale / sale deed.
(v) Copy of approved plan where applicable
(vi) Own Contribution receipts.
(vii) Demand note by builder.
(viii) Allotment letters where applicable.
(ix) Permission to mortgage.
(x) Guarantor.
(xi) 13 years search report in case of vacant land.
(xii) Pay slip where applicable.
25
Indicative Interest rates and EMI for loans of Rs. 1 lakh, Rs. 5 lakhs
and Rs. 10 lakhs.
Rate of interest may vary from Bank to Bank and from time to time.
Term loan (years) Rate of Interest EMI for a loan EMI for EMI for a loan of
(%p.a.) of Rs. 1 lakh Rs. 5 lakhs Rs. 1 Lakh
Upto 5 7.25 1992 9960 19920
6 to 10 7.50 1187 5935 11870
10 to 15 8.00 956 4780 9560
15 to 20 8.00 836 4180 8360
EMI = Equated monthly instalment.
(ii) For commercial and industrial properties.
The amount of loan required by a borrower for the purchase of commercial

and industrial properties will be more because units of commercial property
are generally larger and much more valuable. Here the investor or purchaser
will have to borrower money from the financial institutions at usual rate of
interest and not at subsidised rate as in case of residential property or from
the commercial money market.
The commercial or industrial property involves a greater risk than the owner
– occupied residential property. If there is sudden depression due to change
in economic situation, the commercial or industrial unit will become sick
and it will be difficult to recover the loan in such case.
Gearing and equity:
The term gearing is used to refer to the relationship in percentage between

the money an investor puts into a scheme himself and the money he
borrows for the scheme.
The money provided by an investor himself is referred to as his equity in the

scheme.
With respect to gearing and equity, the projects can be grouped in the
following two categories:
(1) Low-geared: The Equity is a major proportion of the total capital

involved and only a small portion of money is borrowed by the
investor. Such a project is referred to as a low-geared project.
(2) High-geared: where the equity is a small proportion of the total

capital involved and the greater part is money which has been
borrowed, the project is said to be a high-geared project.
26
If, Investor‟s capital = X

Borrowed money = Y
Total investment = X + Y
Y
Then, Gearing = X Y 100
Following are the three important aspects of gearing.
(i) Cost of borrowing
(ii) Increase in interest
(iii) Increase in return.
In practice, the success of an investor in real properties who is depending

mainly on borrowed money entirely revolves around the process of gearing.
We can come across many cases in which high gearing has produced very
profitable results and may, in the eyes of a layman, look terrific and
fantastic. But at the same time, it should not be forgotten that high gearing
is equally very risky also.
Many investors or developers made fortunes under favourable conditions

because they were able to borrow money at low rates of interest to invest in
properties which produced a higher yield. It may be due to great foresight of
developers who had considerable development skills which they utilized in
their schemes or projects. They were also prepared to take what were
considered to be great risks and unwise actions by many people. But they
possessed one of the great skills of accepting the unexpected behaviour of
economy and real property market and were able to estimate accurately the
necessary financial requirement of a project and thereafter borrowing on the
right terms to obtain an acceptable yield on the equity and thereby to make
a scheme workable or viable. On the other hand, if circumstances have
changed adversely and things have not gone favourably as predicted, many
investors or developers have also lost considerable money in addition to
enormous mental strain and worry which accompany in such situation.
To illustrate the above principles of finances for investment in real

properties, a few simple problems may be solved.
Problem 1:
A property gives a net annual return of Rs. 60,000/- . It was purchased for
Rs. 10 lakhs. The investor borrowed Rs. 6 lakhs of the purchased money
form Bank at the rate of interest of 8%. What is the yield of the investor‟s equity?
27
Net annual Return Rs. 60,000.00
Deduct interest on loan of Rs. 6,00,000.00
@8% 8 60,00,000.00 Rs. 48,000.00

100
Net income to the investor

= Rs. 60,000.00 – Rs. 48,000.00 Rs. 12,000.00
Investor‟s capital = (10 - 6) lakhs Rs. 4,00,000.00
Hence, yield on investor‟s equity
Rs.12,000.00
100 3%( Ans)
Rs.4,00,000.00
Problem 2
In problem 1, the investor subsequently invests further Rs. 2 lakhs at an

opportune time and the annual return becomes double in amount after
second investment. What is the final yield of the investor‟s equity?
Net annual return after 2nd
investment = Rs. 60,000.00 × 2

Rs. 1,20,000.00
Deduct interest on loan of Rs. 6,00,000.00
@8% 8 60,000.00
100
Rs. 48,000.00
Net income to the investor
= Rs. 1,20,000.00 – Rs. 48,000.00

Rs. 72,000.00
Investor‟s Capital = ( 10 – 6 + 2) lakhs
Rs. 6,00,000.00
Hence the final yield on the investor‟s
Rs.72,000.00
equity = 100 = 12% (Ans)
Rs.6,00,000.00
28
Problem 3
A commercial property gives a net annual returns of Rs. 3 lakhs. It was

purchased for Rs 30 lakhs. The investor initially barrowed Rs. 20 lakhs of
purchase money at the rate of interest of 12% from Bank and subsequently
invests further Rs. 5 lakhs and the annual return becomes double in
amount after the 2nd investment. What is the final yield of the investor‟s equity?
Net annual return after the 2nd investment

= Rs. 3,00,000.00 × 2 Rs. 6,00,000.00
Deduct interest on loan of Rs. 20 lakhs @ 12%
12 Rs.20,00,000.00
(-) Rs. 2,40,000.00
100
Net annual income to the investor Rs. 3,60,000.00
Investor‟s Capital = ( 30 – 20 + 5) lakhs Rs. 15,00,000.00

Hence the final yield o investor‟s
Rs.3,60,000.00 100
Equity = = 24% (Ans)
Rs.15,00,000.00
29
CHAPTER V
CHARACTERISTICS OF REAL ESTATE AS AN INVESTMENT.
An investor tries to study the available opportunities for investment in the
market and depending upon his ability and way of thinking, he makes
investment in various types of articles and goods. The expenditure on
instant pleasures such as visits to popular places of entertainment,
expensive holidays etc. is gone for ever and it cannot provide a future
income-flow in the form of earnings. For some people, money saved is money
earned. But at the same time, it should not be forgotten that money spent is
money enjoyed. There are many persons who believe that today is more
important than tomorrow and accordingly, they would like to adjust their
way of life with the available resources of money.
Few possible opportunities of investment open to the investor are discussed

below for better comparison of investment in Real Property.
(1) National savings certificates:

These are the certificates or bonds issued by the government to encourage
saving and to grant reasonable rate of interest. These certificates can not be
encashed before maturity and hence, they do not possess liquidity of capital.
They grant relief in income tax and wealth tax Maturity period is 6-years.
(2) Insurance:
To safeguard against the probable unlikely and unwanted future events,
insurance policies are taken and the investor pays regular yearly
instalments in the form of insurance premiums. There are various types of
insurance policies available and depending upon the risk involved, the
insurance company decides the rate of premium.
In the simplest form of insurance policy, there is no return\at all unless the
event occurs. For example, with a car policy, there is no payment from the
insurance company unless the car is damaged or stolen or someone is
injured as a result of the use of the car.
The L.I.C. (Life Insurance Corporation) has come out with a variety of
schemes and depending upon the circumstances, a person can get the
maximum benefit by paying regularly the premium for a particular
insurance policy. The usual periods are 10 years, 15 years or 20 years and
the policy-holder has to pay annual premium during this interval of time.
With a little luck, the amount of the insured sum is returned and the
insured person may enjoy the money himself. But, if in the meantime he
30
dies, his widow or successor will receive the entire insured sum on his death
and the premium payments will cease. This is the most useful type of life
insurance policy. I t can be easily understood that if death occurred when
only one premium payment has been made, the receipt of insured lump sum
would yield an incredibly high rate of return on the investment, a fact which
would be of great help to the family of the deceased but of little help to the
insured person.
The investment in insurance policies has proved to be attractive in recent

times because of benefit granted in income tax upto a certain limit. The
insurance policy is well worth having due to the indemnity or protection
granted against loss or damage. But from the view point of pure investment
only, it is difficult to recommend judging by the way the purchasing power of
the sum payable is eroded by inflation
( 3) Fixed deposits in banks:
If the amount is put in the form of fixed deposits for a certain period, the
banks grant a slightly higher rate of interest as compared to the savings
accounts. The facility of loan is also given and the depositor is allowed to
withdraw a certain percentage of the amount of fixed deposit with a nominal
additional rate of interest above the rate of interest at which the deposit is
received by the bank. The fixed deposits in banks also grant some relief in
taxation.
(4) Company deposits:
The limited companies invite fixed deposits from public and they pay higher
rate of interest as compared to banks. The company depositors are treated
as unsecured creditors and in case of default, there are chances for the
depositors to lose their capital. However, the fixed deposits with reputed
companies are fairly safe. The main advantage of fixed deposit is that the
procedure involved is very simple. The only thing the depositor has to do is
to fill up the necessary form and hand it over to the company or its broker
with the necessary amount.
(5) Public provident fund:
This fund is operated by the government to which any person can

contribute. The amount to be invested can vary from year to year. The
advantages claimed by this scheme are as follows:
(i) These deposits earn compound interest and it is exempt from income
tax and wealth tax.
(ii) The amount can be deposited in joint name with a nominee who can
receive the amount in the case of death of the depositor.
(iii) A loan to the extent of 25% of the sum invested can be made available
after 3 years to be paid back within 2 years and a non-refundable
31
withdrawal upto 50% of the balance can be made after 6 years.
(iv) The fund cannot be attached under any order or decree of a court.
Maturity period – 15 years.
(6) Units of the Unit Trust of India:
The Unit Trust of India is a statutory public sector investment institution
which was set up in. 1964. It mobilises the savings of the community
through the sale of its Units under different schemes floated by the Trust.
These savings are then invested in shares and debentures of good
companies for the benefit of Unit holders. The net income from these
investments is then distributed to the Unit holders annually in the form of
dividend. Thus the Unit Trust of India gives an opportunity to small
investors for participating indirectly in the activities of the Capital Markets
and at the same time, it absorbs the anxieties and worries of investors for
steady return and safe investment of their funds.
A Board of Trustees consisting of specialists in industry, banking, finance

and investment, manages the affairs of the Trust. The chairman of the
Board is appointed by the Central Govt.
The investment in Units grants valuable benefit in income tax and wealth
tax. There are various schemes and plans floated by the Unit Trust of India
to suit the requirements of investors.
(7) M.I.S. (Monthly Income Scheme)
At present 8% interest payable monthly and bonus of 5% on maturity after 6

years. The total deposit shall not exceed Rs. 4,50,000/- in case of single
account and Rs. 900000/- in case of joint account.
An investor may, at any time, after expiry of one year from the date of
opening of the account, close the same and withdraw the entire deposited
amount. If any amount is withdrawn before three years, an amount equal to
5% of the deposit shall be deducted, but monthly interest of 8% will be paid
upto the time of withdrawal. If premature withdrawal is made after 3 years
from the date of deposit, there shall be no deduction.
Interest earned is eligible for deduction from Income Tax.
(8) Shares:
The public limited companies raise their finance by issuing shares in the
form of paper certificates. The stock exchange or share market has a distinct
place in the national economy of any country. As a matter of fact, it serves
as a barometer of economic activities of the area. The shares of different
32
companies are sold and purchased in stock exchange and speculators make
or lose their luck in such markets. If the company is making good profit, the
purchase value of its share will far exceed its face value i.e. the amount
shown in the original share certificate. On the contrary, if the reputation of
the company is not good, the purchase value of its share will be far below its
face value.
The capital appreciation does not always result from investment in shares. It
is due to the fact that for every capital gain made by somebody, there is
probably someone else making a capital loss or at least not doing
particularly well out of a transaction. In recent years, there have been
several very well known companies which have run into difficulties,
indicating the risks inherent in investment in stock exchange market. It is
probably true for investing in shares that unless there are risks, there will
be little prospect of high returns and ultra-cautious investor in shares is
unlikely to die as a millionaire. The greater the risk, the greater the returns
one can hope for, but also the greater the possibility or chances of complete
failure.
The Indian stock market was a world of speculators and gamblers till 1980
or so. But thereafter, there has been a continuous flow of small investors in
the stock market because of entry of many public issues. The financial
institutions and share brokers dominate and manipulate the stock market.
The group of small investors is powerless, scattered and unorganised to have
any effect on the stock market. The small investor is dragged in the market
by a variety of forces like multi-media publicity, advertisements and
brouchers giving a rosy picture of the company, group pressure and quite
often due to excessive desire for getting of having wealth.
(9) Real property as an investment.
The two markets, namely, the investment market and real property market
are closely related to each other. The factors and events which affect one of
the market will affect the other market in the same way. For instance, if
there is increase in the rate of interest in the investment market, there will
be corresponding increase in the yield derived from the real property. Thus
for various purposes, these two markets may be considered as one and the
property market may be treated as a special part of the general investment
market.
It is quite evident that a real property is durable and it can be used over
time. Hence, for such durable objects, payment will have to be made for
their use as they are used. However, it is possible to separate the ownership
and right to use. Thus the real properties can be owned and used; owned
and not used; and used and not owned. The first refers to a self-occupied
property; the second refers to a rented premise; and the third refers to a
33
property occupied as a tenant. In the first case, the owner gives away a
capital sum to purchase the property and it results into the saving of rent
which he otherwise ought to have paid for such occupation. In the second
case, the purchaser collects the return of his investment in the form of rents
from tenants. In the last case, the person is satisfied by staying as a tenant
and by investing his capital elsewhere to earn more income than the rent
paid by him.
Characteristics of ideal investment & their applicability to the

investment in real properties :
At the time of making final choice, a potential Investor usually makes

comparison between the features or qualities of his investment with the
characteristics of an ideal investment. There are many qualities which can
be attached to the investment in real properties, but the following are the six
important ones which will be considered by most of the investors:
(1) Good return from capital invested.

(2) Costs of purchase and sale
(3) Ease of purchase and sale
(1) Part withdrawal of the sum invested.
(5) Security of income
(6) Security of capital
(1) Good return from Capital invested:
In times of inflation, an investor expects that the investments made by him

appreciate in such a way that it keeps pace with the changing value of
money. In other words, when he withdraws his capital from the investment,
he is in a position to purchase the same quantum of goods and services as
he could have purchased when the capital was originally invested. Such
security of investment is referred to as security in real terms because of the
fact that the real value of money is maintained during the period of
investment. The higher the chances of return from the capital, the more
attractive the investment will be. Thus an ideal investment is inflation proof
and it is observed that in recent years, the investments in excellent real
properties have possessed this quality of being secured in real terms to a
greater degree than most of other investments.
(2) Costs of purchase and sale:

It is desirable that the costs to be incurred in investing and in withdrawing
money should be minimum. For certain investments, there is practically no
costs in depositing money and subsequently withdrawing it. For real
properties, considerable expenses are to be incurred for stamp duties,
professional fees, etc. at the time of purchase or sale of such investments. It
is quite clear that the cheaper it is to invest and withdraw money, the more
attractive the investment will be.
34
(3) Ease of purchase and sale:

If the investment is ideal, the investor can realise his capital with a short
notice without undergoing any loss. The ideal investment will always be in
demand in the market and the investor will not be put to any inconvenience
at the time of realising his capital in case the need arises for him to get the
capital at relatively short notice. In case of real property, it will not be easy
to sell at a short notice and it may takes months to realise the capital
because of certain circumstances beyond the control of the seller.
Investment in real property is not ideal in this particular feature.
(4) Part withdrawal of the sum invested:
The investment should be such that if the investor desires to recoup part of
his money, he can do so by withdrawing a part of the amount. The quality of
divisibility into small units grants an added attraction' to the investment.
The investment in real estates generally lacks this quality.
(5) Security of income:
The realisation of income from the investment should not only be certain,
but it should also be regular. An investor is giving up the immediate use of
his money and is allowing its use to pass to some other party. Hence, in
return, he is expecting that he is adequately recouped for giving up the
immediate, use of his money and that there is a high degree of certainty that
the payment will in fact be made. For an ideal investment, the investor has
not to worry for the payment of interest and he receives his dues at fixed
regular intervals. If there is no certainty of realisation of rents from tenants
of a real estate, that property will be far away from an ideal investment.
(6) Security of capital:
This is rather the most important feature as few investors will want to place
their money in an investment, if the prospect of losing that money is high.
For an ideal investment, the security of capital is of the highest order. In
other words, there is no danger of losing the capital under any circums-
tances. The rate of interest on capital is inversely proportional to the
security afforded by the investment. The higher the security, the lower will
be the rate of interest and vice versa. It is for this reason that government or
semi-government loans are easily flooded at nominal rate of interest. In the
layman's thinking, the riskier the investment, the greater the return the
investor will require. This may be due to the desire of the investor to recoup
his capital as rapidly as possible by receiving a higher return on the risky
investment. It is, however, mathematically not a correct way of assessing the
quality of an investment, but it serves as a useful guide to most of the
investors.
35
The above-mentioned characteristics of an ideal investment may also be

treated as the general principles governing the percentage of yield from
investments of various types and it is possible to list other qualities which
may be of importance in different situations. As far as investments in real
properties are concerned, it can be said in general that there are best return
from capital invested in good property as compared to other
inestalmets ad further, good property investments afford security of
income and security of capital. On the other side of the coin,
substantial expenditure will have to be incurred on the transfer of real
property; it will not be possible to subdivide the real property into
small units; and it will not be easy to sell the real property at short
notice and it may take months or even years to realise the capital
because of certain circumstances beyond the control of the seller.
In short, it can be summarised that investment in real property will be of
interest to the investor who will not require his capital at short notice; who
places a high priority on security of capital especially in real terms; and
lastly, who intends to have a regular receipt of income from the real
property.
Pecularities of real property market:

The real property market is part of the general market. But due to the
following peculiarities of the real property market, there exists the gap
between the relative yield from investments in the corresponding markets :
( 1 ) Amount of investment: The real property can be split up into small

uniform sizes only up to a certain extent and the potential purchasers will
have either to accept such sizes as are made available or to vacate the
market. Thus the number of potential purchasers of a real property will be
inversely proportional to the amount of investment in the real property.
Thus a large amount will be required for the purchase of a property as
compared to other goods. Hence, the potential buyers will usually have to
raise substantial sum to realise their ambitions.
(2) Central market: There is absence of central market for real properties
and the dealings are usually carried out in private meetings, generally
through the medium of estate brokers or agents. In most of the cases, the
price at which the bargain is struck is known only to the buyer and the
seller. Hence, there are chances of having different yields on similar real
properties in different areas of the town or city. The absence of central
market for real properties leads to inadequated information and imperfect
knowledge to the potential investors in real properties. Thus the property
market is an imperfect market.
(3) Clearance of title: The purchase of a real property involves the transfer
of rights attached with it and hence, skilled solicitors will have to be
appointed to investigate into the title of real property and to issue the
necessary clearance certificate. Thus the process of establishing proof of
36
ownership sometimes proves to be costly, difficult and lengthy. Many

properties have several interests existing in them and each of such interest
is capable of being transferred. Mere possession of a property may not
indicate its ownership as it is not possible to carry a piece of property from
one place to the other. The study of legal history of the property concerned
reveals the complexities involved and though, in theory, it seems to be
possible to complete the transactions of properties in few days, but in
practice, it seldom occurs because of the absence of ideal circumstances in
all cases. The transfer period in case of properties may run into weeks,
months or even years.
(4) Government action : The real property market is considerably affected
by various government specific actions for such as town planning Act, rent
restriction Act, Land acquisition Act., Land ceiling Act etc. Such legislative
measures have considerable effect on the income and the value of the real
property. To cut down the speculative aspect of real property in urban areas,
The Urban Land (Ceiling and Regulation) Act, 1976 has been passed by the
government and according to this Act, limit has been put over the
possession of urban vacant land upto 500 sq.m. The surplus land will be
handed over to the government for the use of weaker sections of the society.
The government can also exert pressure on real property market by its
taxation policy, investment policy, bank rate, etc.
(5) Durability: The property normally lasts for many years. Hence, in
comparison with many other goods, the property is durable. It is also found
that in most of the cases; when the property deteriorates, the rate of
appreciation in land value on which it is standing far exceeds the rate of
deterioration of the property. Hence, the ultimate result is that, though the
building has deteriorated, the overall value of land and building remains the
same and in many cases, it increases with the passage of time. Thus as
compared to other modes of investment, the real properties provide good
security for the money over a long period.
Factors affecting real property market:

There are various factors which affect the real property market and it is
essential for a valuer/estate manager to study these factors at considerable
length. The property market involves a long-term investment and therefore it
does not react in quite so volatile a manner as does the stock market. It is
usually not affected by the short-term ups and downs. However, the factor
such as international political situation can also develop appreciable effect
on the property market.
Following are some of the important factors affecting the property market:
(1) Communications: The existence of excellent transport facilities has

always remained an important factor influencing the property market. The
speed of modern road vehicles is moderately fast and the road net-work for
trucks plays an important role in this respect. But even then, it is an added
advantage to remain near to good means of communications such as
37
railways, canals, harbours, etc. This particular factor is of vital importance

especially with commercial properties and industrial units.
(2) Fashion and local demand: It is quite evident that the properties which
have not kept pace with the changes in fashion, will command lower prices
than those which have maintained harmony with the changing needs of the
society. For instance, in most of the modern houses, a bed room is provided
with an attached toilet. Similarly, decent looking elevations combined with
finishes of materials of superior quality will certainly prove to be good selling
features. There will be great demand for new houses with modern design
and it will take many months to dispose off, even at a discount price, the
old-fashioned properties though they may be structurally sound and good in
other respects.
(3) Government policies: The policies framed by the Central Government as
well as State Government have direct effect on the property market. For
instance, if large sums can be borrowed at lower interest, the Property
Developer may be tempted to invest his borrowed sums in real properties
and thereby try to profit himself by the difference between the cost of
borrowing and yield from the real property. They Government will also have
an indirect influence on the investment market through their taxation
policies, their policy in the nationalised industries and in many other ways.
Under the present circumstances, the Governments will certainly have a
major influence on the investment market.
(4) Lack of market information : It is quite true that some properties fetch
more prices because of lack of market information on purchaser side. It is
for this reason that prices paid by careless purchasers should not be
considered while determining the general tone of the property market. In
such cases, the purchaser might be in urgent need of the property due to
some pressing reason and he might not have cared to collect the market
information with respect to property values. It may also happen that such a
purchaser, if he comes out to dispose off the same property subsequently
because of a change in circumstances, may not be able even to receive the
sum paid by him. Such transactions are not uncommon in practice.
(5) Local economy: If the area is developing and there are better prospects
in future for the appreciation of properties, investors may be tempted to
purchase the properties in that area. On the other hand, the property
market will be dull in a depressed area which is losing its importance day by
day. Thus the state and trends in the local economy will be affecting the
property market.
(6) Services: The potential purchaser is easily influenced by the presence or

absence of services such as water mains, sewer lines, electric cables and in
some cases telephone lines. The easy availability of connections to such
essential services gives weight to the value of the property. It is evident that
this factor will have considerable effect on the development of industrial
sites because industrial activities cannot be carried out without the
38
existence of such essential services. Hence, if these services are totally

absent or if connections to such services are available at prohibitive
expenses, the land, though otherwise physically suitable for industrial
development, will remain idle and will command low value.
Estate agent:
The real property market is of peculiar nature and to serve as a common

platform or as a link between the potential buyers and potential sellers,
some agency is required. Estate brokers or estate agents provide such
agencies and with certain commission, they assist both the parties to reach
upto the final sale.
For potential seller, the estate agent visits the property and studies its
characteristics. He also assists in framing the subjective valuation of the
seller and then by advertising or other means, tries to contact the potential
buyers in search of such properties. He also arranges for the visits to the
property for the interested buyers.
For potential buyer, the estate agent tries to know the type of property to be
purchased and his subjective valuation. Then by advertising or by other
means, he comes into contact with the potential sellers of such properties.
He then arranges for the visit of the potential buyer to the various sites.
It is thus seen that with the help of estate brokers, the potential buyers and
potential sellers come in contact with each other. Ultimately, a potential
seller is faced with a potential buyer. The estate broker acts as an
intermediary between the two for communicating offers and counter offers
as in most of the cases, higgling over the value is not uncommon. The estate
broker also helps in arranging some of the preliminaries to a transaction
such as amount of deposit, time limit for final deed, draft for agreement to
sale, etc.
There is no Government approved estate agent available in our country for

this type of profession as in vogue in western countries. There is no
prescribed qualification of standard norms available as approved by any
statutory authority for this type of property related job.
39
CHAPTER VI
PROMOTER- CODE OF CONDUCT
To meet the ever increasing demand for housing in various districts of West Bengal
especially in urban areas, many Promoters have come forward to build and sell flats
or apartments. Relationships between promoters and buyers have steadily
deteriorated in the absence of proper laws and regulations resulting to complexities,
accusations and even bitterness.
WHO IS A PROMOTER ?
“ Promoter” means a person who constructs or causes to be constructed a building

on a plot of land for the purpose of transfer of such building by sale, gift or
otherwise to any other person or to a company, cooperative society or association of
persons.
HOW TO REGISTER THE NAME?

