Real Estate

Intellectual Property Appellate Board

Tribunals, at least in theory, are known to provide technical expertise, ease of the procedure, and speedy disposal of cases. Moreover, Tribunals are supposed to alleviate the burden on the Indian judiciary and expedite justice. However, these objectives seem easier to conceive in theory than in practice. 

The Intellectual Property Appellate Board (IPAB) was established in 2003 under the Trade Marks Act, 1999 with the intention of speedy disposal of cases in alignment with the above objectives. To affect this intent, it also established a timeline of 3 months to file an appeal, with the duration starting from the date the order was passed by the Registrar of Trade Marks.

However, contrary to the intent behind its establishment, a significant delay persisted in the adjudication of such disputes with an estimated backlog of 2,626 trademark cases, 617 patent cases, 691 copyright cases, and 1 geographical indication case, as last seen on April 2020.

In one case, Novartis v. Controller General of Patents, the delay in adjudicating matters related to Patents was as much as 5 years. There has been a considerable lag in the appointment of a chairperson as well, a responsibility vested with the Government. In fact, in its entire existence, a total of 1,130 days the tribunal has been forced to function without a Chairperson.

In view of the existing plight, the Central Government abolished the Intellectual Property Appellate Board (IPAB) through an Ordinance that aims to eradicate tribunals set up under a plethora of subsisting legislation such as the Copyright Act 1957, the Customs Act 1962, and the Patents Act 1970, to name a few. The most instant consequence that would be observed of such scrapping, would be seen in the public exchequer due to the reduced costs spent on infrastructure. 

When seen from the point of view of the litigants, the same would result in the reduction of legal costs, since IPAB functioned as a step of the hierarchy, pursuant to which its orders could be challenged in the High Courts through Writ Petitions. However, there is no denying that matters of intellectual property are complex and expertise-oriented and take much more time than normal other civil or criminal matters.

Thus, abolishing a series of tribunals under the Ordinance would invariably defeat the purpose of expeditious disposal of cases in the interest of justice. Another by-product of delayed proceedings is higher litigation costs to be incurred by litigants. 

The abolishment of IP Tribunals, at a time when India’s data protection regime is at a nascent stage while technological innovations are sky-rocketing, could spell disaster in these pandemic times. Among other industries, the pharmaceutical industry is likely to bear the brunt of such abolishment, especially in times where each second, each milliliter of vaccine could save an additional life.

Therefore, it appears that blanket abolition of diverse tribunals smacks of arbitrariness and blatant absence of application of mind.

What’s next? Experts suggest an IP bench in the High Courts. However, it remains no hidden fact that the stounding level of pressure the High Courts face due to the backlog of many pending cases, and such a shift without requisite guidelines to fast track these matters, seems like a shaky foundation to begin on.

Further, due to the transfer of power, while it is certain that there may be differences in opinions on various IP issues, it is only hoped that the same does not create furthermore confusion and administrative issues.

However, since ‘technical expertise’ had been the foundation and intent behind establishing the IPAB, how the High Courts deal with such matters involving such precise technical expertise still remains in the dark.

Thus in view of the above changes, the onus will be transferred to the shoulders of the High Court to outperform the IPAB’s “marvelous record” of reversing unreasonable decisions and provide justice to litigants in infringement suits, patent claims, and other IP disputes which are likely to gain further traction with the rise in IP-conscious companies.

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Fractional Ownership

The overall gloom cast over the real estate industry on account of the COVID-19 pandemic has brought to light several unconventional methods to keep the dreams of homebuyers alive while developers strive to stay afloat. In fact, the pandemic has proven to give the necessary impetus and stimulus for people to invest.

A growing number of Indians are acquiring slices of rent-yielding residential and commercial properties, owning parts of expensive property, in a way that is comparable to investing in stocks of a company. Fractional real estate, as the concept is known, allows investors to buy, say, 1% of a vacation home for a minimum amount and use and occupy it while earning rental income. What’s interesting is that weekend properties were neither essential nor urgent, but COVID-19 has changed this perception.

