The Real estate sector in India has always been muddled, with no regularized norm or rather lack of transparency and accountability. The Real- Estate sector in India is not structured; there are various discrepancies in the functioning of Real estate. Buyers in the country are facing unnecessary delays and prolonged purchases. The confusion was such that the buyers were struggling to find a forum or appropriate authority to redress their grievances. Owing to continues delay and unnecessary roadblocks it became imperative to devise a mechanism that will curb and help streamline the process.
The defining moment for the Real estate came on March 15, 2016, with the passing of the Real Estate (Regulation and Development) Bill, by Loksabha. The Real Estate Bill, now notified as the Real Estate (Regulation and Development) Act, 2016 (“the Real Estate Act”) comes as a major relief to all home buyers who were struggling with constant delays and lost assurance. The new Real Estate (Regulation and Development) Act, 2016 reinstates the confidence amongst the buyers and also provides statutory protection against unnecessary delays and other safeguards in project construction thereby boosting the buyer confidence. The major portions of the Act have been made effective from May 01, 2016 initiating the process of making rules as well as putting in place institutional infrastructure to protect the interests of the consumers.
The real estate sector is a critical sector of our economy. It has a huge multiplier effect on the economy and therefore, is a big driver of economic growth.
Lack of clear land titles, Absence of title insurance, bsence of industry status, Lack of adequate sources of finance, Shortage of labour, Rising manpower and material costs, Approvals and procedural difficulties.
The Indian real estate sector has traditionally been an unorganised sector but it is slowly evolving into a more organised one. The sector is embracing professional standards and transparency with open arms.
Core problem buyers faced was untimely possession of their property. With the advent of the New Real Estate (Regulation and Development) Act, 2016 both developers and buyers will have timely completion of projects. The Act contains numerous provisions to discourse the lacunae in the real estate sector, mainly by way of establishing a disclosure structure and setting strict liabilities for promoter irregularities. Set out below are the major changes or introductions envisioned by the Act:
Mechanism to curb delay in handover of the developed property has been devised in the Act which envisages that in case the promoter is unable to hand over possession of the apartment, plot or building to the allottee in accordance with the terms of the agreement of sale or for any other reason, then
In order to protect the exploitation of buyers and also to safe guard them from the abuse of any abstruse sale tactics, the requirement of sale of units on the basis of carpet area criterion has been imposed. This comes as a boon to buyers to tend to succumb to unwarranted sale tactics of the developers.
Duties of promoters to protect the interest of buyers.
Allottees will get all the necessary rights to know about the layout plans of the project.
One of the most important features of this act is the establishment of a Regulatory Authority for the redresses of disputes between the buyers and the developers. Section 20 of the Act, provides authorizes the government to designate any officer, preferably the secretary of the department dealing with the housing as the interim Regulatory Authority until the establishment of a proper Regulatory Authority as per the Act. The time period provided for the establishment of a Regulatory Authority is one year.
This Act has made it mandatory for all the real estate projects to be registered with the regulatory authority in the following cases:
the total area of land proposed to be developed exceeds 500 square meters or more than eight apartments are proposed to be developed inclusive of all phases
It is obligatory to ensure that all the construction approvals are taken and requirement of ensuring registration of the real estate property is also extended to all real estate agents.
Chapter VIII of the Act provides for stringent penalties to ensure enforceability and compliance of the Act. Some of the major penalties include the penalties imposed on the promoter such as a penalty of up to 10 percent of the project cost or three years’ imprisonment for failure to register the property or project. Further, if the promoter does not comply with the order of the Regulatory Authority imprisonment of up to three years and a further penalty of up to 10% of the estimated cost, or both will be imposed. Additionally, in case the promoter provides any false information while making an application to the Regulatory Authority or contravenes any other provision of the Act – the penalty may be up to 5% of the estimated cost of the project or construction.
Similar penal provisions are provided for both the violation of the act by the real estate agents or the buyers/allottee.
Interesting questions arise when a state law has been passed with President’s assent instead of the Governor’s. In such a case, which law prevails? The Real Estate law in the state of Maharashtra has President’s assent.
Where a law made by the Legislature of a State with respect to one of the matters enumerated in the concurrent List contains any provision repugnant to the provisions of an earlier law made by Parliament or an existing law with respect to that matter, then, the law so made by the Legislature of such State shall, if it has been reserved for the consideration of the President and has received his assent, prevail in that State:
Provided that nothing in this clause shall prevent Parliament from enacting at any time any law with respect to the same matter including a law adding to, amending, varying or repealing the law so made by the Legislature of the State.
Thus the Proviso of the article makes it clear that the Parliament shall have the power to add, amend, vary or repeal a state law.
The formation of the Real Estate (Regulation and Development) Act, 2016, took eight years. However, the change is welcome as this not only brings accountability and transparency but also lays focus on range of areas, starting from launch of projects to post-sales issues. It was proposed in January 2009, and came into effect from 1 May 2016. It is anticipated to bring in much required transparency and accountability into the segment
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