At least 90 days before the commencement of construction of such building each
Promoter must deposit Rs.2000/- as Name Registration Fee with the Authorised
Officer of the said Act. In this regard Form “A” (available from the office of the
Authorised Officer situated in the Housing Department in New Sectt. Bldgs., 3rd
floor ...........-1) must be duly filled-in and submitted as application for registration.
Certificate of registration would normally remain valid for ten years. However, there
is provision for extension. The State Govt. may extend the said period for five years
or by such further period as it thinks fit. On the other hand, if false or incorrect
statement has been submitted or substandard materials have been used in
construction, Registration may be cancelled on the basis of hearing even before
expiry of validity period of such certificate of registration.
TO BE SUBMITTED ALONG WITH APPLICATION FOR PERMISSION
Form „D‟ must be filled-in and submitted as application for permission to

begin, house construction. This can happen only after receiving Registration
Certificate. Different permissions have to be obtained for construction in
different locations. Permission fee is to be deposited by Cash or by Bank
Draft as per following:
Approx. cost for House (s) construction Fee

Upto Rs.50 lakhs … Rs. 10000/-
Over Rs.50 lakhs but upto Rs.100 lakhs … Rs. 15000/-
Over Rs.100 lakhs … Rs. 20000/-
40
Other documents/ particulars to be submitted along with Application for

Permission, over and above the abovementioned fee:
1. Detailed description of land with site plan.
2. Copy of Deed/document as proof of Land Ownership.
3. Documents regarding rights, ownership etc., in case other person (s)

have any claim on the land.
4. Land area for house construction, number of flats and area thereof,
description of facilities/amenities being offered to buyers.
5. Sanctioned plan of the house/Building (in case plan has not been
sanctioned at the time of application an undertaking declaring that it
would be submitted immediately on approval, should be given).
6. Statement regarding approximate cost of construction, means of

funding, details of agreements with banks or financial institutions.
7. Details of agreement between land owner and promoter

regarding construction of houses.
8. Details of how much advance is being received from buyers, time

period of giving them possession of flat as also copy of agreement
between promoter and Buyer.
9. Names and addresses of Architects, Engineers and contractors. If

changed at a later stage, it must be informed to the
AUTHORISED OFFICER.
10. Clearance certificates for Income Tax & Sales Tax need to be
submitted.
PROTECTION OF BUYERS
a) Promoter will not take advance from the buyer beyond 40% of the sale
price of the flat..
b) Promoter cannot mortgage the flat after agreement.
c) Promoter is liable to pay 12% interest on advance of the delay period

for handing over the flat..
d) If a promoter after abiding by all rues and regulations and after

getting adequate time and opportunity still fails to give possession the
completed flat or delays construction of the flat without adequate
reason., and if the buyer under agreement legitimately refuses to
41
purchase the same the buyer will get refund of money deposited with
the promoter with 256% interest on the deposited money.
e) Buyers will be able to demand compensation in the due process of law

for any defect in the construction of the building or in the material
used or for any unauthorized change of structure of the building.
f) In case of any disagreement between promoter- buyer, the buyer may

lodge a complaint with the Authorised Officer for solving the problem.
g) There is a provision for formation of a society to look after the common

area and common services of the Building Block. After obtaining
occupancy Certificate for the building and within two months after
minimum number of persons, required to form an apartment owners‟
association under the W.B. Apartment Ownership Act., 1972
(minimum four members ) or a co-operative society under the W.B.Co-
operative Societies Act, 1983 (minimum eight members), have
taken flat, the promoter shall take steps for the formation of an
association of apartment owners or Co-operative Society under some
specific name and style.
h) Once construction of building(s) is complete, and completion
certificate is obtained from concerned Competent Authority, the same
must be submitted within 15 days vide Form “D” to the Authorised
Officer.
i) On completion of building (s), the promoter shall insure land with

building(s) with any general insurance company and obtain an
insurance policy or policies covering the liability extending upto the
value of life and property lost or bodily injuries suffered and shall
submit a copy of the policy to the Authorised Officer and keep him
informed of payment of premier from time to time. The insurance
cover will remain valid for five years after possession of the last
saleable flat. Insurance premium will be payable by the promoter. The
insurance risks and quantum of value will be determined by a
Tribunal headed by a Judicial Officer.
AGREEMENT BETWEEN BUYER AND PROMOTER
The agreement that will be signed between Buyer and Promoter

must Contain the following information :
Detailed description of land, details of location of flat, total covered area of

flat, carpet area, height, measurement of each room, constructional
particulars and necessary details, electrification and sanitation
arrangements, common area for flat-owners, for example: staircase, lift,
parking space, fire-fighting arrangements, pump house etc., details thereof,
total cost of flat, how much money is receivable as booking fee, details of
instalments, mention of dates and interest chargeable in case of default,
42
how much refund would the buyer get in case he submits his unwillingness
to take possession in writing, when the deed to the flat would be completed,
when possession would be given etc. etc.
HOW TO COMPLAIN?
In case the buyer lodges a complaint directly to the promoter regarding any
defect in construction, inferior quality of materials or unauthorised changes
in construction, the promoter is liable to rectify defect(s) or compensate for
the same. If the complaint remains unresolved the buyer or other
complainant may on submission of Rs.50/- as fee per flat lodge a complaint
against promoter after which the Authorised Officer shall refer the matter to
the Chief Engineer under Housing Department or to other officers under the
Act for investigation and will take action as indicated in the subsequent
report. If the complaint is proved true, the complainant(s) will be refunded
the aforementioned fee.
PUNISHMENT OTHGERWISE
If any promoter cannot or does not abide by this Act. and if he is proved
guilty, he can face minimum imprisonment upto 6 months extendable upto
5 years or fine upto Rs.50000/- or both. Breach of trust in case of advance
money received from buyers is also punishable by imprisonment and/or
fine.
“AREAS” USED IN BUILD AND SELL OF BUILDING / FLAT.
(i) Plinth Area- Plinth area is the built up covered area measured at the
floor level of any storey of a building . Plinth area can be calculated by
taking the external dimensions of the building excluding plinth offsets.
Based on this defination, State P.W.D. and C.P.W.D. have prescribed the
rates on plinth area basis to work out the cost of construction of different
type of buildings excluding the cost of water supply, sanitation,
electrification and architectural treatment. Rates are revised every year.
Estate Managers/ Valuers generally use this method to estimate the cost of
construction. It may be less accurate, but the method is simple and if
adopted with proper judgement the estimation will be close to the correct
value.
(ii) Floor Area Or Rentable Area – Floor area of any storey of a building
is its plinth area minus the area of the walls at floor level and also the area
of the staircase, lift well etc. which are of common use in case of the
buildings with multiple tenements. Floor area is the guiding factor when
income capitaised method or rental method is adopted for valuation of an
immovable property. Fair rate of rent of the property can be ascertained
from the comparable rent data of different premises of the locality. Annual
rental value of a building can be obtained by multiplying fair net annual
43
rent with the floor area of the building which will be capitalised to get the
value of the building.
(iii) Carpet Area Or Effective Floor Area- Carpet area is the habitable
area of the building at floor level. Carpet area can be calculated after
deducting the area of open verandah, corridor, passage, bathrooms, kitchen,
store etc. from the floor area of the building. All these components are
considered as the essential amenities of effective floor area. In State Rent
Control Act, carpet area of a residential building is the guiding factor in
assessment of standard rent of the premises. The actual rents of the similar
buildings in the locality are studied and allowing proper weightage for
balancing the amenities in relation to the premises compared, the rate of
rent of the demised premises is decided. Standard rent of the building is
obtained by multiplying the rate of rent thus obtained with the carpet area
of the building.
(iv) Super built Area- The term is applicable in case of a flat or apartment
in a multistoried building. In a building with multiple tenements, super built
area of a single tenement or flat is the plinth area of the flat plus the
proportionate percentage of the common areas like stair with landings, stair
cover (mumty), lift well including landing, machine room, pump room,
common passage, society room, community hall etc. The terminology like
super built area is not available in any standard Engineering Book or in
I.S.code. The promoters of Real Estates for selling of flats or apartments first
introduced the term. Now in general, the term is accepted by the
Municipalities / Corporations and also by the Estate Managers / Valuers for
valuation of building block of flats. But in sizeable number of flats the
difference between super built area and the plinth area has gone up to as
high as 45 percent. The difference is known as load factor in real estate
market. What makes matter worse is that most flat buyers continue to
remain in dark about the measurement of the flat as the super built area is
an imaginary area, which cannot be measured. Plinth area of the flat can be
measured, but proportionate percentage of common areas cannot be
measured.
PRECAUTIONS IN BUYING LAND /FLAT.
Land :
a) Before negotiating for acquiring a plot of land for building a house the
intending purchaser is to be very cautious about the background of
the person intending to sell and transfer the plot of land. Even if the
papers are clean the Purchaser may face considerable problems
despite a well drafted Agreement for Sale.
b) After having checked the background of the seller the title deed in
respect of the property too have to be examined. Normally if the
44
property has been acquired by a registered Deed of conveyance and

has remained in possession of the seller, say for a period of 30 years,
there should be no problem. But one should not rely on one document
and should check the title deeds for a minimum periods of 30 years.
Most of the properties are acquired and/or devolves upon the Seller.
Therefore it is to be examined as to how the property devolved upon
the seller and if the seller is the rightful owner of the property.
c) Searches should be carried out at the appropriate registration offices
including the Court. It is a time consuming process. It is also
desirable that pending completion of the transaction, proper notices
are published in newspapers regarding purchase of the plot of land.
Typical “Non-encumbrances Certificate” and “Search Report” issued by
Advocate are enclosed and marked as Annexure-III.
d) If the plot is a vacant plot of land and is more than 500 sq. metres
then it cannot be sold unless permission has been obtained from the
competent authorities under the Urban Land Ceiling & Regulation Act.
1976. Printed Copy of „No Objection Certificate‟ issued by
Competent Authority is enclosed and marked as Annexure -IV.
e) The next step is fixing the price of the plot. Taking into account the
location and other relevant factors and the prevailing rate of the
locality the value of the plot may be fixed. For ascertaining the value,
a proper certificate should be obtained from a reputed valuer.
Flat :
a) The first and foremost consideration while negotiating or acquiring a

flat is to enquire into the background of the promoter. The track
record of the promoter can be checked by inspecting the building he
has already constructed and also by asking around.
b) If the promoter is selling a flat in pursuance of a Development

Agreement, consent of the owners must be obtained because most of
the problem in a joint development agreement arise because of the
possible dispute between the owners and the developer.
c) It is to be ascertained whether the owner has a good title and was

competent to enter into the Development Agreement.
d) It is also to be ascertained whether the Developer/Promoter has been

registered under the West Bengal (Regulation of Promotion of
Construction and Transfer by Promoters) Act 1993.
45
e) The Architect should certify that the plan has been lawfully
sanctioned and the area comprised in the said flat is in accordance
with the plan duly sanctioned by KMC.
f) The plan sanctioned by KMC should be thoroughly examined.
g) The specifications with which the building is to be constructed must

be spelt out.
h) Area of the flat should be thoroughly examined. Flat buyers are often
continue to remain in dark about how the area has been calculated as
the promoters often do not provide all accurate details. In many cases,
advertised cost of flat of the promoter does not represent the correct
price of the flat and the buyers are to pay more in the name of super-
built area. For instance, the promoter has advertised 1400 sft. Flat at
a Rs. 23.00 lakhs i.e. @ Rs. 1643/- per sft. When asked how this 1400
sft. has been arrived, the promoter gives a vague reply and in reality
the buyer gets 850 sft. floor area in the flat i.e. wall to wall area which
are in exclusive use of the buyer and 975 sft. builtup area or plinth
area and the price comes to Rs. 2359/- per sft. with a load factor of 30
percent which are not detailed in the advertisement or in the
brochure. So the buyer should know the full details of the floor area
plinth area and super-built area of the flat he is buying at the time of
booking of flat.
i) ........... has already been officially declared to be within a seismic

zone. While purchasing a flat in a high-rise building, say a 10-storied
building, the buyer should note if adequate precautions are being
taken against earthquake and fire hazard. The structural engineers,
architects normally follow the rules of National building code in
designing such building. But the rules are not followed when the
promoter actually constructs the building.
CHAPTER VII
JOINT VENTURE DEVELOPMENT OF THE PROPERTY
Joint Venture development between the owner of the land and the developer
or promoter of the Apartment Building is a common phenomenon now a
days in major cities due to acute crisis of vacant saleable land in and
around the cities. Under this scheme the owner of a land who wishes to
develop his property to a Residential or Commercial complex, approaches a
Developer ( Builder or Promoter ) and offers his land, sometime may be with
old dilapidated building. The Developer in turn agrees to construct and hand
46
over the building on a percentage basis as per the specification stipulated by

the land owner subject to the Town Planning Rules. This percentage varies
with the land value, specification, FAR/FSI achieved etc. In this Joint
Venture scheme, the entire cost of construction will be borne by the
Developer and after completion of the project, a specific percentage of
completed building will be handed over to the owner. Remaining portion will
be marketed by the Developer. The normal ratio of agreement between them
is 60:40, 55:45, 50:50, 45:55, the 60% will be retained and marketed by the
Developer for the construction cost, overheads and his profits and the 40%
of completed building will be handed over to the land owner. The entire
transaction will be governed by a Joint Venture Development Agreement
between the land owner and the developer.
The percentages of ratio fixed among the developer and the land owner is
discussed here with an example:
There is a vacant site of 11 Cottah or 8,000 Sq.ft. in Parnasree Pally area of

Behala in ............ The width of the plot is 80 ft. and depth is 100 ft. and the
width of the front road is 25”-0”. The prevailing market rate in the locality is Rs.
6.00 lakhs per cottah or Rs. 835/- per Sq.ft. As it is, the owner can sell the
property for Rs 66. 80 lacs (8,000 Sq.ft. x Rs. 835/-). But he expects more
value for his land and hence he approaches a Developer for
Joint Venture Development. Work out the Developer‟s share in the joint venture.
The details of arriving at a suitable percentage is worked out as follows:
Detailed Study -
(i) Value of vacant land -
The Area of the Land - 80‟ x 100‟ - 8,000 Sq.ft.

The prevailing market rate per Sq.ft. - Rs. 835/-
The value of the land - 8,000 Sq.ft. x Rs. 835/- - Rs.66.80 Lakhs
(ii) Value of Apartment Building -
Allowable F.A.R. 1.8
Total buildable area in all the floors – (8,000 x 1.8) - 14,400 sq.ft.
Adopted selling rate of the Apartment with the normal
Specification adding 10% for common facilities
and services. - Rs.1,320/-per Sq.ft.
Total sale price of the project on completion
=(14,400 x Rs. 1,320/-) - Rs. 190 Lakhs.
(iii) Value of Developer‟s share of expenditure -
Construction cost for the Developer to build
47
the Project= 14,400 Sq.ft. @ Rs. 550/- per Sq.ft. - Rs. 79.20 Lakhs.
Common services cost including Overheads,

Profit and interest on investment of the
Developer = 14,400 Sq.ft. @ Rs. 150/- per Sq.ft. - Rs. 21.60 Lakhs.
Total expenditure by Developer - Rs. 100.80Lakhs.
(iv) Percentage of Share -
Share of Construction cost + Profit etc.

with reference to total sale price 100.80
-------- 100 53%.
190.00
So the Developer can offer 47% of the buildable area to the land owner and
the ratio in this case will be 53:47.
Proposal given by the Developer
The Area of the Property - 8,000 Sq.ft.

Total buildable area proposed in the
property (8,000 x 1.8) - 14,400 Sq.ft
Proposed Ratio between Developer
and Land Owner - 53:47
i.e. 7,632 Sq.ft. of the constructed building
to the Developer and 6,768 Sq.ft. to the land owner.
It is proposed to construct 16 flats in Ground plus three floors. Each floor

will have 4 flats of 900 Sq.ft. including proportionate common area of
staircase with landing of the floor. As per ratio agreed, land owner is entitled
to 6,768 sq.ft. only. But for the practical reason the Developer has offered
7200 Sq.ft. i.e. 8 flats having an area of 900 Sq.ft. each.
For the extra 432 Sq.ft. the land owner is getting, he will have to pay to the
developer @ Rs. 1,320/-per Sq.ft.i.e. Rs. 5.70 Lakhs or mutually agreed rate.
The expenses towards the Approval, License Fees, Development Charges etc.
all will be borne by the Developer. Any extra works done over and above the
agreed specification for 8 flats allotted to the land owner will be at his cost..
Against this joint venture Agreement, land owner now earns Rs. 89.40 Lakhs
i.e. an additional amount of Rs. 22.,54 Lakhs.
A typical “Development Agreement” is enclosed and marked as

Annexure-VI.
48
CHAPTER VIII
MUNICIPAL BUILDING RULES IN REAL

ESTATE MANAGEMENT & VALAUATION
Municipal Building Rules play an important role in management & valuation

of urban properties. Built – up area, open space, parking space, height of
building etc. are regulated by the building rules and unless the Estate
Manager / Valuer has adequate knowledge on these rules, proper
management of urban properties, particularly the valuation of open lands,
cannot be made. In big cities, building in numbers are needed to
accommodate the ever increasing urban growth. Building rules are framed
49
to control the haphazard growth of building to impart better facilities to the

people as regards air, light, water etc. Rules are framed for the regulation
and restriction of the use of land as site for building and for the regulation
and restriction of building and of alteration in, and addition to, buildings.
Different municipalities/Corporations have their own building rules. Here,

the ........... Municipal Corporation Building Rules 1990 (as amended upto
date) have been taken up which are more or less on the same pattern of the
building rules of other big cities of the country. Here the provisions of
building rules only in residential buildings which have wide application in
management / valuation of urban properties, have been summed up.
(i) Covered Area – Maximum permissible covered area of building

varies with the size of the plot and is specified as below.
65% of plot area when plot size upto 200 sq. meter i.e upto 3
cattah.
50% of plot area when plot size of 500 sq. meter or more i.e. 7.5
cattah or more.
Proportionate percentage coverage shall be calculated for plot size

in between 200 sqm. and 500 sqm.
Permissible covered area of a plot, say of frontage -18.62 metre and

depth – 24.00 metre or, 446.88 Sq.m. or, 4808 Sft. or, 6.67 cottah
may be calculated.
For 7.5 K , 50% covered area.
For 3 K, 65% covered area.
From 7.5 K to 3 K i.e. for difference in plot area of 4.5 K,
difference
in covered area 15%
For difference in 3.67 K, covered area difference 15x3.67 =12.23

4.5
For 6.67K plot, maximum permissible covered area 65%-12.23=52.77%.
(For valuation of residential house properties on rental method or income

capitalised method, Income Tax Department, in their Rule 1 BB of Wealth
Tax Act, have used terms like unbuilt area, specified area, aggregate area
etc. which have their specific meanings to work out the potential value of the
property. Aggregate area is the total plot area and unbuilt area is the open
land on which no construction has been done. Specified area is 60 per cent
of aggregate area i.e. plot area in Metropolitan cities. There is no change in
the value of the property if the difference between the unbuilt area and the
specified area does not exceed 5 per cent of aggregate area. But between the
range of 5 per cent and 20 per cent, the value is to be increased by the
following percentage of total value arrived as above.
50
10 per cent to 15 per cent …. 30%
15 per cent to 20 per cent …. 40%
5 per cent to 10 per cent ….. 20%
However, for properties having difference between the unbuilt area and the
specified area exceeding 20% of aggregate area, this rule will not be
applicable and also the rental method of valuation is not applicable.
To illustrate, a typical case may be worked out-
Available data –
Aggregate area or plot area 250 sq.m.
Built up area ……. 80 sq.m.
Normal value of the property on rental method Rs. 350000.00
Now,
Specified area 250 X 0.60 = 150 sq.m.
Unbuilt area 250 – 80 170 sq.m.
Difference between unbuilt area
And specified area 170 – 150 20

sq.m.
20 100
Percentage of aggregate area 8%
250
As the difference between the unbuilt area and specified area exceed 5% but
less than 10% of aggregate area, the value of the property is to be increased
by 20%.
Hence the value of the property works out to 1.20 X 350000 Rs.
420000.00.)
(ii) Floor Area Ratio (F. A. R.) – Varies with the width of front
road. Maximum permissible F. A. R. i.e. the ratio of total
covered area on all floors to the area of plot of a building is
specified as under. In some Municipal Corporations, it is termed
as Floor Space Index (FSI).
Total area of all floor

F.A.R.
Total plot area
Width of front road F. A. R.
Below 2.4 Nil

Above 2.4 to 3.5 1.25
51
3.5 to 7 1.75
7.0 to 10 2.00
10.0 to 15 2.25
15.0 to 20 2.50
20.0 to 24 2.75
24.0 3.00
Additional floor area of 20 sq. m. per covered car parking space is available
were the building is actually provided with car parking space in accordance
with the rule.
(iii) Height of Buildings – Varies with the width of front road.
Width of front road in Metre. Permissible height in Metre
2.4 to 3.50 8.00

Above 3.50 to 7.00 11.00
Above 7.00 to 10.00 14.00
Above 10.00 to 15.00 18.00
Above15.00 to 20.00 24.00
Above20.00 to 24.00 36.00
From the above, it may be seen that if the road width is 8 metre, we may get
(G +4) building i.e. 4 flats with garage space, but if the road width 7 metre,
we get only 3 flats. We have to sacrifice one flat and garage space against the
building on the same plot having one metre less road width in front, value of
which may be more than ten lakhs in ........... Metropolitan area. Thus in
comparative method for valuation of urban residential lands, width of road
is a very vital factor. The greater is the width of the road on which the plot
abuts, the more will be the value in a similar area. Wider front road allows
erection of high-rise building and larger amount of space.
(iv) Minimum Open Space Requirement – Varies with the height of

the building.
(a) Height of the building Front open space.

Upto 13.50 Metre 1.20 Metre
Exceeds 13.50 Metre 6.00 Metre or 20% of
height of building,
whichever is less.
52
(b) Height of the building

in Metre Rear open space
in Metre.
Upto 8.0
Above 8 .0 to 11.0 2.0
Above 11.0 to 13.5 3.0
Above 13.5 to 18.0 4.0
Above 18.0 to 24.0 5.0
Above 24.0 to 50.0 7.0
Exceeding 50.0 10.0
12.0
Side open space
(c) Height of building in Metre
in Metre.
1.20 on either side.
Upto 11.00
. 1.20 on one side &
Above 11.0 to 13.50 2.50 on other side.
2.50 on one side &.

Above 13.50 to19.00 4.0 on other side.
5.50 on either side

Above 19.00 to30.00
10.0 on either side
Above 30.00 to50.00
12.0 on either side
Above 50.00
From the above, it appears that minimum side open space requirement is
(1.20 + 1.20) metre or 2.40 metre and minimum open space requirement in
depth is (1`.20 + 2.00) or 3.20 metre in case of a residential plot. So on a
plot of land having frontage of less than 5.50 metre (18 ft.) and depth of less
than 9.0 metre (30 ft.), no residential building is permissible since after
providing required open space, no building with one bedroom, one bath and
kitchen space can be constructed for habitable purpose. Minimum area of
an independent plot for residential purpose thus comes to about 0.75 cottah
with the minimum frontage of 18‟-0” and depth of 30‟-0”. An independent plot for
residential purpose having lesser frontage or lesser depth than above should
normally have no value.
(v) Parking Space requirements – Car parking space for a building

more than 100 sq.m. floor area has become compulsory in the
revised building rules. In building with multiple tenements,
additional car parking space are to be provided. Minimum car
53
parking space – 2.5m x 5m with a minimum head room of

2.2metres.
1. Tenement with less than 50sq.m upto 5-no car parking space .For 6-
one car parking space. For every 6 – one more
2. Tenement with 50 to 75 sqm upto 3-no car parking space .For
4- one car parking space. For additional 4 – one each
3. Tenement with 75to 100 sqm. For every 2 – One car parking space.
4. Tenement with more than 100 sqm One car parking space for
every 100 sqm .
Further few restrictions of ........... Municipal Building Rules.
a) Plinth height not less than 60 cm. ( 2‟-0”)
b) Floor at G.L. shall be raised 15 cm. (6”) above the level of the street.
c) Habitable room - Floor area not less then 6sq.m.

Width not less then 2.4 m.
Height not less then 2.75m. from floor to
ceiling & 2.4 m. from floor to beam.
d) Kitchen- Floor area not less then 4.5 sq.m.

Width not less then 1.8 m.
e) Bath- cum- W.C.- F.A. not less then 2.6 sq.m.