Such realty ownership concept has arisen predominantly from the Work-From-Home culture and subsequent work-vacation culture, attracting NRIs and the domestic demographics alike. Such a property acts as an asset, attracting a plethora of investors, and becoming a potential Special Purpose Vehicle-related investment.

Emerging as a completely new form of realty investment arena wherein the property in question not only attracts a variety of classes as investors but also ceases to act as an overly expensive property yielding no returns.

From the taxation standpoint, the fractional ownership of property opens such owners to a plethora of taxable liabilities, when comparing the yearly taxation related costs of such interests, prospective buyers or their counsel/advisors need to be sure of the usage arrangement, location, ownership size, basic amenities, and other items.

A unicorn investment refers to a startup avenue/venture, occupying less than $1 billion of the industry share. Considering the fact that this sort of timeshare arrangement is a novel arena of investment for the Indian masses, the value of such investment could possibly render the whole idea a potential cash cow for the Real Estate developers adapting to such forms of investment.

Especially with the pandemic having rendered the traditional and conventional real estate an under-yielding area of investment in the markets currently, fractional ownership might just pave way for the steady boom in the real estate sector.

Whilst fractional ownership may appear to be an inexpensive mode of investment to potential investors, it comes with a plethora of pros and cons. Procedures involving the investment in such ventures could involve detailed due diligence and legal red-tapism, not paying attention to such procedures could end up providing stressed properties in the hands of lesser advised investors.

Moreover, expenses considering maintenance of the property, management expenses, and any such costs could essentially tip the scales against the owners should they not be able to actually utilize the property within their arrangements.

Having said that, the benefits accruing out of part ownership of vacation properties, while might not account monumentally in financial terms, the leisurely advantages of utilizing such property allow the investors to change their workspace surroundings or in general, allows them to choose rather inexpensive modes of vacation. Furthermore, the ownership of real estate may act as the potential for lower-class investors who may want to opt for lesser investments.

As has been numerously recounted above, fractional ownership could prove to be the gateway to a real estate investment boom the sector so gravely yearns for, however, the legal procedures involve might turn off a certain class of investors, moreover, a relatively newer arena of investment always ends up taking a lot more time in yielding the benefits, even if the time-value of money is rather unaccountable, since the property provides more leisurely than commercial benefits, however, the case may differ.

Timeshare investments, while popular in western investment culture, are considered to be a relatively nascent area of investment, particularly while fractional ownership is considered to be the gateway to the current unstable recession in the real estate market. However, given the correct legal framework and taxation incentives, the current status of such investment could be elevated to providing the work-vacation culture with the stability that the recent short-lived boom is testament to.

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Second Wave Pressure on Real Estate Stakeholders

Residents are once again subjected to partial lockdowns and a host of limitations with the second wave of COVID-19 sweeping the country. The real estate industry is facing the burden of this, as there has been an increase in the number of property deals that have been postponed. The housing market did show hints of resuscitation in the first quarter of 2021, but the rising trend has already come to a standstill.

Indeed, if the second wave continues to rage across the nation in the next quarters, house sales will most certainly be curtailed, and property development plans will be abandoned or postponed.

Even during the initial lockdown, many construction workers abandoned their sites and returned home by any measures imaginable due to the threat of being infected by the virus, as well as a shortage of employment and inexpensive housing. It was terrible to see about 70% of the migrant workers return to their hometowns in 2020.

The real estate business was blindsided since developers missed prior information and skills to deal with the pandemic condition, and by the time individuals could start improvising new methods, most migrant workers had already fled the cities. As a result, the pandemic’s impact was particularly severe during the first wave.

In reality, due to the increase in instances in Maharashtra, the second curfew has resulted in an outside exodus of construction personnel. Furthermore, the worst-affected cities are Mumbai and Pune, in which the majority of real estate construction is taking place.

However, despite the overall number of active cases during the second wave surpassing all prior statistics, the real estate scenario is not as severe as the one in 2020, owing to the fact that no nationwide lockdown was implemented.

Furthermore, the situation is not as catastrophic as the year prior, so there is some optimism. According to Knight Frank India, the residential housing market in India has experienced a steady increase in both sales and launches in the first quarter of 2021.

