Benami law helps property buyers

Benami law lets realtors, banks, and buyers can do real estate deals without any doubt about legality.

Banks take their own sweet time to ascertain the legality of a property that a loan seeker may want to buy. This is to filter out the number of cases of benami properties where fraudsters, in their quest to conceal property ownership, get multiple properties registered under someone else’s or even a fictitious name. In its quest to clean up the system and ensure no black money is used to buy or sell benami properties, the government has now cleared the Benami Transactions (Prohibi-tion) Amendment Act.

Here is a look at the important aspects of the Benami Transactions Amendment Act and what you should know as a property holder to stay clear of legal trouble.

Real estate and black money trail It is an open secret that black money hoarders invest some of their ill-gained wealth in real estate. The government has ensured such infusion of black money in the real estate market gets tracked with a complete overhaul of the system.

The three essential regulations of Real Estate (Regulation and Developm-ent) Act, 2016, the Land Acquisition Rehabilitation and Resettlement (Amend-ment) Bill, 2015 and now the Bemani Transactions (Prohibition) Amendment Bill, 2015 are poised to make the real estate sector free from any black money infusion while ensuring consumer safety.

Overview of Benami Transactions (Prohibition) Amendment Act The Benami Transactions (Prohibition) Amendment Bill, 2015 recently received the nod from both houses of parliament. As per the new regulation, there has been an amendment in the definition of what will constitute a 'benami' transaction. The bill streamlines processes to establish adjudicating authorities including a dedicated appellate tribunal for all benami transactions.

If anyone is found to own any kind of benami transaction, the legislation allows for confiscation of the property as well as fine and a jail term for the benami owners.

Penalties as per the new Benami Amendment ACT The new Benami Transactions (Prohibition) Amendment Act increases the penalty of anyone having any benami transaction from the existing 1-3 years period to a seven-year period. Apart from the jail term, the property owner will also have to pay a penalty of 25 per cent of the fair market value of the benami property. The government can also have the right to confiscate the benami property. How passage of benami transactions bill helps you as an investor The Benami Amendment Act is not just another regulation. The passage of the Benami Transactions (Prohibition) Amendment Bill, 2015 can help you in more than one way.

Banks and NBFCs will lend with confidence Today, banks and NBFCs take a long time in scrutinising a property before approving any associated loans. The rising bad debt and incidents of benami fraud have made banks reluctant to approve loans quickly.

With the Benami Amend-ment Act in place, banks and NBFCs will have reasons to be assured of a property’s legality and therefore approve loans faster as any property-related benami transaction can lead to a high risk of jail and fine for the owner-a huge deterrent by any yardstick. Rationalised real estate pricing Black money was used by individuals to purchase benami real estate assets. With a strong law, the incidence of benami property ownerships is likely to decline, resulting is more realistic and rationalised prices.

With no more inflated real estate prices because of infusion of black money in the realty market, the dream of a common man to have a home can be achieved with ease.

This law is one of the many much awaited regulations to clean the economy resulting in a crackdown on domestic black money. It is now poised to catalyse the real estate market and rationalise property prices, a win-win for both property developers and buyers.

Smoother land transactions Since benami transactions have been a major factor in land ownership, land transactions would get smoother. This means builders can now acquire property with ease, leading to faster approvals and faster real estate development.

As a buyer, you can get a ready real estate product developed in a quicker timeframe as the builder will enjoy clear and faster land transaction and purchase.

The writer is the CEO of BankBazaar.com