How do you take a handover from a builder?

Nemmadi RWA HOTO Audit

In the Indian real estate industry, the process of “handover takeover” or “Builder Handover Process” refers to the transfer of ownership and responsibility for a housing project from the builder to the Residents’ Welfare Association (RWA) and the society at large. This process is critical in ensuring that the housing project is safe, habitable, and well-governed for the residents.

What is the Handover Takeover:

The builder handover process, also known as the “handover takeover,” involves several steps that must be completed before the RWA / society can take over the management and maintenance of the housing project. Some of the key steps include (in no particular order):

  • Obtaining all the various legal documents and certificates, such as to name a well known one – occupancy certificate,  and other necessary permissions from the local government. 
  • Completing final inspections by the builder’s Quality Control team and making any necessary repairs or modifications. 
  • Transferring utility connections and other services to the RWA / society.
  • Providing a list of the amenities and common areas that will be maintained by the RWA. 
  • Providing training and instructions on the operation and maintenance of any equipment or systems in the building

Importance of Builder Handover to Society:

The handover of a housing project from the builder to the RWA / society is an important step in ensuring that the project is safe, habitable, and well-governed for the residents. Some of the key benefits of the handover process include:

  • Ensuring that the housing project is safe and habitable for the residents
  • Enabling the RWA to take over the management and maintenance of the common areas and amenities
  • Facilitating the transition from a builder-controlled environment to a self-governed community
  • Creating a sense of ownership, responsibility, and self-governance among the residents.

When does the Builder Handover to society:

It’s important to note that in this context, handover from builder to RWA and handover from builder to society is the same. Both the RWA and society are separate entities, but their responsibilities are intertwined. While the builder may transfer ownership and responsibility for the housing project to the RWA, it is ultimately the responsibility of the society to maintain and govern the community. The RWA acts as a liaison between the society and the builder and represents the society in matters related to the housing project. Builder hands over the housing project to the RWA and society once all the necessary steps such as obtaining occupancy certificates, completing final inspections, and transferring utility connections and other services are completed, the project is deemed fit for habitation and ready for society to take over.

Is there a Builder Handover checklist?

It is possible to generate a builder handover checklist, it would be a very detailed and technical checklist.  To understand in a cursory manner what this would contain we should look at “how a society should take over from the builder?”

How a society should take over from the builder?

As you may already know, this is not an easy task or a task that can be completed in a day or two. Our suggestion is that an RWA engage a 3rd party consulting engineering firm that will help the RWA in their HOTO Process.  

You may ask “how long after practical completion is the handover?” or “when a builder should handover to society” 

Technically, here is what RERA Chapter III, sections 17, clause 1 and 2, has to say 

According to the Real Estate Regulation and Development Act (RERA), Chapter III, sections 17, clause 1 and 2, the builder must transfer ownership of the completed apartments and common areas to the resident welfare association (RWA) or the competent authority within a specified period as per local laws. This transfer of title can also be referred to as handover. Specifically, the conveyance deed must be executed and the physical possession of the property must be given to the allottees and the common areas to the RWA or the competent authority within three months from the date of the occupancy certificate. Additionally, the builder must handover necessary documents and plans, including common areas, to the RWA or the competent authority within thirty days after obtaining the completion certificate.

In ideal circumstances, the builder will consent to and facilitate the formation of a Residents Welfare Association (RWA). Reviewing the construction agreement will indicate whether the builder is required to give their consent for the formation of the association. Though not legally necessary, obtaining consent can bring transparency to the process. Reputable builders may initiate a meeting for all flat owners to form the RWA and nominate volunteers, possibly even taking the lead themselves. In this case, the builder will handle all necessary formalities upon request, and the handover process will be completed through mutual discussion with association members. However, if the RWA is formed without the builder’s consent, it may be more difficult for the association to take possession of the finished flats.

Forming a Resident Welfare Association (RWA) without the builder’s consent can be a complex task, but it can be done. 

Here is a step-by-step process on how to form the association without builder’s consent, which is not needed:

If the builder hasn’t started the formation of the association during the specified time period, affected or residing owners can come together and form the association. A minimum of 7-10 volunteers are ideally needed to represent the welfare of the owners, this varies based on the laws of your state.

Suggestion is to first, create a WhatsApp group for residing owners and add non-residing owners if possible, to gain support. Next, hold a meeting with an agenda, discuss the formation of an Executive Committee/Management Committee, and make a minutes of the meeting(MoM), an MoM is mandatory.

Then, draft the bylaws of the association with the help of established associations’ bylaws, as they have made several revisions based on the Registrar of Societies and Auditor observations.

There is still a debate as to which of the two is better: Registrar of Societies or Apartments Ownership Act. It is advisable to seek legal advice on this matter.

If you are following the Registrar of Societies path, then – The association should then be registered with the Registrar of Society and obtain a certificate. After obtaining the certificate, inform the owners, builder, local Panchayat, police station, etc. that the association has been formed and registered and that it will be taking charge from the builder in a stipulated time frame.

Send a series of reminder letters to the builder until they come forward with a plan for handing over. If necessary, engage a lawyer with the takeover target month and inform it to the association notice board.

Meanwhile, apply for a PAN in the association’s name and open a bank account in a nationalised bank. Appoint an Estate Manager 2-3 months prior to taking over and you may also insist that the builder pay his salary, if that doesn’t work, his salary can be diverted from the residing owner’s Maintenance Charges (MC).

Request and instruct all residing and non-residing owners to start paying the MC account from the target month you set to the builder. Appoint a facilities management agency to take care of maintenance, security, and housekeeping in a phased manner to match with the taking over of collection of MC. Make sure to recruit a team to support the existing RWA Management Committee (MC) / Executive Committee (EC) Members, and have the owners fully support the association MC/EC members without conflict.

What does a Builder Handover Takeover Audit entail?

It is always a good idea to have a 3rd party audit the works to have a outside educated perspective. As an organisation that performs these audits we have written a few blogs that will explain the process.

Conclusion:

In conclusion, the builder handover process, also known as the “handover takeover” is an important step in the Indian real estate industry, as it ensures that housing projects are safe, habitable, and well-governed for the residents. By transferring ownership and responsibility for the housing project to the RWA and society, the builder enables the transition from a builder-controlled environment to a self-governed community and creates a sense of ownership, responsibility, and self-governance among the residents.

 

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