DRAFTREAL ESTATE (REGULATION & DEVELOPMENT) BILL.,2015

By Mr.Rahul Reddy & Mr. Prathap Reddy

CORE IDEA AND PURPOSE OF THIS BILL:• This Bill aimed to create a Real Estate Regulatory Authority and an

Appellate Tribunal that will act as a watchdog for the housing sector, primarily towards protecting consumer interests while creating an alternative redress mechanism for any disputes that may arise.

• This bill also aims to provide a uniform regulatory environment in the real estate sector which is laced with black money, corruption, red tapism, land mafias and corruption. The core objective of this Bill are three fold., i:e to ensure sale of immovable properties in an efficient and transparent manner and to protect the interest of consumers in the real estate sector and to promote investments specially FDIs.

Before going into the study first let us discuss between a Bill and a Draft.

Legislative proposals are brought before either house of the Parliament of India in the form of a bill. A bill is the draft of a legislative proposal, which, when passed by both houses of Parliament and assented to by the President, becomes an Act of Parliament. As soon as the bill has been framed, it has to be published in the news papers and the general public is asked to comment in a democratic manner. The bill may then be amended to incorporate the public opinion in a constructive manner and then may be introduced in the Parliament by ministers or private members.

• How a Bill becomes an Act in Parliament: A Bill is the draft of a legislative proposal. It has to pass through various stages before it becomes an Act of Parliament. There are three stages through which a bill has to pass in one House of Parliament. The procedure is similar for the of States.

Now Lets Discuss the contents of the Draft Bill:• Why is the bill needed?• What are the chapters of the bill?• What are the provisions incorporated in the bill?• What are the powers conferred to the central, state and the

constituent authorities in the bill?• Incorporation of Real Estate regulatory authority and the appellate

tribunal, its powers. &• Its use to the public, (i.e., Promoter and allottee)• Its salient features, key issues and Analysis.

NOW LETS SEE WHAT IS INCORPORATED IN THE BILL & WHAT IT CONSISTS OFF:

A BILL• to establish the Real Estate Regulatory Authority for regulation andplanned development in the real estate sector and to ensure sale ofimmovable properties in an efficient and transparent manner and toprotect the interest of consumers in the real estate sector and establishan Appellate Tribunal to adjudicate disputes and hear appeals from thedecisions or orders of the Authority and for matters connected there with or incidental thereto.

CHAPTER I PRELIMINARY1. (1) This Draft may be called the Real Estate (Regulation & Development) Act, 2015 (drafted in 2011., passed on 10th Mar 2016). (2) It extends to the whole of India except the State of Jammu and Kashmir. (3) It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint: Provided that different dates may be appointed for different provisions of this Act and any reference in any such provision to the commencement of this Act shall be construed as a reference to the coming into force of that provision.

2. Here the Definitions of certain terms are been defined. Lets go through those terms:

(a) Advertisement(b) Allottee(c) Apartment(d) Appellate Tribunal(e) Appropriate Government(f) Architect(g) Authority(h) Building(i) Chairperson(j) Carpet Area(k) Company(l) Competent Authority

(m) Development(n) Development Charges(o) Development Works(p) Engineer(q) Estimated cost of Real estate project(r) External Development Works(s) Internal Development Works(t) Immovable Property(u) Interest(v) Local Authority(w) Member(x) Notification

(y) Owner(z) PERSON : This includes(aa)An individual(ab)A Hindu undivided family(ac)A Company(ad)A Firm(ae)A Local authority(af)An association of persons or a body of individuals whether incorporated or not;(ag)Any such other entity as the appropriate government may, by notification in the

official gazette(G.O), specify in this behalf.(za)Project(zb)Promoter(zc)Real Estate Agent and Project(zd)Rules and Regulations

CHAPTER II REGISTRATION OF REAL ESTATE PROJECT AND TRANSFER OF IMMOVABLE PROPERTIES

3. Prior registration with Real Estate Regulatory Authority:

No promoter shall develop any immovable property or make anyconstruction thereon or alteration thereof or convert any existingundeveloped immovable property or part of it without registering thereal estate project and obtaining a certificate of registration from the Real Estate Regulatory Authority established under this Act: Provided that no such registration shall be required,-

(a) when the area of land proposed to be developed does not exceed 4000square meters, or an area as notified by the Central Government in consultation with the States and Union Territories from time to time, which may be different for different States or Union Territories;

(b) where the promoter has sought all permissions and received allrequisite approvals for the development of immovable property oneyear prior to the commencement of this Act;

(c) for the purpose of renovation or repair which does not involve re-allotment and marketing of immovable property.