This is a 44 percent increase over the same period the previous year. As a result, despite the fact that the second wave is destructive, it has not impacted the property market. As a result, even if the second wave is severe, it has not caught the real estate industry entirely off guard, as people have learned from Lockdown 1.0.

Interestingly, just 15% of construction employees in Maharashtra have left the sites to return home during the present lockdown. This is significantly lower than the figure for 2020, and it is not likely to rise since the authorities have supported and prepared builders, due to a significant beneficial impact.

Workers have recognized, based on their previous experiences, that they are considerably better off in metropolitan than in their homes and communities, where there are presently near to nil opportunities for employment.

Builders that take preventive steps and other efforts to protect their workforce have set the standard in the real estate industry. CREDAI (Confederation of Real Estate Developers Association of India) has promised construction employees not only housing but also foodstuffs, medical support, and improved hygienic conditions.

Workers may also expect prompt medical treatment and site inspection maintenance. CREDAI has also stated that it will deliver free vaccinations to nearly 2.5 million construction employees on the job. As a result, testing employees for COVID—19 regularly on the job sites and providing medical segregation facilities has undoubtedly increased the stakes involved in the real estate business.

As a result, despite the delayed pace of building due to the worrying number of covid-19 cases per day in Pune and Mumbai, the building is progressing. Ironically, this development activity is being driven by genuine demand, as the epidemic has increased awareness of the significance of housing.

Building construction is still one of the state’s leading employers of unskilled workers, and the demand to purchase a home has not waned in these extraordinary times. Because two positives can only lead to another positive, things are likely to return to normalcy as soon as the present lockdowns and limitations are released.

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Analysis of The Delhi Rent Control Act 1958

The motivation for the design of a rent control statute in the post-independence era was to protect economically disadvantaged parts of the community who couldn’t buy a property or qualify for loans due to bad credit scores. When demand for rental property exceeds supply and renters are abused by landlords, rent control measures are required.

As a corollary, the Rent Control Act of 1958 was enacted with the goal of protecting tenants’ rights, ensuring their safety, and limiting landlords’ ability to evict renters. The Act was written uniquely for each Indian state. The purpose of this essay is to examine and comprehend key parts of the Delhi Rent Control Act.

After years of trying to come up with the right law, Delhi finally established a comprehensive rent control law in 1958. The government imposed a rent restriction and established policies that favored renters, resulting in a general lack of interest among investors in purchasing real estate as a result of the DRC Act.

The Delhi Rent Control Act is intended to serve two main purposes: protect the tenant from paying more than the standard rent and protect the tenant from unilateral eviction.

The Act has changed again in 1988, exempting properties with monthly rents above Rs. 3,500 from the Rent Control Law and allowing landlords to increase rent by 10% every three years.

But, because the actual monthly rent at the time varied from the low double digits to barely Rs. 1000, and the legislation stipulated that assets would be subject to the DRC Act until the rent reached Rs. 3500, the realization of this rate failed to provide a significant profit for the landlords.

This amendment was guided by proposals to achieve a better mix between landlords and tenants and to reduce the inhibition of the Delhi Rent Control. However, the Act seeks to apply several other outdated regulations that do not allow landlords to revisit their rent. The relevance of the Act’s outdated requirements, as well as the law’s procedural legality, have been questioned on various occasions.

The DRC Act focuses on the mistreatment of tenants as well as the owners’ exorbitant rental charges, and the regulation of these activities, as well as rental management improvements, is a primary motive for the law.

Rental management also gives property owners more financial stability since, because loans are limited, inhabitants want to stay in an estate for a long time. This ensures that property owners will not face vacancies next year, as the existing renters are expected to extend and renew their lease.

The main effect of the DRC Act is a reduction in housing standards since assets are not maintained regularly and landlords do not increase the quality of the facilities until the returns begin to dwindle.

This law not only restricts the availability of legal rental homes but also eliminates applicants who force residents to establish informal or unrecorded agreements. The eviction of tenants is also a major issue that a landlord face which is very strictly monitored. 

