What is FSI?

What is FSI?

Floor Space Index(FSI) means the quotient of the ratio of the combined gross floor area of all floors excepting areas specifically exempted under these Regulations to the total area of the plot.

Is the leave and licence agreement generally signed in multiples of 11 months or 12 months?
Is there any stipulation of time?

Formerly leave and licence agreements used to be signed in multiples of 11 months or 12 months. After The Maharashtra Rent Control Act,1999 came into
force from 1.3.2000 there is no stipulation as to whether leave and licence agreement should be in multiples of 11 or 12 months, and there is no stipulation as to total time period. However Leave and licence agreement generally does not exceed three years.

Can premises already encumbered to a bank be leased out to a Company with a high deposit
and in case of a default who holds the first lien?

And will the Company/Occupant be evicted? Yes premises already encumbered to a bank can be leased out to a Company with a high deposit. However you may require the No-Objection of the bank. If the deposit monies are with you and in case if you default on payment to the bank, obviously you will continue to hold the deposit money. The Co./occupant can be evicted only if there is a provision to that effect in the lease Agreement.

Is Business Centre Agreement done for Commercial Premises safe?

If the Business Centre Agreement is genuinely a Business Centre Agreement then it is safe to use commercial premises as such business center, since you shall be in physical control of the premises

What is TDR?

Rule 34 of the Development Control Regulations for Greater Bombay,1991 defines TDR which stands for Transferable Development Rights as under: ‘In certain circumstances, the development potential of a plot of land may be separated from the land itself and may be made available to the owner of the land in the form of Transferable Development Rights. These rights may be made available and be subject to the Regulations in Appendix VII hereto. Appendix VII lays down the rules for the grant of Transferable Development Rights to owners/developers and conditions for grant of such rights: 1. The owner (or lessee) of a plot of land which is reserved for a public purpose in the development plan and for additional amenities deemed to be reservations provided in accordance with these Regulations excepting under certain conditions shall be eligible for the award of TDR in the form of Floor Space Index(FSI) to the extent and on the following conditions set out below. Such award will entitle the owner of the land to FSI in the form of a Development Rights Certificate (DRC) which he may use himself or transfer to any other person. 2. Subject to Reg.1 where a plot of land is reserved for any purpose specified in S.22 of Maharashtra Regional and Town Planning Act,1966 the owner would be eligible for DR’s to the extent stipulated in Rules 5 & 6 in this Appendix after the said land is surrendered free of cost or after completion of development. 3. TDR’s will be available only for prospective development of reservations. 4.DRC’s will be issued by the Commissioner himself giving details of FSI credit. 5. The built up area for the purpose of FSI shall be equal to the gross area of the reserved plot to be surrendered. When the owner or lessee also develops or constructs the amenity on the surrendered plot at his cost, he may be granted a further DR in the form of FSI equal to the area of the construction/ development done by him.

Is registration of a Leave and Licence mandatory and what are the consequences
if the same is not registered?

As per Section 55 of the Maharashtra Rent Control Act, 1999 registration of Leave and Licence Agreement is compulsory and it is the responsibility of the landlord to ensure registration. If the same is not registered, the landlord would be prosecuted and on conviction he’s subject to upto three months imprisonment or be subject to fine not exceeding Rs.5000/- or with both. Further in the absence of a Registered Agreement, the contention of the tenant, about the terms and conditions on which the premises have been given to him by the landlord shall prevail unless otherwise proved.

How do I determine the property tax on the rent received as I have given the premises on higher
rent to a Company? Are there any guidelines set by the BMC?

The calculation of property tax on rent cannot be generalized and depends on various factors, but however if the premises are rented out to banks, companies, multi-nationals, etc. who are exempted from the provisions of the Maharashtra Rent Control Act,1999 by virtue of Section 3(1) (B) of the Act then the rates of property taxes could be as high as 60% or so. If the premises are rented out to others, who are protected under the Rent Act, the Mumbai Municipal Corporation cannot charge taxes on the actual rent and have to base their taxes on Standard rent defined under the Act, which is, in most cases lower than the actual market rent.

Society charges us heavy amounts and even deposits if we give our apartment on Leave and
Licence basis without payment of past dues which are in litigation? Would occupation by
the occupant create more trouble for him and me?

Although there are no fixed rules on the subject. However the society must be reasonable in all matters and if it is charging an exorbitant amount you could approach the Registrar of Co-operative Societies.

The society refuses to give us NOC for leasing the apartment on leave and licence basis
without payment of past dues which are in litigation?

Would occupation by the occupant create more trouble for him and me?If the society is not giving you its No-objection and you still give your flat out on leave and licence, the society could file a suit against you and the licencee and take legal action.

What is the difference between lease and leave and licence agreement?

Lease is defined under Section 105 of The Transfer of Property Act,1882 and a lease of immoveable property is a transfer of a right to enjoy such property for a certain time or in perpetuity on consideration to be rendered periodically or on specified occasions, while a licence is defined in Section 52 of the Indian Easement Act,1882 and it does not create any interest in the premises in favour of the licensee excepting a mere right to use and occupy the premises for a limited duration. Both documents have now to be registered. A lease deed is required to be stamped and registered. However the stamp duty payable on lease is more than on Leave and Licence for a period upto three years. For a period exceeding three years the stamp duty is same for both agreements. The implications of entering into a lease agreement would be: i) That stamp duty would have to be paid ii) That the document would have to be registered iii) That Municipal taxes may go up iv) Of course, Income-tax would have to be paid on your income; and v) The question of Wealth-tax would have to be considered. One property is exempt from Wealth-tax. However, if you have any other property, this implication would have to be considered.