4.Application to Authority:

(1) Every promoter shall make an application to the Authority forregistration of the project for development of any immovable property in such form accompanied by such fee and other information as may beprescribed.

(2) The prescribed form referred to in sub-section (1), shall include but not be limited to the information relating to the number and size of Plots layout plan, proposed project and the proposed facilities to be provided thereof.

(3) The promoter shall enclose the following documents along with theapplication referred to in sub-section (1), namely:- (a) an authenticated copy of the approval and sanction from the

competent authority obtained in accordance with the laws as maybe

applicable for the real estate project mentioned in the application, and

where the project is proposed to be developed in phases, an

authenticated copy of the approval and sanction from the competent

authority for each of such phases.

(b) a declaration which shall be signed by the promoter stating,- (i) that he has a legal title to the land on which the development isproposed along with a legally valid authentication of such title ifsuch land is owned by another person; (ii) that the land is free from all encumbrances, or as the case maybe, of the encumbrances on such land including any rights, title,interest or name of any party in or over such land along withdetails; (iii ) his affirmation that the project or the phase of the projectshall be completed as the case may be in accordance with the termsand conditions of the registration;

(iv) the period of time within which he undertakes to complete theproject or phase thereof, provided it is within the period ofsanction by the competent authority;

(v) that seventy percent of the amounts realized for the real estateproject from the allottees, from time to time, would be deposited ina separate account to be maintained in a scheduled bank, withinfifteen days of its realization for meeting the costs of the real estateproject and would be used only for that purpose;

Explanation.- For the purpose of this clause, the term “scheduledbank” means a bank included in the second schedule to theReserve Bank of India Act, 1934.

(vi) that he has furnished such other documents as may beprescribed by the rules or regulations made under this Act.

(4) On receipt of the application under sub-section (1), the Authority shall within a period of thirty days from the date of receipt of the applications complete the process of the scrutiny of the applications submitted to it. (5)The Authority, after scrutiny of the applications shall— (a) grant registration subject to the provisions of this Act and the rules and the regulations made thereunder; or (b) reject the application for reasons to be recorded in writing, if such application does not conform to the provisions of this Act:Provided that no application shall be rejected unless the applicant has been given an opportunity of being heard.

(6) For reasons beyond its control, if the Authority fails to complete the scrutiny of the applications within the aforesaid period, the applicants may be permitted provisional access to the website of the Authority and allowed to enter the project details in respect of the projects covered in the application on the website:

Provided that the Authority shall furnish a detailed report for every threemonths to the Appropriate Government, with reasons for delay onprojects for which registration has not been granted within the aforesaidperiod of thirty days.

(7) The Authority shall grant the registration to the promoter, if it issatisfied that the promoter has— (a) entered into an agreement with the Competent Authority forcompletion of the development works; (b) complied all the provisions of this Act and the rules and theregulations made thereunder; and (c) furnished the information required by the Authority.

(8) The registration granted under this section shall be valid for a period declared by the promoter under sub--clause (iv) of clause (b) of sub-section(3) for completion of the project or phase thereof, as the case may be. (9) The Authority shall, after registration, issue a Login Id and password to the applicant for accessing the website of the Authority and permit the promoter to access the website of the Authority to create his web page and to fill therein the details of the proposed project.

5.Renewal of registration:(1) The registration granted under section 4 may be

renewed by the Authority for a further period of one year on an application made by the promoter in such form and on payment of such fee as may be prescribed:

Provided that the registration so renewed shall not be for a period more than that extended by the Competent Authority;Provided further that no registration to a promoter shall be renewed for a period of more than two years;

(2) No application for renewal of the certificate of registration made under this section shall be rejected unless the applicant has been given a reasonable opportunity of being heard in the matter.

CHAPTER III OBLIGATIONS OF PROMOTER AND ALLOTTEE8. (1) The promoter shall, upon receiving his Login-Id and password under sub-section (9) of section 4 and the Authority’s permission to access its website, enter all details of the proposed project in all the fields as required, and the information and documents as specified in sub-section (2) as self declared.

(2) The information and documents referred to in sub-section (1) amongst other documents as may be required, include,- (a) details of the sanctions accorded by the Competent Authority; (b) details of the registration granted by the Authority;

(c) full and true disclosure of his enterprise details including its name,registered address, type of enterprise (proprietorship, societies,partnership, companies, local authority etc.) and registration details under the law registered.

