Real Estate (Regulation and Development) Bill, 2016:
Real estate sector has been a highly unorganised sector paving way for many corrupt activities, defaults and delays much to the dismay of real estate property buyers. There was a compelling need to have a law that brings in systematisation and transparency in the field.
Hence, Real Estate (Regulation and Development) Bill, 2016 was passed by the Rajya Sabha on 10th March, 2016.
Here are ten points you must know about this important Real Estate Bill.
1) The preamble of the bill lays down the objective – ‘to establish the Real Estate Regulatory Authority for regulation and promotion of the real estate sector and to ensure sale of plot, apartment of building, as the case may be, or sale of real estate project, in an efficient and transparent manner and to protect the interest of consumers in the real estate sector and to establish an adjudicating mechanism for speedy dispute redressal and also to establish the Appellate Tribunal to hear appeals from the decisions, directions or orders of the Real Estate Regulatory Authority and the adjudicating officer and for matters connected therewith or incidental thereto.’
2) Therefore, in order to achieve the aim of a better-organised real estate sector, Section 20 provides for establishment of Real Estate Regulatory Authority. It is to be established by State Government within a year from the Act coming into force. It shall consist of a chairman and two members. They shall be appointed by the appropriate government on recommendation of a Selection Committee consisting of the Chief Justice of the High Court or his nominee, the Secretary of the Department dealing with Housing or Law Secretary from persons having adequate knowledge in the field of housing, real estate development, infrastructure etc., with professional experience of at least 20 years in case of Chairman and 15 years in case of members.
3) Chapter II of the Real EstateBill mandates registration of all promoters, agents, structural engineers, architects, contractors, layout plans, approvals, agreements etc.
4) In order to ensure timely completion of project as buyers at present do not get possession of the property for a long time due to delay in construction, Section 4(2)(D) of the Real Estate Bill provides that 70% of the amount realised from the allottees shall be deposited in a separate account to cover the cost of construction and land cost and shall be used only for this purpose. In fact, the Section also provides that the amount can only be withdrawn after it is certified by the architect, engineer and a certified chartered accountant to ensure that the withdrawal is in proportion to the percentage of completion of project.
5) The explanation to Section 2 (za) of the Real Estate Bill provides that the rate of interest payable by promoter to allottee in case of default or delay is the same as the interest payable by allottee to promoter. The period for payment of interest by promoter shall be from the day he receives amount to the day it is refunded.
Also, Section 59(2) provides that the promoter shall be liable for an imprisonment of 3 years or penalty that extends to 10% of the cost of the real estate project if he violates the orders, directions or decisions issued under the Bill.
6) Under Section 11(4)(e), promoter has a duty to enable the allottees to form the allottees’ association within three months from the date on which majority of allottees have booked their plots. Also, under Section 14, promoter has to follow all the sanctioned plans, layout plans and specifications for construction and any change in them can only be done after obtaining consent from the allottees.
7) Section 31 states that an aggrieved person can approach the Authority or adjudicating officer to file complaints. The functions of the Authority among other things is to create a robust grievance redressal forum, to provide for amicable settlement of disputes between promoters and allottees through dispute resolution forums, digitisation of land records to guarantee conclusive property titles.
8) According to Section 35, the Authority will have the same powers as that of a civil court and can also take up cases suo moto and order inquiry into the same.
9) Under Section 3 of the Bill, no promoter can advertise, market, book or offer for sale or invite people to purchase plot, apartment or building unless the real estate project is registered with the Authority. Moreover, Section 12 imposes obligation on the promoter for veracity of the advertisement or prospectus. If a person makes an advance or deposit on the basis of the information provided in the advertisement and suffers loss or damage by reason of incorrect or false statement in the advertisement/prospectus, then the promoter is liable to compensate the allottee.
10) The buyers can make an informed decision as under Section 4(2)(b) the promoter has to submit details of all his completed and on-going projects in the last five years to the authority along with details like delay in completion, delay in payment, type of land etc.
While, digitisation and the attempt to bring in transparency will surely improvise the real estate sector, what needs to be noted is the number of approvals that every project needs and the time taken to issue each of these. Approvals like Intimation of Disapproval, Commencement Certificate, NOC, building completion certificate, occupancy certificate etc., further delay the entire process of real estate construction. Hence, along with this bill, there is a need to bring about better administrative reforms in the sector in order to make the process faster.