REGULATORY FRAMEWORK FOR FRACTIONAL OWNERSHIP OF PROPERTY: EVALUATING SEBI’S RECENT AMENDMENT AND COMPLIANCE REQUIREMENT

AUTHOR – RADHIKA BADERIA, ADITYA PRATAP SINGH, AVIRAL SINGHAI & SHUBHAM SHARMA

STUDENTS AT NATIONAL LAW INSTITUTE UNIVERSITY, BHOPAL

BEST CITATION – RADHIKA BADERIA, ADITYA PRATAP SINGH, AVIRAL SINGHAI & SHUBHAM SHARMA, REGULATORY FRAMEWORK FOR FRACTIONAL OWNERSHIP OF PROPERTY: EVALUATING SEBI’S RECENT AMENDMENT AND COMPLIANCE REQUIREMENT, INDIAN JOURNAL OF LEGAL REVIEW (IJLR), 6 (3) OF 2026, PG. 1019-1030, APIS – 3920 – 0001 & ISSN – 2583-2344.

ABSTRACT

In recent years, the concept of fractional ownership has gained significant traction as an alternative approach to property ownership or real estate investment. Fractional ownership allows individual investors to co-own commercial or residential properties as an alternative investment route. According to this concept, Properties are acquired through Special Purpose Vehicles (SPVs) or Fractional Ownership Platforms (FOPs), with investments typically directed towards pre-leased assets, ensuring monthly rental returns for investors. However, in India the concept of fractional ownership is regulated by various SEBI regulations and different legal frameworks. The Real Estate (Regulation and Development) Act, 2016 (RERA) had provided a regulatory framework for Real Estate Investment Trusts (REITs). It aims to protect the interests of buyers by ensuring transparency, fair practices, and timely delivery of projects. However, the focus of the regulatory framework always revolved around large REITs with minimum real estate assets of at least 500 Crore Rupees. Therefore, in order to regulate small enterprises offering FOPs, recently, SEBI has notified amendments to the REIT Regulations to introduce a framework for small and medium Real Estate Investment Trusts (SM REITs) on March 8, 2024. This research paper therefore, aims to explore the legal implications revolving around the concept of fractional ownership, and how does the recent SEBI amendments address the specific challenges faced by fractional ownership platforms along with the compliance requirements for SPVs and FOPs under the SEBI regulations and other relevant laws, lastly, whether these regulatory frameworks ensure investor protection and transparency in fractional ownership schemes?

KEY WORDS: Fractional Ownership, SEBI (Real Estate Investment Trusts) Regulations, 2014 (2024 Amendment Regulations).