(d) a full and true disclosure of the nature of his title to the land on

which the proposed project is developed or intended to be developed; (e) If such land is owned by another person, the agreement with

the owner of land for the development of the proposed project.

Explanation.- For the purposes of this sub-section, documents relatingto the title to the land shall be same as submitted before the competent authority.

(f) details of all encumbrances on such land, including any rights, title, interest or claim of any party in or over such land; (g) fortnightly up-to-date list of bookings on the basis of the agreement to sell entered with them;

(h) proforma of the agreements proposed to be signed with theallottees; (i) the number and the carpet area of each unit or part of unit for salein the project;

(j) the layout plan of the proposed project or the phase thereof, andalso the layout plan of the whole project as sanctioned by thecompetent authority;

(k) the plan of development works to be executed in the proposedproject;

(l) the names and addresses of his real estate agents, if any, for theproposed project, as and when appointed by the promoter;

(m) the names and addresses of the architect, structural engineer, if any and other persons concerned with the development of the proposed project; and

(n) such other information and documents as may be prescribed byrules or regulations under this Act.

9. ISSUING OF ADVERTISEMENT OR PROSPECTUS INVITING BOOKINGS, ADVANCE OR DEPOSIT.

(1)No promoter shall issue or publish an advertisement or prospectus, or invite any member of the public to buy or book in such projects to be developed or take advances or deposits without obtaining a copy of certificate of registration with the Authority.

(2) No promoter shall issue advertisement or prospectus without first filing a copy of such advertisement or prospectus in the office of the Authority (3) The advertisement or prospectus issued or published after complyingwith the provisions of sub-section (1) shall mention prominently thewebsite address of the Authority wherein all details of the registeredproject have been entered and include such other matters which areincidental thereto.

10. OBLIGATIONS OF PROMOTER REGARDING VERACITY OF THE ADVERTISEMENT OR PROSPECTUS.Where any person makes an advance or a deposit on the basis of theinformation contained in the advertisement or prospectus and sustains anyloss or damage by reason of any incorrect, false statement included therein,he shall be compensated by the promoter in the manner as may bedetermined by the Authority:Provided that if the person affected by such incorrect, false statementcontained in the advertisement or prospectus, intends to withdraw fromthe proposed project, he shall be returned his entire investment along withinterest at such rate as may be prescribed.

11. NO DEPOSIT OR ADVANCE TO BE TAKEN BY THE PROMOTER WITHOUT FIRST ENTERING INTO AN AGREEMENT OF SALE.

(1) Notwithstanding anything contained in any other law for the time beingin force, a promoter shall not accept any sum of money as an advancepayment or deposit, from a person without first entering into a writtenagreement for sale with such person

(2) The agreement referred to in sub-section (1) shall be in such form asmay be prescribed and specify the particulars of development of theproject including the construction of building and apartments, along withspecifications and external development, works, the dates and the mannerby which payments towards the cost of the plot, building or apartment areto be made by the allottees and the date on which the possession of theplot, building or apartment is to be handed over and such other particulars,as may be prescribed:

TRANSFER OF TITLE (1) After obtaining the occupation certificate or completion certificate, asthe case may be, the promoter shall submit a copy thereof to the Authorityand thereafter take all necessary steps to execute a registered conveyancedeed in favour of the allottee thereby transferring the title in theimmovable property along with the undivided proportionate title in thecommon areas simultaneously with the handing over of the possession ofthe immovable property and the other title documents pertaining thereto.

(2) After obtaining the occupation certificate or completion certificate, asthe case may be and handing over physical possession to the allottees interms of this section, it shall be the responsibility of the promoter to handover the originals of the title documents and the plans to the association ofthe allottees incorporated as per the local laws.

RETURN OF AMOUNT(1) If the promoter fails to complete or is unable to give possession of aplot or building,-(a) in accordance with the terms of the agreement or, as the case maybe, duly completed by the date specified therein or any further dateagreed to by the parties; or(b) due to discontinuance of his business as a developer on account ofsuspension or revocation of his license under this Act or for any otherreason,he shall be liable on demand, without prejudice to any other remedy towhich he may be liable, to return the amount received by him in respectof that plot, building, with interest at such rate as may be prescribed inthis behalf and also penalty as may be determined by the Authority;(2) The interest referred to in sub-section (1) shall be chargeable from thedate the promoter received the amount or any part thereof, till the date theamount or part thereof and interest thereon is returned and such amountand interest shall be a charge on the land and other structures thereon andbe recoverable as arrears of land revenue.