Width not less then 1.2m.
Height not less then 2.2 m. floor to ceiling.
f) Built –in-wadrob Projection not more then 0.75m.
g) Store- F.A. not less then 1.5 sq.m.
h) Ventilations- Not more then 7.5m (25‟-0”) from open

Verandah to the furthest pt. Of Drg. Cum Dining.
i) Loft- Clear height below the loft shall not be less then
2.2m.
j) Ledge or Tand- Projection not wider than 0.60 m.
54
k) Garage - Not less then 2.5m X 5m. ( 8‟-3” X 16‟-6‟)

Headroom 2.3 m. ( 7‟- 6”).
SPECIAL CONDITIONS IN BUILDING RULES AFFECTING MANAGEMENT

/ VALUATION OF REAL ESTATE
II. Tank filled Land - In the revised building rules, submission of soil
investigation report for sanction of the Construction of multistoried
building has become obligatory and construction on tank – filled land is
permissible only after providing special type of foundation usually pile
foundation which involves high cost. Normally value of shallow tanks is
taken as half the value of the surrounding solid land. A tank of usual
depth of 3 to 4 metre, if filled in layers with earth, will take 10 years at
the utmost for consolidation. From this idea, value of tank – filled land
deferred for 10 years after deducting the cost of filling up the tank by
carried earth.
III. Unauthorised structure – In municipal / corporation area, sanction of

plan by the municipality for any sort of structure is compulsory. The
structure constructs without such sanction may be declared as
unauthorised structure. Such unauthorised buildings or buildings
constructed in deviation from sanctioned plan as approved by the
Appropriate Authority or buildings put to unauthorised use are not
uncommon and the Estate Managers/Valuers are to face quite often
such structures. It is the Estate Manager „s and Valuer‟s duly to verify whether
the building has sanctioned plan, whether any deviations have been
made from the sanctioned plan and in case of deviation if it is
possible to demolish the portion of the building without the main
building getting damaged. There are three views on valuation of
unauthorised structures.
(i) No value shall be provided for the building as it is illegal.
(ii) The possibility of demolition in part or full cannot be regarded

as an actuality as the possibility is too remote to deprive the
owner to have benefit of value of building as his asset.
(iii) The possibility is to be considered and the value of possibility is

to be assessed which should be deducted from the market
value.
55
Depending upon the merit of the case, the Estate Manager / Valuer should
study the legal implications, considering the realistic situation and use his
discretion for arriving at the value of unauthorised buildings.
56
CHAPTER IX
ENCUMBRANCES, EASEMENT AND OTHER
RESTRICTIONS IN REAL ESTATE DEVELOPMENT
Encumbrances:
Virgin freehold land without any dispute is unencumbered land. When there
are two vacant plots at the same place, their values are nearly equal with a
slight variation according to the individual characteristics. When structures
are put upon such lands, the land takes upon itself the value imposed by
the type of the structure because it is the earning capacity of the building
that determines the value of the land. Hence, for getting full market value of
the land, the type of structure suitable for full exploiting the land has to be
constructed over it so that full economic benefit can be derived from the
total unit of land and structure. If residential building is constructed in
commercial area or if the F.A.R. or allowable covered area is not fully
utilized, then the economic yield will be less and hence, part of the value of
the land will be wasted. This wastage is due to the wrong type of structure
which, what is called, encumbers the land. Now how much and to what
extent the structure encumbers the land will have to be investigated by
comparison of yields from fully utilized or fully developed land and yield
from under-developed or encumbered land. If full value of the land is to be
derived, then the unsuitable structure has to be removed for making way for
the construction of a structure suitable as per the prevailing value of the
land.
In addition to the above another form of encumbrance is encroachment and

construction of temporary sheds on a plot in occupation of unauthorized
dwellers. The price of such plots would be low as the purchaser will have to
pay the necessary premium to the hutment dwellers in order to clear the
plot or to provide alternative accommodation to them which means
additional expenses to the purchaser.
Tenanted building is also encumbered property as the old rent is always less
than the prevailing fair rent and the income from the property is less than
the fair income and thus the value of the property will be reduced.
Easement :
An easement is an acquired right and it is taken out from the ownership of

one property and added to the ownership of another property. Such is not
the case with natural rights which are secured to the owner of land by the
common law of the land.
Natural rights are inherent in the land and they are respected by law as the
ordinary incidents of property. For instance, every owner of land has right to
57
enjoy the light and air passing through his land or has right to develop his
land as he likes by respecting the provisions of the prevailing bye-laws of the
locality. These are natural rights and they do not require any special
treatment for their creation. On the other hand, easements are artificial and
they are not given to every owner of land, but they are acquired or created
by special human acts or incidents.
Easement are the restrictions on the use or utility of a particular property. It
is a very peculiar, but yet a very essential and important right, which strikes
a delicate balance between the owner of a property and a person who enjoys
it. For example „A‟ is the owner of a certain house. The path way which leads to his
house belongs to „B‟. The right of way enjoyed by „A‟ over the pathway of „B‟ for
several years although he is not the owner of the property. The right of way
enjoyed by „A‟ is known as an easementary right. The land belongs to „A‟ enjoys the
right of pathway on land belongs to „B‟ and thus holds commanding influence or
position and this land of „A‟ is termed a dominant tenement or a dominant
heritage. The land of „B‟ over which the right of pathway is imposed is termed a
servient tenement or a servient heritage. Respective ownerships of these
different lands are termed as dominant ownership and servient ownership.
Thus dominant owner will be in a commanding position as compared to the
servient owner with the respect to the enjoyment of an easement right over
an immovable property.
Essential characteristics of easements:

Following are the essential characteristics of an easement:
(i) Dominant and servient heritages must co-exist i.e. there cannot be an
easement without the simultaneous existence of the dominant and
servient heritages. A dominant heritage cannot exist without a servient
heritage and vice versa.
(ii) Easement is always an appendage to a dominant heritage.
(iii) Ownership of a dominant heritage and that of a servient heritage

must be different. A dominant heritage and a servient heritage cannot
have single ownership because a sole owner of both the heritages
cannot beneficially enjoy a right of easement of one heritage over his
own other heritage.
(iv) Easements are granted by a deed or there is an assumption that its

grant had been made previously.
(v) Easements are attached to the properties and not to the owners.
Hence, they move with the property and not with the owners. For
instance, suppose a property X has a right of light through an open
space appurtenant to property Y. Then in case of sale of either of the
properties X or Y, either of the new owner has the same right and
privilege or submission to inconvenience as per the previous owner.
58
(iv) An easement must be definite and capable of being beneficially

enjoyed. It must be capable of being granted and rescinded. A fanciful,
unspecified, vague or indefinite right cannot be claimed as a right of
easement. Suppose an owner X has a property having a view of a hill
or a river or a sea or a garden or such other thing, with land of or
lands of other owner Y, between his property and the view, then X
cannot claim this view from his property as a right of easement and
prevent other owner Y from building over Y‟s property which might
obstruct the view from property of X.
Different methods of creating or acquiring and easement .
i) Self-imposed easement:
Self-imposed easements are created by the consent or agreement

between the parties concerned. Following are the instances of self-
imposed easements :
(a) The members of a family while dividing the property among

themselves may agree that no member can sell out his portion
without the consent of the other members.
(b) A housing society may make a resolution stating that its

members shall be of a particular caste or community.
ii) Legal easement:
Legal easements are controlled by the provisions of the Indian

Easements Act, 1882.
Following are the instances of Legal easement.
(a) Right of common passage of abutting or adjoining properties. It

includes footway, crossing way, cable way or vehicle way.
(b) Right to lay, cross or constructs pipe lines, ducts or cable over or
under the land or property.
(c) Right of light and ventilation through an open space or an opening

appurtenant to the abutting or adjoining property.
(d) Right of disposal of rain or other type of water through the other
property.
(e) Right to take water from a well or a reservoir or a flowing stream of

water situated in or passing through another property.
59
(f) Sometimes a right is acquired over other property whereby the owner
of the first property has the right to enter to the adjoining land to
repair an outside wall.
The list above are only illustrative and not exhaustive.
(iii) Granting by Deed :
An easement granted by a deed is governed by the conditions of the

deed e.g. a right of light and ventilation through a certain specified
space or right of footway only through a defined boundary. This is
called an express grant of easement. When a property is partitioned,
an easement may be imposed to enjoy the parts so formed. Thus, the
two or more parts formed by division are so relatively situated that one
cannot be enjoyed without the exercise of a particular privilege in or
over or in respect of the other and such a privilege is granted in the
partition deed.
(iv) Granting by immemorial use :
When the easement is enjoyed from immemorial time and there is no

proof of grant obtained to have such an easement, it is presumed that
the easement exists unless there is a proof to show that it is
impossible to make such a grant.
(v) By prescription:
This is the most usual way of creating an easement. When the right is
enjoyed over a property by a person without interruption, for a period
of 20 years or more, an easement is imposed on the property. If
property involved belongs to the government, the prescriptive period is
60 years.
(vi) By Custom :
By virtue of local custom, an easement may be acquired. Such

easements are known as customary easements. These easements are
of local birth and they can be enjoyed only in a particular locality. It is
also necessary that a customary easement should be reasonable and
it should comply with the conditions of the custom.
Suppose there is a custom in a particular village that every cultivator

of village land is entitled, as such, to graze his cattle on the common
pasture. X, having become the tenant of a plot of uncultivated land in
the village, breaks up and cultivates that plot. X therefore acquires an
easement to graze his cattle in accordance with the custom.
60
(vii) By legislation:
An easement maybe imposed on the property by legislative
enactments. For instance, the legislation may frame suitable Acts to
control pollution of air, pollution of water, flow of water, consumption
of water, development of sites, etc. Not to exceed 60 desible of sound
in running of microphone or not to dispose of polluted water directly
from factory to river Ganga are such recent legislative enactment.
Effect on valuation due to casement :
The impact of existence of easement on the valuation of real property

concerned will depend on the degree of obligation thrown on the property to
be valued. Higher the obligation, higher will be the reduction factor from the
value arrived at on the basis of non-existence of the easement and vice
versa.
Appendage of an easement to a property reduces the attraction to that

property to a certain extent and hence, the degree of competition for
purchase also diminishes as compared to that of a property without any
easement. While evaluating property, the valuer must ascertained as to
whether the property is burdened with benefit or liability of an easementary
right i.e. if the property is of servient tenement then value of the extent of
land which is subject to easement should be reduced from the market value
of the property. If the property is having the benefit of the easement i.e., the
dominant tenement then value of the extent of the land which enjoys the
easement should be included to the market value of the property which is
valued.
Other Restrictions :
While developing or carrying out the modifications in the real property, the
owner has to respect the prevailing planning laws of the land. Various town
planning acts, laws or restrictions have come into existence and the owner is
required to obtain the necessary permission from the concerned authorities
before he starts to develop or modify his property.
Also, in case of emergency or by the application of some Acts of Parliament,

the government may force the owner to sell or to let his land or property to
local authorities or some other persons for some public or semi-public
purposes. The property can be acquired under the provisions of „The Land
Acquisition Act, 1894.
61
CHAPTER X
CAREER IN REAL ESTATE

Renting a flat, buying a plot of land, buying a shop in a commercial building
are all examples of transactions taking place in real estate. Consumer of real
estate services includes home buyers and sellers, tenants and landlords,
investors and developers. Nearly everyone gets involved in a real estate
transaction sometime in his/her lifetime. This is because of human being‟s basic
need for shelter.
Real property market is the part of general market. Real property is a

product but in India there is no recognized sales person of the product. A
sales person needs to know enough about the product to be able to educate
the clients and customers whether they are buyers, sellers, renters or
investors. Also real estate products deal with very specific and often very
complicated legal issues. But property related high quality managerial
services or consultancy are almost non-existing not only in ........... but also
in other big cities of the country, although the ownership apartment, group
housing and multiple tenement system started around seventies of previous
century. Till date, there is no professionally trained real estate agents or
sales persons or managers available in our country for this type of
management as in vague in the Western countries.
In USA, Real Estate Agents can do their business only on getting license from
the designated authorities. There are a set of laws termed as “Real Estate License
Laws” which includes the provisions for the process of being licensed, the
liabilities of the licensees, the means of removing of licensee as and when
occasion arises. Laws set forth the qualification requirement for licensing as
real estate managers, real estate sales person and real estate brokers. State
Licensing Authorities also conduct real estate examination for selection of
real estate managers, real estate sales persons and brokers.
Licensed brokers may be listed with Property Developers on Commission
basis. There is a separate Statutory Authority to take action against the real
estate broker for his discriminatory action.
In India, anybody can act as a real estate broker. There is no prescribed

qualification or standard norms available as approved by government or by
statutory authority for this type of property related job. At present, normal
services offered by the Brokers are as follows.
1. Locating a property for Tenant :
a) Identify suitable properties matching to Tenant‟s requirement.

b) Participate in negotiations of Lease Terms with the Owners.
c) Assist in preparation of Lease Deeds.
d) Advise Tenants on the Market trends.
62
2. Fixing a Tenant :
a) Identify suitable tenants who qualify Land Lord‟s requirement.

b) Participate in negotiations of the Lease terms with the tenants.
c) Assists in preparation of Lease Deed.
d) Advise owners on Market Trends.
3. Sale of Property :
a) Identify suitable Buyer.

b) Participate in negotiations on the terms of the Sale Agreement.
c) Advise on steps involved in Property Transfer.
4. Purchase of Property :
a) Identify suitable properties matching Buyer‟s requirement.

b) Participate in negotiations on the terms of the Sale Agreement.
c) Advise on steps involved in Property Transfer.
But in the present scenario, when people think about „real estate‟, they never think
for „broker‟ only. Now real estate is a big business. It creates multifarious
employment and empanelment opportunities as follows.
(i) Growth of the real estate industry is generating jobs for skilled
Manpower in sales and marketing and consultancy jobs.
(ii) Residential home loan disbursement which has gone up to Rs. 1

Lakh crore per annual nationally is also generating jobs for
huge number of skilled manpower in sales and distribution,
credit appraisals, property insurance and valuation and in allied
services.
(iii) Also there is scope of management and maintenance of high-rise

buildings with multiple tenements against a monthly fee.
Today a Broker or a Property Consultant or a Real Estate Manager or Real

Estate Agent as better designated, should have basic knowledge of legal
aspects, taxation, valuation and management of real properties and also in
construction and maintenance of buildings. To upgrade the standard of this
profession, more and more trained, educated and conscientious personnel
are necessary in management of real estate.
Side by side, government should set laws to streamline the profession and
issue license to the qualified Real Estate Brokers / Managers. The fact
remains that any profession to flourish in the right direction requires
governmental support as in case of Architect, Lawyers, Chartered
Accountant etc. This profession also deserves support from government and
from other statutory authorities.
63
PART II
HOUSING ESTATE MANAGEMENT
64
CHAPTER XI
MANAGEMENT OF A HIGH–RISE BUILDING WITH

MULTIPLE TENEMENTS.
Estate Managers may sometime be entrusted with a real property of multiple
tenements for its total management and also for collection of revenue from
the property, usually against a monthly fee of 5% of the revenue collected.
Here collection of revenue means collection of rent from the tenants which is
gross rent and the cost for proper management and maintenance of the
property should be deducted from the gross rent to get the actual income.
Such expenses which are to be incurred in connection with the property, so
as to maintain the periodical revenue from it, are termed as outgoings. As a
matter of fact, all types of properties are subjected to various types of
outgoings and the Estate Managers will not only involve with all different
types of activities for regular income from the property but also keep watch
on the expenses of outgoings for higher return. Following are the usual types
of activities connected with a high-rise building for good return from it at a
fixed regular interval.
1) Interaction with superior landlord, if any, and payment of rent.
2) Interaction with Government authorities and payment of Govt.

revenue.
3) Interaction with local self-government unit and payment of taxes.
4) Interaction with competent authorities and payment of special local

rates.
5) Repair, maintenance with cost of cleaning materials.
6) Management and Collection.
7) Vacancies and Bad debts.
8) Insurance.
9) Sinking Fund.
(1) INTERACTION WITH THE SUPERIOR LANDLORD & PAYMENT OF

GROUND RENT.
This is applicable in case of leasehold property. Here amount of

deduction from gross rent may be ascertained from relevant
documents which will also speak of restrictive terms, if any . Ground
rent paid by the lessee for the land should be deducted from the gross
rent to determine lessee‟s interest in a property.
(2) INTERACTION WITH GOVT. AUTHORITIES AND PAYMENT

65
OF GOVT. REVENUE.
Land revenue payable to Government is usually a small amount.
There is a special provision under Khashmahal Act prevailing in and
around ............ Under the provisions of the West Bengal Multi-
storeyed Building Tax Act, 1979, every owner of high-rise building
(five- storeys and above in and around ........... is required to pay the
tax in advance for each year on the covered space calculated at the
rate as specified by the Govt.
3) INTERACTION WITH LOCAL SELF- GOVERN MENT

UNIT AND PAYMENT OF TAXES.
Each local self-government unit i.e. municipality or notified area or
even Panchayat area has its own method of assessing general rates on
the basis of value of the premises within the orbit of State or City
Municipal Act or Panchayat Act. General rates should be first
ascertained from rate bills and if the rates be found high, appeal may
be made to the local body and to the Tribunal to ascertain the rates on
the basis of value of the premises or on the basis of expected rent of
the premises as applicable in the particular case.
(4) INTERACTION WITH COMPETENT AUTHORITIES AND PAYMENT

OF SPECIAL LOCAL RATES.
Often it has been found that in addition to general rates, local bodies
charge rates for some other counts such as water supply, sanitation
etc. It may also be the case that supply of water or sewerage clearing
is the function of some other body, who charge the property –owners
separately for such services or it may be that water is a separate sub-
item of rates charged by local bodies as introduced recently by ...........
Municipal Corporation and other local bodies of West Bengal. These
rates should be investigated and accounted for according to
circumstances.
(5) REPAIRS, MAINTENANCE WITH COST OF CLEANING MATERIALS.

Cost of such repairs vary from property to property depending on its
nature of construction, upkeep, use etc. There are also various ways
of estimating the said repairs, but the usual practice is that cost of
repairs, maintenance and cleaning should be arrived in percentage of
annual gross rent. Income Tax authorities and consequently for
Wealth –tax , Capital Gain Tax and Estate Duty, the authorities allow
as an element of repairs and maintenance 1/6th of the rent after
deduction of local rates including special rates, if any, government
revenue or rent payable to immediately superior landlord. Local bodies
usually allow 10% of annual rent for repairs and maintenance. In
Land Acquisition proceedings also 10% is allowed for repairs. Such
petty repair are occasional as become necessary from time to time.
There is also periodical repair such as painting, colour washing, white
66
washing, etc. In addition, there are special repairs such as repair of

pump, renewal of flooring, repair to cracks or dilapidation owing to
hazardous use. Such special repairs should be accounted for either as
a separate item or in additional percentage of gross rent. Cleaning
materials should be used almost daily. But An experienced Estate
Manager usually makes his own estimate on observation of various
instances of cost of repairs. There are special cases, as we often find
in towns and places affected by Rent Act, where the existing rent
under Rent Act is low and the tenants can not be ejected inspite of low
rent owing to the said Act Landlords in such cases, due to
disproportionately high cost of repairs does not care to repair the
buildings. In such cases cost of repairs amounts to 30% or even more
than 30% of the gross existing rent.
(6) MANAGEMENT AND COLLECTION.
Often in case of big properties, specially where the owners live outside,
collection is entrusted to agents, who usually charge 2% for the same
but if to manage and look after every thing, agents usually charge 4%
to 5% of gross rent. Income –tax authorities allow a maximum of 6%
deduction from gross rent less for local rates and Government revenue
or rent payable to immediately superior landlord. In case of high –rise
building with multiple tenements, management and collection charges
include the following in addition to the usual fee of the Estate
Manager.
(a) Salary of sweeper, lift -man, watchman and pump attendant.
(b) Electric energy consumption for common lights in passages,

stairs and for lifts, pump etc.
(c) Service charges for lifts and pumps.
The normal deduction for the collection and management charges

depends upon a number of factors like nature of tenancy, amenities
provided, age of building etc. Estate Manager must be careful in
estimating this figure as it has been observed that at times this cost
often exceeds even 10% of the gross rent in which case the actual
expenses should be adopted in preference to that based on a
percentage basis.
(7) VACANCIES & BAD DEBTS.

It may not be possible to keep all the tenements of a high-rise building
occupied continuously round the year. Thus some apartments may be
non-revenue producing for certain period of the year. These periods
are referred to as vacancies. In such cases a suitable reduction for
loss of rent should be made from the gross income of the property.
Bad debts occur due to irregularity of payments by the tenants and in
case of high- rise building with multiple tenements, there is possibility
67
of defaulters where legal action against the tenant may sometime call
for. If it is found that vacancy and bad debts are increasing every year
it is expedient to take last year‟s figure with some weightage. In case the
vacancy and bad debts decreases, the last year‟s instances should be taken
into account. For income-tax matter vacancy & bad debts should not
be taken into account as only the income of the year is the
consideration, but in the matter of Wealth-tax, Estate Duty, Capital
Gain Tax, vacancy or bad debt and legal cost thereof are matters for
consideration.
(8) INSURANCE.
Often a property is insured against fire, riots etc. The rate is

calculated on the basis of value of the property. In the present days
the rates for insurance are high – may be yearly ¼% to ½% of the
value of the property according to the risk to be covered. With slight
increase of the above rate of insurance, risk insurance for lift-man,
pump-man etc. may be covered. This risk insurance should be made
so that employer may not have to be indemnified under Workmen‟s
Compensation Act for any injury to those employed while in actual
operation.
(9) SINKING FUND
It is the money set apart yearly or periodically and deposited in a

Bank or with a General Insurance Company so that the money along
with interest accumulated may be utilised for rebuilding the building
or any other physical property or for heavy repairs.
The present scope of management of high-rise building in ........... by

the Estate Managers is limited and the present quality of the services
rendered by the Estate Managers is also not upto the mark. There is
no professional manager available in our country for this type of
management as in vogue in the Western countries. There is also no
standard norms available as approved by any statutory authority for
this specialised job. Strictly speaking, property related managerial
services or consultancy are almost non-existing not only in ...........
but also in other big cities of the country. For management of a high-
rise building with multiple tenements, a Real Estate Manager should
be familiar with the local laws affecting the income from the property
which include the Tenancy act, Acquisition and Requisition act,
Municipal act, Town and Country Planning act etc. In addition, he
should have basic knowledge of legal aspects, taxation, valuation of
properties and also in construction and maintenance of building.
68
CHAPTER XII
MANAGEMENT OF OWNERSHIP APARTMENT
The concept of ownership apartment / flat has become popular in Cities
since late eighties of last Century due to the overgrowing needs of
accommodation in close proximity of cities and towns and due to exorbitant
price of urban land and its scarcity.
The aspirants for owning a house with economic limitations have to prefer
flats. This brings into the scene, the promoters of flats. A few of them are
discreet and follow the ethics, while some promoters try to exploit the
buyers. It is necessary for the buyers to be cautious at every stage right from
initial stage of signing the agreement. Many of the buyers have neither
experience in this trade nor knowledge in buildings.
The promoter constructs buildings and sell different flats to different parties
and after sale, forms a society of buyers to take care of maintenance and
repairs.
In Mumbai, where the construction and sale of flats on ownership basis was
first introduced against all other metropolitan cities in India, the flat-owners
initially form themselves into Flat-Owners‟ Association by seeking registration
under the Indian Companies Act, 1956 and applying for exemption from a
number of relevant provisions of the said Act from the Central Government.
However, while forming an Association of Flat-Owners it is to be kept in
mind that unless it is registered or incorporated under a Statute so as to
give it a legal entity, the flat-owners who form themselves into such an
Association shall have no rights or locus standi and the lessor or his agent
or the Developer or the Promoter may be under no obligation to consult such
association. The flat-owners may also form themselves into a
Society duly registered under the Societies Registration Act as may be
applicable to the State where the flat scheme has been implemented and
control of the entire affairs in respect of the common services and
maintenance etc. of the premises may be vested in the Society.
In West Bengal, it is West Bengal Apartment Ownership Act, 1972. As per

provisions of the Act, Apartment Owners have the right of undivided interest
in the common area and facilities and the owners will enjoy the heritable
and transferable right on the Apartment. They may form the “Association of
Apartment Owners” with intimation to the Competent Authority for repair
and maintenance of the common area and facilities of the premises. Similar
provisions are also available in Delhi Apartment Ownership Act (1986), U.P.
Ownership of Flat Act (1975), Maharashtra Ownership Flats ( Regulation of
the Promotion of Construction, Sale, Management and Transfer-Amendment
and Validating Provisions) Act, 1983 and in similar Acts of other states.
69
In pursuance of West Bengal Apartment Ownership Act, 1972, only four

Apartment owners can form an “Association of Apartment Owners” and may
apply to the competent Authority to the following address for registration in
prescribed form (Encl.-I). There shall be a Board of Managers of the
Association. After the Managers of the Board are elected, the Board shall
elect its President in 1st meeting and the President shall forward the names
of the Managers of the Board in another prescribed form (Encl. –II) to the
Competent Authority, which shall cause those names to be entered in the
relevant register to be maintained in its office or the purpose. Present
address of the Competent Authority is Apartment Ownership Cell, Housing
Department, New Secretariate Building, 1, Kiron Sankar Roy Road (3rd
Floor), ........... – 700 001.
Prior to the formation of Association, declaration by the Owner/Owners

containing particulars as may be prescribed and also the deed of apartment
and copies of floor-plans showing the layout, location, the total number of
apartments, dimensions of apartments and their respective numbers duly
verified and certified by a qualified engineer or an engineer recognized by the
Act for this purpose are to be furnished to the Competent Authority. The
administration of every property is governed by bye-laws, a copy of which
shall be annexed to the declaration. Thus it will be seen that the states
where the Apartment Act is passed, it helps the flat owners in many ways.
Where the Act is not passed, only the flat is registered without declaration
and deed of apartment and there is no licensing system for flat promoter
and any body can become a flat promoter. He will not be punished for any
lapses. He can have his own method of agreement.
In case of flats, the land attached to the building does not belong to the flat
owner and only undivided share of land is apportioned to the flat. The
services also are to be shared by all the occupants. The various parts of the
building like foundation, terrace, staircase, etc. have to be considered to
serve all the flats, irrespective of the location. The flat owners in the ground
floor cannot content that they shall not share the expenses towards
maintenance of lift charges and similarly those in other floors cannot claim
that they have nothing to do with the foundation.
In West Bengal, flat buyers enter into an agreement with the Promoter/
Developer in response to their advertisement. In ..........., normally the land
belongs to some other and the Developers have a Joint Development
Agreement with the Owner. A typical “Agreement for Sale” and a typical
“ Joint Development Agreement” are enclosed and marked as
Annexure- V and Annexure – VI respectively.
The following additional factors will be cropped up in valuation of such
ownership flat..
1. Composite rate method is generally adopted to arrive at the value of a

flat in a multiple tenement. The terms Composite Rate is used to
70
indicate the rate per unit area of the flat of an Apartment Block along
with proportionate undivided share of land. Here land Component is
undivided share of land that can easily be calculated if the permitted
FAR or the total floor area of the building block and if the Land is fully
developed. Then the extent of undivided share of land corresponding
to the area of flat
= Built –up Covered area or, Land area x Flat area

