Finally! A consumer-friendly real estate act

The government has uploaded the draft of the Real Estate (Regulation Of Development) Act, inviting comments from state governments, stakeholders and experts within 45 days.

The Act is designed “To establish a Regulatory Authority and an Appellate Tribunal to regulate, control and promote planned and healthy development and construction, sale, transfer and management of colonies, residential buildings, apartments and other similar properties, and to host and maintain a website containing all project details, with a view to protecting, on the one hand the public interest in relation to the conduct and integrity of promoters and other persons engaged in the development of such colonies and to facilitating on the other the smooth and speedy construction and maintenance of such colonies, residential buildings, apartments and properties and for matters connected therewith or incidental thereto,” according to the preamble.

[caption id=“attachment_112219” align=“alignleft” width=“380” caption=“The proposed act seeks to protect the interests of the consumer by clearly defining the role of the promoter. AFP”]  [/caption]

The proposed act seeks to protect the interests of the consumer by clearly defining the role of the promoter, by checking his or her antecedents and legal status, by checking encumbrances on the title of the land being developed, specific details of what is the extent of common areas, clarity on built up and super built-up areas, amongst other details. The property proposed to be developed will need to be registered with the Regulatory Authority and all details have to be uploaded to a website to be launched by the Regulatory Authority.

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In a significant protection, promoters will not be able to release advertisements or print any sales collateral without first registering the project. “No promoter shall issue or publish an advertisement or prospectus, offering for sale any plot, building or apartment, or inviting persons who intend to take such plots, buildings or apartments to make advances or deposits without registering with the Regulatory Authority…, and without first filing a copy of the advertisement or prospectus in the office of the Regulatory Authority,” the proposed Act says.

The proposed Act includes punishment for the promoters in the event they do not deliver on the commitments made by them in their registration.

“When any person makes an advance or a deposit on the basis of the information contained in the advertisement or prospectus and sustains any loss or damage by reason of any untrue statement included therein, he shall be compensated by the promoter for any loss that he may have sustained consequent to such information:

Provided that, if the person affected intends to withdraw from the project, he shall be returned his entire investment along with interest at a rate not exceeding the current rate of interest,” the Act proposes.

Consumers, used as they are to unkept promises and worrying delays that they can do little about, will find comfort from the following provisions:

Promoters will have to, among others:

a) disclose the stage wise time schedule of completion of the project;

b) disclose the time schedule for connecting the project with the municipal services such as sewerage, water supply, electricity, drainage etc. as applicable.

Overall, the draft Act will, without a doubt, help in consumers making informed decisions on what is almost certainly the most significant investment that they make.

The whole Act can be read below: