Landowner & Real Estate Developer: Rights and Liabilities 2024

Introduction

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 to 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 parties need to be aware of the existing law in relation to their liabilities before entering into any kind of formal agreement. 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 Law Explained

 

The Real Estate Development and Management Act primarily governs 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 the 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 on his own land etc., excluding government initiatives. However, in the 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 the sale of any real estate. It is to be mentioned that, the landowners and developers do 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 need 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 an option in hand to go to the concerned learned court to resolve 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 documents to the developer company, as per the 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 the 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 the terms and conditions of the contract. Also, after the completion of the development of the real estate, the company is liable to hand over the possession of the allotted portion of the property to the landowner.

Punishment for the 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 the 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 the 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 the 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 the 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 their 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 the same as aforesaid if the developer company beings work on a 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 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 hand over 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 the 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 the agreement between the developer company and the land owner which is subject to exception in case of the following issues, namely- natural disaster, political turmoil, the 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 the consent of the purchaser, it will face the 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 materials or if the proper quality and quantity of materials are not used for construction, 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 the 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 a 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 the landowner

 

As a legal entity, the developer company has the right to file a suit against the landowner, if it is the aggrieved party of any of the disputed matters related to real estate as per laws in force in this country.

Concluding remarks

Counsels Law Partners (CLP) is a full-service law firm which has been dealing with real estate-related matters on a regular basis, i.e. providing a legal opinion, consultation, arbitration, litigation etc. through its competent experienced lawyers since its beginning. Therefore, if you need any assistance or consultation, visit us at our office or feel free to contact us at +8801700920980 (WhatsApp) or via Email-  info@counselslaw.com