Permitted FAR Floor area of building block
Promoters‟ / Developers‟ offered composite rate of flat is normally on the

basis of super built area i.e. per sft. of Plinth Area proportionate
percentage of the common areas. But the terminology like super built
area is not accepted in I.S. Code and not properly defined by the
Government or by any Statutory Authority. So for valuation of a flat, it
is advisable to take only the built-up covered area i.e. the plinth area
of the flat which will be multiplied by the composite rate and to add
some reasonable percentage for all additional facilities, common rights
and services available.
2. Valuation vary if the flat is tenanted and not owner-occupied.
3. Terms and conditions imposed in the Joint Development Agreement

between land owner and the Developer.
4. Terms and conditions imposed in the Deed of Conveyance or in the

Sale Agreement of the demised flat.
In addition, due weightage are to be given for the following factors in fixing
up value of the flats of different floors, even if the building is equipped with
lift.
1. Lawn or garden facility in the ground floor. On the contrary, less

security in ground floor and less privacy, disturbances in ground floor
due to movement of vehicles, persons and children playing,
disturbance of mosquitoes and insects and also possibility of water
stagnation within the compound during heavy downpours.
2 More light and ventilation in upper floors compared to ground floor, but less pressure
of water in upper floors and dependency on lift in upper floors.
3. Leaky terrace and roof heat causing inconvenience to the top

floor owners.
Some percentage deduction may be made from the prevailing

composite rate to assess the fair value / rate of ground floor and
top floor flats.
71
Ownership flats – points to safeguard the interest of the buyers.
The concept of ownership apartment / flat has become popular in west

Bengal since eighties of last century. This brings into the scene, the
promoters of flats. After the first generation small time promoters, the
Government and a few big real estate developers ruled till 2003. Now far
bigger national and international business houses are coming for
development of apartment buildings.
In the business, the promoter constructs apartment building blocks with
multiple tenement and sells different flats to different parties and after sale,
formed a society of buyers to take care of maintenance and repair.
But when it comes to follow the norms in selling of flats or apartments, the
scenario remains more or less the same. All the relevant Acts have failed to
safeguard the interest of buyers in price fixation of flats.
As per provision of West Bengal Apartment Ownership Act, 1972, flat

Owners have the right of proportionate undivided share of land and
undivided interest in the common area and facilities of Apartment Building
and the owners will enjoy the habitable and transferable right on the flat.
The second relevant Act is the West Bengal Building ( Regulation of
promotion of construction and transfer by Promoters) Act, 1993(amended in
2002) which has passed by the Government to exercise some control on the
promoters and to regulate the real estate business. But the Acts have failed
to safeguard the interest of buyers at least to the following two spheres.
(A) SNAG IN THE ACT IN COST CALCULATION OF FLAT
The Acts have not incorporated any clause on method of cost calculation of
flats. Composite rate method is normally adopted to arrive at the cost of a
flat in multiple tenement. The term composite rate is used to indicate the
rate per unit area of the flat of an Apartment Block along with proportionate
undivided share of land.
There aught to be a clause making mandatory on the part of the promoter to

spell out the composite rate per unit of plinth area or built –up covered area
of the flat of the Building block along with area of proportionate undivided
share of land at the time of booking of the flat. The Promoter should also
indicates clearly the percentage to be added to the composite rate for all
additional facilities, common rights and services available against the flat. In
the Act, there is no such code of conduct for the Promoters and their
advertised rate per sft. or per sq.metre in many cases does not represent the
72
correct price of the flat and the buyers are to pay more in the name of super
built area.
The terminology like super built area is not available in any standard
Engineering Book, nor the term is accepted in I.S. Code. The term has been
introduced by the Promoters of Real Estates for selling of flats or
apartments. According to them, in a building with multiple tenements, super
built area of a single tenement or flat is the plinth area of the flat plus the
proportionate undivided share of land plus the proportionate percentage of
the common areas like stair with landings, stair cover (mumty), lift –well
including landing, common passage, community hall, pump house,
boundary wall etc. Thus the super built area is an imaginary area, which
cannot be measured. Plinth area of the flat can be measured, but
proportionate percentage of common areas cannot be measured.
In sizeable number of flats, the difference between the super built area and
the plinth area has gone up to as high as 45 per cent. The difference is
known as load factor in real estate market. What makes matter worse is that
most flat buyers continue to remain in dark about how the load factor has
been calculated, as the promoters often do not provide all accurate details.
The promoter often brings down the price per square feet to close a deal but
cushion their profits by increasing the load factor. The buyer assumes that
he is getting a cheaper deal, when in reality the higher load factor negates
the benefit of price cut.
For instance, the Promoter has advertised 1230 sft. flat at Rs. 16.00 Lacs
i.e. @ Rs. 1300/- (approx.) per sft. When asked how this 1230 sft. has been
arrived, the Promoter gives a vague reply and in reality the buyer gets 910
sft. plinth area or built –up covered area of the flat and the price comes to
Rs. 1758/- per sft. with a load factor ( as known in real estate market) of
35% which are not detailed in the advertisement or in brochure where only a
term of „ Super Built Area‟ is used.
For price calculation of flat, it is better to take only the built – up covered
area i.e. plinth area of the Flat which will be multiplied by the Composite
Rate and to add some reasonable percentage for all the amenities, common
rights and services available. In State Rent Control Act, stair with landing,
passage, lift etc. are taken as essential amenities of the flat and the
Standard Rent of a flat is arrived by multiplying the rate of rent with the
effective floor area or carpet area of the flat. Only some weightage in
percentage is allowed for balancing the additional amenities. For cost
calculation of Flat, same procedure may be followed. Or, standard should be
laid down in Wet Bengal Promoters Act, 1993 (amended in 2002) to fix up
the percentage of load factor in Super Built Area with its upper ceiling for
the benefit of flat buyers. In the Agreement for sale, both super built area
and plinth area of the flat should be mentioned.
The lately imposed code of conduct by Maharashtra Housing Chamber of

Industry has clearly spelt out that the thickness of walls of the building, its
73
staircase, landings, lift-well, common passage will be charged as a part of

load factor and the Society room, Community hall, Pump house, Boundary
wall etc. cannot be included in Super Built Area.
It is worthwhile to mention that West Bengal Housing Board, a statutory
body of the Government, also follows the faulty price calculation on super
built area basis and like private promoters charges price against the
imaginary additional area.
So long, point of safeguard against faulty price calculation has been
discussed. Now if examined properly, it can also be ascertained that the
offered price of Promoters against a flat as appeared in News Paper
advertisement, is some time exorbitant. Now big size vacant land in proper
........... is not available. Apartment building blocks are coming around
..........., particularly in the added area & suburban area of ...........
Municipal Corporation. In the above instance, the offered price of Rs. 16.00
lakhs of the Promoter is on the higher side, which can be shown from the
detailed calculation as below.
The flat as mentioned above with 1230 sft. super built area and 910 sft.
plinth area is in 2nd floor in a (G+4) – storied building with 16 flats of more
or less same size on 11 cottahs of land on James Long Sarani, ...........-
700008. Construction of flat is with all first class materials and first class
finishing with marble flooring, plaster of paris to walls, concealed electrical
wiring etc. The land, as learnt, was purchased in the year 2003 at Rs. 3.50
lakhs per cottah and the building was completed in the year 2006. The
above advertisement appeared in 2005.
We may calculate the cost of the flat and also the fair market value of flat.
The probable price of flat per sq.ft. consists of five components as follows.
(i) Land component which is undivided share of land and is apportioned
to the flat and projected to net present value (NPV).
(ii) Construction cost of the flat projected to N.P.V.
(iii) Proportionate reasonable percentage to be added to the cost of the flat
or all common facilities and services available.
(iv) Interest on the capital of the Promoter.
(v) Profit of the Promoter.
Here, the fair price of the flat may be arrived at as follows.

(i) Land component-developed land
Undivided proportionate 11. K. X 3. 50
share against the flat ------------------ 2.40 Lakhs
16
Net present value allowing 13% interest p.a.
for 3 years = 2.40 + 2.40 X 0.13 X 3 = 3.34 Lakhs .. Rs. 3.34 Lakhs.
(ii) Construction Cost including planning

910 sft. @ Rs. 550/- per sft. = 5.00 Lakhs
74
Net present value allowing interest

= 5+5 X 0.13 X 2X ½ = 5.65 Lakhs. .. Rs. 5.65 Lakhs.
(iii) Add 20% on (ii) for common facilities

and services available (proportionate
common area of staircase with landing
is not included in 910 sft.) .. Rs. 1.13 Lakhs Rs10.12 Lakhs.
(iv) Interest on above capital of Rs. 8.12 Lakhs for

two Years in average (considering advance
@ 2.00 lakhs each by the prospective buyers
against the flat as part of
the Capital ) @ 13%. = 8.12 X 0.13 X 2 .. Rs. 2.11 Lakhs.
(v) Allowed Promoter‟s profit –30% on Rs. 8.12 .. Rs. 2.43 Lakhs.
(In P.W.D. Schedule contractor‟s
profit is 10% to 20%.) -------------------
Total Rs. 14.66 Lakhs.
Hence the Promoter‟s price of Rs. 16.00 Lakhs for the flat is on the higher side
taking into account Promoter‟s additional income against eight car parking spaces
and other vacant area at ground level.
(B) SNAG IN THE ACT IN COMMON MAINTENANCE OF FLAT.
(iii) In the West Bengal Apartment Ownership Act, 1972, there is also snag
in formation of Society to look after the common area and common services
of the building block. Section 10 of the Act states that the Promoter shall
take steps for formation of an Apartment Owners‟ Association or a Co-
operative Society of buyers of all flats. But when the buyer is a member of a
Co-operative Society, the right to the property i.e. right to the flat will be
vested to the Society and the buyer is to take permission from the Society
and from the Registrar of Co-operative Society is to let out the flat and also
to sell the flat, if and when occasion arises. For ready built flats of the
Promoter, buyers are to form the Co-operative Society after making full
payment of flats as per the demand of the Promoter and after the
registration of flats when the buyers are not enjoying any benefit of the Co-
operative Society.
Here, the requirement of formation of Society by the Promoter is for looking

after the common area of the premises and common problems of the
members of the Society pertaining to the flat. Such problems can easily be
tackled by the formation of an Apartment Owner‟s Association under the
West Bengal Apartment Ownership Act, 1972 where the buyers may also
maintain their independent rights over the flats.
75
To safeguard the interest of flat buyers in multiple tenements, the relevant

Acts require a few amendments as above.
l. I
FORM NO. 1
To
The Competent Authority
Under The West Bengal Apartment Ownership Act, 1972
Sir,
I hereby communicate that in a general meeting duly held

on……………..presided over by the undersigned, the Association of
apartment owners under the name and style of ……………….of our at
property……………………………………………………………………………………….
already submitted to the provisions of the West Bengal Apartment
Ownership Act 1972,has been formed under the bye-laws framed under the
said Act with the following as members thereof :
Name of the member : No of the apartments in the

building owned by him/her.
(1) Shri/Smt.
(2) Shri Smt.
(3)Shri/Smt.
(4)Shri/Smt.
and so on
Yours faithfully,
Signature of the apartment owner
presiding over the general meeting.
76
Date :
Place:
FORM No. 3
Encl - II
To The Competent
Authority
Under The West Bengal Apartment Ownership Act, 1972
…………………………………………….
…………………………………………….
Sir,
In the first meeting of the Board of Managers held today in accordance with
the bye-laws framed under the West Bengal Apartment Ownership Act,
1972 I have been duly elected President of the said Board for the Association
of the apartment owners in respect of the property at
………………………………………………………………………………………………….
and I do hereby forward to you the names of the President and of the
Managers of the Board as follows :
(1) Shri / Smt. President

(2) Shri /Smt. Manager
(3) Shri/ Smt. Manager
(4) Shri/ Smt. Manager
and so on
Yours faithfully,
77
Date : Signature of the President
Place:
78
CHAPTER XIII
MANAGEMENT OF CO-OPERATIVE HOUSING
Organisation & Registration of Housing Co-ops. :
For registration of a primary co-operative society at least 10 person are

required. But a co-operative housing society may be registered with only
eight persons.
The primary object of a co-operative housing society shall be to provide its

members with dwelling houses and also arranging maintenance of common
services for them.
The construction project of a housing society should be sponsored in a
compact area. This condition may be relaxed in cases where the plots
already owned by the members are located in different areas of a city, town
or village. But this relaxation is not allowed to the members of a co-operative
housing society organised or registered in the city of ............ Compactness
of the housing project is a pre-condition for registration of a housing society
in the city. It is so in the Salt Lake areas also.
The application form, model bye-laws of a housing co-op. society may

be had from
1) The City Office of the West Bengal State Co-operative, Union at 23A,
Netaji Subhas Road, 7th floor, ...........-700 001.
2) Office of the District Co-operative Unions,8B, R. N. Mukherjee Rd,
........... – 700 001.
3) Main Office of the West Bengal State Co-operative Housing Federation
at P-15, India Exchange Place Extension.
Procedure for submission of application for registration of a Co-

operative Housing Society.
For registration of co-operative housing societies of Flat Ownership –Type

there is a guideline issued by the Registrar of Co-operative Societies, West
Bengal. According to this guideline the following particulars are required to
be submitted to the registering authority along with the application for
registration.
1. A copy of the proceedings of the meeting of promoters. Specimen of

Promoters‟ meeting is given in subsequent pages.
2. 3 printed copies of the proposed bye-laws duly filled in and signed by

promoters.
3. An application for registration of co-operative in prescribed form and

79
signed by the intending applicants / promoters. Prescribed form of

application is annexed in following pages.
4. Application by Chief Promoter for registration of co-operative housing

society. Standard Performa for application is in subsequent pages.
5. Particulars of land, building, tenement proposed to be purchased or

acquired with copies of records, deeds connected with it.
6. Allotment of flat no in floor against the name of each promoter in case

of co-operative housing societies of flat ownership type.
7. A statement showing initial income and expenditure so far made in

connection with organization of the society.
8. A project report detailing the housing scheme giving approximate

number of flats or plots for distribution among the members with cost
involved. Along with the project report the chief promoter is required
to submit the following-
a) Blue print of the proposed housing complex,

b) Layout or site plan and floor plan of the building, object of the project,
area and status of the land, number of members, number of flats,
amenities proposed to be provided in flats, mode of raising fund,
phasing for payment etc.
Flat cost of the allotee should not be more than his five years‟ gross
income. If the cost shows an amount exceeding one‟s 5 years‟ income, the
member concerned shall have to indicate the source to cover the
deficit of estimated flat cost.
A typical case of project report and floor plan are enclosed.
9. A declaration by the chief promoter that he is not acting as a chief

promoter for any other co-op. Society,
10. Affidavit of promoter to the effect that he does not own any house,
plots in his name or in the name of any member of his family within
the project area, i.e., in the concerned city, town or village and intends
to join the society for owning residential accommodation for himself
and the members of his family. Standard proforma of Affidavit is in a
page hereinafter.
11. Information relating to income of the promoters in the form of salary

or income tax assessment certificated and two recent passport –size
photograph.
12. A declaration from the chief Promoter that he shall arrange
80
submission of additional information, statements etc. as may be asked for

by the registering authority within 90 days from the date of registration of
the society.
In respect of societies proposed to be organised in the City of ........... and

Salt Lake the registration paper may be submitted to the Dy. Registrar of
Co-operative Societies, ........... Metropolitan Area Housing Cell, office of
whom is located at 245, B.B. Ganguly Street, ........... – 700 012 for the
present. In other case it may be submitted to the Asstt.. Registrar of Co-
operative Societies of the concerned ranges.
Housing Co-Operative on Government Land.
In ........... and Salt Lake City, housing society may be formed on the plots of
land offered by the ........... Improvement Trust, Metropolitan Development
Department and Housing Department, Govt. of West Bengal, C.M.D.A. etc.
The registering authority may not register a housing society unless the
authorities concerned provide its chief promoter certificate that the
application on behalf of the proposed society for allotment of land / plots
has been received and there is likelihood of favouring it with allotment for
construction of building on co-operative basis. The chief promoter should in
such cases apply for such certificates on submission of application for
allotment of plots in proper form to the address of the following:-
1. Chief Executive Officer, ........... Improvement Trust, India Exchange

Place- in case of KIT plots.
2. Secretary, Metropolitan Dev. Department, Sech Bhavan, Salt Lake – In

case of Salt Lake plots.
3. Secretary, Housing Department, 1, K. S. Roy Road, ........... –1 in case

of Housing Dept. plots.
4. Chief Executive Officer, Howrah Improvement Trust, Howrah – In case

of plots in Howrah town.
Role of Chief Promoter :
Responsibility regarding submission of registration papers lies with the chief
promoter of the concerned proposed society. He plays a very important role
in the matter of organisation and registration of the society. In the promoters‟
meeting he may be authorised to open an account with a co-operative bank in the
name of the proposed society and operate the said account as and when
required jointly with another promoter to be duly authorised in the promoters‟
meeting and also to negotiate for purchase or acquisition of land, building,
tenement etc.. Such a person shall be chosen in the promoters‟ meeting of the
proposed society. Any person shall not be entitled to act as chief promoter for
more than one housing society.
81
The role of the Chief Promoter virtually ceases with the registration of the
society. Within one month from the date of registration, Chairman shall call
the first meeting of the managing committee where the Secretary will be
elected. Specimen of the proceedings of First Managing Committee meeting
after registration is given in subsequent pages.
Membership Qualifications :
Each and every person is not eligible for membership of a housing society.
At the time of admission the managing committee of the society should
examine the following :
1. A person who is a permanent resident of West Bengal and who does

not own a house, flat or building site in his own name or in the name
of any member of his family in a city, town or village where the
housing project of the society is being or has been undertaken may be
considered eligible for membership, provided that he is not a member
of any other Co-operative Housing Society of the area.
2. A person who does not owns a house or flat tenement but possesses a
plot of land for house building purposes within the project area may
be considered for membership if he applies for the same for
construction of house with the assistance of the society.
3. A person may apply for membership even on owning a house or flat or

tenement if he likes to extend the existing area or accommodation in
his possession or for repairing his house with the assistance of the
society.
4. Total number of members of a society should not be more than the

number of flats, houses or plots available for allotment amongst
members.
5. The managing committee of a society may keep a panel of applicants

for allotment of plots, houses or flats in cases of future vacancies upto
a maximum of 10% of the total number of members already admitted.
Particulars of address and annual income in order of priority based on
the date of receipt of application should also be kept in respect of
these panelled persons admitting them as nominal members without
right of subscribing shares or of voting.
6. Membership may be given only to one of a family consisting of

husband, wife, dependent children with minor sons and unmarried
daughters, dependent wife of predeceased sons and husband‟s dependent
parents Joint memberships with wife or son or unmarried daughter is
permissible, but they should also be eligible to be members. Specimen
of application for approval of membership by
82
Registrar is in subsequent pages.
Cessation of Membership.
1. A person may lose his membership for his failure to accept allotment of
a house, flat or plot, as the case may be, within 90 days from the date
of offer by the society the period of which may be extended for further
period of 90 days by the managing committee. A person as such may
get six month‟s time at maximum for acceptance of allotment on payment of
the cost involved in the offer.
2. A member may be expelled from membership by the managing

committee of the society after passing a resolution in a meeting
attended and voted in its favour by two –thirds of the members of the
committee for any of the reasons noted below:
i) When a member is a defaulter in respect of payment of his dues for

more than six months.
ii) When he enters into or intends to enter into any business relationship
relating to the project of the society,
iii) When he fails to comply with the provisions of bye laws of the society,
iv) When he purchases or becomes owner, otherwise than by inheritance,

of a house or flat which does not form a part of the society‟s housing project
functioning in the city or town or the Development Block in districts
he shall resign from membership of the society. He may be expelled
from membership on his failure to comply the direction of the
managing committee for resignation,
v) A member may also be expelled for bringing disrepute to the society or

for doing acts detrimental to the interest of proper working of the
society.
Financial transaction and maintenance of accounts.
All transaction above Rs. 1000/- shall be made by A/C. Payee cheque.
Receipt book of the society shall be machined numbered. All receipts
and expenditure shall be entered in the cash book and other books of
accounts which shall be audited by a qualified auditor.
Transfer and letting out of flat by members of the Society.
i) For both the purposes, written consent of the society and prior
permission of the Registrar of Co-operative Society are required. In no
case, permission of the Registrar or the written consent of the society
shall be withheld arbitrarily.
83
ii) Fee or donation is to be paid to the society as specified by State Govt.
for according consent to transfer.
iii) Ground for transfer – To pay off debts or to compel to shift from the
locality or in need of money for marriage or education of his son or
daughter or for medical expenses of family or other reasonable and
justifiable grounds.
Specimen of Promoters‟ Meeting of a Co. operative Housing Society.
Draft proceedings of the meeting of the promoters for organisation of the

proposed …………. Co-operative Housing Society Ltd.
Place Date Time
Name of promoters present Signature
1.
2.
3. ( at least 8 in number)
Shri ………………..being proposed by Shri………………….and seconded by

Shri………..was unanimously elected to preside over the meeting.
Shri…………………Convenor of the meeting, explained the purpose of the

meeting. He stated that the promoters who have assembled together are
faced with acute housing problems of their own which according to them
can be solved through formation of a co-operative housing society. He also
brought forward the salient clauses of the Co-operative Societies Act & Rules
and explained on the requirements that shall have to be fulfilled for
organisation and registration of the society.
He thereafter, at the request of the Chairman, read the proposed by-laws of

the society clause by clause on which promoters present discussed. After
detailed discussion the following decisions were adopted unanimously and
resolved that :
1. A co-operative housing society be formed under the name and style

….….Co. operative Housing Society Ltd. at ……………………… with the
objective of launching a housing project for providing ownership flats
in a mutistoried building / plots of land for construction of tenement
or unit houses to the members with financial assistance through the
society.
2. The model bye-laws of the society as read, discussed, filled in and

adopted be submitted for registration.
3. The area of operation of the society………………… and the

construction project area would be at……………………..and
84
………………………respectively.
4. Shri …………………………. now residing at ………………..is chosen at

the Chief promoter of the society on his specific declaration that he
has not acted as such in case of any co.operative housing society in
the past.
He was authorized to take all those steps as may be necessary for
registration of the society in accordance with the Co-operative Act and the
Rules and the bye-laws framed there under.
He was also authorized to make negotiation for purchase or acquisition of

land in consultation with the Chairman of the first managing committee
constituted there under.
5. The managing committee of the society shall be constituted of six /

nine / twelve elected directors.
(1)Shri chairman
(2)Shri Vice Chairman
(3)
(4)
(5)
(6)
6. The promoters will make payments to the Chief Promoter on account

of admission fee, value of share and such other contribution as may
be required by him with prior knowledge and consent of the chairman
and the vice-chairman against proper receipt to be issued by the Chief
Promoter and the chairman. The Chief Promoter shall, however, take
steps on collection of money only under necessary information to the
Dy. Registrar of Co-operative Societies (CMA) Housing.
7. A Saving / Current A/C. be opened in the name of proposed society

with West Bengal State Co-operative Bank Branch where all receipts
to be credited by the Chief Promoter.
8. The Bank Account when opened shall be operated by

Shri…………………, the Chief Promoter along with Shri
………………………, the Chairman or Shri…………………..
The Vice –Chairman on behalf of the proposed society.
9. The allotment of flat was made on the basis of lottery. The following
members are allotted flats as noted against each.
85
Sl. No. Name of Member Flat No. Floor.
1.
2.
3. ( at least 8 in number )
10. The Chief Promoter be and is authorised to prepare all papers as

required including details about the proposed housing project in
consultation with the Chairman and the Vice-Chairman and submit
those to the Dy. Registrar of CS. (CMA) Housing.
The meeting terminated offering vote of thanks to the Chair.
Chairman
[ The draft is meant for a housing society proposed to be registered

within the limits of ........... Metropolitan Area inclusive of the city of
...........]
86
FORM OF APPICATION FOR THE REGISTRATION OF A CO-
OPERATIVE SOCIETY WITH LIMITED LIABILITY
[ RULE 8 (I) ]
PART I
To
The Registrar of Co-operative Societies.
Date ………….2004
Sir,
We, the undersigned, agree to the enclosed bye-laws and under section 13 of
the West Bengal Co-operative Societies Act, 1983 (West Bengal Act. XIV of
1983), apply to be registered as a Co-operative Society with Limited Liability
under the title of ……………the registered office being
at……………………………… Post Office ……………….. Thana ………………..
Town/Panchayat………………….Subdivision
…………………..District……………………..
Sl. No. Name of the Promoters Father‟s name Occupation Age

1 2 3 4 5
Permanent Present Whether member of any other society; if so, Signature or

Address address name and address of the society (ies) L.T.I.of applicant
6 7 8 9
PART – II
1. Name of the proposed Society –
2. Name of liability of members-
3. On share basis or with out shares-
4. Number of promoters-
5. Names of the members of the first board Constituted
(1) Shri…………………………………………………………………..Chairman.
(2) Shri……………………………………………………………Vice –Chairman.
(3) Shri……………………………………………………………
(4) Shri……………………………………………………………
(5) Shri……………………………………………………………
87
(6) Shri……………………………………………………………
6. Name and address of the person ( Chief Promoter in the case of a Co-
operative Housing Society ) to whom communication, if any, are to be
addressed till registration of the society :-
7. Certified that each of the Promoters belong to a different family as

required under the Act.
Signature of three promoters authorised
(1)
(2)
(3)
Date :
___________________________________________________________________________
N.B. A True Copy of the Proceeding of the Promoters Meeting should be
annexed with the application.
88
FORM OF APPLICATION FOR REGISTRATION OF A CO-

OPERATIVE HOUSING SOCIETY
[ RULE 131 ]
Application by Chief Promoter
To
The Registrar / Assistant Registrar of Co-operative Societies.
Sir,
I submit herewith a proposal for registration of a Co-op. Housing Society

with limited liability under section 13 of the West Bengal Co-operative
Societies Act, 1983 (West Bengal Act XIV of 1983 ), the particulars of which
are recorded below :-
1. Name of the proposed society……………………………………………….
2. Address of the proposed society……………………………………………..
3. Area of operation (specified locality)………………………………………..
4. Name and address of Chief Promoter with whom communication is to be

made till the registration of the society…………………………..
I am sending herewith three copies of the proposed bye-laws adopted and

signed by the promoters along with the true copy of the proceedings of the
promoters‟ meeting held on …………………………and other particulars and
documents required in terms of Rule 135 (1) of West Bengal Co-operative
Societies, Rue, 1987.
……………………………..
(Signature of Chief Promoter)
PROJECT REPORT CONCERNING THE PROPOSED HOUSING SCHEME

[ To be submitted with application for registration of Housing Society]
( A Typical Case with Typical Floor Plan)

89
Name of the proposed : …………… Housing Co-operative Society Ltd.

Housing Co-operative (title of the Society has been accepted by the
Society. Dy. Registrar of West Bengal Housing Co-
operative Society).
Address of the Society :
Name of Chief Promoter :
Total members : 8 (Majority of the members are officers of

Govt. semi-Govt organisation in the gross
income range of Rs. 12,000/- to
Rs.22,000/-)in the year 2002.
LAND : CMDA offered land in 2002 exclusively for
Co-operative housing at Mukundapur near
Eastern Metropolitan By- Pass. Plot area is
above 6 cottah (402 m2) and upto 7 cottah
(469 m2)on 13 metre wide road and the
cost is Rs.1,50,000/- p.k. photo copy of
letter ……. dated …………….. of CMDA is
enclosed.
BUILDING : Applied for a plot of above 6 cottah (402m2)

and upto 7 cottah (469m2), say the plot size
is 6.67 cottah i.e. 4808 sft. i.e. 446.88 sq.m.
No.of floor proposed in the Housing Complex

= G + 4 i.e.Garage + 4 floors.
No. of flat proposed in each floor -------- = 2

No. of flat = 8 for eight members.
Now, according to the bye-laws of Calcutta
Municipal Corporation, permissible covered
area is 51.77% of the plot area.
_______________________________
Plot size 200 sq.m.,covered area = 60%.
Plot size 500 sq.m., covered area = 50%.
For difference of 300 sq.m.,covered area difference = 10%.
Here plot size 446.88 sq.m. and covered area difference = 10 X 246.88 = 8.23%.
300
..Permissible covered area against 446.88 sq.m 60%.-8.23% =51.77%

. . Covered area of the building = 4808 X 51.77% = 2489 Sft.
. . Covered area of each flat = 2489 1245 sft. ..(I)
2
90
Again, according to the bye-laws of Calcutta Municipal Corporation,

permissible floor area ratio (FAR) = 2.3 as the width of front road =13 Metre
and an additional area of 20 sq.m. is admissible for each car parking space.
Total covered area of all five floors including garage
Hence [--------------------------------------------- = 230]+ 8x20 x 10.76
Total plot area
or, Total covered area of five floors = ( 2.30 X 4808) + 1722 = 12780 Sft.
. . Total covered area of each floor = 12780 = 2556 Sft.

