REAL ESTATE UPDATE
5th December 2022
Issue No. 16/22-23
DIGITISATION OPPORTUNITY IN REAL ESTATE
The Ministry of Electronics and Information Technology (“MeitY”) released a notification on 26th September 2022 that made the Information Technology Act of 2000 (“IT Act”) applicable to several new documents and transactions, this notification may help unlock digitisation opportunities in the real estate as well as financial sectors.
The First Schedule of the IT Act has provisions that governs the transactions which can be done online and the documentations that are valid online. However, there are some documents and transactions which cannot be done digitally as listed in the First Schedule of the IT Act. These exclusions have been so far seen to be high-risk, and for them, parties must only use paper records.
Through this new notification of MeitY (which has amended First Schedule), the following documents and transactions can now be executed digitally:
- The Demand promissory notes (DPNs) or Bills of Exchange issued in favour of, or endorsed by an entity regulated by Reserve Bank of India (RBI), National Housing Bank (NHB), Securities and Exchange Board of India (SEBI), Insurance Regulatory and Development Authority of India (IRDAI)and Pension Fund Regulatory and Development Authority (PFRDA).
- Powers of attorney (POAs) that empowers an entity regulated by RBI, NHB, SEBI, IRDAI and PFRDA to act for, on behalf of, and in the name of the person executing such POAs.
- Any contract for sale or conveyance of any immovable property, or any interest in such immovable property.
By this notification, it will now be possible to make all property transactions paperless provided the stamp and registration laws are amended in this regard. This is expected to reduce the administrative costs in real estate and in land records offices.
It is also going to be easier for lenders to disburse loans electronically, since it is now possible to create mortgages or promissory notes or get powers of attorney forming part of lending documentation using digital documents.
The said notification of the Ministry of Electronics and Information Technology can be accessed here.
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