The Effects of Real Estate Laws in India and the United States - The Red Carpet


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Tuesday, February 1, 2022

The Effects of Real Estate Laws in India and the United States


The Effects of Real Estate Laws in India and the United States

What exactly does the term "real estate" mean? 

Real estate is defined as land and improvements such as buildings, fixtures, roads, structures, and utility systems. Property rights confer ownership of land, improvements, and natural resources such as minerals, plants, animals, water, and so on.

Real estate law is the body of legislation that controls the purchase, use, and sale of land. It is the legislation that controls how individuals obtain property and what they may do with their property. Real estate law is frequently referred to as real property law. Actual estate law is so named because it deals with real property. Personal property is items, whereas real property is land. Fixtures that are permanently affixed to the land, such as buildings or other big constructions, are also considered real property.

Real Estate Types 

Real estate is classified into numerous categories. The primary categories are as follows: 

  1. Land

Land is the foundation for all other sorts of real estate. Undeveloped property and unoccupied ground are sometimes referred to as "land." Developers buy land, merge it with other properties, then rezone it to improve the density and value of the property.

  1. Residential 

Individuals, families, and groups of people can live in residential real estate. This is the most prevalent sort of estate and the asset class with which the majority of people are familiar. Residential consists of single-family homes, apartments, townhouses, and other sorts of living arrangements. 

  1. Commercial 

Commercial property refers to land and structures utilised by businesses to conduct their activities. Shopping malls, individual businesses, and office buildings are all examples. 

  1. Industrial

Industrial real estate refers to land and structures utilised by industrial firms for operations such as manufacturing, R&D, and construction.

What exactly are Real Estate Contracts? 

Contracts governing the transfer and use of immovable property in the Real Estate industry are often in the form of agreements for sale, sale deeds, development agreements, lease deeds, and leave and licence agreements. On some of the aforementioned contracts, the impact of a Force Majeure occurrence is analysed as follows:

  1. Lease Deed

(i) If the lease period exceeds one year or if yearly rent is reserved, a lease deed must be registered. 

(ii) This agreement binds both the lessor and the lessee for the specified period of time. 

(iii) Things to keep in mind: 

  • Immovable property must be the subject of the lease. 

  • The lease term should be established. 

  • Before execution, no interest is transferred to the lessee. 

  • Termination provisions might be incorporated according on the circumstances. 

  • Parties' information

  1. License and Leave

(i) There is no such thing as a transfer of property interest as that of Lease

(ii) The licensee obtains the personal right to inhabit the property. 

(iii) Things to keep in mind: 

  • The rights' duration 

  • Information about the parties involved 

  • Specifics about the property 

  • Agreement terms

  1. Mortgage Deed:

(i) The mortgage money is the monies lent against which the property is used as security. 

(ii) The mortgage agreement is the agreement that instruments the transfer. Deed 

(iii) Things to keep in mind: 

  • The type of mortgage determines its enforceability and legality. 

  • Cross-check the agreed-upon interest rate 

  • The land's tenure should be investigated and noted. 

  • Provision for payment of the amount owed if the mortgagor fails to pay interest


In India, the real state is regulated by a blend of federal and state-specific legislation. This is largely due to the fact that, according to article 246 of the Constitution, land is the subject matter of the state list or list second of the seventh schedule of the Constitution of India, which covers subjects for which only the state can legislate, whereas transfer of property other than the challan, registration of deeds and documents, and contracts other than for agricultural land fall under the concurrent list or list third of the seventh schedule of the Constitution of India. Furthermore, because India is a multi-sectarian country, laws governing issues such as devolution, inheritance, and so on relies heavily on norms and practises in addition to codified laws. Various judicial presidents and judgments have also judged on various areas of real estate over the years, which are either binding or have a high relevance value, depending on the form or court which adjudicated.