5
. . Total covered area of each flat ………. = 2556 = 1278 Sft. ………. (II)
2
Restricted to 1245 sft. due to restriction of covered area as in (I) above and
this includes some common area.
Now, total covered area of each flat = 1245-80 = 1165 sft.
Here 80 sft. floor area has been deducted from each flat for common
staircase, common passages, landing etc.
. . Floor area of each flat = 1165 – 15% = 990 Sft.
COSTING – First class building with 1st class brick work with cement
mortar, R.C.C. roof, marble floor, glazed porcelain tiles in walls
of bath-cum W.C.s., inside and outside cement plastered, plaster
of paris with plastic emulsion paint on inside plaster, outside
shall be colour snow -cem washed, glazed window with m.s.
Ornamental grill, single leaf panel shutter for door, 1st class
sanitary and water fittings and electrical installation with
concealed wiring – Rs. 450.00 per sft in 2002 including 5% for
additional common facilities and services.
(Few members with engineering back ground have specific

knowledge and experience on this type of construction work. In
pursuance of Co-operative bye-laws, the work will be carried out
on contract by inviting tender, but the full technical supervision
will be extended by the members. Plinth area rate of Rs. 450.00
per sft. Including 5% for additional common facilities of the
building of the Society was believed to be the workable rate).
. . Construction cost of each flat = 1245 X 450.00 =Rs. 5,60,250.00

Land cost = 6.67 K. @ 1,50,000.00 p.k. = Rs. 10,00,500.00
. . Land cost against one flat = Rs. 1,25,063.00
. . Total cost of one flat = Rs.5,60,250.00+Rs.1,25,063.00
91
= Rs. 6,85,313.00
Cost of each car parking space = 2489 X 150.00 = Rs. 46,500.00
8
Say Rs. 50,000.00
Share against Lift =400000.00 =Rs. 50000.00

8
Composite rate of the flats including both land
and building and also including 5% for additional
Common facilities & services. = 685313 = Rs 550 .00 per sft
1245
Total cost of the project = ( 6.85 + 0.50 + 0.50 ) lakhs X 8

= Rs. 62.80 lakhs.
Total cost to be shared by each member = 62.80 = 7.85 lakhs.

8
MODE OF RAISING FUND
Members have the capacity to raise the fund from personal savings, from
non-refundable P.F. loan, maturity of LIC etc. and also from loan from their
employers and if necessary, from WBSCHF or HDFC or from Bank.
PHASING FOR PAYMENT
Rs. 1.25 lakhs X 8 = Rs. 10,00,000.00 by 15. 2. 03 – from non-refundable

P. F. loan and personal savings of members.
Rs. 1.68 lakhs X 8 = Rs. 13,44,000.00 by 15.11.03 –Govt. loan, Bank loan or
loan Housing Co-op. to a tune of Rs. 5.00 lakhs per member.
Rs. 1.66 lakhs X 8 = Rs. 13,28,000.00 by 28.2.04 - - do –
Rs. 1.66 lakhs X 8 = Rs. 13,28,000.00 by 15.5.04 - - do -
Rs. 1.00 lakh X 8 = Rs. 8,00,000.00 by 30. 6. 04 - Non –refundable

P.F. loan, personal
saving etc.
Rs. 60,000.00 X 8 = Rs. 48,000.00 by 31. 7. 04 - From maturity of

L.I.C., P.P.F.and by
Disposal of
ornaments, if
necessary.
92
------------------------------------------------------
Total =7.85 Lakhs X 8 = Rs. 62.80 lakhs.
=================================
PROPOSED ACCOMMODATION IN EACH FLAT.
Combined Drawing-cum-Dinning – 18‟-0” X 10‟-6” +

10‟-6” X 10‟-0” = 294 Sft.
Bed Room - 2/13‟-6” X 10‟-6” = 284 ,,
Study Room - 1/10‟-6” X 8‟-0” = 84 ,,
Kitchen with washing space - 1/12‟-0” X 7‟-0” = 84 ,,
Common Toilet - 1/11‟-0” X 5‟-0” = 55 ,,
Attached Toilet - 1/9‟-0” X 5‟-0” = 45 ,,
Store - 1/3‟-6” X 5‟-0” = 18 ,,
Passage - 1/3‟-6” X 3‟-6” = 12 ,,
Verandah (back) - 1/8‟-0” X 4‟-0” = 32 ,,
Balcony - 2/7‟-0” X 4‟-6” = 64 ,,
----------
972 Sft.
=======
CHIEF PROMOTER
PRPPOSED ………………….HOUSING
AFFIDAVIT
I Shri / Smt…………………………………. Son/ unmarried daughter / wife of Shri /

Smt……..
……………………………..by occupation………………………..at present residing at
93
P.O. ……………………Police Station………………………… (Name of the City /

Town / Village to be stated) in the District of …………………….. do hereby
solemnly affirm and declare as follows –
1. That I do not own a house / a flat / a tenement / building / a

building site / a land either in my own name or in the name of any
member of my family in the City / Town / Village of
…………………….in which the Society / proposed society is going to
undertake or has already undertaken construction of the project.
2. (a) That I am a permanent resident of / intend to settle

down permanently in the State of West Bengal.
(b) That I am an Indian Citizen.
3. That I intend to be a member of …………………………..(Name of the

society / proposed society to be stated here) for the purpose of :-
Owning a house / a flat / a tenement / a building / a building site / a land

in the house project of the society only for the residential accommodation of
myself and members of the family.
4. That I am not a member of any other Co. operative Housing Society in

West Bengal.
That the statements made in paragraph 1 to 4 of foregoing affidavit are true

to the best of my knowledge and belief.
………………………………….
( Signature of the deponent)
Read over and explained the contents to

the Deponent in Engish / Bengali and
admitted to be correct. The deponent
identified by me and he has signed in
my presence.
(Signature of the Advocated / Identifier)
N.B. – Particulars which are not applicable to the deponent may be scored out.
Specimen of the proceedings of First Managing Committee

Meeting after Registration.
Place Date Time
94
Name of the members present with signature.
The meeting started with Shri ………………………………………..on chair.

At the outset Shri……………………., the Chief Promoter appraised the
members on the approval of the society by the Deputy Registrar of the Co-
operative Society ( ........... Metropolitan Area). He read the approval letter
before the members and placed in the meeting. Thereafter agenda –wise
discussion started.
solution No. 1.
The issue of election of office bearers of the society was discussed.

Thereafter Shri ………………..proposed the name of Shri …………………….as
the Chairman of the Society and the proposal was seconded by
Shri………………….. Shri ………………………….proposed by
Shri…………………………. and seconded by Shri ………………………… as the
Secretary of the society.
It was unanimously resolved that the other office bearers of the society
would be as follows :-
1. Vice Chairman.
2. Treasurer.
3. Director.
4. Director.
5. Director.
6. Director.
Resolution No. 2.
Application of the members praying for loan for construction of their flats
was discussed in the light of loan rules and regulation.
Resolved that WEST BENGAL STATE CO-OPERARTIVE HOUSING

FEDERATION LIMITED be moved for sanction of loan of Rs. 5.00 lakhs
individually i.e. in total 40.00 lakhs in favour of the society.
Resolution No. 3.
The issue of allotment of flats was discussed. The allotment was made
provisionally in first promoters‟ meeting held on ……………… on the basis of
lottery. Provisional allotment was confirmed in the meeting. The following
members are allotted flats as noted against each.
Resolution No. 4.
95
Resolved that the secretary of the society along with chairman or treasurer
shall operate the bank account jointly which will be opened with
ALLAHABAD BANK, BRANCH………………….
...........…………………..
Resolution No. 5.
It was unanimously resolved that the society would issue appointment to

Shri……………………
B. Arch. of FC –4, Sector-III, Salt Lake City, ...........- 700 064 as Architect of
the society for construction of the project.
There being no other agenda for discussion the meeting ended with vote of
thanks to the chair.
CHAIRMAN
96
Specimen of Application for approval of membership by Registrar.
To
The Registrar of Co-operative Society.
Sir,
As required under bye laws no. ………. of our registered byelaws I send
herewith the particulars of the following persons, who have been found duly
qualified to become members of our society in its meeting dated
…………………… (copy of relevant resolution enclosed) for approval of
membership by you. I state that necessary information and documents as
required under laws have been obtained from them. Attested copies of those
original documents (copies of affidavit, salary certificates, income certificates
and allotment of plot / flat ), are enclosed herewith for your approval, while
the original may be presented to you or to your representative as and when
so desired. This list includes names of all persons from whom money has
been received against allotment of plot / flat.
For your kind information it is further intimated that against total number
of 8 (Eight) plots / flats, we have already admitted 8 (Eight) person as
member with your prior approval. There is no other application pending at
this end for submission to you at this moment.
___________________________________________________________________________
Name Father / Age Annual Plot/flat No. Remarks/
Husband‟s Income provisionally Reasons
Name. allotted for refusal.
(1) (2) (3) (4) (5) (6)
__________________________________________________________________________
___________________________________________________________________________
You are requested to favour us with your approval at a very early date.
Yours faithfully,
Note : of 3 – copies, one copy to be retained by the Office of Registering authority and 2
copies to be returned to the applicant society.
97
CHAPTER XIV
MANAGEMENT OF COMMERCIAL PROPERTY

The most common type of properties in these categories are shops and
offices. They feature as an essential element of urban development. Other
commercial properties include hotel and restaurants, cinemas and theaters,
cold storages, garages, warehouse and godown, marriage hall and
auditoriums etc.
Wide varieties of shops are found in a city area starting from giant
departmental stores in a central business district to the small outlets in
secondary locations.
Central business district shopping group

The income from the shopping trade determines the level of rent that can be
offered for occupation of a shop. The highest income shopping groups are
located near the best high street position in the central business district.
Shopping business flourishes where a large number of pedestrians pass.
Easy means of accessibility from a transportation center is an essential
feature, the main shopping group in a metropolitan city not only serves the
needs of the city proper, but also caters for the needs of a whole region. All
seven states of North East India and also Nepal, Bhutan are the hinterland
of the Siliguri market of North Bengal. Because of their advantageous
positions the central area shopping groups draw a large clientele and cater
for a wide variety of goods. The shops in this location are said to be in a first
class position and these shops show a very fast rate of appreciation in rental
level.
It may happen that some important business streets specialize in particular

class of goods. Shops in the same group are complementary as well as
competitive with one another and that create an atmosphere of healthy and
growing business activity. Ezra Street (electrical). College Street ( Books),
Bowbazer (Ornaments) are such a few areas of shopping group.
Current trends in shopping include Mall and Multiplex. Super

Market/Hyper Market in coveted position display a mixed use with Offices
and Multiplex. Theatre Complex in different floors of same premises.
Shopping trends in the City have seen a radical shift over the recent years
and the future of retailing in the City lies in new-age Shopping Mall, which
provides verities, reasonable price ad convenience in a more comfortable
environment with adequate walking space and air condition arrangement.
Essential features of Shopping Malls are as follows:
(i) Centrally air-conditioned.
(ii) An impeccable blend of retail shops, show rooms and office areas.
98
(iii) Multiple opening & easy accessibility.
(iv) Hyper Market / Super Market.
(v) Kids Play Zone.
(vi) Multi Cuisine Food Courts & specially Restaurants.
(vii) Professionally managed parking area.
...........‟s first mall „Forum‟ emerged on Elgin Road, then came „City Centre‟ in Salt
Lake with 55000 sq. ft. and now coming up new malls on E.M. Bypass and
in the eastern part of the City with around 4,00,000 sq. ft. Encouraged by
the success of above malls and also of retail chains like Pantaloon, Big Bazer,
Shopper‟s stop in ..........., Developers have plan to open malls in Siliguri,
Durgapur , Haldia , Rajarhat. Durgapur City Centre project is spread over
370000 sq.ft. and is a one stop center for shopping, entertainment,
education, recreation, health, hospitality, medical amenities and residential
accommodation.
Essential feature of Multiplex Theatre Complex are as follows :
(i) At least 2-screen in a single complex with a combined seating capacity

of more than 600 people.
(ii) Tastefully decorated interiors and luxurious seats.
(iii) Air conditioning and safety provision for emergency.
(iv) Fast food centre.
(v) 100% round the clock power supply with complete back-up.
(vi) Ample parking space.
Intermediate shopping group
These shops are found in intermediate centers of a town catering for needs
of severalneighbourhoods taken together. They provide for such essential
services that may not be available from local shopping outlet. They also
supply goods for day-to-day needs and some consumer durables. Even local
retain chains like Arambagh Hatcheries, Kathleen, Sree Leathers etc. are
available in intermediate centers. In a Multinuclei city however some
shopping streets in intermediate locations may specialize in some types of
goods. Gariahat Market, Bhowanipur Market, New Market, Shyambazar
Market, Diamond Harbour Road are a few such markets in ............
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Local Shopping group
These shops are situated at nodal points in a neighbourhood and may serve
the needs of 50 to 500 persons. They cater for a small variety of goods
consisting usually of the necessity – confectioneries, groceries and small
stationary outlets etc.
Apart from the consideration as regards location the premises itself plays an
important role in ascribing value to a shop. The following physical aspects
amongst others need to be examined regarding the property.
1. Structural condition :
2. Appearance :
3. Frontage : As for example, a large display frontage

for shops selling fashion garments or
furniture may be an advantage.
4. Storage provision :
5. Secondary access : As for example, facility of being served

by delivery vans at the rear of the shop
without conflicting with the front
shopping street is an advantage.
Office Properties
The current demand for office locations in big cities is in nodal points in
communications network, but may be on the outer ring of the central
business district in comparatively quieter surroundings, where sufficient
spare space around the building is available for car parking. Thus Sarat
Bose Road, Elgin Road, Camac Street, Salt Lake, Eastern By-Pass in ...........
are gaining more and more importance as the location of office- both of
Government & Companies and B.B.D. Bag, Esplanade so long considered as
prime office location are rapidly losing their importance. The building itself
also matter, much for an office to be classified as a first class investment.
Thus a well designed multi-storied building with open spaces around to
allow for sunlight and greenery is the standard requirement of a first class
office building. Apart from the location and setting of the building the
conveniences provided within the building itself also matter for an office to
be attractive for an investor. Services such as lifts,
water supply, electricity and air-conditioning are common requirements for
first class office today. Automation in offices results in reduction of space
demand and preference for Cosy environment in small surroundings. A
number of insurances may be involved in an office investment. Fire
insurance must be common in all types of properties. In addition third party
insurances for lift and for other
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special equipments such as heating in a cold region are the items to be

allowed for.
Municipal rate of commercial property is 50% more than that of residential
property. Apart from the municipal rates that is common with any other type
of building, office premises may be subjected to other taxes such as multi-
stored building tax, urban land tax, etc. Management of an office building
may therefore, include maiantenance of all these services, insurance and
taxes and in addition maiantenace and cleaning of common areas and
facilities including appointment of care taking personnel and security over
and above the traditional repairs and maintenance item.
The following criteria should however be followed for distinguishing

commercial property from residential one :
1. A particular property may be determined as commercial on the basis

of the nature of the property, activity undertaken there, and from the
Trade Licence issued by the Statutory Authority. Such property is
used for transaction of business and also for keeping of accounts and
records of business.
2. Accordingly to Rule IBB of Wealth – Tax Act, if more than 2/3rd of the
total built-up floor area is used for residence, the property shall be
deemed to be used for residential purpose.
3. Buildings are being used for commercial purposes but some portion of
the building or buildings are being used by the staff of the
undertaking for residential purposes buildings should be treated as
entirely commercial building.
4. Building occupied by Central and State Government Offices should be

treated as non-commercial.
5. Building occupied by Autonomous Corporate bodies doing business

such as the Life Insurance Corporation of India shall be treated as
„Commercial‟.
6. Building occupied by Chambers of Lawyers and consulting rooms of

Medical Practitioners should be treated as „non-commercial.
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CHAPTER XV
INDUSTRIAL PROPERTY – DISINVESTMENT OF ONGOING INDUSTRY.
It is the cost of transportation of raw materials from the source to factory
site and the cost of mobilization of the finished product from the factory site
to the markets that influence the location of an industry.
Land
(i) Industrial land situated in residential area :
Where the industry is located in residential area, the value is to

be taken as that prevailing for the residential plots of land.
However factors like size of the industrial plot, governmental
restrictions for prevention and control of environmental
pollution, the next best use of such land and the demand for
similar land in the locality just be kept in mined before arriving
at the correct valuation.
(ii) Industry situated in Industrial Area :
Where the land is situated in the Industrial Estate developed by

the Government, the minimum price fixed by the government is
taken as the land value. After a fixed period of time when the
land becomes available for free sale, sale price in the vicinity for
similar plot, demand for plots in the Industrial Estate, facilities
provided by the estate, restrictions and covenants on
development and restriction on user must be taken into
consideration and accordingly the land must be valued for a
higher or lower value.
(iii) Industry situated in Hazardous zone :

For certain hazardous industries like heavy chemical plants,
explosives, detergent factories, certain zones are allocated by the
Urban Development Authorities or the like. The area of such
land is limited and is governed by the rules laid downs by the
urban development authorities. The location in such hazardous
zones will be preferred for establishing such industries and will
have impact on the valuation of such industries.
(iv) Industries situated in remote area :
The value of such land depends on the demand. It may have a

future value but since at present the land is available in plenty,
the value of such land may be very low. There would be few
takers of such industry in such remote locality as the costs of
transportation, labour, water, light etc. would be high. Even
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Government incentives are made available to entrepreneurs such as

subsidy, tax exemptions for a definite period of five years or so to encourage
decentralisation.
Building
An industry manufacturing a certain product may be required to
manufacture some other product after a few years, due to diversification or
sale of if it is increasing loss or unable to meet the specific profit targets.
In such a case the structure may have to be demolished, altered

considerably to make it suitable for the new product. So the industrialist
would not be willing to spend too much on the cost of construction.
Pitched roof having steel trusses and A.C. sheet roof, with brick masonry
side wall is the most common structure built for industries.
Ancillary structures like water treatment plants, auxiliary power plant, store
house, ware house, pollution control equipment, water tanks may also be a
part of the industrial building.
Disinvestments Process
During early 1980s and onward, Public Sector, Undertakings (PSUs) started
becoming sick. Number of sick PSUs has increased in the last two decade,
and this number is still piling up. This has adversely affected the national
economy and employment. So, Government has pumped huge amount
running to crores of rupees for the revival of these sick industries. But this
also could not bring good health to the sick PSUs. For formulating
appropriate revival packages, Government of India has constituted the
Board of Industrial and Financial Restructuring (BIFR) under the provision
of Sick Industrial Companies (Special provision), Act 1985. Till then sick
industrial enterprises including sick PSUs are being referred to BIFR.
Government intends to restructure and revive all strategic and potentially

viable PSUs., close down those that cannot be revived and lastly to go for
disinvestments process i.e. to strip or bring down the Government held
equity in all non-strategic PSUs. Policy decision of the Government is
privatization of these PSUs by disinvesting their share and transfer to
private parties. Huge fund mobilized through disinvestments will be utilized
to meet the basic needs of the country such as health, education, transport,
law and order etc. A new Department of Disinvestments was created by the
Government of India in December 1999. Disinvestments would be based on

four imperatives like public interest, maximum value, transparent process
and protection of workers‟ interest. Recently, after formation of United
Progressive Alliance Government, Department of Disinvestments has been
abolished but the process of disinvestments has not been abandoned and
the process will continue after review under the administrative control of the
ministry of heavy industries and public enterprises.
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Basis of Valuation –Tangible & Intangible Assets
Methodology for valuation of ongoing industries may very but the value will
depend not only on its assets‟ value, but also on the capacity to earn the net income
from the industry and the base of such valuation will be the receipts and the
expenditure of the particular industry. The valuation of a running industry
will involve careful physical inspection of its assets and liabilities as well as
the nature of trade and production, extent of earning capacity and future
prospects of the products and trade of that enterprise.
When an industry is sold as going concern its valuation depends also on its
intangible assets like goodwill, management, trade marks licenses, research
& development etc. Normally intangible assets may not feature in the
Balance Sheet. Going concern with intangible assets has a higher market
value than its book value i.e. value generally exceeds the value of its tangible
assets, but market value may be less than book value when the industry is
sick and has no growth possibility. Such industry cannot be valued by
Balance Sheet method. Usual Land & Building and other methods may be
adopted for valuation of assets and liabilities of such industry. Study of
balance sheet and profit and loss account of last three years may establish
the condition of the ongoing-industry. Cost towards maintenance of
machinery in use may establish the condition of machines. One more
important element in a valuation of ongoing –industry will be the class or
category of prospective buyers to whom the industry is most likely to appeal.
Valuation parameters
Parameters for valuation of an ongoing industry are the net worth and net
profit of the going concern and also the worth of its intangible assets.
Net worth of the ongoing –industry may be determined from the assets and
liabilities of the going concern, which are available from its Balance Sheet.
Assets = Fixed assets + Current assets.
Fixed assets are the value of land, building, plant & machinery, equipments
etc.
Current assets are the value of raw materials, finished goods and other
supplies and stock, advance to employees, advance income tax, cash in
bank, cash in hand etc.
Liabilities = Fixed liabilities + Current liabilities.
Fixed liabilities are the amount of Government loan, Bank Loan, Debenture,
etc.
Current liabilities are the amount of Trade A/C payable, other A/C payable,
Bank over-draft, etc.
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et profit may be determined from the gross annual receipt of earning which
may be calculated from the study of Profit and Loss Account of the going
concern for the immediate past three financial years. From the gross receipt,
the amount spent against the manufacturing of goods may be deducted to
arrive at the gross profit. Expenses of the following elements may be
deducted.
1. Raw materials consumed

2. Productive wages
3. Royalty of production.
4. Carriage.
5. Depreciation.
6. Electric consumption.
7. Fuel consumption.
8. Repairs of plants and machinery.
Indirect expenses may then be deducted to arrive at the net profit, before
tax. Elements of indirect expenses may be as follows :
1. Rent, rates and taxes.