OBLIGATIONS OF ALLOTTEES(1) Every allottee who has entered into an agreement of sale to take a plotor a building under section 11 shall be responsible to make necessarypayments in the manner and within the time as specified in the saidagreement and shall after taking possession of the plot or building undersection 14 pay at the proper time and place, the proportionate share of theregistration charges, municipal taxes, water and electricity charges, groundrent, if any, and other charges, in accordance with such agreement.

(2) The allottee shall be liable to pay interest, at such rate as may beprescribed, for any delay in payment towards any amount or charges to bepaid under sub-section (1).

(3) The obligations of the allottee under sub-section (1) and the liabilitytowards interest under sub-section (2) may be reduced when mutuallyagreed to between the promoter and such allottee.

CHAPTER IV & VESTABLISHMENT OF REAL ESTATE REGULATORY AUTHORITY AND APPELLATE TRIBUNALIt comprises of:• Incorporation of real estate regulatory authority• Qualifications of chairperson and members of authority• Term of office of chairperson and members• Salary and allowances • Administrative powers• Removal of chairperson• Functions of authority for planned lands development & promotion of real estate sector• Powers of authority for amicable settlement of disputes• Power of authority to call for information and issue directions• Execution of orders of authority

• Establishment of real estate appellate tribunal• Application for settlement of disputes and appeals to appellate

tribunal• Composition of appellate tribunal• Qualification for appointment of chairperson and members• Term of office of chairperson and members• Salary and allowances payable• Removal of chairperson and members• Officers and other members of the tribunal• Administrative powers of chairperson of Appellate tribunal• Vacancies

(1) The Appellate Tribunal shall not be bound by the procedure laid downby the Code of Civil Procedure, 1908 but shall be guided by the principlesof natural justice.

(2) Subject to the provisions of this Act, the Appellate Tribunal shall havepower to regulate its own procedure.

(3) The Appellate Tribunal shall also not be bound by the rules of evidencecontained in the Indian Evidence Act, 1872.

(4) The Appellate Tribunal shall have, for the purpose of discharging itsfunctions under this Act, the same powers as are vested in a civil courtunder the Code of Civil Procedure, 1908 in respect of the followingmatters, Namely:

(a) summoning and enforcing the attendance of any person andexamining him on oath;(b) requiring the discovery and production of documents;(c) receiving evidence on affidavits; and(d) issuing commissions for the examination of witnesses ordocuments;(e) reviewing its decisions;(f) dismissing an application for default or directing it ex-parte; and(h) any other matter which may be prescribed.

(5) All proceedings before the Appellate Tribunal shall be deemed to bejudicial proceedings within the meaning of sections 193, 219 and 228 forthe purposes of section 196 of the Indian Penal Code, and the AppellateTribunal shall be deemed to be civil court for the purposes of section 195and Chapter XXVI of the Code of Criminal Procedure, 1973.

Orders passed by Appellate Tribunal to be executable as a Decree: (1) Every order made by the Appellate Tribunal under the Act shall beexecutable by the Appellate Tribunal as a decree of civil court, and for thisPurpose, the Appellate Tribunal shall have all the powers of a civil court.

(2) Notwithstanding anything contained in sub-section (1), the AppellateTribunal may transmit any order made by it to a civil court having localjurisdiction and such civil court shall execute the order as if it were adecree made by that court.

APPEAL TO SUPREME COURT: (1) Notwithstanding anything contained in the Code of Civil Procedure,1908 or in any other law for the time being force, an appeal shall lie against any order, (not being an interlocutory order) of the Appellate Tribunal to the Supreme Court on one or more of the grounds specified in section 100 of that Code. (2) No appeal shall lie against any decision or order made by the Appellate Tribunal with the consent of the parties. (3) Every appeal under this section shall be preferred within a period of ninety days from the date of the decision or order appealed against:

Provided that the Supreme Court may entertain the appeal after the expiry of the said period of ninety days, if it is satisfied that the appellant was prevented by sufficient cause from preferring the appeal in time.

Real estate regulatory authority – powers and functions The Authority will act as a nodal agency to co-ordinate efforts regarding development of

the real estate sector and render necessary advice to the appropriate Government to ensure the growth and promotion of a transparent, efficient and competitive real estate sector.

