- 1 Introduction:
- 1.1 Laws in relation to Real Estate in Bangladesh:
- 1.2 Rights and liabilities of Landowner & Real Estate Developer:
- 1.3 Rights and liabilities of the Landowner:
- 1.4 Rights and liabilities of the Developer company:
- 1.5 Concluding remarks:
There are many Real Estate Developer Companies in Bangladesh, which have been involved in making construction on the landowner’s land with permission from the landowner. As a result parties are entering into agreements for fulfilling the required legal formalities. Very often various dispute arises between the real estate developer and the land owner in relation to the rights and liabilities against each other. Therefore, both the parties need to be aware of the existing law in relation to their liabilities before entering into any kind of formal agreements. This writing will focus on the rights and liabilities of the land owner and real estate developer against each other in light of the laws, rules and regulations in force in Bangladesh.
Laws in relation to Real Estate in Bangladesh:
The Constitution of Bangladesh; The Contract Act, 1872; The Real Estate Development and Management Act, 2010; The Real Estate Development and Management Regulation, 2011; Specific Relief Act, 1877; Arbitration Act, 2001; Transfer of Property Act, 1882; the Registration Act, 1908; Land Development for Private Residential Projects Rules, 2004; The Building Construction Act, 1952; Building Construction Rules, 1996; Town Improvement Act, 1953; Private Residential Project Land Development Rules, 2004; Partnership-based Infrastructure Development (Flat Construction) on Public Land Rules, 2008; Bangladesh National Building Code, 2006; Trade Organizations Ordinance, 1961; Government Circulars & Notifications etc.
Real estate explained:
The Real Estate Development and Management Act primarily governs the real estate related matters with all the other applicable relevant laws. According to this Act, ‘Real Estate’ means land based property developed for sale and purchase in the real form of following, i.e. residential, organizational, commercial plot, apartment flat, organizational or mixed floor space built or developed. The applicability of this Act is limited to private or mixed ventures, i.e. projects undertaken by the land owner himself or by the developer in his own land etc., excluding the government initiatives. However, in case of joint-venture assignments between the government and private developer companies the abovementioned law is applicable.
Mandatory requirement of Developer companies:
For the developer companies, it is a mandatory requirement to mention the following, i.e. registration number, sanction number of the authorized plan with memo numbers, dates of such grants etc. in its published prospectus or in order to publish advertisements in public media for sale of any real estate. It is to be mentioned that, the landowners and developers does not have the authority to initiate or carry out construction work till receiving of design, allotment and other necessary permissions from the concerned government authority.
Rights and liabilities of Landowner & Real Estate Developer:
The parties in relation to the agreement needs to know their rights and liabilities first, to conduct and complete all the legal formalities amicably without any dispute or hassle, as per laws in force in this country. However, if any dispute arises, the concerned parties, i.e. landowner, developer company etc. to the contract have the option to resolve the disputed issues mutually and if not yet resolved then they have the option to resolve the matter through arbitration and in this case, the decision from the arbitration tribunal will be binding upon the parties. On the other hand, if no parties are willing to present and resolve their matter in the arbitration tribunal, subsequently they have option in hand to go to the concerned learned court to resolved their disputed matter.
Rights and liabilities of the Landowner:
Handover of the necessary documents:
The landowner has all the right to get the required documents of the property from the developer company and similarly s/he is bound to provide all the necessary document to the developer company, as per agreement, as well as following the laws in force in the country. Also the landowner is required to execute the power of attorney in favour of the developer company.
Compensation in case of delay:
As per REHAB code of conduct, a mutual agreement between the landowner and the developer company has to be executed, which will entitle the landowner to rental compensation which will be paid on a monthly basis by the developer company, in case of any delay made by the developer company.
Transfer of possession:
The owner of the land is bound to hand over the possession of the land to the developer company for the purpose of its development as per terms and conditions of the contract. Also, after the completion of the development of the real estate, the company is liable to handover the possession of the allotted portion of the property to the landowner.
Punishment for delay:
If the landowner with malafide intention delays the handover over the possession of the property or cancels the Power of attorney executed in the name of developer company without providing previous notice of 30 days, then the s/he will be liable to punishment, i.e. maximum monetary penalty amounting to BDT ten lacs and/or imprisonment not exceeding two years, as per law, i.e. Real estate development and management Act of this country. On the other hand, if the delay of handing over the possession is from the developer company, then the landowner is lawfully entitled to compensation as per agreement and laws in force in this country.