2. Salary, bonus to the staff.
3. Interest to creditors.
4. Insurance.
5. Provident fund and gratuity.
6. Printing and stationery.
7. Telephone and post.
8. Professional fees.
9. Bad debts written off.
10. Miscellaneous such as traveling expenses, license fees, Bank charge,
etc.
Entrepreneurship and risk of the owners may also be included in indirect

expenses.
Value of the ongoing –industry
a) Net Worth = Value of total assets less the total

amount of liabilities ……..(X)
b) Net average profit = Gross Profit less expenses as above
for the last 3 years including tax ……(Y)
c) Worth of = judicious discretion of the valuer,but to
intangible assets be finalized after negotiation with the
seller and purchaser of the going
concern ……….. (Z)
Total value = X+Y+Z.
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CHAPTER XVI
ENVIRONMENT NORMS IN HOUSING ESTATE DEVELOPMENT
Today, Housing estate development has trumped up at an unbelievable

pace. Almost every day some new area is being developed. Cities and towns
are pulling down their existing limits at a fantastic speed and extending
their spread.
New apartments are coming up at astonishing regularity just as their buyers
are also appearing at a seemingly endless stream. There has been an
extensive shift in the housing industry since the 80‟s of last century when the
boom started in ............ After the first-generation small time promoters, the
government and a few big real estate developers ruled till early 2002. Now
far bigger national and international business houses are coming for
development of housing industry. But when it comes to follow the
environment norms, the scenario remains more or less the same. Most of the
real estate projects do not take environment norms seriously. Although the
recent study of Asian Development Bank reveals that the construction
activities responsible for around 30% of the particulate pollution in the City
of ..........., but so long impact on air-pollution of housing projects has not
been assessed.
Environment norms for housing complexes were introduced only in July,
2004 by the Union Environment Ministry. Effective implementation of norms
may take some time.
According to the environment norms of July 2004, Developers of housing
projects have to apply first to the State Pollutions Control Board with
Environment Impact Assessment (EIA) reports when the project includes
more than 100 flats or the built-up covered area of the buildings of the
housing complex is more than 60,000 sq. ft. or has a Capital investment of
Rs.5 Crore or more. Once the Board gives‟Consent to establish‟, Developers can
Officially apply for sanction to municipal authorities and apply for bank
loan.
For bigger Complex of Real Estates, environment clearance from the Central
Ministry of Environment and Forest is necessary. Such bigger complexes
may be a new township, industrial township, settlement colonies,
commercial complexes, hotels complexes, hospital and office complexes
having accommodation more than 1000 persons or discharge sewerage of
more than 50000 litres per day or need investment of over Rs. 50 Crores.
Above environment norms have been modified in September 2006 by a

notification of the Union Ministry of Environment and Forest. In the
modified norms, building space is the only criterion and projects less than
20000 sq.m. built-up area will not need any environment clearance and all
clearance will be obtained at the state level. Projects with built-up area in
the range of 20000 sq.m. to 150000 sq.m. will not require EIA report, but
106
have to provide specific information in a prescribed form to state-level expert

appraisal committee. Projects bigger than 150000 sq.m. and /or covering an
area of 50 hectares or more will be required to submit the EIA report.
Few other environment norms and restrictions prescribed in pollution

control rules relating to the development of housing complexes are as
bellow:
1. No manufacturing process as defined in the Factories Act will
be allowed within the complex.
2. Commercial establishments can occupy only upto 5% of total area.
3. Construction can be carried out only between 8 am. to 6 p.m.

Extension of 2 hours may be allowed on request.
4 Waste water to be treated before discharging externally.
5 Developers should take preventive measures to control dust

Pollution.
6. Prior consent from State Pollution Control Board needed to

instal Diesel Generator of more than 5 KVA.
7 Installation of pump to extract ground water requires prior

permission from agencies like the Central Ground Water Board,
the State Public Health Engineering Department or from State
Water Investigation Directorate, as applicable.
For environment clearance of a new housing project with built-up area of

more than 150000 sq.m. as notified in September, 2006, the Developer has
to submit an application to the State Pollution Control Board in a specified
proforma accompanied by Environmental Impact Assessment(EIA) report
prepared in accordance with the guidelines issued by the government from
time to time.EIA is an essential technique for ensuring the likely effects of a
new developmental project on the environment and takes into account
before the development is allowed to go ahead. It is not only the assessment
of pollution, but also the assessment of any change in the physical,
chemical, biological and also socio-economic environmental system which
may be affected by the project. For planning authority and other public
bodies with environmental responsibilities, E I A provides a basis for better
decision making. Following are the main objectives of EIA.
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(a) To identify beneficial and adverse environmental impact.
(b) To suggest measures which might reduce adverse impacts and

Enhance beneficial impacts.
(c) To identify and describe the residual adverse impacts which

cannot be mitigated and to suggest appropriate monitoring
system to track the impact.
(d) To get all relevant environmental information‟s relating to the

project
One Flow Chart showing the procedure to prepare E.I.A.

is given here-in-below
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CHAPTER – XVII
CONSTRUCTION PRACTICE OF HOUSING ESTATE –
THE OWNER,THE CONSULTANT, THE CONTRACTOR.
Construction of housing estate needs the maximum utilisation of men and

materials. The housing industry is now one of the most important industries
due to the recent boom in housing and property development. This industry
provides jobs to a very large number of labourers, technicians, engineers
and technologists throughout the country. Before the commencement of any
housing project, it is required to know the purpose of the project, design all
the structural elements including the superstructure and the substructure
well ahead of the beginning of the construction, and prepare the detailed
drawings according to which the construction will proceed.
All these activities may last for quite a good number of years depending on
the size of the project. It may need thousands of hands, the experience of
generations of experts and the use of natural and manufactured products of
different trades and occupations. It is of utmost importance that the flow of
money be smooth so that the job may proceed unhindered and the supply of
materials of construction and labour also follow the schedule of
construction.
The key persons responsible for the successful implementation of the project
are the owner, the consultant and the contractor.
The Owner
The owner or the promoter decides to undertake the work after a
detailed analysis of the costs and the payment schedule for the
project. The payment to be made by the owner has to be regular and in
line with the progress of the work. To maintain the flow of money the
owner may utilise his own resources or borrow money from other
sources. The money arranged and spent for the job is known as the
“capital investment”. The owner may be a person or a group of persons
acting as a corporate body such as a local government authority or a
government department, a company, a corporation or joint board or
any other authority possessing adequate powers.
The duties and responsibilities of the Owner are mainly as follows :-
(1) To appoint an engineer /consultant / architect and give him power to

work on his behalf. He will also appoint other staff in consultation
with the Engineer to carry out the project work.
(2) To intimate the Engineer about the requirements of the project
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including his desired time of completion.
(3) To obtain necessary sanction for its construction from competent

authority in collaboration with the Engineer.
(4) To give necessary sanction of the estimated cost to the Engineer.
(5) To enter into a contract with the contractor by signing the contract
documents.
(6) To give possession of the site to the contractor.
(7) To render necessary help for obtaining permission of electric and

water supply connection from other organisations.
(8) To safeguard the progress of work from outside interferences that are
beyond the control of the contractor or the Engineer.
(9) To make payment to the contractor on production of certified bills

from the Engineer.
(10) To take over possession of the completed project timely from the
contractor.
The Engineer /Consultant / Architect.
The contract imposes heavy responsibilities upon the consultant/ engineer.

The owner employs a consultant / engineer to act as his a representative in
order to perform mainly the following duties and responsibilities relating to
the housing project.
(1) To prepare the necessary drawings, specifications and estimate

in accordance with the requirements of the owner.
(2) To check up the soil conditions.
(3) Preparation of tender paper, inviting tender on behalf of the Owner,
sale of the tender paper after investigating the soundness of the
contractors, preparation of comparative statement and advising the
Owner regarding acceptability of the tender.
(4) To supervise the work and ensure that the drawings and
specifications are faithfully followed.
(5) It is the duty of the Engineer to supply the working drawings to the
contractor timely so that the progress of work is not hampered due to
his delayed action.
(6) To check up the progress of the work with the passage of time and
submit progress report to the owner.
(7) The Engineer shall check the quality of work, make measurement of
work done, quantities, rates and pass the bill for payment. The
amount to be paid for extra works, if any, shall be determined by the
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Engineer according to the terms of contract. He will also look after

that timely running payments are made as per terms of contract.
The Contractor.
In prescribing the duties and responsibilities of the contractor, it should be
kept in mind that the main objective of the contract method is that the work
shall be done by a skilled contractor in order to relieve the owner of all
responsibilities in connection with management, purchase of materials,
employment of labour, and construction operations. The contract price is
assumed to include a reasonable profit to the contractor for the
accomplishment of the objective.
The vital duties and responsibilities of a contractor are covered by the
conditions of contract. Some specific duties and responsibilities are
mentioned below:
(1) It is the duty of a contractor to inspect the site and study soil
condition before tendering. He should investigate the accessibility,
availability of electric power, water supply condition for construction
purposes, and the local law and order condition.
(2) After receiving the work-order it is the duty of a contractor to start the
work in time and to carryput the work in accordance with the contract
drawings and specifications. Any omission in the specification, or any
extra work required should be brought to the notice of the Engineer
and his written directions or approval should be obtained before
starting such work.
(3) The contractor should be required to designate a representative who is

authorised to act for him on matters pertaining to the contract when
he himself is not available.
(4) All royalties and license fees are to be paid by the contractor and he
shall be responsible in all cases of suits or claims for infringement of
patent rights.
(5) It is the duty and liability of a contractor to follow the labour act truly.
(6) The contractor is liable to safeguard his own men and materials or
materials issued to him.
(7) The contractor should submit his claims for extra works and submit
bills for payment in due time.
(8) It is the responsibility of a contractor to hand-over the completed work

in a sound condition.
Above all a contractor should strictly follow the conditions of contract.
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CHAPTER XVIII
ENGINEERING CONTRACTS AND TENDER
ENGINEERING CONTRACT
Engineering Contract is an undertaking by a person or firm to do any work under

certain terms and conditions. The work may be for the construction or maintenance
and repairs, for the supply of materials and / or labour, for the transport of
materials etc. The term contractor means a person or firm who undertakes contract
for the construction or execution of works or repairs.
Selection of Contractor:
(i) By inviting offers from reputable, resourceful agencies by publishing
advertisements in news papers, widely circulated.
(ii) By inviting offers from a selected group of contractors who may have some
sort of registration or empanelment with the owner / clients for execution of
construction jobs.
(iii) By inviting offers from only a few contractors, each being approached
through individual letters.
(iv) By entrusting the construction job to a particular contractor, as per choice or

discretion of owner/ client, on negotiation.
(v) By inviting offers in two bid system from specialised firms or reputed
manufacturers throughout the World through Global Tender for big and
specialised job.
Major types of engineering contracts – comparative advantages and disadvantages:
1. Item rate contract.
2. Percentage rate contract.
3. Lump sum contract.
4. Fixed time contract.
5. Turn key contract.
6. Materials supply contract.
7. Labour contract.
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8. Sub Contract.
1. Item rate contract : A schedule is provided to the prospective contractors,

where the items required to be executed in the construction work are fully
detailed and the quantities and units of measurement against each item are
also given. The contractors are required to quote unit rates for each item and
total for each item is also calculated and entered by the contractor. The final
total amount is the value of offered contract.
Advantage :
(i) This form of contract ensures a detailed analysis of cost by contractors

and is therefore more scientific. The element of guess work which is
inherent in percentage rate contract is absent.
(ii) The contractor has to work out judiciously rates of all items based on
market rates and profit margin. Thus unworkable or absurd rated
offers can be avoided and work can be done on a rational rate.
Disadvantages:
(i) Due to intentional or unintentional arithmetical error in calculating

amounts for each items or for total value, the position of a contractor
can not be readily determined. The calculations are to be checked first ,
and then only the real position is known.
(ii) As the quantities may increase or decrease, a contract of this nature

requires careful examination of the schedule of items by the owner /
client. By wise anticipation or perhaps by outside information a
contractor may quote high prices for items that are likely to increase in
quantity and low prices for items likely to decrease in quantity. This
shall result in unreasonable profit to contractor and loss to owner. Such
offer is termed as unbalanced tender.
2. Percentage rate contract : In this form of the contract the owner / client draws
up the schedule of items according to the description of items needed,
quantities, units and rates. The amount for each item and total amount for all
items are also given. The contractor offers rate in form of a fixed percentage
above or below the total amount or at per with that.
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Advantage :
(i) The position of a contractor is known immediately on receipt of the

offers.
(ii) Increase or decrease in any quantity does not adversely affect financial
interest of either party.
Disadvantages:
(i) Prospective contractors may not calculate cost of works and may not
quote percentage on the basis of minimum realistic cost and minimum
profit, and may quote unworkable percentage rate.
(ii) More than one contractor may quote same rate percentage, leading to
difficulty in awarding contract to single contractor.
3. Lump sum contract : In this form of contract, the tenderers are required to
quote a fixed sum for execution of a work complete in all respects
according to the drawings, designs and specifications supplied to them,
within the specified time.
Advantages :
(i) The owner / client knows before completion of works, the total cost.
(ii) Since interim payments to contractor are made on the basis of stage
completion, the contractor remains alert for quick completion of stages,
leading to early completion of total work.
(iii) There is no necessity for recording detailed measurements, excepting
for additions/ deletions/ alterations.
Disadvantages :
(i) It is not suitable where large variation in drawing, specifications etc.

are anticipated.
(ii) The work has to be accurately and completely depicted on the
drawings and specifications and full informations about site conditions
should be available/ otherwise dispute can easily arise.
(iii) In case of termination of contractor’s work after part construction,
determination of proportionate dues, is difficult.
4. Fixed time contract : In this type, a schedule of items is prepared, similar to

percentage rater contract, but no quantity is mentioned. The schedule contains
detailed nomenclatures of items and unit rates only. A fixed round
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figure amount and a fixed period to complete works is agreed as target.

Similar to percentage rate contract, the contractor has to quote rates as
percentage above/ at per / below the schedule rates. The work under the
contract is deemed to have been completed, either on expiry of the contracted
period or cost of works reaching the fixed target amount, which ever is
earlier.
This type of contract is advantageous, in maintenance and repair works of

buildings where a continuous care of building is needed. Emergency repair,
alteration works can be readily taken up, since the services of a contractor is
available for the total contracted period. Generally a half yearly, or yearly
contract is made, for building maintenance.
5. Turn – key contract : It sometimes happens that the owner contemplating a

construction project desires to deal with only one party for all services, both
planning, design and construction, in connection with the work. This is called
turn-key or package job. Offers are invited from specialized contractors for all
planning, design, specifications, preparation of estimates and construction
services under one contract on competitive basis. The contract may be drawn
either on a firm price or cost -plus basis.
6. Materials supply contract : This is actually a purchase contract made by

owner / client with manufactures, dealers or agents ( all can be termed
suppliers ), for procuring construction materials. The contactors ( or here
suppliers ) offer their rates for the required quantity of materials, stating price
ex-factory or ex-quarry ( for stone chips, sand etc.) and all other charges like
excise duty, sales tax, any other local tax, carriage cost by rail , road from the
point of dispatch to the point of delivery, i.e the owners / clients’ godown,
stockyard or site of construction where the materials shall be consumed.
Sometimes cost for insurance of the materials on transit is also added, where
the material is costly, to cover loss or damage to materials during carriage.
Some suppliers, particularly manufacturers do not undertake the carriage

part. In such case suppliers (manufacturer) quote rates ex-factory plus sales
tax only. The owner / client has to engage a separate agency ( or contractor)
for transport of the materials from production end to utilization point.
7. Labour Contract : This is a contract where the contractor quotes rates for item of
works excluding the element of materials, which are supplied by the owner /
client. In this type of contract, the supply of materials should be regular and
assured, so as not to cause any idling of labour on account of scarcity in
materials.
8. Sub-Contract : The practice of entrusting a part or whole of the job

undertaken by a contractor, to one or many smaller agencies, is sub-contract.
In this case the main contractor becomes client and the sub-contract for takes
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role of main contractor, in the matters of responsibilities and obligations for
execution of the job assigned to the sub-contractor, but the main contractor is
responsible for the job to the owner and takes permission from the owner for
engagement of sub-contractor.
TENDER : It is the signed financial offer of the contractor to construct the

work conforming to the drawings, specifications, bill of quantities and general
conditions of contract.
Tender documents : Tender documents shall consist of following documents

forming one set. Two sets, at least, having identical documents, are to be
prepared so that each of owner/ client and the contractor can retain one copy
with him.
(1) Notice Inviting Tender.
(2) Instruction to tenderer.
(3) General conditions of contract.
(4) Scope of work
(5) Technical specifications

(a) Specifications for materials
(b) Specifications for workmanship.
(6) Bill of quantities / Priced Schedule.
(7) Drawings.
(8) Articles of agreement or contact agreement.
(9) Special or additional terms and conditions (if any).
(10) Special or additional Technical terms and conditions (if any).
Notice inviting tenders shall comprise :
(i) Name of work or works to be executed.

(ii) The owners’ or clients’ estimated value of the work; or amount put to
tender.
(iii) Time of completion of works the time is reckoned from the date of
work order or from a fixed stated date.
116
(iv) Amount of earnest money to be submitted with tender usually two

percent of the estimated amount subject to a maximum fixed amount
of Rs. 20,000/-in tenders called by Government (W.B.) . In case of
private contracts, the Earnest Money may not be mandatory, or can be
of other amounts.
(v) The mode of depositing earnest money – Cash, Bank Draft, Bank Pay
Order, Bank Guarantee and in some ( Government ) cases National
Savings Certificates, specified Government Securities duly pledged in
favour of Owner / Client.
(vi) The price of tender documents to be purchased by tenderers or

prospective contractors – usually payable in cash.
(vii) The last date and time for purchase of tender documents.
(viii) The last date and time for submission of tender / quotation /offer;
(ix) Name of office and officer representing the owner / client responsible for
selling tender documents;
(x) Name of officer and office representing the owner / client to receive
tender / quotation / offer.
(xi) The date and time for opening of the tenders;
(xii) Name of office and officer representing the owner / client to open the
tenders and declare results.
(xiii) The eligibility criterion for participating in tender;
Terminology generally used in tendering Govt. Engineering Contract.
Letter of Intent :
(a) A letter of acceptance of the offer is sent to the tenderer, by the Executive
Engineer, or by the Superintending Engineer. In this letter a time schedule is
given for signing of formal agreement. The agreement is signed by the
contractor and the officer who is competent to accept the tender offer; this is
done on a printed form. Depending on value of tender Government rules
authorize the Executive Engineer or the Superintending Engineer as
tender accepting officer.
(b) Work order :

117
Letter of acceptance is issued first to a tenderer intimating that his rate has
been accepted and to perform a formal agreement within a specified number
of days.
After the formal agreement is performed for the contract a letter is issued to
the contractor known as Work Order to take up the work and the date of
completion is treated normally from the date of issue of this letter. This is an
order of commencement for a work and is issued to a contractor by the
Executive Engineer concerned.
(c ) Earnest Money :
Earnest money is an assurance or guarantee in the form of cash on the part of

the contractor to keep open the offer for consideration and to confirm his
intentions to take up the work accepted in his favour for execution as per
terms and condition in the tender. In case tenderer fails to commence the
work awarded to him, the earnest money is forfeited to Government. No
interest is payable upon earnest money to the contractors.
If the amount of the earnest money is not large it may be deposited in cash in
Divisional or Sub-Divisional Office. In other cases the contractor has to
deposit the same in the Treasury / Bank and to produce the receipted challan
with the tender. The contractor may also deposit the same in the form of “
Deposit at call Receipt’ of a scheduled Bank duly guaranteed by the Reserve
Bank of India, if so desired. The amount of the earnest money which a
contractor should deposit with the tender is regulated by the department and
generally for works up to Rs. 5 Lakhs @ 2-1/2% of the estimated cost subject
to a maximum of Rs. 10,000/-; for works above 5 lakhs @ 2% of the estimated
cost subject to a maximum of Rs. 20,000/-. Enlisted contractors of a
department mostly deposit a fixed permanent security according to their
classification and departmental rules, in order to enable them to secure
exemption from payment of earnest money.
Earnest money given by all contractors except the three lowest tenderers
should be returned within a week from the date of receipt of the tenders.
Earnest money of the second lowest and third lowest tenderers should be
returned within 15 days of the acceptance of the tender, if their offers are not
considered. The earnest money of the lowest tenderer whose tender is
accepted is retained by the Department as a part of the security deposit for
due performance of the contract.
118
(d) Security Deposit :

Security deposit is an amount of money which shall be deposited by the
contractor whose tender has been accepted in order to render himself liable to
the department to pay compensation amounting to the part or whole of his
security deposit if the work is not carried out according to the specification,
time limit and conditions of contract.
After acceptance of the tender of a contractor, the earnest money which he has
deposited at the time of tender is treated as part of the security money and
additional amount of security money is deducted from the progressive bills so
that the total amount constitute is 10% of the tendered amount, subject to a
maximum of Rs. 1 lakhs only (followed by C.P.W.D.) is deducted from the
progressive bills.
The security deposit is refundable to a contractor after the prescribed
maintenance period is over. In order to afford relief to the contractor a
percentage (normally 50%) of the security money is refunded for the portion
of the work which has been completed and, whose maintenance period is
over.
(e) Retention money :

Whenever any claims for payment of a sum of money arises out of or under
the contract against the contractor, the Engineer-in-charge is entitled to
withhold and also have lien to retain sum or sums in whole or in part from
security deposit till finalization or adjustment of any such claim. In the event
of the security amount being insufficient to cover the claimed amount the
Engineer-in-charge is entitled to withhold and have lien to retain to the extent
of such claimed amount referred to above, from any sum or sums found
payable to the contractor under the same contract or any other contract with
the Engineer –in-charge pending finalization or adjustment of any such claim.
(f) Liquidated damage :
Liquidated damage is an amount of compensation payable by a contractor to

the owner or Government due to delayed construction having no relationship
with real damage. If the contractor fails to complete the works within the time
prescribed in the tender then the contractor shall pay to the owner or
Government an amount equal to 1% of the contract value or such smaller
amount as the competent authority may decide for each week of delay after
the stipulated time of completion subject to the maximum of 10% of contract
value. The payment or deduction of such damages shall not relieve the
contractor from his obligations and liabilities under the contract.
119
(g) Supplementary tender :

In course of execution of works some additions to or substitutes for the
original specification, drawings, designs and instructions may appear and
contractor has to carry out the same supplementary work. But since there is
no formal contract between the employer and the contractor in the original
tender schedule, the rates of those items are worked out separately according
to the conditions of contract of tender or from departmental schedule or by
analysis and signed by both the above two parties which is known as
supplementary tender. The time for the completion of the work shall be
extended in the proportion that the altered additional or substitute work bears
with the original contracted work.
In the measurement book these supplementary works are entered separately

with the heading “supplement tender”. The date of sanction, reference
number of sanction shall also be mentioned. Before starting such
supplementary work the variations must be confirmed in writing by the
Engineer-in-Charge and the rates also if possible be confirmed.
(h) Secured advance :

The contractor shall be entitled to get 75% advance payment against the
estimated value of any materials which have been brought on the site in
connection with the work during its progress and which are in the opinion of
the Engineer-in-Charge securedly stored and protected from any damage.
Any such above mentioned materials shall not be used in the works at the
time of advance payment. To get such advance payment the contractor shall
sign an indemnity bond in the form to be specified by the Engineer-in-Charge.
When materials, on account of which an advance payment has been made, are
used in the work the full amount shall be deducted from the next payment
made under this contract.
(i) Maintenance period :

he contractor shall be liable for any damage done or any defects noticed
within the prescribed maintenance period of 3 months or 6 months or 12
months as the case may be as per terms of contract. The work shall, as soon as
practicable after the expiration of the period of maintenance, be handed over
to the Engineer-in-Charge in good and perfect condition. If any damaged,
defects, imperfections or other faults become apparent in it from the agreed
date of commencement until the end of the maintenance period, the
contractor shall make good the same at his own expense or in default, the
Engineer-in-Charge shall be entitled to carry out such work by other
workmen and deduct the expense from any sums that be due to the contractor
or from his security deposit. The security deposit of the contractor shall
normally not be refunded before the expiry of maintenance period or till the
final bill has been prepared and passed whichever is later.
120
Specimen of Tender Notice

NOTICE INVITING TENDER N.I.T. NO. ……………2008-09
Sealed tender in duplicate, on item rate basis are invited by the undersigned on
behalf of the Governor of West Bengal from the bonafide, resourceful & competent
civil contractors, registered with Central Govt. Departments / State Govt.
Departments / Public Sector Enterprises, having sound technical & financial
capacity and have experience in execution of General Building, Sanitary &
Plumbing, Internal Electrical Installation, Roads and other Ancilliary works of value
not less than Rs. 375.00 (Rupees three hundred seventy five ) lakhs in single contract.
The tender documents may be purchased from the office of the Superintending
Engineer……………………………............- 700 064, during office hours between 11-00
A.M. & 4.00 P.M. from ………….. (except Saturdays, Sundays & Holidays) against
cash payment of Rs. 1000.00 (Rupees one thousand only) non refundable upto
……………….
Tenders will be issued to only those contractors who submit documentary evidence
of having executed at least two similar works of above value during the last five
years for Government / Public Sector Undertakings along with completion
certificate from Client, indicating total time of completion. Valid Sales Tax & Income
Tax Clearance Certificates, List of Equipments, List of Technical Personnel, List of
major works in hand shall also be enclosed with applications.
1 Estimated cost of Work Rs.500.00 (five hundred) lakh approx.
2 . Name of Work : General Building –Pile foundation &

Superstructure Sanitary & Plumbing,
Internal Electrical Installation and also Roads
and other Ancilliary works for the proposed
Office -cum Laboratory Complex of
……………….at Salt Lake, ............
3. Earnest Money Rs.20,000.00(Rupees twentythousand) only (at

the time of submission of tender) by Crossed
Demand Draft, payable at ........... and
drawn in favour of Executive Engineer ……….
Division, ............
4. Time of Completion 24 (twenty four) calender months.