The mismatch between the rent payable and the available lodging is another flaw; also, renters are unable to make modifications, renovations, or withdrawals in the building without the approval of the owner. In addition, the rent control methods entail high administrative expenses and a complicated enforcement mechanism.

Due to the poor returns imposed by the DRC Act and the Pagdi scheme, landlords have no motivation to make any modifications to the house, and to combat this scenario under this non-upgraded regulatory system, rentals have remained low while maintenance and operational costs have grown dramatically.

As a result, the Delhi government allowed landlords of buildings to raise the rent, paid, by 25% in 2020 to fund restoration work, as long as the majority of them remained secure and met safety regulations.

There have been petitions filed in the High Courts of Maharashtra, Tamil Nadu, and Karnataka, requesting that such antiquated rent control legislation be repealed. If any of these appeals are successful, Delhi may be on the verge of passing a tenancy law that benefits both renters and landlords.

To conclude, the Act’s major flaw is its stagnating property income, and implementing a new policy in lieu of the existing one would aid in raising investment and boosting the rental housing industry in the National Capital.

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Due Diligence in Real Estate Transactions

The word caveat emptor is not well recognized among most real estate owners and wealthy benefactors; nonetheless, it is amongst the most important and crucial legal criteria governing land transfers all over the world. In Latin, it translates as “let the purchaser be informed,”. It emphasizes that the consumer is solely responsible for ascertaining the quality and suitability of what they’re purchasing.

This is apparently the most important stage a client or funder would go through before negotiating a deal because it determines whether a property has the value it addresses. A property may appear to be perfect on the outside, but there may be factors why it should not be acquired at all or why it must be acquired for less than its listed price.

The expansion of inland exchange esteems joined with the developing investment of the coordinated area in the land has brought about increased attention to the dangers implied and, thus, the requirement for guaranteeing that the dangers are recognized and limited in such exchanges.

The rise in land exchange values, combined with growing investment in the integrated region in the land, has raised awareness of the risks involved and, as a result, the need to ensure that the risks are identified and minimized in such transactions.

Entrepreneurs will be preoccupied with finding better ways to progress open doors in a fast-increasing land commercial area. Veteran financial supporters in commercial real estate lay down every stone to reduce the possibility of post-exchange surprises. Given the breadth of the threats at hand, amateurs should use a comparable process and avoid rushing into an agreement.

Obtaining property necessitates further due diligence to find critical facts that aren’t always immediately apparent or attainable in determining the value of a property or portfolio. Such hidden nuances can derail the economic rewards of an overall beneficial agreement, turning the transaction into a costly blunder.

The relevance of performing real estate investigative reporting stems from the continual variations in the advantages of the property. As an outcome, the risks have escalated, as has the potential impact on the agreement. Due to cleverness concentrating on land resources might now analyze the genuine adequacy of the genuine trade.

As a result, it is critical for the placing organization to do an inquiry into the title, the legality of the projects being alluded to, the consents obtained, if any, encumbrances associated with the properties, and various other additional data that impact the notion of the exchange.

Thereafter, a property due diligence would basically seek to discover the merchant or lessor’s entitlements, proprietary rights, expenses, house mortgages, acquisitions, litigation, or any other constraints connected with the estate. Perseverance is important since it aids in the discovery of flaws in a project.

A thorough study is required to determine whether or not a property has any defects. Evidently, the seller would not be prepared to reveal the flaws in his resource in order to sell it at a reasonable price.

It is also possible that the merchant is aware of the risks associated with the commodity and is seeking to sell it to an inexperienced financier. Purchasing a property without first understanding its physical and legal condition is extremely risky. A buyer may be exposed to the risk of extortion, a pending case on the property, or the inability to get title to the property.

Furthermore, convincing due diligence would assist the buyer in making a better speculating decision. For example, due diligence may aid in identifying main damages that may be costly to repair, as well as unpaid charges, service bills, and other responsibilities that the merchant had failed to pay.

Given the foregoing, due diligence plays a significant role for an individual in any transaction involving land estate, whether it is for sale, purchase, rent, or house loan. Each such record or data concerning land property that impacts the character and transactions of such property must be tested and assessed.