The authority shall ensure compliance of the obligations cast upon the promoters and the allottees and to cause an inquiry to be made into compliance of its orders or directions made in exercise of its powers

To host and maintain a website of records of all real estate projects within its jurisdiction as database, with all details as provided in the application for registration under the Act, for projects, for which registration has either been granted or cancelled as the case may be;

To make recommendations on protection of interest of the allottees, measures to improve the processes and procedures for clearance and sanction of building plans and development projects from the Competent Authority; and construction and maintenance of structurally safe, environmentally sustainable, and low cost buildings, apartments and properties and any other form of assistance or advocacy to promote competition and efficiency in the real estate sector.

Regulatory Authority has the power to Issue directions to promoters

and allottees from time to time and such directions are binding on all concerned.

Powers of the Regulatory Authority consequent upon lapse of or cancellation of registration of the promoter to recommend to the Competent Authority to have the remaining development works, carried out from the proceeds of the enforcement of bank guarantee and recover charges incurred on the said development works due from the promoter.

The Regulatory Authority shall have powers to regulate its own procedure and shall be guided by the principles of natural justice and shall have all the powers as are vested in a Civil Court under the Code of Civil Procedure,1908

CHAPTER VII OFFENCES AND PENALTIESPunishment for nonregistration under section 3: If any promoter willfully fails to comply with or contravenes the provisions of section 3, he shall be punishable with imprisonment for a term which may extend to three years, or a penalty which may extend to ten per cent of the estimated cost of the real estate project, or with both.

PENALTY FOR CONTRAVENTION OF OTHER PROVISIONS OF ACT: If any promoter contravenes any other provisions of this Act, other than that provided under Section 3, or the Rules or Regulations made There under, he shall be liable to a penalty which may extend to five percent of the estimated cost of the real estate project.PUNISHMENT FOR WILLFULL FAILURE TO COMPLY WITH ORDERS OF AUTHORITY: If any promoter, who willfully fails to comply with, or contravenes any ofthe orders or directions of the Authority, he shall be liable to a minimumpenalty of one lakh rupees for every day during which such defaultcontinues, which may extend to five percent of the estimated cost of thereal estate project.

PUNISHMENTS FOR WILLFULL FAILURE TO COMPLY WITH ORDERS OF APPELLATE TRIBUNAL: If any promoter, who willfully fails to comply with the orders of theAppellate Tribunal, he shall be punishable with imprisonment for a term which may extend to one year or with a penalty which may extend to ten percent of the estimated cost of the real estate project, or with both.COMPOUNDING OFFENCES:Notwithstanding anything contained in the Code of Criminal Procedure,1973, any offence punishable under this Act, not being an offencepunishable with imprisonment only, or with imprisonment and also fine,may either before or after the institution of the proceeding, becompounded by the court before which such proceedings are pending.

CONCLUSION- Major Highlight of the Bill

• Real Estate sector is the second largest employer in the country, next only to agriculture and accounts for about 9 per cent of GDP and the construction sector supports 250 ancillary industries.

• Such an important sector, over decades has been marked by lack of trust and confidence between the consumers and project developers. In the process, this sector has acquired certain notoriety, adversely impacting investment climate and hurting the interests of lakhs of home buyers every year where 2,349 to 4,488 new housing projects were launched every year between 2011 and 2015. A total of 17,526 projects were launched with a total investment value of Rs 13,69,820 crore.

The provisions of this Bill are applicable only to residential projects.

• Prior approval before launch and advertisement- This bill contains provisions restricting launch of projects or advertisements unless all approvals are received and all the agents are not expected to facilitate the sale of immovable property which are not registered with the Authority and to maintain books of accounts, records and documents.

• Mandatory deposit of fund- It makes mandatory upon the promoters to deposit 70 per cent or such lesser per cent as notified by the government to cover the construction cost of the project of funds in a separate bank account to ensure timely completion and prevent fund diversion.

• Registration of real estate project and real estate agent - The bill also ensures mandatory registration of real-estate projects and real-estate agents with the Authority, except when the land proposed to be developed is less than 1000 square meters. This provision is likely to provide another level of protection to buyers while also preventing concerns regarding money laundering by the non-organised broker community.