5. Time and date of submission Before 2.00 P.M. on ………… as
of tender: per instruction in the tender documents
121
6. Time & date of opening of tender : 2.30 P.M. on ……………….
7. Undersigned will not be bound to issue tender documents to any of the

applicant and also reserves the right to accept or reject any or all the tenders
without assigning any reason to the tenderers.
Sd/-
SUPERINTENDING ENGINEER
………………………….CIRCLE.
………………...........……….
122
CHAPTER XIX
CONTROLLING OF A HOUSING PROJECT.
Housing Project controlling is a specialized job. Each project, whether big or

small has the following main objectives.
(i) The project should be completed with a minimum time span.
(ii) It should use readily available man power and other resources
as much as possible.
(iii) It should be completed with a minimum capital investment.
Project management normally involves three phases, namely, project

planning, project scheduling and project controlling. Out of the three phases
of project management the first two phases are normally accomplished
before the actual project starts. The third phase i.e. project controlling is
operative during the execution of the project. Project controlling methods or
techniques can be divided into two groups – (i) Conventional methods. (ii)
Network methods.
Bar Chart method is included in conventional method and this method is

only discussed in details as the method is simple and is widely used in
housing project management. Bar Chart method can display time schedule
of different activities in the project as well as make a comparison between
actual performance and the schedule.
A Bar –Chart consists of two co-ordinate axis, horizontal axis represent the
time elapsed and vertical axis represent the jobs or activities to be
performed. Each bar represent one specific job or activity of the project. The
beginning and end of each bar represent the time of start and time of finish
of that activity. The length of bar therefore represents the time required for
the completion of that job or activity. Generally in any project some jobs or
activities can be taken up concurrently and some will have to be completed
before others can start.
Annexed Bar Chart of a Office Complex has different activities in serials 1, 2

(a to g), 3,4,5,6 (i & ii), 7 (I & II), 8 with respective description of work and
bar length denotes the time duration for the completion of these activities.
From the bar chart it is evident that number of activities are concurrent i.e.
they start at the same time and proceed in paralled though they have
different time intervals for their completion. Total 22 months duration is
allowed for completion of 12 crores project which is indicated in the
Horizontal axis.
123
Annexure-I
LEASE AGREEMENT
THIS INDENTURE made this ……………….day of ……………….One Thousand

Nine Hundred and Eight……….BETWEEN THE CALCUTTA METROPOLITAN
DEVELOPMENT AUTHORITY, a body corporate constituted under the West
Bengal Town and Country (Planning and Development ) Act 1979, hereinafter
referred to as „The AUTHORITY‟ (which expression shall unless excluded by or
repugnant to the subject or context mean and include its Successor–in-
Interest) of the ONE PART AND Sri/Smt.
………………………………………………………………………………………………….
………………………………………………………………………………………………….
……………………….…………………………………………………………………………
……………………………………………….…………………………………………………
……………………………………………………………………….…………………………
……………………………………………………………………………………………….…
……………………………son/daughter/wife………………………………………… of
………………………………………………………………………………………………….
…………………………………………………………………………………………………
………………………..
by religion …………………..by occupation……………………residing at
………………………………………………………………………………………………….
unless excluded by or repugnant to the context be deemed to included

hi/her/their heirs, executors, administrators, representatives and assigns)
of the OTHER PART :
WHEREAS the LESEE has applied to the Calcutta Metropolitan

Development Authority (hereinafter referred to as the Authority ) for a lease
of the plot of land/plot with core-house in the Baishnabghata Patuli Area
Development Project mentioned and described in the Schedule hereunder
written AND WHEREAS to enable the LESSEE to erect a house and building
thereon for use of residential purpose the Authority has agreed with the
LESSEE to grant a LEASE in favour of the LESSEE for the period and to
erect a house and building thereon for use of residential purpose and on the
terms conditions hereinafter appearing.
NOW THIS DEED WITNESSETH as follows :
1. (a) In consideration of the purposes for which the plot / plot with core
house, hereinafter to and mentioned in the Schedule as hereunder written,
is required by the LESSEE and in consideration of the annual rent and
LESSEE‟S covenant hereinafter reserved, the Authority doth hereby grant and
demise unto the LESSEE ALL THAT land hereinafter more particularly
mentioned and described in the Schedule hereunder written (hereinafter
124
referred to as „the demised lad‟) to hold the same for the period of 999 years at a
premium of Rs. …………………./-
(Rupees……………………………………………………………………………………….)
whereof the sum of Rs.………………(Rupees………………………………………………..)
only has been paid to the Authority in or before the execution of these
presents (the receipt whereof the Authority doth hereby acknowledge).
(b) A ground rent of Rs. 1/- (Rupees one) only per cottah or part thereof per
annum subject to revision every ten years at the discretion of the Authority,
will have to be paid bys the LESSEE before the closing of each calendar
year.
2. The LESSEE to the intent that the obligations and covenants shall
continue throughout the period of demise agrees ad covenants with the
Authority as follows :-
(i) To pay the ground rent on the days and in the manner aforesaid.
(i) (b) The LESSEE shall be liable to pay to the Authority the charges as may
be imposed by the Authority form time to time in respect of the demised land
and in cases where the said payments are not made within due dates then
the Authority shall be at liberty to determine the lease hereby granted after
due notice.
(ii) To pay all rent, taxes and other impositions in respect of the aid demised
land and structure thereon which are or may be assessed to be payable by
the owner or the occupier in respect thereof during the said term, from the
ddate of possession.
(iii) At the own cost of the LESSEE who has been allotted plot, within five
years from the date hereof or within such further time as the Authority may
at its option allow in writing on sufficient and reasonable grounds, to erect,
construct and complete a house or building for being used for residential
purpose with boundary walls, sewers and drains in accordance with plans,
sections and specifications as may be approved bys the appropriate body
according to the rules and regulations framed framed for the purpose.
(iv) To keep the land clean and free from al sorts of nuisance and not to
allow heavy accumulation of water on it.
(v) Not to make any excavation and/or changes in the classification for
purpose other than the purpose for which the Lease is granted, as stated
hereinabove, in the land during the period of demise without the prior
consent of the Authority in writing. Should any excavation and/or change in
the classification as stated hereinabove be made without the consent of the
Authority within the period of demise, the Authority shall be at liberty to
revoke the Lease forthwith and the LESSEE shall restore the land to its
original condition and pay adequate damage to the Authority.
125
(vi) The LESSEE shall not sub-divide or sub-let the demised land or the
building to be constructed without the consent in writing of the Authority
first and the Authority shall have the right and be entitle to refuse its
consent at its absolute discretion.
(vii) The LESSEE shall not assign or transfer the demised land or any part
of the demised land and/or the structure erected thereon without the
previous permission of the Authority in writing. In case of transfer or
assignment of the Lease the Authority shall have the right of pre-emption
and upon the exercise of this right the building constructed bys the LESSEE
on the land shall be taken over by the Authority at a valuation of the
building to be made by the Authority on the basis of the costs of
construction of the building less depreciation at the usual rate or the market
value thereof, whichever is less. The value of the land will be the amount of
the premium paid by the LESSEE. The valuation to be made as aforesaid by
the Authority shall be final and binding upon the parties hereto.
(viii) In case of a lease in favour of two or more individual lessees jointly,
anyone of such joint LESSEES will have the right to transfer his/her share
to the other co-sharer or co-shares.
(ix) Not to use or allow to be used the land and/or the structure thereon or
any part thereof for ay purpose other than for residential purpose without
the prior permission in writing of the Authority (or other authority
prescribed in that behalf).
(x) Subject to the provisions in Clause 2(vii) hereof the Lessee shall not have
the right to mortgage or charge the interest in the land and/or the building
to be erected thereon without the previous consent in writing the Authority.
(xi) If the LESSEE dies after having made a bequest with the permission of
the Authority of the demised premises and the building thereon, if any, in
favour of more than one person or dies in testate having more than one heir,
then in such case the persons to whom the demised premises with the
building thereon be to bequeathed or the heirs of the deceased Lessee, as
the case may be, shall hold the aid property jointly without having any right
to have a partition of the same by metes and bounds or they shall nominate
one person amongst heir number in whom the same shall vest.
(xii) The Lessee shall not remove any earth from the demised lad or carry
on or allow to be carried on in the land any unlawful, illegal or immoral
activities or activities which may be considered offensive or a source of any
annoyance, inconvenience or nuisance to the area surrounding the demised
premises.
(xiii) The Lease shall not allow the demised land to be used as a place of
public worship or burial or cremation ground, private or public or allow any
shrine, masjid, church or temple to be erected thereon.
126
(xiv) That on the determination of the period of demise the Lessee shall
make over possession of the demised land in as good a condition as the
same now is.
(xv) The Lessee shall allow any person authorized by the Authority to
inspect, repair and clean the sewer lines and manholes or to do any work in
connection therewith within the plot without obstruction or hindrance by
the Lessee or the employees of the Lessee or the assigns or the tenants of
the Lessee.
(xvi) The Lessee shall not after determination of the lease remove without
the permission in writing of the Authority anything which has been attached
to the earth of the demised property.
(xvii) Not to claim any damage for delay in completion of engineering

services or fr any other cause whatsoever.
3(i) The Authority hereby further covenants with the Lessee that the Lessee
observing and fulfilling all the terms and conditions herein contained on its
part shall hold the said demised premises for the period of demise without
any interruption by the Authority or any officer of the Authority.
3(ii) The Authority hereby further covenants with the Lessee that the Lessee
shall be provided with all facilities in regard to sewer connections, water-
supply, electric connection, roads and other amentias as may be available to
other Lessees in respect of other plots of land of the Baishnabghata Patuli
Area Development Project of C.M.D.A. Facility of services such as roads,
sewer and drain line, water lines and electricity will be made available at the
peripheral roads (where such lines have been taken as per planning)
abutting the demised premises from which connection will be taken by the
Lessee at his/her/their own cost.
PROVIDED ALWAYS AND IT IS HEREBY FURTHER EXPRESSLY

AGREED as follows:-
4(i) If there be any breach of any covenant on the Lessee‟s part herein
contained and to be performed or observed or any of the terms and
conditions hereof, then in the said cases it shall be lawful for the Authority
at ay time thereafter to re-enter upon the demised premises or any part
thereof in respect of any breach of the Lessee‟s covenants herein contained.
(ii) Any notice requiring to be served hereunder shall be sufficiently served

on the Lessee if addressed to him on the demised premises or forwarded to
him by registered post or left at his last known address in India and shall be
sufficiently served on the Authority if delivered to the office of the Deputy
Director (Marketing and Management) against proper receipt. A notice
served by post shall be deemed too be given at the time when in due course
of a registered post it would be delivered at the address to which it I sent.
127
(iii) Any relaxation or indulgence granted by the Authority to the Lessee or

by the said Lessee to the Authority shall not in any way prejudice the rights
of the parties under this Deed of Lease.
THE SCHEDULE ABOVE REFERRED TO :
ALL THAT piece or parcel of land measuring …………… m2 be the land a little more
or less plot No………………in …………….category in Block
…………………at Baishnabghata Patuli Area Development Project in the
district of South Twenty-four Parganas/City of Calcutta, P.S. Jadavpur ,
butted and bounded as follows, that is to say :-
On the North - 30‟-0” wide Road,
On the South - Commercial Plot No.
On the East - Plot No……………………..
On the West - Plot No……………………..
IN WITNESS WHEREOF the parties to these presents have hereunto set

and subscribed their respective hands the day, month and year first above
written.
Signed and delivered for and on behalf of

the Calcutta Metropolitan Development Authority, the LESSOR
In the presence of
Signed and delivered by the LESSEE
In the presence of
Witness :
Signature in full :
Address :
128
Annexure -II
AGREEMENT FOR LICENCE

THIS AGREEMENT FOR LICENCE made this
…………………….BETWEEN SRI …………………….
SON OF Late ……………………………… of ……………………………….. ,
hereinafter called the LICENSOR AND Shri ………………….., son of Shri
………………………of …………………………..hereinafter called the LICENSEE.
WHEREAS the Licensor is possessing of one flat being Flat No. 4,

Block “I” , consisting of three rooms, one kitchen, one bath-cum-W.C., front
covered Verandah etc. at ….. …………., ……………………. And the Licensee
has proposed the Licensor to give permission to the Licensee to stay in the
said flat, and so, the Licensor and the Licensee have executed this
agreement on the following terms and conditions :-
1. The licensee will take the said flat from the said Licensor at a monthly
fee of Rs. 2200/-(Rupees Two Thousand Two Hundred ) only (Rs. 1100/- as
license fee and Rs. 1100/- as MC., S.C. etc.) per month payable according to
English Calendar month.
2. That the licensee shall pay the said license fee to the Licensor on the
seventh day of the each current month.
3. That the agreement for license will be valid for 11 ( eleven ) calendar
months with effect from the date of execution of this agreement.
4. That the period of license can be extended only at the discretion of the
Licensor.
5. That the license shall stand automatically terminated upon :-
(a) the death of the licensee or

(b) the expire of the period of validity of the licensee or
(c ) the violations by the licensee of any terms and conditions of the license.
(d) The default on behalf of the licensee to pay the monthly license fees
for two months, or
(e) The expiry of ninety days‟ notice given by the licensor to the licensee to the
effect that the flat is required by the licensor for his own occupation.
6. That the licensee shall use the flat exclusively for the purpose of
residence of the licensee and the members of his family residing with him
and for no other purpose whatsoever.
129
7. That the licensee shall not assign or sublet the flat or any part of it to
any one or put pay person not being a member of his family in possession of
the flat.
8. That the licensee shall not add to or alter any fixture of the flat or
make any structure alternation in the flat without the express permission in
writing of the licensor.
9. That the licensee shall not cause or suffer to be caused any damage to
the premises beyond the normal wear and tear through the proper use and
occupation of the flat.
10. That the licenses shall allow the licensor or the duly authorized
representatives of the licensor to inspect the flat as and when necessary.
11. That the licensee shall deposit to the licensor an advance of Rs.
4200.00 (Rupees four thousand two hundred only) out of which Rs. 2200.00
will be the last month‟s license fee and Rs. 1000.00 (Rupees one thousand only) will
be adjusted with last month‟s electric bill and Rs. 5,000.00
(Rupees five thousand only) as the security money against repair of
breakage or damage, if any.
12. That on the expiry or termination of the period for licence, the licensee
shall deliver vacant possession of the flat to the licensor in the same
condition in which the licensee took possession of the flat.
That the licensee shall never be treated as a tenant in respect of the flat.
That this agreement of licence shall never be treated as an agreement for

tenancy.
We both the licensor and the licensee do hereby sign and seal this
agreement for licence on the date and time mentioned above.
WITNESSES :
1.
2. ………………………………..
Signature of the Licensor
………………………………..
Signature of the Licensee
130
Annexure -III
NON – ENCUMBRANCES CERTIFICATE
To Whom It May Concern
That one …………….., Son of ……………………… of Village Chandiberia, P.S.

Rajarhat, District 24-Parganas (North) purchased a land measuring 60 dec.
in Mauja-Chandiberia, J.L. No. 15, Khatian No. 16/1, Dag No…., P.S.
Rajarhat, by a registered deed dated 08. 05. 1963. The said
purchaser……………. died leaving behind his own son ………………………as
his only heir. At present ……………………………. is the absolute owner of the
above plot of land who has mutated his name in all the departments of
Government. He is in possession of the said property and paying rent and
taxes in his name.
I have seen the Search Report caused by my junior in the sub-registry office
at A.D.S.R.O. Bidhan Nagar and District Registry Office at Barasat and
District Registrar ........... for last 30 years ( 1975-2005) and found the title
of the said property is perfect.
Considering the above I am of opinion that the above property is free from
encumbrances and said Sri …………………………… has absolute marketable
title in the said property and the said property is free from all
encumbrances.
Sd/- Advocate
Encl : Search Report.
Search Report
Ref : Sri ……………………………………………
S/o …………………………………………..
Of Chnandiberia,
P.S. Rajarhat, Dist. North 24-Parganas.
Under Mouza –Chandiberia, J.L. No.15, P.S.
Rajarhat, Khatian No.16, Dag No.
I have caused searches in Index no. I, in the above named person in

the records of D.R.O. ..........., D.R.O. Barasat ande A.D.S.R.O. Bidhan Nagar
from the years 1975 to 2005 each offices up-to-date.
During this period I found no entry sale, gift, mortgage, lease,

agreement or any other transfer transaction as per available records.
Hence in my opinion the present owner has got good clear and marketable
title over the above Dag, Khatian and Mouza and it is free from
encumbrances as per available records of the registration offices are
concerned.
Search receipt is attached herewith.
Sd/ - Advocate
131
Annexure – IV
NO OBJECTION BY COMPETENT AUTHORITY UNDER
LAND CEILING ACT, 1976 ( Printed Form )
GOVERNMENT OF WEST BENGAL

Office of the Competent Authority &
Sub-Divisional Officer, Barrackpore
North 24 Parganas
(URBAN LAND CEILING BRANCH)
Memo No. …………………………. Dated…………
To
Shri __________________________
S/o. ___________________________
of ____________________________
Sub : No objection of Land under the provision of Urban

Land ( Ceiling & Regulation ) Act, 1976.
This is to certify that Dag No. under Khatian No. R.S. –16, Halkh.
16/1 at mouja Chandiberia J.L. No. 15 P.S Rajarhat, District North 24
Pargnanas, Area of Land-60 Desimals. That the above schedule land in
question is not found to be vested and not to attached under the provision of
Urban Land (Ceiling & Regulation ) Act, 1976.
Whether the above schedule land is in mortgage, sale, gift etc. to any other
person/ institute by the land lord, there is no objection and for which action
will not be taken as per provision of the said act.
Sd/-
COMPETENT AUTHORITY
& S.D.O., BARRACKPORE.
Annexure –V
132
AGREEMENT FOR SALE

This agreement made on ……………….between …………………………………….
by faith-Hindu, by Occupation –Business, residing at…………………………
……………………………………….hereinafter referred to as the VENDOR
(which expression shall unless excluded by or repugnant to the context be
deemed to mean and include her heirs, executor, successors,
administrators, legal representatives and assigns) of the FIRST PART.
AND
………………………………………………………………………………………………
by faith –Hindu, by Occupation – Service, residing at…………………………
………………………………………………….hereinafter called the PURCHASERS
( which term or expression shall unless excluded by or repugnant to the
subject, context or meaning thereof be deemed to mean and include his
heirs, successor/ successors, executor / executors, administrator/
administrators, legal representative and assign / assigns) of the SECOND
PART.
AND WHEREAS the party of the FIRST PART, became the Vendor of the
land measuring area of 3(Three) Cottah, 0 (Zero) Chittacks, 2 (Two ) Sq.ft.
lying and situated at K.M.C. Holding No. ………………Assessee No………
…………………Khaitan No. 2101, Mouza – Behala, Towzio 346. P.S. Behala
,Dist. 24Pgs. (South) ........... Municipal Corporation, Ward No.130, under
the Sub-Registry Office A.D.S.R. ........... at Behala 25. 02.1963 and
accordingly the above named Vendor in respect of Premises
No……………………………….
AND WHEREAS the vendor of the FIRST PART constructed 6 No. of Flats at
the premises No. …………………………………………………………………………..
more fully described in the Schedule written hereunder without ay
interruption or disturbances from any other person and free from all
encumbrances.
AND WHEREAS the purchaser of the SECOND PART have taken inspection
of the said flats and satisfied as to the marketable title of the Vendor and he
offered the vendor directly for purchasing one flat on the South East portion
of the 1st Floor, measuring area 650 Sq.ft. (Approx.) (Including Service Area)
at the said building at the premises No……………………………………P.S.
Behala along with undivided proportion of Share & Interest in the Land of
the Schedule “A”, property, particularly mentioned and described in
Schedule “B” hereunder written together with common areas and facilities
provided in the said building fully described in the schedule “C” the said flat
for the price of Rs. 6,80,000/- (Rupees Six Lakhs Eighty Thousand Only)
133
free all encumbrances, attachments, lien, lismendences, requisitions and

terms and conditions hereunder written.
AND WHEREAS purchaser have taken inspection of all title deeds and
documents including plan sanction in respect of the property and have fully
satisfied upon the said flat and the purchaser have agreed to purchase the
said flat which is fully describes in the Schedule “B” hereunder written and the said
vendor agreed to sale the aforesaid flat which is free from encumbrances,
attachments charges and other claims demands. The cost of the aforesaid
flat alongwith the undivided proportionate share of land of
Schedule “A” property is Rs. 6,80,000/- (Rupees Six Lakhs Eighty Thousand
Only).
NOW THIS INDENTURE WITNESSETH and it is hereby agreed between the

parties hereto as follows :
1. That the owner shall sell and the purchaser shall purchase and
acquire said flat being No. 1B in the First Floor (East Portion) containing
built up area 650 Sq.ft. (Approx.) which is fully descried in the Schedule
“B” here in below together with permanent hereditary and absolute right of the use
and occupation of the said flat and together with other benefits as provisions
of the West Bengal Apartment Ownership Act, 1972 for the total price of Rs.
6,80,000/- (Rupees Six Lakhs Eighty Thousand Only).
2. That the “COMMON AREA” shall mean and include areas as described
in the Schedule “C” hereunder written.
3. That the purchaser had paid the Vendor a sum of Rs. 1,02,000.00
(Rupees One Lakh Two Thousand only), details attached, by way of earnest
money and / or part payment of consideration money and the vendor hereby
receipt hereunder admit, acknowledge and confirm and the purchaser also
agreed to pay the balance consideration money at the time of registration of
deed of sale of the said flat.
4. That if the purchaser fails to pay the balance consideration money

within the specific period either on the day of possession or on the day of
registration, according to this agreement the vendor or the owner will forfeit
the full amount, which was paid by the purchaser as an advance and this
agreement will be treated as cancelled without any further notice.
5. That if the purchaser hereby further more agree with the vendor that
he shall joint the Society of Apartment Owners‟ of the premises and abide by the
rules and regulations and the bye laws of the said society and pay for and
discharge and satisfy all calls, demands, contributions and dues with the
said society.
6. That the purchaser shall prepare the Deed of Conveyance at his own
costs and arrange for registration of Deed of Conveyance at his own cost.
134
7. That the FIRST PARTY is at liberty to sue the Purchaser for specific
performance of contract and the SECOND PARTY also is at liberty to sue
the Vendor for specific performance of Contract.
8. From and after the date of taking possession of the said flat the
purchaser shall not be entitled to raise any objection in respect of internal
decoration and / or fittings and fixture excepting the structural defects of
any kind of work.
SCHEDULE “A” ABOVE REFERRED TO
ALL THAT piece and parcel of vacant land measuring an area about 3
(Three ) Cottahs, 0(Zero) Chittacks, 2 (Two) Sq.ft. be the same little more or
less under the Sub-Registry Office A.D.S.A. ..........., P.S. Behala, Ward
No……………………under the jurisdiction of ........... Muicipal Corporation.
ON THE NORTH : Land of …………………………..