Right to file suit against developer:
Depending on circumstances, if any dispute related to real estate matter arises between the landowner and the developer company, then the aggrieved landowner can file a suit for specific performance of the contract against the developer company on various matters done in breach of contract, i.e. continuous delay in development of the land, for possession of the allotted property etc.
Moreover, the landowner may also file a writ under the Constitution for the purpose of availing his or her desired remedy, if there is no other equally efficacious remedy available, as per law of this country.
Rights and liabilities of the Developer company:
Incorporation, registration and membership:
First and foremost, all the developer companies are required to be incorporated with registration as per law with the concerned government authorities, i.e. RJSC etc. to run its operation in Bangladesh, breach of which the developer company will be liable to imprisonment of two years or penalty of ten lacs BDT or both. The amount of punishment is same as aforesaid, if the developer company beings work on real estate project without approval from the appropriate authorities. Also the developer companies have to be taken membership from the relevant authorities, i.e. REHAB etc. to be recognized as a legally valid in Bangladesh.
Handover of the necessary documents:
The developer company is bound to provide all the required documents to the landowner, also to the purchasers at the time of handing over of the portion of the property ensuring other services and benefits, i.e. parking, telephone, water, gas etc. after the completion of the construction, as per agreement. Similarly, the landowner is bound to provide all the necessary documents to the developer for the purpose of development of the land. Moreover, the developer company is bound to handover the deeds of the property, i.e. sale deed, registration etc. to the purchaser within three months of payment by the purchaser.
Execution of deeds:
If no power of attorney was executed by the land owner in favour of the developer company for the purpose of executing sale deed and completion of registration in favour of the purchaser of the developer’s part of the property, then on request in writing from the developer company, the landowner is bound to execute the deed in favour of the purchaser within 15 days of the receipt of the notice. However, if the landowner does not comply with the said notice, then the developer company will be able to complete the sale deed, as if, it itself is the owner of the land and will also be able to complete the registration.
Repair and maintenance liability:
It is to be mentioned that, if repairs are required due to construction defects after handover, the repair work shall be completed at the developer’s own expense for at least two years from the date of handover. Also, as per the terms of the agreement executed between the parties, each developer has to maintain the real estate for at least one year after the transfer.
Transfer of possession:
The landowner is bound to transfer the possession of the property, i.e. land etc. to the developer company for the development of the estate. Similarly, the developer company is bound to transfer the possession of the allotted portion of the real estate, i.e. apartment, plot of land etc. to the landowner/s within time, which was agreed between the developer company and the landowner/s as per the deed of agreement as per law, i.e. Real estate development and management Act of this country.
On the other hand, in the event of delay in handing over the possession to the landowner, the developer company is liable to pay rental compensation as per agreement between the developer company and the land owner which is subject to exception in case of following issues, namely- natural disaster, political turmoil, unusual rise of prices of the building material, delay in getting utility connection from the appropriate authority or other force majeure.
Punishment for the developer company for certain deeds:
If the developer company mortgages real estate without consent of the purchaser, it will face punishment of imprisonment for one year or a fine of up to BDT five lakhs or both.
In addition, for illicit gain, if the real estate company uses substandard material or if the proper quality and quantity of materials are not used for construction, or if the real estate construction was made outside of the approved design, or if the real estate were not sold to the owner without his knowledge as promised, then the developer company will be liable to imprisonment for a term not exceeding three years or a fine not exceeding twenty lakhs or both.
Moreover, in breach of agreement between the developer company and the landowner, for the following, i.e. intentional delay of development work without paying compensation, refusal to hand over the property etc. the developer company will be liable to punishment, i.e. penalty not exceeding BDT twenty lacs and/or two years of imprisonment etc.
Furthermore, if the services or facilities, i.e. water, gas, electricity etc. as mentioned in the prospectus were not provided by the developer company as promised in the prospectus by the developer company during the handover of the portion of the property, i.e. flat etc., then the developer company will be liable to penalty of less than BDT five lakh, non-payment of which it will be liable to imprisonment of less than one year.
Right to file a suit against land owner:
As a legal entity, the developer company has the right file a suit against the landowner, if it is the aggrieved party of any of the disputed matter related to real estate as per laws in force in this country.
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