Thursday, March 10, 2016

REAL ESTATE (REGULATION AND DEVELOPMENT) BILL- Good News For Buyers

REAL ESTATE (REGULATION AND DEVELOPMENT) BILL

A long standing demand of the real estate consumers come to an end with a regulatory mechanism “Real Estate (Regulation and Development) Bill” certainly it is going to be a game changer with regard to arbitrary behavior of Builders, estate confidence building.

Background: 
Real estate development and housing construction was largely the concern of State institutions till the 1980s with very few private promoters and a nascent industry. With the liberalization of the economy, conscious encouragement was given to the growth of the private sector in construction, with a great deal of success, and the sector today is estimated to contribute substantially to the country’s GDP.
 Currently, the real estate and housing sector is largely unregulated and opaque, with consumers often being unable to procure complete information, or to enforce accountability against builders and developers in the absence of effective regulation.

Key Features:

Applicability of the Bill

It is now proposed to cover both residential and commercial real estate;
Except the Municipal bodies and government projects

Mandatory Public Disclosure of All Project Details

This law makes it mandatory for developers to post all information on issues such as project plan, layout, government approvals, land title status, sub contractors to the project, schedule for completion with the State Real Estate Regulatory Authority (RERA) and then in effect pass this information on to the consumers. 
Discloser of Carpet Area

The current practice of selling on the basis of ambiguous super built-up area for a real estate project will come to a stop as this law makes it illegal. Carpet area has been clearly defined in the law, as net usable area of an apartment which means now you will be charged only for your carpet area.

Compulsory Deposit Of 70 Percent

This Act obliges the developer to park 70% collections from buyers should be deposited in separate escrow account to cover cost of construction and land. This will ensure that developers are not able to invest in numerous new projects with the proceeds of the booking money for one project, thus delaying completion and handover to consumers. 

Alteration In The Plan

The developer cannot make any changes to the plan that had been sold without the written consent of the buyer. This puts paid to a common and unpopular practice by developers to increase the cost of projects.

Delay in project- Developer Liability

Any delay in project completion will make the developer liable to pay the same interest as the EMI being paid by the consumer to the bank back to the consumer. 

Establishment of Real Estate Regulatory Authority

Establishment of one or more ‘Real Estate Regulatory Authority’ in each State/ Union Territory (UT), or one Authority for two or more States/UT, by the Appropriate Government for oversight of real estate transactions.
To appoint one or more adjudicating officers to settle disputes and impose compensation and interest.

Establishment of Real Estate Appellate Tribunal

Real Estate Appellate Tribunal to hear appeals from orders of the Authority and the adjudicating officer.

Fast Track Dispute Settlement Mechanism

Appellate Tribunals will now be required to adjudicate cases in 60 days as against the earlier provision of 90 days
Punitive Provisions:

The maximum jail term for a developer who violates the order of the appellate tribunal of the RERA is three years with or without a fine.

The Bill provides for imprisonment of up to three years in case of promoters and up to one year in case of real estate agents and buyers for any violation of orders of Appellate Tribunals or monetary penalties or both.

Misleading advertisements to be made punishable offence where first-time offenders will be fined 10% of project cost and repeat offenders could face jail term.

Opinion
No doubt, it is going to be a big support to consumer against the  arbitrary nature of builders, but the success of the bill depend on the fast track adjudication, else it would be a piece of legislature.
If we compare it with the Consumer Protection Act, which has also the sprite and Mandate for time bound disposal, but it seems to be contrary to it, and rather protecting the consumer it is losing it sprite, because of delay in disposing the case.






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