• Disclosing of mandatory information - The real - estate agents / developers are now required to disclose material information such as details of the promoters, project, layout plan, plan of development works, land status, carpet area (as opposed to super area) and number of the apartments booked, status of the statutory approvals and disclosure of proforma agreements, names and addresses of the real estate agents, contractors, architect, structural engineer etc on the Authority's website.

• Restriction on taking advance - Prohibition on taking more than ten percent as advance from the buyers without a written agreement and also the developers/ agents are required to refund to buyers the full amount in case of delay of projects.

• Liability/ Penalty – The Bill prescribed for Civil and criminal liability for the contravention of various provisions of the Bill, such as, imprisonment up to three years or a penalty up to ten per cent of the estimated cost of the real estate project for projecting out misleading information in advertisements or prospectus

• Real estate regulatory authority – The Bill give the power to establish one or more Real Estate Regulatory Authority in each State/UT, or one Authority for two or more States/UT, by the Appropriate Government, specifying their functions, powers, and responsibilities to exercise oversight of real estate transactions. The Bill shall also appoint adjudicating officers to settle disputes between parties, and to impose penalty and interest.

Applicability of the bill• The proposed Bill has limited its applicability to residential real estate only i.e.

housing and any other independent use ancillary to housing. The Bill defines• "real estate project" as the development of a building or a building consisting of

apartments, or converting an existing building or a part thereof into apartments, or the development of a colony into plots or apartments, as the case may be, for the purpose of selling all or some of the said apartments or plots or buildings and includes the development works thereof

• ''apartment" whether called dwelling unit, flat, premises, suite, tenement, unit or by any other name, means a separate and self-contained part of any immovable property located on one or more floors or any part thereof, in a building or on a plot of land, used or intended to be used for residential purposes, or for any other type of independent use ancillary to the purpose specified and includes any covered garage, whether or not adjacent to the building in which such apartment is located which has been provided by the promoter for the use of the allottee for parking any vehicle, or as the case may be, for the residence of any domestic help employed in such apartment

HIGHLIGHTS OF THE BILL: The Bill regulates transactions between buyers and promoters of residential

real estate projects. It establishes state level regulatory authorities called Real Estate Regulatory Authorities (RERAs).

Residential real estate projects, with some exceptions, need to be registered with RERAs. Promoters cannot book or offer these projects for sale without registering them. Real estate agents dealing in these projects also need to register with RERAs.

On registration, the promoter must upload details of the project on the website of the RERA. These include the site and layout plan, and schedule for completion of the real estate project.

70% of the amount collected from buyers for a project must be maintained in a separate bank account and must only be used for construction of that project. The state government can alter this amount to less than 70%.

The Bill establishes state level tribunals called Real Estate Appellate Tribunals. Decisions of RERAs can be appealed in these tribunals.

KEY ISSUES AND ANALYSIS:• One may question Parliament’s jurisdiction to make laws related to real estate as “land” is in

the State List of the Constitution. However, it may be argued that the primary aim of this Bill is to regulate contracts and transfer of property, both of which are in the Concurrent List.

• Some states have enacted laws to regulate real estate projects. The Bill differs from these state laws on several grounds. It will override the provisions of these state laws in case of any inconsistencies.

• The Bill mandates that 70% of the amount collected from buyers of a project be used only for construction of that project. In certain cases, the cost of construction could be less than 70% and the cost of land more than 30% of the total amount collected. This implies that part of the funds collected could remain unutilized, necessitating some financing from other sources. This could raise the project cost.

• The Standing Committee examining the Bill has made several recommendations. These include: (a) the Bill should also regulate commercial real estate, (b) smaller projects should also be covered, and (c) all real estate agents must be required to register.

• The real estate sector has some other issues such as a lengthy process for project approvals, lack of clear land titles, and prevalence of black money. Some of these fall under the State List.

How does this bill help us?

Ritwik and Shalini Saluja are a young working couple and a potential real estate buyer. With so many cases of forgery, fraud, builder’s default and possession delay, they have turned extremely cautious of investing in property market. The Real Estate Regulatory Bill as they have heard will make investment in real estate industry safer. The Salujas, however, have little knowledge of the Bill and its positives. Many such prospective investors who had withheld buying properties might venture to do so now. Although, investors are pinning hopes that post the passage of the Bill, the situation will improve, the implementation process will take a long time.