ON THE EAST : 8‟ FT. WIDE common Passage
ON THE SOUTH : K.M.C. Drainage and 12‟ft. wide Road
ON THE WEST : Land and property of …………………
SCHEDULE “ B” ABOVE REFERRED TO
ALL THAT the flat marked No. 1B at 1st floor (East Portion) of premises No.
……………………………………………………………, measuring about 650 sq.ft.
(including proportionate common area of staircase with landing of the floor )
particularly delineated in the map or plan annexed hereto and bordered I
Red colour together with undivided proportionate share of interest in the
said holding mentioned in the schedule “A‟ and undivided share of the said
Building along with all other enjoyment in common together with other
facilities provided in the said flat as described in the Schedule “C” hereunder
written, easement rights advantages and appurtenances thereto.
SCHEDULE “C” ABOVE REFERRED TO
(a) Main gate, entrance, common stair-case along with corridor, lobby,
ventilation duct of the main building leading to roof.
(b) Common Passage and surrounding area along with boundary walls on
the ground floor.
(c ) Water Supply System, including pump, underground and overhead
reservoir sanitary system, including pit and septic tank, rain water disposal
system.
(d) Electric wiring meters (common) and fittings including these are
installed for any particular flat, lighting arrangement in common areas,
meter room, etc.
(e) Drainage System.
(f) 24 hours water supply, if available.
135
SCHEDULE – “D”
Specification of Construction
Building designed on R.C.C. foundation conforming to national building
Code and ........... Municipal Corporation Rules or as per sanction Plan.
FLOORING & SKIRTING :

All rooms, toilets, kitchen and verandah, will have cast in situ Grey mosaic
with 6” skirting all around with dado in west area.
TOILETS:
All toilets will be provided with G I Pipe for supply of water, standard white
basin, pan or commode with low down cistern, all toilets walls will have Grey
mosaic, upto 4‟ height all around and 5‟-6‟ height in bath area.
KITCHEN ;
Kitchen will have one Black stone shelf and one Black stone sink.
DOORS & DOORS FRAME:

All doors will have a wood frame and 1‟-6” thick flush door having commercial ply
on both sides and two coated enamel paints.
WINDOW FRAME & GRILLS :
All window frames shall be made of steel and shutters with MS Grills of
suitable design with 3-MM clear sheet Glass.
INTERNAL WALLS:
Plaster wall finished with plaster of paris, Bricks work will be done 3” and 5”
thickness for internal partition walls.
EXTERNALWALLS :
External walls to be coated with water proof cement paint and thickness of
the wall 8”.
STAIRCASE :
Plaster wall finished with white lime wash.
ELECTRICAL :
All concealed wiring in every rooms, toilet, kitchen, living-cum-dinning and
verandah.
BED ROOMS :
1. One bracket light point.
2. One tube light point.
3. One ceiling fan point.
4. One night lamp point.
5. One 5 pin plug point on switch board.
136
LIVING / DINING :
4. One 5 Amp. Point.
6. One TV Antenna in concealed pipe line layout only.
7. One Electric Call Bell attached at Fat entrance.
ELECTRICAL METER:
A separate meter will be provided for each flat at the cost of security
deposits to be paid by the intending buyer of flat holder. The Developer shall
provide for the electrical meter for common services including staircase
lighting at his cost but amount of deposit shall proportionately recovered
from the intending buyer of flats.
PLUMBING :
Concealed GI pipe for water line for basin, shower and tap in attached
toilets, one inlet and outlet connected for kitchen sink.
WATER :
The Developer provides K.M.C. water from under ground reservoir.
Deep Tube well with cost Extra (borne by Flat Owners).
EXTRA WORK :
Buyer‟s request for extra work and or change in above mentioned specification
towards betterment and fixing of costly items shall be entertained before
commencement of the construction work of the specified item and the
buyers shall be required to pay for the extra cost as may be determined by
the developer or it‟s Architect in advance.
IN WITNESS WHEREOF the parties have hereunto put their respective

hands and seals the day, month and year first above written.
SIGED, SEALED AND DELIVERED

In presence of :
1.
2. _______________________
Signature of the Vendor
___________________________
Signature of the Purchaser
137
RECEIVED a sum of Rs. 1,02,000.00 (Rupees One Lakh Two Thousand

Only) by Cash / Cheque No………………dated …………… drawn on
………………(Behala Branch).
MEMO OF CONSIDERATION
Paid by Cash / Cheque No. 327583 of Rs. 50,000/-
Dated on :
Cash Rs. 52,000/-

--------------
Total Rs.1,02,000/-
==========
(Rupees One Lakh Two Thousand only).
WITNESSESS
1.
_________________
Signature of Vendor
2.
138
Annexure -VI
DEVLOPMENT AGREEMENT
THIS AGREEMENT is made on the

…………………………………….BETWEEN Sri……………………………., by faith
-Hindu,by occupation–Doctor, residing at ………………………………………….
AND SRI………………………. , son of Late …………………, by faith-Hindu, by
occupation–Service, residing at ………………………………………………………..
Hereinafter referred to as the OWNERS (which expression shall unless
excluded by or repugnant to the context be deemed to mean and include her
heirs, executors, successors, administrators, legal representatives ad
assigns) of the FIRST PART.
AND
M/S. ……………………………….. represented by its sole proprietor by
Smt………………W/o …………………, by faith Hindu, by Occupation –
Business, residing at …… Roy Bahadur Road, ........... – 700 034, hereinafter
referred to as the DEVELOPER ( which expression shall unless excluded by
or repugnment to the context be deemed to mean and include her heirs,
executors, successors, administrators, legal representatives and assigns) of
the SECOND PART.
WHEREAS the party of the First Part, became the absolute owner of the
land measuring about area of 3 (Three) Cottahs 0 (Zero) Chittacks 2 (Two)
Sq.ft. lying and situated at K.M.C. Holding
No………………………………………., Assessee No. 41-130-02-0081, Khatian
No. 2101, Mouza – Behala Towzi No. 346, P.S. Behala, Dist. 24 Pgs (South)
........... Municipal Corporation, Ward No 130, under the Sub-Registry Office
A.D.S.R. ........... by virtue of the Bengali Kobala Deed registered at A.DS.R.
........... at Behala on 25.02.1963 and accordingly the above named Owner
became the absolute owner in respect of Premises No……. Becharam
Chatterjee Road, ...........- 700 034.
AND WHEREAS thus the owners of the First part are absolutely seized and
possessed of the land measuring about 3 (Three)Cottahs 0 (Zero) Chittacks 2
(Two) Sq.ft. vacant land, be a little more or less under the Sub-Registry
Office A.D.S.R. ..........., P.S. – Behala, ...........- 700 034 under the
jurisdiction of ........... Municipal Corporation.
AND WHEREAS the Owner being agreed to develop through the Devoloper of
their schedule land along with kutcha structure approached the Developer
herein for developing herProperty and entered into this Developers
agreements for the terms and conditions hereinafter appearing.
ARTICLE I DEFINATION
1. OWNER: The owner shall mean SRI-------------------------------------------
son of SRI----------------------------,by faith – Hindu,by occupation- Doctor,
residing at ….. Rishi Bankim Chandra Road, ................ – 700034, AND SRI-----
-----------------------,son of late-------------------------------------------------------
139
by faith – Hindu, by occupation –Service, residing at …. Becharam

Chatterjee Road, Behala, ........... – 700034.
2. DEVELOPER : M/S,------------------------------------------------ represented

by its sole proprietors by SMT----------------------------------------- W/O Sri --
----------------------,by faith Hindu, by occupation – Business, residing at ……
Roy Bahadur road, ........... – 700034.
3. THE LAND: Means more fully and particularly described in the Schedule
“ A” hereunder written measuring an area of 3 (Three) Cottahs 0(Zero)
Chittacks 2 (Two)ft. alongwith single storied kutcha structure situated at
K.M.C. area, Holding No. ---------------------------------------------- , Assessee
No 41-130-0081, Khatian No.2101, Mouza- Behala Towzi No.346, P.S.
Behala, Dist-24 pgs (south) ........... Municipal Corporation, Ward No.
130,Under the Sub-Registry Office A.D.S.R............ by virtue of the Bengali
Kobla Deed registered at A.D.S.R ........... at Behala 25.2.1963 and
accordingly the above named owner become the absolute owner in respect of
Premises No. ….. Becharam Chatterjee Road, ...........-700034.
4. BUILDING : Mean building to be constructed on the said land in

accordance with the plan to be sanctioned by the ........... Municipal
Corporation and also in accordance with the specification fully and
particularly described in the Schedule “B”.
5. COMMON FACILITIES AND AMENITIES shall include Boundary Walls,

entrance gate, exit gate, entrance passage, staircases and staircase landing
on all the floor, all electrical main, service lines and fittings, electric meter
space, water pump space, underground water reservoir,overhead water tank,
all common water supply lines together with all common plumbing
installation & fittings, underground septic tank and all common sewerage
lines & fittings and other common portions and fittings and roof for common
use by the co-owners of the proposed building as will be provided by the
Developer from time to time.
6. ARCHITECT/ CONSULTANT shall mean such person or persons or firm

to be appointed by the Developer.
7. BUILDING PLAN shall mean which is required to be sanctioned in the

name of owner by the ........... Municipal Corporation and the process of
which shall be performed by the Developer at her own cost.
8. PURCHASERS shall mean a person, firm, limited company, Association

of person to whom any space in the building shall be sold by way of
registered Deed of Conveyance with the concerned Registry Office.
140
ARTICLE II - COMMENCEMENT
This Agreement shall be deemed to have commenced on and with effect from
the date of its execution.
ARTICLE III – RIGHT OR REPRESENTATIONS
1. The owner is absolutely seized and possessed of and /or otherwise well
and sufficiently entitled to the said property.
2. None other then the Owner has any right, title, interest claim and /or
demand over and in respect of the said proposed several storied building
(G + Three) and / or portion thereof.
3. The said property is free from all encumbrances, charges, lines,

attachments, trusts, acquisitions, requisitions whatsoever or howsoever.
ARTICLE IV – DEVELOPER‟S RIGHT
1. The owners hereby grant subject to what have been hereinafter provided
and exclusive right to the Developer to build upon and to exploit commercial
– cum –residential of the said property and construct the said several storied
building (G + Three) in accordance with the plan to be sanctioned by the
........... Municipal Corporation .
2. The developer shall be exclusively entitled to have two complete floors

out of Three Storied Building on the said plot of land if the building is
constructed as three storied Building basis and the Developer shall
exclusively entitled to have two complete floors along with entire Garage
Space except One Garage Space (or Rs. 1,00,000/ -[One Lakh] as the price
of Garage Space) as stated for Owner if the proposed building is constructed
as G + Three floor basis, then the second Floor and Third Floor and along
with Three Garage Space on the Ground Floor and also the proportionate
entire roof right of the proposed several storied building (G+Three) with
exclusive right to sell / transfer or otherwise deal or dispose of the same
without any right, claim or interest therein of newly constructed building (G
+ Three). A copy of site plan will be attached. In so far as necessary all
dealings by the Developer in respect of the new several storied building (G +
Three) shall be in the name of the owner and for which the Owner under
take to give the Developer a General Power of Attorney in a form and manner
fasten of creating any financial liability upon the Owner.
141
ARTICLE V - CONSIDERATION
(a) Owner shall be entitled to have 1st floor if the building is constructed as
Three Storied building basis, along with one Garage Space on Ground floor
or Rs. 1,00,000 /-(One Lakh), if constructed as G + Three building basis.
The owner shall have proportionate right of roof over the proposed building,
which has been mutually agreed upon between parties. A sketch of a site
Plan will be attached herewith.
ARTICLE VI – BUILDING
1. The Developer shall at her own costs construct erect and complete the
building on the said premises in accordance with the sanctioned plan with
good ad standard quality materials as may be specified by the Architects
from time to time.
2. Subject as aforesaid, the decision of the Developer regarding the quality

of the materials shall be final and binding between the parties hereto.
3. The Developer shall install in the said building at her own cost and
managerial acumen of fixing pump, a water storage tank, overhead
reservoirs, electrification, permanent electric connection. Temporary electric
connection shall be provided and other facilities as are required to be
provided.
4. The Developer shall be authorised in the name of the owner in so far as

is necessary to apply for and obtained quotas entitlements and other
allocation of or best quality of cement, steel, bricks of reputed one and other
buildings materials allocation to the owners for the construction of the
building and to similarly apply for to obtain temporary and permanent
connection of water, electricity, power, drainage, sewerages and/or gas to
the construction or enjoyment of the building for these purposes, the owners
shall execute in favour of the Developer a Power of Attorney and other
authorities as shall be required by the Developer.
5. The Developer shall at own costs and expenses and without creating
any financial or other liability on the owner‟s construct and complete the said newly
several storied building ( G+ Three) within 24 (Twenty four) months from the
date of starting the execution of works.
6. All costs, charges and expenses including Architect‟s fees shall be

discharges by the Developer ad the Owner shall have no responsibility in
this context.
7. To pay and incur all fees, charges and expenses, costs in the matter of
construction and all other matters concerning and/or arising out of the
construction of the said building.
142
8. To apply for obtaining sanction, permission, clearances and service

connection before Appropriate Authorities, Improvement Trust, C.M.D.A.,
C.E.S.C., Fire Bridge and any local and all Government Offices and to sign
on Owner‟s behalf all necessary forms, application, petitions and documents and
apply for obtaining permit, license, permanent and temporary supply service
as may be required for making the building habitable.
9. The Developer is at liberty to engage any workers viz. Masons,

Carpenter, Electricians, Plumbers which they think deem fit and proper with
a view to complete the several storied building ( G + Three).
10. The Developer can negotiate on term for and to agree and sell the
property or part thereof towards the Developer‟s allocation, which is particularly
mentioned in Aricle-IV, developers right point No.2.
ARTICLE VII – OWNER‟ OBLIGATIONS
1. The Owner shall handover the vacant possession entirely of the said
property to the Developer simultaneously with the execution of these
presents for construction of the building on the said property in terms of
this agreement.
2. The Owners hereby agree and covenant with the Developer not to do
any act deed or thing whereby the Developer may be prevented from selling,
assigning and/or disposing if any of the Developer‟s Allocation ;in the building at
the said property.
3. The Owner shall not let out grant lease, mortgage and/or charge the
said property or any portion thereof without the consent in writing of the
Developer during the period of construction.
4. The Owner hereby agree and undertake that the Owners shall cause
to join such party or parties in the Deed of Conveyance as Vendors as
confirming Parties so as to transfer of the flats/shops etc.
ARTICLE VIII – DEVELOPER‟S OBLIGATION
1. The Developer shall construct the said newly several storied building
( G+ Three) at the said property in accordance with the sanctioned plan and
the specification.
2. The Developer shall also construct and complete at her own costs and
also arrange for entire common facilities and amenities for the said building.
3. The Developer hereby agrees and convents with the owners to

complete construction of the said building within 24 (twenty four) months
from the date of sanction plan of the building by competent authority by the
143
Owner for the Development and also subject to handing over the vacant
possession of the said property by the Owner for the Development.
4. The Developer shall have to complete the said newly several storied
building (G+ Three) within the stipulated period of 24 (twenty four) months
as specifically mentioned above. The developer will not give possession to the
buyers of the above mentioned two flats until the developer give possession
of the above mentioned allotted flat to the owner.
SCHEDULE – „A‟
SCHEDULE OF LAND ABOVE REFERRED TO :
ALL THAT the piece and parcel of land along with structure measuring about 3 (Three)
Cotahs 0 (Zero) Chittack 2 (Two) Sq.ft. situated at K.M.C. Holding No. Assessee No. 41-
130-02-0081-7, R.S. Khatian No. 2101, Mouza – Behala, Touzi No. 346, P.S. Behala, Dist.
24 Pgs. (South) ........... Municipal Corporation, Ward. 130, under the Sub-Registry Office
A.D.S.R. ........... at Behala butted and bounded as under :-
ON THE NORTH : Land of ……………………….

ON THE EAST : 8‟ Ft. wide Common passage.
ON THE SOUTH : K.M.C. Drainage and 12‟ ft. wide Road.
ON THE WEST : Land and property of ………………….
SCHEDULE – „B‟
Specification of Construction
Building designed on R.C.C. foundation confirming to national building

Code and ........... Municipal Corporation Rules or as per sanction Plan.
FLOORING & SKIRTING :
All rooms, toilets, kitchen and verandah, will have cast in situ Grey mosaic
with 6” skirting all around with dado in west areas.
TOILETS :
All toilets will be provided with G. I. Pipe for supply of water, standard white
basin, pan or commode with low down cistern, all toilets walls will have Grey
mosaic, upto 4‟ height all around and 5‟-6‟ height in bath area.
KITCHEN :
Kitchen will have one Black stone shelf and one Black stone sink.
144
DOORS & DOORS FRAME :
All door will have a wooden frame and 18” thick flush door having
commercial ply on both sides and two coated enamel paints.
WINDOW FRAME & GRILLS :
All window frames shall be made of steel shutters with MS Grills of suitable
design with 3-MM clear sheet Glass.
INTERNAL WALLS :
Plaster all finished with plaster of paris, Bricks work will be done 3” and 5”
thickness for internal partition walls.
EXTERNAL WALLS :
External walls to be two coated with water proof cement paint and the
thickness of the wall 8”.
STAIRCASE :
Plaster wall finished with white lime wash.
ELECRICAL :
All concealed wiring in every rooms, toilet, kitchen, living –cum-dining and
verandah.
BED ROOMS :

4. One night lamp point.
5. One 5 pin plugs point on switch board.
LIVING / DINING :

4. One 5 Amp. Point.
6. One TV Antenna in concealed pipe line layout only.
7. One Electric Call Bell attached at Flat entrance.
145
ELECTRICAL METER :
A separate electric meter shall be provided for each flat at the cost of
security deposits to be paid by the intending buyers of flat holder. The
Developer shall provided for the electrical meter for common services
including staircase lighting at his costs but amount of deposit shall be
proportionately recovered from the intending buyers of flats.
PLUMBING :
Concealed GI pipe for water line for basin, shower and tap in attached
toilets, one inlet and outlet connected for kitchen sink.
WATER :
(a) The Developer provides K.M.C. water from under ground reservoir.
(b) Deep Tube well cost Extra ( borne by Flat Owners).
EXTRA WORK :
Buyers request for extra work and or change in above mentioned

specification towards betterment and fixing of costly items shall be
entertained before commencement of the construction work of the specified
item and the buyers shall be required to pay for the extra cost as may be
determined by the developer or its Architect in advance.
IN WITNESS WHEREOF the parties have hereunto put their
respective hands and seals the day, month and year first above written.
SIGNED, SEALED AND DELIVERED by

The Owners at ........... in the presence of :
1.
………………………………
2. Signature of the Owners.
SIGNED, SEALED AND DELIVERED by

………………………………………………
………………… ……as the DEVELOPER
at ........... in the presence of :
1.
……………………………………
2. Signature of the Developers.
146
CHAPTER XX
ELECTRICAL INSTALLATION
We know that electricity is dangerous and can cause accidents, if not treated with
respects. Choice of accessories, selection of cables and their correct sizing, the
arrangement of outlets on a number of separate circuits, the proper ways of
installing cables and the need for protecting cables against mechanical damage are
the points which deserves care for minimizing electrical faults. Nevertheless, it is still
necessary to provide protection against such faults as may happen.
The general principle of protection is that a faulty circuit should be cut off from the
supply and isolated until the fault can be found and repaired. The protective
device must detect that there is a fault and must then isolate the part of the
installation in which it has detected the fault.
A logically ideal system of protection against all possible faults cannot be
made economically, and the protection designed must make use of the
equipment commercially available.
Two dangers to be prevented are fire and shock to people and livestock. In turn
these dangers can arise from three kinds of fault, namely a short circuit, an
overload and a fault to earth.
If through a fault in the wiring or in an appliance, the line or phase and neutral
conductors become connected, the current that flows is limited only by the sum of
the resistance of the cables of the permanent wiring and the impedance of the
accidental contact between the two cables the latter generally regarded as
negligible. If the fault connecting the line and neutral has a negligible impedance the
two conductors are effectively short circuited. The current that flows through the
conductors is a short circuit current, and is very high and if allowed to continue
would burn the insulation. The high conductor temperature resulting from the
excessive current could start a fire. If the excess current continues to flow further
after the insulation has been damaged, there is also a possibility that the conductor
might touch exposed metal and give a shock to anyone touching the metal.
If the fault that connects the line and neutral has some impedance the current
flowing through the fault and conductors is less than the current in a short circuit of
negligible impedance. It is still likely to be higher than the maximum current the
Circuit can safely carry and if it persists over a period of time, it can cause serious
damage. When an overcurrent is flowing in a circuit, which is electrically sound, it
is described as an overload.
A fault to earth occurs if through some defect the line conductor becomes connected
to earthed metalwork. The effect is similar to a short circuit, but whereas a short
circuit will not raise exposed metalwork above zero potential, an earth fault will.
Rewirable fuses
147
The earliest protective device consisted of a thin fuse wire held between terminals in
a porcelain holder. It is inserted in the circuit being protected and the size of fuse
wire is matched to the rating of the circuit. The fuse wire is designed so that if the
current exceeds the rated current of the circuit the fuse wire melts and interrupts the
circuit.
HRC Fuses
The rewirable fuse has limited breaking capacity. If a very large current flows the
fuse wire melts very rapidly and a very large amount of energy is released. It can be
large enough to cause serious damage to the fuse carrier.
In High Rupturing Capacity (HRC) fuses, the fuse element is mounted between two
end caps which form the terminals of the complete fuse link.The fuse element is
surrounded by a closely packed slica filler and the whole is contained in a ceramic
casing, When the fuse element melts, or blows, the silica filler absorbs the energy.
Miniature Circuit Breaker
An alternative to a fuse element which melts when overheated is a miniature circuit

breaker (mcb).A mcb is one which has a rating similar to that of a fuse and is about
the same physical size as a fuse carrier of the same rating.
It has a bi-metal element which is heated by the circuit current and operates the trip
catch when it deflects. A simple magnetic is included to trip the catch on short circuit.
The mcb has a toggle switch by which it can be operated manually.This switch is
thrown into the off position when the overload device trips the breaker and the mcb is
reset by the same switch.
RCD
Another device frequently used is the residual current device(RCD).This is a

circuit breaker which detects a current leaking to earth and uses this leakage
current to operate the leaking mechanism. Residual current devices which do
incorporate overcurrent production are referred to as RCBOs.
Protection of persons
People using the building have to be protected against electric shock. They would
get a shock if they come into contact with live parts. A distinction is made between
direct and indirect contact. Direct contact is contact by a person with a live conductor
which is intended to carry current in normal operation. The normal protection against
this is the provision of insulation on all current carrying cables, enclosing terminals
and connections.
Indirect contact is contact with exposed conductive parts which are not intended to
carry current but have become live as a result of a fault. When it occurs, the metal
case of an appliance which a person is likely to handle is raised towards line
potential and will cause a shock if it is touched by someone using the appliance.
148
Protection is provided by the fact that the case is earthed and that a protective
device will disconnect the circuit as soon as a fault current flows to earth.
Earth protection
As we have seen, fuses and mcbs react to short circuits. If they are to provide
protection against faults to exposed conductive parts, the wiring must be such that
the fault produces the same conditions as a short circuit, namely a large excess
current in the line conductor. This will happen only if the impedance of the path
taken by the fault current is low enough.
When a fault occurs, current flows through circuit protective conductors to earth, and
because of the low impedance in the earth fault loop path, the current is large
enough to operate the protective device. It must also be large enough to operate the
device within the time stipulated above.
Earth electrode
In normal earthing, the earth and the neutral are quite separate. The load current
flowing through the neutral must cause a potential difference between the two ends
of the neutral. Since the end of the supply transformer is earthed, the end at the
consumer’s service terminal must inevitably be at some potential above earth. It
can not, therefore. Be used as an earth point.
Nevertheless, an effective earth has to be found for the earth continuity conductors
of the permanent installation in a building. The consumer’s must provide their own
earth electrodes and the design of these become part of the design of the building
installation. IS:3043 may be consulted for detail of earthing standards,
The effectiveness of earth protection depends on the low resistance of the

electrode when current flows through the electrode into the soil. This resistance
cannot be accurately predicted in advance and must be checked by testing..
The testing shall be carried out by Earth Resistance Measurer commonly called
Earth Meggar.
The periodical testing shall be carried out for an electrical installation by Insulation
Resistance Measurer or Meggar .The value should be greater than 1 Meg Ohm.
Similarly earth resistance measured by Earth Meggar should be less than 1 ohm.
149

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Study Material

Real Estate Management

PRACTISING VALUERS ASSOCIATION INDIA

Real Estate Management

Gr.A – FUNDAMENTAL OF REAL STATE MANAGEMENT

1. CHAPTER I CONCEPT OF REAL ESTATE

2. CHAPTER II REAL PROPERTY ECONOMICS

3. CHAPTER III LEGAL INTEREST IN REAL ESTATE MANAGEMENT

4. CHAPTER IV FINANCIAL ASPECT IN REAL ESTATE MANAGEMENT

5. CHAPTER V CHARACTERISTICS OF REAL ESTATE AS

7. CHAPTER VII JOINT VENTURE DEVELOPMENT OF THE PROPERTY

8. CHAPTER VIII MUNICIPAL BUILDING RULES IN REAL ESTATE

9. CHAPTER IX ENCUMBRANCES, EASEMENT AND OTHER

10. CHAPTER X CAREER IN REAL ESTATE

Gr. B HOUSING ESTATE MANAGEMENT

11. CHAPTER XI MANAGEMENT OF A HIGH–RISE BUILDING WITH

12. CHAPTER XII MANAGEMENT OF OWNERSHIP APARTMENT

13. CHAPTER XIII MANAGEMENT OF CO-OPERATIVE HOUSING

14. CHAPTER XIV MANAGEMENT OF COMMERCIAL PROPERTY

15. CHAPTER XV INDUSTRIAL PROPERTY – DISINVESTMENT OF

16. CHAPTER XVI ENVIRONMENT NORMS IN HOUSING ESTATE

17. CHAPTER XVII CONSTRUCTION PRACTICE OF HOUSING ESTATE – THE

18 CHAPTER XVIII ENGINEERING CONTRACTS AND TENDER

19. CHAPTER XIX CONTROLLING OF A HOUSING PROJECT

20. CHAPTER XX ELECTRICAL INSTALLATION

CONCEPT OF REAL ESTATE

Land by nature is indestructible and immovable. The properties other than

Types of real properties can be classified as :-

Residential – All property used for bungalows or apartments, whether in urban/suburban

Commercial - Business property including office space, shopping centers, stores,

Agricultural- Farms, agricultural land used for agriculture.

Special-purpose – Churches, temples, schools, government held land etc.

REAL PROPERTY ECONOMICS

Characteristics of Real Property i.e. Land or Land with building

(ii) It is limited in supply and it is not possible by any human effort to

(v) Land is heterogeneous by its very nature because it varies in

purposes, import being restricted primarily from foreign countries. So a land

It is possible to create many different interests in the same piece of property,

(i) Freehold interest.

A freehold property implies that the owner of such property is either in

(ii) Right of others.

(i) Law of the land:

While developing or carrying out the modifications in the freehold

Also, in case of emergency or by the application of some Acts of

(ii) Right of others:

The freeholder should develop or modify his property without

II. Leasehold interests:

Reasons for creating leasehold interest:

The above arrangement is adopted by the lessor under the following

(1) He is in possession of a large piece of valuable land and it is not

(1) As the property develops or the locality gains more importance

Nature of leasehold interest:

rent even though he is unable to dispose it off or take any advantage

Lessor and lessee:

Following are the liabilities of a lessor:

(1) He is bound to disclose the material defects with reference to the

Following are the rights of a lessee:

(4) If the property, which is leased, is destroyed or becomes permanently

Following are the liabilities of a lessee:

(1) He is bound to disclose the extent or nature of interest which he is

(8) If any encroachment is made on the property by a third party or

Following are the five principal forms of lease:

(1) Building lease