Finally, there is a ray of hope for the buyers who are marred by the delay in delivery of the projects or the delivered product not being as promised at the time of booking in terms of quality, specification and carpet area, etc.
The Bill is expected to change the way the real estate sector operates in our country, aimed at greater accountability, disclosure norms, investor protection, and e-governance, facilitating transparent and efficient working in real estate by enforcing fair practices and accountability norms and fast tracking dispute resolution.
However, still much more needs to be achieved to make it a real win. This is just half the battle won as there is a bigger challenge ahead of implementing the same into the system, which is already there for so many years. Moreover, there are issues which are yet to be addressed to actually get the benefit of this bill, such as efficient approval process, land acquisitions implementation issues, etc.
Key clauses and their implication on the buyers and developers:
1. Mandatory registration of project and threshold limit: There is a mandatory registration required for all real estate project ads measuring more than 500 sq mtr for any booking, selling, offer for sale, invitation of purchase in any manner. To make this requirement effective there is a provision of punishment for non-registration as penalty and if not paid within a certain time, then imprisonment of the promoter.
This clause will certainly reduce the risk of the buyer to a certain extent as now they will enter into a project only after it received initial approvals, however; the risk associated with completion is still there as a majority of projects currently are stuck at completion stage. Noida is a classic example of this.
2. Mandatory requirement to keep 70% of project proceedings into a separate account: The Bill required the developer to compulsorily deposit at least 70% of the amount realised from the buyers in to the particular project account. Punishment of non-compliance will lead to a penalty. The intent is noble, as this will push developer to use the project proceeds into the same project.
3. Real Estate agents under the purview of the regulation: The Bill requires the registration of the real estate agent for selling a project. The registration would be granted by the authority on payment of prescribed fee and for limited time period. The functions of real estate agent is also defined in the bill such as maintaining books of account, records, facilitation of all the documents, etc. This is much required, but at the same time we also need formal education for these agents. There are institutes like RICS which are providing specialised education, but we need much more of such kind.
4. Defined functions and duties of promoters and Allottees: The function and duties of promoters are defined in the bill, including quarterly update, registration details, varsity of the advertisement or prospectus, etc. No deposit or advance is permitted to the promoter without first entering into an agreement of sale. The promoter needs to adhere to the approved plan and project specifications and facilitate the execution of registered conveyance deed.
The Bill provides right of information relating to the site and layout plans along with the specification, stage wise time schedule, claim possession and claim of refund in case of default. The Bill also made provision of payment of interest by allottees in case of default in scheduled payment.
5. Formation of Real Estate Appellate Tribunal: The Bill has a provision to establish real estate appellate tribunal which needs to fast track dispute resolution as there is a provision that Appellate Tribunals be required to adjudicate cases in 60 days. Even the Consumers can approach 644 consumer courts available at the district level.
In conclusion, this is the approach in the right direction but needs an effective implementation plan and an effective approval mechanism. Single window clearance system is what the industry is demanding for since a long time which is the need of the hour.