For others like Saluja, here are few points that make RERA a win-win situation for investors-1. It provides for the establishment of a real estate regulator in each state to settle disputes and order compensation or penalties. This will keep a check on errant developers.2. All residential and commercial projects will have to be compulsorily registered with the regulator. Developers will have to disclose layout plans and submit clearances for the project with the regulator. This will usher in greater transparency in projects.3. Developers will have the responsibility to rectify structural defects and refund money in cases of default.4. Developers will need the consent of two-third of the buyers to alter plans, structural designs and specifications of the building. This will stop developers from making unapproved changes.5. Brokers, who intend to sell flats and plots in a project, will also have to register with the real estate regulator, and will be punished for non-compliance of regulatory orders.6. For wrong disclosure of information or non-compliance with requirements, the regulator has the authority to de-register the projects and impose penalties on the developer.7. Promoters to deposit 70% of amount from buyers. To ensure projects are completed on time, promoters will have to deposit 70% of the amount received from buyers in a separate bank account within 15 days. This will deter developers from diverting funds elsewhere and ensure timely completion.

MARKET VIEWSThough this has all the positive aspects which can survive the purpose of the investors and the common people, and keep them in safe hands,as the real estate sector definitely needs a regulator on the lines of the one controlling telecom, banking, stock markets and insurance sectors. There is also a criticism from the sector stating that the discretionary powers for registering or deregistering projects and adjudication by a bureaucrat could become breeding grounds for corruption. Moreover, the provision for criminal prosecution of developers could lead to the exit of professional and qualified developers. "Our fear is that those with expertise to handle political influencers will only survive, thus leaving the all important industry in the hands of corrupt people," Mr. Jain who is also the Chairman and Managing Director of Mumbai-Pune developer Kumar Urban Development Limited (KUL), said .

Real estate regulatory bill: close to the finish line and added recommendations• New recommendations on the Real Estate Regulatory Bill were made by the ministry and sent to PMO for approval, and the cabinet has now approved it. Next, it will be tabled in the Parliament for passing the bill and making it an Act. In essence, reduction of minimum balance to be maintained in the escrow account of a project has been reduced from 70% to 50%. This amount from the monies collected from the buyers must be placed in an escrow account within 15 days.

• This provision will effectively allow developers to continue their practice of diverting funds collected for a project towards land acquisition or other projects, and will work in their favour by also allowing them to grow their land and/or project portfolio. However, the 50% mandate will still place enough restriction on developers to divert funds elsewhere and ensure better completion records.

• For the buyers, the concerns regarding funds diversion will be higher now. The end result is that the bill will be slightly less protectionist towards buyers. Other revisions include bringing in commercial projects under the purview of the bill, which will provide protection to investors of commercial assets, as well.

• The Bill now covers commercial real estate, as well; also, brokers and agents have been now been included under its purview as well, and are effectively rendered punishable in case of non-compliance with the authority's and tribunal ruling. All under-construction projects have to be compulsorily registered within three months of setting up of the regulator, and developer cannot make changes to original plans or the structural design unless he gets the consent of two third of the customers. The states have to set up the regulatory bodies within one year of the Bill’s enactment while also setting up a web-based online registration facility within a further period of one year from setting up of the bodies.

• Failure to register a project will cause the developer to attract a penalty of 10% of the overall project cost, and an additional penalty of 10% penalty and/or a three-year prison term in case of continued non-compliance. Incorrect or incomplete disclosures will attract a penalty of 5% of the project cost. Project cancellation has been stated as possibility in case of continued non-compliance.

• One issue pointed out in the bill by stakeholders was that it aimed to place itself as the sole course of action for redressal of grievances by customers, with no recourse to other consumer forums. It was correctly pointed out that such a stance could lead to pressure on this regulatory body in terms of an increased log of cases, though it would certainly reduce instances of multiplicity of suits. This clause has been done away with in the version that the cabinet has cleared, so customers can now seek recourse with consumer courts and forums as well. All projects which have not received their completion certificates will also be now covered under the bill, so it now allows bigger umbrella coverage for buyers and investors.

• The Bill will provide a renewed boost to transparency levels in the Indian Real Estate sector. India which lies in the middle in a survey of 90 countries for the JLL Transparency Index will make further progress up the rankings. This will instil more confidence among global investors, thus providing better access to structured capital for this sector. However, though, the new amended Bill reads very positively for inducing transparency and better governance, the continued non-inclusion of government agencies whose slow approval processes are a major contributors to project delays, remains an issue and needs to be addressed.

