Benefits and Advantages of Real Estate Bill, 2013
The Bill proposes to regulate transactions in the real estate sector and is in pursuance of the powers under Entries 6, 7 and 46 of the Concurrent List of the Constitution, which deals with Transfer of Property, Registration of Deeds and Documents, and Contracts. The draft Bill has been prepared after detailed deliberations with the State Governments and concerned Central Government Ministries, and after having suitably incorporated the suggestions received from them.
· The Bill will bring about standardization in the sector leading to healthy and orderly growth of the industry through introduction of definitions such as ‘apartment’, ‘common areas’, ‘carpet area’, ‘advertisement’, ‘real estate project’, ‘prospectus’ etc. Introduction of the concept of using only ‘carpet area’ for sale which has till now been ambiguously sold as super area, super built up area etc., will curb unfair trade practices.
· The Bill like other sectors such as telecom, electricity, banking, securities, insurance etc. provides for specialized regulation and enforcement which includes both curative and preventive measures, with powers to enforce specific performance, not available under the consumer laws. The Authority has powers to give directions for specific performance powers to impose penalty for non-registration of projects including imprisonment for continuous violation upto 3 yrs and impose penalty in case of other contraventions.
· The Bill proposes to register real estate agents which have hitherto been un-regulated, with clear responsibilities and functions, thereby leading to money trail and curbing money laundering. This clause has been added on the recommendations of the Department of Revenue, Ministry of Finance.
· The Bill aims to ensure consumer protection, by making it mandatory for promoters to register all projects, prior to sale; and only after having received all approvals from development/municipal authorities thereby protecting buyer investments.
· The Bill will promote transparency and fair and ethical business practices, relating to transactions, through disclosure of project details and contractual obligations vis-à-vis the project and the buyer, promoting informed choice for the buyers. This will substantially reduce the power asymmetry prevalent in real estate transactions.
· The Bill seeks to establish a regulatory oversight mechanism, through Real Estate Authority(s) and Appellate Tribunal in the States, to enforce accountability norms for the promoter buyer and the real estate agents.
· The Bill will infuse professionalism and promote planned development of the real estate sector through the promotional role of the Regulatory Authority.
· The Bill makes it mandatory upon the promoters to deposit 70% or such lesser per cent as notified by the Appropriate Government to cover the construction cost of the project of funds received by the Promoter in a separate bank account, for purposes of ensuring timely completion of projects to be used only for that project, which shall help in timely completion of projects, and prevent fund diversion.
· The Bill provides for a speedy and specialized adjudication mechanism to settle disputes between the promoter, buyer and real estate agents, thereby de-clogging the civil courts and consumer forums, from disputes in the real estate sector.
· The Bill will catalyze domestic and foreign investment into the sector, thereby contributing to enhanced activity, and increase in GDP growth.
The main features of the Draft Bill:
o Applicability of the Bill:
The proposed Bill is limited in its applicability to residential real estate i.e. housing and any other independent use ancillary to housing. The two important definitions in this regard are:
“real estate project means the development of a building or a building consisting of apartments, or converting an existing building or a part thereof into apartments, or the development of a colony into plots or apartments, as the case may be, for the purpose of selling all or some of the said apartments or plots or buildings and includes the development works thereof”
“apartment whether called dwelling unit, flat, premises, suite, tenement, unit or by any other name, means a separate and self-contained part of any immovable property located on one or more floors or any part thereof, in a building or on a plot of land, used or intended to be used for residential purposes, or for any other type of independent use ancillary to the purpose specified and includes any covered garage, whether or not adjacent to the building in which such apartment is located which has been provided by the promoter for the use of the allottee for parking any vehicle, or as the case may be, for the residence of any domestic help employed in such apartment”
o Establishment of Real Estate Regulatory Authority:
Establishment of one or more ‘Real Estate Regulatory Authority’ in each State/UT, or one Authority for two or more States/UT, by the Appropriate Government, with specified functions, powers, and responsibilities to exercise oversight of real estate transactions, to appoint adjudicating officers to settle disputes between parties, and to impose penalty and interest;
o Registration of Real Estate Projects and Registration of Real Estate Agents:
Mandatory registration of real estate projects and real estate agents who intend to sell any immovable property, with the Real Estate Regulatory Authority;
o Mandatory Public Disclosure of all project details:
Mandatory public disclosure norms for all registered projects, including details of the promoters, project, layout plan, plan of development works, land status, carpet area and number of the apartments booked, status of the statutory approvals and disclosure of proforma agreements, names and addresses of the real estate agents, contractors, architect, structural engineer etc.;
o Functions and Duties of Promoter:
Duty of promoters towards disclosure of all relevant information and adherence to approved plans and project specifications, obligations regarding veracity of the advertisement for sale or prospectus, responsibility to rectify structural defects, and to refund moneys in cases of default;
o Compulsory deposit of seventy percent or such lesser percent as notified by the Appropriate Government, to cover the construction cost of the project, of funds received by the Promoter, in a separate bank account:
Provision to compulsorily deposit seventy percent or such lesser percent as notified by the Appropriate Government, of the amounts realized for the real estate project from the allottees, from time to time, shall be deposited in a separate account to be maintained in a scheduled bank within a period of fifteen days of its realization to cover the cost of construction and shall be used only for that purpose.
o Functions of Real Estate Agents:
Real estate agents not to facilitate the sale of immovable property which are not registered with the Authority required under the provisions of the Act, obligation to keep, maintain and preserve books of accounts, records and documents, obligation to not involve in any unfair trade practices, obligation to facilitate the possession of documents to allottees as entitled at the time of booking, and to comply with such other functions as specified by Rules made in that regard;
o Rights and Duties of Allottees:
Right to obtain information relating to the property booked, to know stage-wise time schedule of project completion, claim possession of the apartment or plot or building as per promoter declaration, refund with interest in case of default by the promoter, and after possession entitled to necessary documents and plans. Duty of allottees to make necessary payments and carry out other responsibilities as per the agreement;
o Functions of Real Estate Regulatory Authority:
The Authority to act as the nodal agency to co-ordinate efforts regarding development of the real estate sector and render necessary advice to the appropriate Government to ensure the growth and promotion of a transparent, efficient and competitive real estate sector;
o Fast Track Dispute Settlement Mechanism:
Establishment of fast track dispute resolution mechanisms for settlement of disputes, through adjudicating officers (an officer not below the rank of Joint Secretary to the State Government) to be appointed by the Authority, and establishment of an Appellate Tribunal to hear appeals from the orders of the Authority and the adjudicating officer;
o Establishment of Central Advisory Council:
Establishment of Central Advisory Council to advise the Central Government on matters concerning implementation of the Act, with a mandate to make recommendations on major questions of policy, protection of consumer interest and to foster growth and development of the real estate sector. The Council to have among others, five representatives of State Governments, to be selected by rotation;
o Establishment of Real Estate Appellate Tribunal:
Establishment of Real Estate Appellate Tribunal, by the appropriate government to hear appeals from the orders or decisions or directions of the Authority and the adjudicating officer. The Appellate Tribunal is to be headed by a sitting or retired Judge of the High Court with one judicial and one administrative/technical member;
o Punitive Provisions:
Punitive provisions including de-registration of the project and penalties in case of contravention of the provisions of the Bill or the orders of the Authority or the Tribunal;
o Power to make Rules and Regulations:
Appropriate Government to have powers to make rules over subjects specified in the Bill, and the Regulatory Authority to have powers to make regulations.
Tags :Property Law