Unexperienced financial backers may jump in whereby the qualified consumers fear to go, eager to participate in what appears to be a sure bet with no risk. Without a doubt, the lack of rigorous due diligence by all financial supporters might be a ticking time bomb, especially given concerns about a surging property market

Hardly any economic supporter can risk the extravagant surprise that arises as a result of an exchange’s completion. Furthermore, prior to entering into any such property exchange, it is appropriate to determine and ensure that all chain deeds, title archives, impediment endorsement, protection plans, and official permissions are in accordance with the legal requirements.

The proportion of due rigor varies with the value of the endeavor. The further money at stake, the more thorough the due diligence should be.

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Analysis of RERA Act

On May 1, 2020, the Real Estate (Regulation and Development) Act, 2016 (RERA) finished a long period since its establishment. This period is a conventional time skyline to consider the working of a Real Estate Regulatory Authority, set up under administrative law, in any event, to address the course, want, and assurance, with which it has accepted the job endorsed for it under the law.

The discussion among home buyers is that RERA, a law authorized to enable purchasers has been cunningly turned around into law for real estate developers – of the manufacturers – by the manufacturers, capably helped by the Regulatory Authorities. A look into the different web-based social networking trades would commute home the distress through which home buyers are getting hooked in the possession of the developer–authority nexus.

Starting with the guidelines under the Act being wrongfully weakened by some significant States (principally forgetting about progressing ventures); delays in the foundation of Authorities/Appellate Tribunals/Adjudicating Officers; deficient facilitating of sites with practically no undertaking data; and others, there is currently an additional weight of managing administrative torpidity.

The most evident of which is the easy-going usage of significant arrangements of the Act, to be specific – informing quarterly task refreshes; ensuring the upkeep of 70 percent venture assets in a different record; guaranteeing offices and enhancements as guaranteed; defending nature of development; knowing about purchaser complaints; and in particular, the execution of requests.

One plausible excuse, being promoted by the Authorities is ‘we need more powers’. This excuse is the oddest contention made by any Regulatory Authority over any part of India. Similar forces are accessible to most administrative specialists, cutting across areas, specifically – to force punishments, and to get orders executed for recuperations as unpaid debts of land income.

Truth be told, this is likewise conjured by the legal executive in instances of recuperation from delinquents. Actually, there is an absolute absence of importance to genuinely and powerfully actualize the Act.

On the other hand, some insignificant things are keeping a few Authorities drawn in, clearly by arrogating powers not given under the Act. One, the Authority of Self-Regulatory Mechanism (SRM) for manufacturers; one wonders, if developers were to self-manage, at that point, why would there be the requirement for RERA.

Moreover, if self-guidelines worked then would the circumstances have come to such a pass. Another, the Authority thought of ‘reviewing’ land ventures, clearly to help offtake deals for manufacturers.

All restrictions of semi-legal etiquette were crossed when Real Estate Regulatory Authorities of all States held hands to frame a skillet India Association. Have we at any point known about any affiliation framed by legal or semi-legal bodies?

As of late, there was a news report that this Association of Authorities, would seek after the Reserve Bank of India (RBI) for credit rebuilding for developers. It is bizarre, if not dubious, to see Authorities attempting to encourage supporting the board for developers.

Unpredictable expansion of undertaking enlistment has become a standard as opposed to an exemption. As of late, under the affection of COVID-19, most Authorities have offered six to nine months’ sweeping augmentation to all undertakings, past one year given under the Force Majeure clause in RERA. This was done to cleanse developers of any obligation towards intrigue, remuneration, and punishment, for delays.

The homebuyers’ locale is losing trust in RERA Authorities, which are encouraging the end of RERA, longingly looked for by manufacturers. In any case, we trust that the Central Government and especially the Prime Minister, will take comprehension of these practices, and find a way to bring the Authorities into the groove again.

One such initial step could be a quick review, either by the Comptroller and Auditor General of India (CAG) or some other able position, of the elements of the Regulatory Authorities’ opposite obligations indicated under the Act. The time, vitality, center, and assets squandered by the Authorities in doing the trivial items aforementioned, could have been all the more productively used for lively usage of RERA.

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