What is Conversion in Real Estate?

Sujan Afi S

You wake up every morning and get ready for another hectic day. You travel by bus even if you have to bear lots of problems. You buy clothes only when the occasion comes. You don’t order pizzas or momos quite often. You make sure that you save 20 % of your salary every month! And the list goes on and on and on. When your friend asks you, “Why are you taking so much pain to save the amount?” The reply goes, “I want to have my own house. I don’t want my parents to stay in a rental apartment for long.” 

But… What if your hard-earned money is not utilised fully? What if your builder or developer keeps aside some amount of money for his/her use? It will hurt you. But there might be several instances where the real estate agent might utilise your fund for his/her benefit. This is the case of “CONVERSION”. 

In a very simple word conversion can be defined as one kind of intentional tort. It is the deprivation of rights of other people regarding possession or use of the personal property. The property is not ‘real property’, i.e., land with permanent improvements. Here a person uses the money or property upon which he has no rights. In other words, the property or money rightfully belongs to another person. It is an unauthorized act through which one deprives a proper owner of personal property generally without his/her consent

In this way, the owner is excluded from enjoying or using his/her personal property. Therefore, it is completely illegal. In the case of conversion, one pretends to own something; but in reality, it belongs to someone else. In the process of conversion, someone may steal your property or act as if they own the property (which, lawfully, is yours). Hence, it becomes a matter of concern for you. 

What is Conversion in Real Estate?

In the sector of real estate, the term ‘conversion’ has multifaceted uses. But, the term ‘conversion’ is used when a real estate agent uses the owner’s asset (like the fund, etc.) for his/her personal use. It is the illegal act through which someone uses or enjoys the personal property or funds that have been entrusted for use in some different kind of purposes. For example, you give 1 lakh to a builder for buying some building materials. He buys something for himself using some amount of money that you have given him for buying some building material. Then, it becomes a case of conversion.

A Deeper Understanding

The meaning of conversion in the real estate sector can be explained through various points of view. Although a real estate agent is entrusted with funds or personal property of the owner for improving or repairing the property of the owner. But in case of conversion, the agent usually withdraws from this fund for his personal use, like for purchasing personal property, etc. Therefore, it is a crime as the realtor or real estate agent cheats the owner in the entire process. If the real estate agent tries to replace the fund (which he previously borrowed from the trust) with money of his own then he/she commits another serious crime which is known as ‘commingling’

At times you might see that the real estate agent might use some of the personal belongings (of the owner) like, furniture, electronic gadgets and appliances, decorative items or any other kind of home listed property without the consent of the owner. In such a case, the real estate agent might remove the home listed property for his/her personal use. In many cases, the realtor or real estate agent sells the home listed property without the consent of the owner! This is recognized to be a serious crime, i.e., conversion in the real estate sector. Exchange of the personal property of the owner with the property of the real estate agent is also seen as a conversion when the consent of the owner is not taken.

Committing conversion in the real estate sector is witnessed to be a serious and punishable offence. Therefore, the injured party, i.e., the client or owner of the property can seek legal relief. 

Example of Conversion in the Real Estate Sector

  1. Mixing the fund of the client with the personal fund of the agent.
  2. Using the home listed property of the owner for personal use.
  3. Utilising the fund of the owner or client for the personal purpose of the realtor.
  4. Selling/using any personal belonging of the owner like home appliances etc. by a real estate agent without the consent of the owner.
  5. Exchanging the owner’s/client’s personal property with the property of the realtor or real estate agent.

In the End

I hope that I have been able to explain to you the concept of conversion. Committing conversion is a serious crime. It is an unethical and legal violation of the trust which is generally shared between the owner (client) and real estate agent. 

Once the trust is broken, things get worse. Thus, try to choose a builder or developer who will never break your trust, because, this very trust is the key to every relationship.

If you are new in the field of real estate, try to consult with an expert before taking any decision. You can contact us at info@roodland.com to get the advice of our experts who will guide you in the right direction. We understand you and try to build up a bond of trust with you.

Roodland India is always there to help and guide you in matters related to real estate. So, feel free to contact us in case you need any assistance.  


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