To have much cumbersome real estate sector run in an efficient and methodical manner, Real Estate Regulation Bill has finally been passed on 19th April 2017. The Union Ministry of Housing and Urban Poverty Alleviation issued a notification announcing a series of section coming into force from 01st May 2017. This is in extension to the Real Estate (Regulation and Development) Act, 2016 that came into force in May 2016. The act has come as a much needed respite to an otherwise chaotic management in Real estate as on today.
With 8 year longefforts coming to fruition, the Act has not only changed the real estate market for better but has also aimed at improving participation from the buyers’ end. It has devised and tight procedure for registering every project and a stern mechanism to deal with people indulging in unfair practices to unethically temper the market forces. With an utmost intent to safeguard buyers’ interest, the act has taken into consideration every pro and con that might have the effect of compromising on their rights and detrimental to their share of investment.
In a nutshell, these provisions relate to the functions and duties of promoters, rights and duties of allottees, registration process of real estate projects with RERA, recovery of interest & penalties, enforcement of orders, offences, penalties and adjudication, taking cognizance of offence.
We shall discuss the each of the salient features of the Act section wise in detail below:
APPLICABILITY– The Act applies to whole of India except the state of Jammu & Kashmir.
Registration of Real Estate Project
The Act has stipulated due procedure for registration making it mandatory for every real estate project to get prior registration with Real Estate Regulatory authority. The application for registration has to be made by the promoters in prescribed form mentioning details of enterprise, the project being carried out, history of the enterprise, required approvals, plan of development, location details, allotment letter, details of contractors, architects and structural designer. On satisfaction, the authority may grant registration within 30 days of application by the enterprise. The promoters are then given a login id on the website of Authority and required to create its own web page.
Registration of Real Estate Agent
Along with the projects being registered, the Act demands the registration of Real Estate Agents. No enterprise shall proceed further with any sale purchase of any plot, apartment or property without having obtained a registration number form the Authority. Any breach to the specified process may lead to hefty penalties under the Act.
Function And Duties of Promoters
The functions and duties of promotes are essentially buyer eccentric. He has to do all as to maintain authenticity in the working of projects, keep the buyers/investors well informed of every aspect of construction at every stage. This includes quarterly updates being uploaded on its web page, making available the letter of allotment to the buyer and postulating details about sanctioned plans, carpet area to include spaces like kitchen and toilets time scheduling, to timely obtain completion and occupancy certificate and to not to take any deposit without first entering into agreement for sale.
Right and Duties of Allotees
The allotees under the act would have to equally agile about their investment plans. They have an entitlement to know stage wise progress on project, to claim possession of apartment and to claim refund of amount paid as interest, if promoter fails to deliver the project on time. Likewise, for any late payment, the allotee would also be liable to pay interest. They must also participate towards registration of the conveyance deed of the apartment.
Real Estate Regulatory Authority
The Real Estate Regulatory Authority formed by appropriate government shall have sufficient number of members as prescribed under the act and one chairperson presiding over them. The authority shall be responsible to accept complaints by any aggrieved person/entity covered under the Act and resolve them expeditiously. Along with registering real estate projects &agents and maintaining records and archiving them for public records, they are also designated to protect interest of allotees, promoters& agents, creating single window systems for time bound projects, creating transparent grievance redressal mechanism and constructing environment friendly sustainable housing. One remarkable feature of this establishment is that the RERA authority has to be formed state wise, which will not lead to less chaotic management of cases, but will also help in speedy redressal of queries at the aggrieved end.
Central Advisory Council
The Central Advisory council under section 41 shall consist representative from Ministry of Finance, Ministry of Industry and commerce, Ministry of Urban Development, Ministry of Consumer Affairs, Law and justice, NITIAayog, National Housing Bank, Housing and Urban Development to advise, from time to time, as to how the authority and the act can work in a more effective and translucent manner. The Council shall recommend, the central government, on questions of matter concerning implementation of Act, to foster growth and development of real estate sector.
Real Estate Apellate Tribunal
The Appellate tribunal shall address the appeal made by any aggrieved person/investor/buyer/promoter. A period of 60days has been stipulated under the act to expeditiously prefer/resolve the appeal and pass such orders, final or interim as it may deem fit. The appellate tribunal shall have to state reasons, for not adhering the stipulated timelines. The tribunal shall consist of two whole time members having adequate capabilities as to technical and administrative qualities and one chairperson.
Offences, Penalties and Adjudication
Considering the scope for embezzlement in activities involved in real estate and construction of buildings, apartments, the Act has included stringent provision for offences and levy of heavy penalties on breaching any of those provisions of the Act.
The offences includes :
- Non-compliance with the order of RERA Authority, central Advisory Council and Apellate Tribunal.
- Providing incomplete or false information about registered projects and concealing information that has the effect of diluting/dissolving investors’/buyers’ money.
- Non registration of the projects or real estate agents.
- Non-compliance to any other provision of this Act.
The penalties includes imprisonment and fine or both depending upon nature and severity of offence conducted. The imprisonment may extend 3 years and fine up to 10% of the estimated cost of the project.
The real Estate Regulatory Act 2017, has an array of advantages for buyers’ set forth in the act with a deep rooted sight and incumbency upon the builders. The act has also mandated deposition of 70% of the collected funds into an escrow account to ensure hastened deliverance of the projects and avoiding any delay in possessions to the buyers. The clarity endowed in the sale purchase agreement and clearly rolling out the functions and duties of promoters and regular intervention by the buyers is likely to surge the authenticity of the project a notch up. The buyers are now supposed to pay for only carpet area and not super area, as per earlier practice. And lastly the Real estate sector in India is going to experience a boost in FDI’s, which was not the case before this Act coming to fore. This will lead to increased overseas investment, amplified foreign exchange and sky highs GDP’s in Indian economy. The Real Estate Regulatory Act has upheaved the level of confidence in the buyers/customers.