The Real estate bill is a reality, effective May 1, 2016. It’s time for states to follow the suite.
The real estate industry is a significant contributor in country’s GDP. The stress in the sector affects overall growth of the country. It is perhaps essential to revive the sector. So the real estate bill is looked as a first step towards instituting transparency and confidence among consumers as this bill can revive consumer sentiment and increase the demand. This can also attract foreign investment to the industry resulting in better prospects for the industry in days to come.
The real estate and housing sector is largely unregulated and opaque. The consumer often does not get complete information about the project. Also, the customer cannot enforce accountability in the absence of strong regulatory environment. The bill intends to address the grievances of buyers by bringing in accountability and efficiency. There will be setting up of a Real Estate Regulatory Authority(RERA) for speedy adjudication of disputes. The bill aims to create a uniform regulatory environment.
The bill contains provisions of registration of real estate projects, Promoters and real estate agents with Real Estate Regulatory Authority. A registration number will be allotted. The project details need to be disclosed once registration is completed.
Promoters of the project have to register the project with Regulatory authority before advertising to sell. The project can be plots, villas or apartments. In case of an ongoing project which are not completed or received completion certificate, promoters shall make an application to the Regulatory authority for registration within a period of 3 months from the commencement of the act. If the project is scheduled to complete in different phases, each phase needs to be registered as one or standalone project. The registration application from builders and promoters must contain comprehensive details of promoter such as registered address, enterprise type in case of proprietorship or partnership, company details in case of company as per company’s act 2013. Brief details about the history, completed projects in last five years along with details of projects under construction need to be furnished. The application also captures details of delay in case if there is any and complaints registered. The application will also have details of type of land and payments due.
As per the bill, the project will come under the purview of Regulatory authority only if the proposed land for construction exceeds 500 square meters or 8 apartments. However the changes in the threshold level will be decided by State Governments and by Central Government in case of Union Territories.
The project which is already completed and awarded completion certificate will not come under the jurisdiction. Any project which is under renovation, repair or re development which does not involve advertising, marketing and selling or allotment of any unit will also be kept outside the purview.
An authenticated copy of approval and commencement certificate received from competent authority will be furnished along with details like location of the project which is proposed for development in each phase. The sanction plan, layout plan and utilization of common area with proposed facilities to be provided. The application should include details of address of promoters, real estate agents if any, contractors, architects, structural engineers affiliated with the project. The promoter has to produce an affidavit stating the ownership of legal title of the land free from all encumbrances along with details of such encumbrances on the land including any right, title, interest or name of any party in or over such land along with details. The affidavit includes the time period within which the undertaken project or phase of the project will be completed.
A profarma of allotment letter, agreement letter for sale and conveyance deed proposed to be signed with allottee. This should contain the details like number of the unit, type of construction, carpet area, common area and proposed plan for utilization of common areas.
The act mandates that promoter shall deposit 70% of the amount realized from time to time from the allottees of real estate project under consideration in a separate account to be maintained in a scheduled bank to cover the cost of construction and the land cost. The deposited money should be used for concerned project only. The promoters are entitled to utilize the amount from the separate account to cover the cost of the project in proportion to the percentage of completion of the project. However such withdrawal can only be made after certified by an engineer, an architect and a chartered accountant in practice. The promoter is required to get the accounts audited within 6 months after the end of every financial year by a practicing chartered accountant. The promoter needs to produce the statement of accounts duly certified from such chartered accountant. Further, the amount collected and utilization of the same for the particular project will be scrutinized to check the compliance with respect to proportion of funds utilized against completion of the project.
Real Estate Appellate Tribunal
In addition to the establishment of the Regulatory Authority, the Bill also proposes to establish a Real Estate Appellate Tribunal (Appellate Tribunal) within one year from the date of commencement of the Act. Any person aggrieved by any direction or decision made by the Regulatory Authority or by an adjudicating officer, may make an appeal before the Appellate Tribunal within a period of 60 days from the date of receipt of a copy of the order or direction.
The Appellate Tribunal shall deal with the appeal as expeditiously as possible and Endeavour shall be made to dispose of the appeal within a period of sixty days from the date of receipt of appeal.
The Appellate Tribunal shall have same powers as a civil court and shall be deemed to be a civil court. An appeal against the order of the Appellate Tribunal may be filed before the jurisdictional High Court within a period of sixty days from the date of communication of the decision or order of the Appellate Tribunal.
For adjudging the compensation to be paid by the promoter in accordance with the provisions of the Act, the Regulatory Authority shall appoint (in consultation with the appropriate Government) one or more judicial officers as deemed necessary, who is or has been a District Judge, to be an adjudicating officer for holding an inquiry in this regard. However, such an appointment will be made after giving any person concerned a reasonable opportunity of being heard.
There are 2 challenges one can imagine in the bill 1) Time required for a) implementation of the bill at state levels b) the setting up of adjudicating officer and c) efficiency of implementation at all levels including infrastructure. 2) The concerns of developers are largely not been addressed. To arrive at a right solution in case the delay is from the government authorities with respect to approvals of land or other infrastructure. This can lead to blame game as the developers blame the authorities but the consumers suffer.
Having mentioned the shortcoming of the bill, it is still a good move towards cleaning up the sector. The consumers will benefit from these baby steps in the long run.
The information provided here in Homemantra.co has been collected from publicly available sources, and is yet to be verified as per RERA guidelines.* Details collected and displayed here are for information purposes only.*