Real Estate Bill finally gets Cabinet nod: Here's how it will protect home buyers from frauds

The Cabinet has approved amendments to the Real Estate (Regulation and Development) Bill, 2013, bringing relief to the lakhs of home buyers or investors in residential and commercial projects. The bill, currently pending in Rajya Sabha, was originally moved by the erstwhile UPA government but was applicable only for residential real estate. It now covers commercial projects as well. The bill with amended provisions would be moved in Parliament in second half of the budget session. [caption id=“attachment_2188235” align=“alignleft” width=“380”]  Reuters[/caption] A government statement said the bill is aimed to protect the interest of consumers, to promote fair play in real estate transactions and to ensure timely execution of projects. It provides for a uniform regulatory environment, to protect consumer interests, help speedy adjudication of disputes and ensure orderly growth of the real estate sector. The Bill contains provisions of registration of real estate projects and registration of 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. Errant builders, who until now had a free run, would now it find it difficult to dupe innocent buyers. Currently, the real estate and housing sector is largely unregulated and opaque, with consumers often at the receiving end. Complaints of cheating and project delay have been rampant. There had been no provision to enforce accountability on builders and developers in the absence of effective regulation. After enactment of the this bill one would hope that fraud and delays are significantly reduced. The government hopes that the bill would ensure mandatory disclosure by promoters to customers through registration of real estate projects as well as real estate agents with the Real Estate Regulatory Authority. “The Bill aims at restoring confidence of the general public in the real estate sector; by instituting transparency and accountability in real estate and housing transactions. This in turn will enable the sector to access capital and financial markets essential for its long term growth. The Bill will promote orderly growth through consequent efficient project execution, professionalism and standardisation,” the statement said. The Bill is expected to ensure greater accountability towards consumers, and to significantly reduce frauds and delays. The Bill seeks to ensure consumer protection, without adding another stage in the procedure for sanctions. It provides for establishment of the Real Estate Regulatory Authority in each State/ Union Territory (UT) to settle disputes and impose compensation and interest. Projects and agents will have a mandatory obligation to get registered with the authority and give details of plot, apartment or building they intend to sell. They will also have to follow guideline for ‘Mandatory Public Disclosure of all project details’ including details of promoters, project, layout plan, plan of development works, land status, status of statutory approvals and disclosure of pro forma agreements, names and addresses of real estate agents, contractors, architect, structural engineer etc.. The promoters will have to follow a host of guidelines and compulsorily deposit 50 percent (or such lesser percent as notified by the Appropriate Government) of the amounts realized for the real estate project from the allottees in a separate account in a scheduled bank within a period of fifteen days to cover the cost of construction to be used for that purpose. More importantly, they will be barred from altering plans, structural designs and specifications of the plot, apartment or building without the consent of two-third allottees after disclosure. Minor additions or alterations will, however, be permissible due to architectural and structural reasons.