The following are the primary laws that govern real estate in India:

  • The Transfer of Property Act, 1882

  • RERA (Real Estate Regulatory Authority) Act, 2016

  • The Registration Act, 1908

  • Stamp duty has to be paid as per state requirements

  • For Non-Resident Indians (NRIs) FEMA( Foreign Exchange Management Act, 1999) also apply

  • Investors have to abide by local laws and bylaws

  • Clearance as per environmental laws have to be taken before starting with any project for construction of immovable property

  • The specific relief Act, 1963

  • Other labour laws including for regulating minimum wages and safety insurance provisions

  • Land Acquisition Act, 2013

The Effect of Real Estate Laws and Contracts in India

  1. Flats delivered on time:

Developers frequently make false claims regarding the project's completion deadline, but seldom deliver. According to the law, tight rules will be imposed on builders to guarantee that work is completed on time and that units are delivered to buyers on time. 

  1. Provide correct project details:

During the building stage, builders market their projects by detailing the numerous facilities and features that will be included. However, not everything goes as planned, with numerous elements missing. There can be no revisions to a plan under this bill. If a builder is found guilty of this, he or she will be fined 10% of the project's expenditures or face up to three years in prison.

  1. Specifying carpet area:

Builders typically sell flats based on built-in area, which includes a common passage area, stairs, and other places that are 20-30% larger than the actual flat's area. However, not all purchasers are aware of the carpet area idea. The real carpet area will be required to be declared under this measure. 

  1. Before starting a project, all the permissions must be obtained:

Builders frequently entice consumers with large discounts with pre-launch deals. And, tempted by the offers, the buyer disregards the clearing. However, due to clearing delays, the buyer does not receive the apartment on time. This bill guarantees that developers obtain all necessary approvals before selling apartments.

  1. Each project should have its own bank account:

Developers earn cash through pre-launch offers and utilise them to buy additional land or invest in other projects. This measure will make it mandatory to keep a separate bank account for each project. Each transaction must be recorded, and no deviation to another project will be permitted. 

  1. After-sales service:

According to an unusual condition in the bill, if the buyer discovers any structural flaws in the building's development, the customer can contact the builder for after-sales service. However, the buyer should contact the builder within a year of purchase to have such flaws repaired at no additional cost.


Real Estate Laws & Contracts

Each state in the United States follows a combination of legislative and common-law principles. In the United States, there are three levels of law: federal, state, and municipal. Changes in the law under common law are brought about by case law and new legislation, both of which are accorded equal weight. Rules regarding parental proof and the necessity for a written agreement to be in effect vary from state to state. Unless the parties' purpose is uncertain, courts will normally rely on the specific language of the instrument. If the provisions of the agreement in question are vague, courts in the United States may examine the parties' behaviour. Contracts for the sale or transfer of real estate should, in general, be in writing.

Real estate transactions are controlled by a plethora of federal regulations as well as a mix of state statutes and common law. State law standards often change dramatically from one state to the next. Real estate brokers are hired to act as the seller's representative in order to find a buyer for their property. A listing agreement is the contract between the broker and the seller. The agreement might be an open arrangement in which the broker only gets a commission if he or she finds a buyer.It is usual in real estate contracts to stipulate that the title of the property sold be marketable. This necessitates that the seller have confirmation of title to all of the property being sold and that third parties have no secret interests in the title. The buyer will frequently hire a title insurance firm or an attorney to determine if the title is marketable. Title insurance providers also protect the buyer against damages caused by a faulty title.

A deed containing a suitable description of the land must be executed and presented in order to convey title. Some states require that the deed be legally registered in order to demonstrate ownership of the property and/or give subsequent purchasers with notice of its transfer. A mortgage is the most popular way to finance real estate transactions.

The Impact of Real Estate Laws and Contracts in the United States:

  • Clarity in business relationships, agreements, and rights of parties

  • Avoiding potential contract disputes and litigation

  • Preventing misinterpretation of communications and agreements

  • Protecting intellectual property, real property, and asset values

  • Better management of commercial relationships

  • Built-in agreements about resolving disputes through arbitration, mediation, or a court in a particular jurisdiction

  • Documentation to allow comprehensive representation and review by an experienced business law attorney



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