Through the amendments to the Bill of 2013, the Cabinet has extended the applicability of the Bill to commercial real estate also. Ongoing projects that have not received Completion Certificates have also been brought under the purview of the Bill and such projects will need to be registered with the Regulator within three months.
The union cabinet on Tuesday gave its approval to the much awaited amendments to Real Estate (Regulation and Development) Bill, 2013 that could go a long way in reining in corrupt real estate developers who sell dream houses to consumers but deliver much below the stated standards coupled with cost overruns.
The government said, recommendations of the standing committee of Parliament on urban development and suggestions of various stakeholders including consumer organisations, industry associations, academia, experts etc. have also been included in the amendments after extensive consultations.
The Bill contains provisions of registration of real estate projects and registration of real estate agents with the Real Estate Regulatory Authority; functions and duties of promoters and allottees; establishment of Real Estate Regulatory Authority; establishment of fast track dispute resolution mechanism through adjudication; establishment of a Real Estate Appellate Tribunal; offences and penalties etc.
Through the amendments to the Bill of 2013, the Cabinet has extended the applicability of the Bill to commercial real estate also. Ongoing projects that have not received Completion Certificates have also been brought under the purview of the Bill and such projects will need to be registered with the Regulator within three months.
Another major modification is that promoters will not be allowed to change plans and structural designs without the consent of 2/3rd of consumers of a project. Real estate agents also have been made punishable for non-compliance of the orders of Regulatory Authority and Appellate Tribunals to be set under the proposed law.
Under other stipulations approved by the Cabinet, States have to make rules within one year, rank of adjudicating officer has been elevated to that of District Judge, web based online system for submitting applications for registration of projects to be introduced within one year of the establishment of Regulatory Authorities and Regulator has to decide cases within 60 days.
Real estate project developers both in residential and commercial sectors will be required to register their projects with the Regulatory Authorities to be set up.
Promoters will be mandatorily required to disclose all information regarding the promoters, project, layout plan, schedule of development works, land status, status of statutory approvals, pro-forma agreements, names and addresses of real estate agents, contractors, architect, structural engineer etc.
Promoters will also be required to compulsorily deposit 50% of the amounts collected from consumers in a separate account in a scheduled bank with in a period of fifteen days to cover the cost of construction. This provision of 50% has been made after taking into account the cost of land needed to be acquired before announcing a project.
Penal provisions under the proposed law include payment of 10% of project cost for non-registration and payment of another 10% of project cost or three year imprisonment or both if still not complied with. For wrong disclosure of information or for not complying with the disclosures and requirements, payment of 5% of project cost will be imposed. Regulatory authorities will also have the power of cancellation of registration in case of persistent violations and decide on the further course of action regarding completion of such projects.
Under the proposed law, one or more Regulatory Authorities will be set up in each State/UT or one Authority for two or more States/UT by the concerned Governments for oversight of real estate transactions. These Regulators will co-ordinate efforts regarding development of the real estate sector and necessary advice to the appropriate Government to ensure the growth and promotion of a transparent, efficient and competitive real estate sector.
For fast track dispute settlement, one or more adjudicating officers will be appointed to settle disputes and impose compensation and interest. Appeals against adjudicating officer and Regulatory Authority will lie with the Appellate Tribunals to be set up and final appeals will lie only with High Courts.
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