Comparison to the regulatory bills of other countries:As the home property is the largest single investment most people will ever make, and thus it is vital that consumers receive the best possible advice, protection and service in the process with growing number of cases, many countries now look forward for setting up the necessary regulatory authorities to protect the consumers rights and control the crimes. Countries like Singapore, Australia and Sharjah have already set up their authorities, and when we compare those to our country the key observation is that they did not only focus on the rights and security of customers but also the quality of market. They have set up institutes of real estate to train and examine the people who are involved into the business such as agents, middle men or the promoter and examinations are also conducted, which enables the quality of it such as professional client care, code of practice and practice guide lines which we lack on. Though the guidelines and focus on Regulatory practice, development and ethical advertisements seems to be same.

The Real Estate Regulation and Development Bill, 2013 has been approved by cabinet and is now with a 21 Select Panel of the Rajya Sabha and yet to be passed.

The much awaited Real Estate Regulatory Bill(RERA) is now a step close to the finish line. As the Cabinet approved the Draft with 20 odd key amendments much to the recommendations of Rajya Sabha panel on 9th of December 2015. After much ambiguity on this bill from few years it has now again came into light with the ray of hope to get passed in the parliament. This bill can essentially be a key factor which may help the sector further attracting investments both from industry wide and also FDIs and households would be the key obviously. Which would be a great push for the growth of Infrastructure sector.

Have a look on the recent amendments:

Builders will now have to pay equal rate of interest in case of default or delays as home buyers.Which really provides a value and security to new and young investors.

This is the other important aspect that adds the safety and value for the investors savings from faulty constructions and may increase the transactions in the market by the assurance provided and may gain boom to the sector.

What has also been changed is the liability of builders for structural defects that has been increased from the earlier two to five years now.

The other aspects which lacked the clarity in the previous draft were rectified…

Carpet area has now been clearly defined to include usable spaces like kitchen and toilets to make it clear.

Garage is now to be kept out of the purview of definition of apartment and is separately defined.

Formation of allottees associations is now mandatory within three months of allotment of majority of units in a project so that buyers get to manage facilities in the housing project.

The bill stands on 7 pillars - mutual trust and confidence, credibility, efficiency, accountability and transparency and timely execution of projects.

Bill now allows aggrieved buyers to approach 644 consumer courts which are available at the district level instead of only the real estate regulatory authorities proposed to be set up under the bill, mostly in capital cities, for redressal of grievances.

Leaving the usual civil courts out.

The government had earlier added a few changes to the bill in December 2014.It had brought commercial real estate projects under the ambit of the bill; had made the provisions of the bill applicable to all existing projects wherein sales are still in progress, and put in place a system that would require consent of two thirds of the buyers in a project for changing project plans.

The revised bill now includes an enabling provision for arranging insurance of land title, which is currently not available in the market.

This will benefit buyers and sellers both in situations where the title of the land is held invalid.

The regulatory authorities would promote single window system of clearances for real estate projects that is likely to speed up construction work that now lags because of delays in getting permissions. Regulatory Authorities can now grade projects along with grading of promoters besides ensuring much desired digitization of land records.

They will now be required to make regulations within three months of its formation as against six months proposed earlier.States will now have to make rules within six months of notification of the proposed Act as against one year earlier proposed; Allottees shall take possession of houses in two months of issuance of occupancy certificate.

The bill now states that additional benches of Appellate Tribunals can be set up in a state if required for speedy adjudication of grievances.

A new provision has been created for imprisonment up to three years in case of promoters and up to one year in case of real estate agents and buyers for violation of orders of Appellate Tribunals or monetary penalties or both.

Appellate tribunals will now have to adjudicate cases in 60 days as against 90 days proposed earlier and Regulatory Authorities to dispose of complaints in 60 days while no such time limit was indicated earlier. Where all these amendments added the real value to the proposed bill. And finally passed in the parliament on 10th March 2016.After this the consumer shall be the king as had happened in sectors like telecom after a regulatory mechanism was put in place. There is an imperative need for consumer to be the king in real estate sector also."When there is a king, there got to be a queen also”. The queen obviously is the developer. And there shall be a happy marriage between the king and the queen, for both to live happily ever after.A total of 76,044 companies which are involved in the real estate sector will come under the purview of the bill.

A regulation is coming in a field in which this country's money is being pumped in. With the beginning made today, things will become transparent. Through this bill, there will be no difference between what the developer shows and what he sells.

©Mr. Rahul Reddy & Mr. Prathap Reddy