Real Estate Bill (Regulation and Development) Act, 2016 / रियल एस्टेट विधेयक

The Real Estate Bill (Regulation and Development) Act, 2016 is an Act of the Parliament of India which seeks to protect home-buyers as well as help boost investments in the real estate industry. The bill was passed by the Rajya Sabha on 10 March 2016 and by the Lok Sabha on 15 March 2016. In this regard, Union Ministry of Housing and Urban Poverty Alleviation (HUPA) had notified 69 of the total 92 sections of the Act to bring it into force from 1st May 2016. The Bill largely seeks to protect the interest of the allottees/purchasers by promoting transparency, accountability, and efficiency in the construction and execution of real estate projects by promoters. It also holds the promoters accountable for not registering their projects with the Real Estate Regulatory Authority (Regulatory Authority) or for providing insufficient information regarding their project. In addition to the promoter and allottees, the Bill also brings real estate brokers who facilitate the sale and purchase of units in a project within its ambit. The real estate sector comprises activities of sale, purchase, and development of land for commercial, residential and industrial purposes. Since land is a state subject, real estate sector comes within the ambit of the state governments.

Features of Real Estate Bill:

Regulatory authorities:

1. Under this act, it is mandatory for all the states and union territories to establish state-level regulatory authorities called Real Estate regulatory authorities (RERAs) within a year of the act coming into force. It is provided that two or more states can establish a common RERA and each state/UT can also establish more than one RERA
2. Each RERA should consist of a chairperson and at least two full time members with experience in sectors such as urban development, real estate, law and commerce
3. Functions of a RERA include:

• ensuring registration of residential projects and ensuring the availability of relevant details on the RERA website
• ensuring that all the stakeholders such as buyers, sellers, and agents comply with obligations under the Act
• Advising the government on matters pertaining to the development of real estate

4. Regulatory authorities have to draft regulations within 3 months of establishment. They shall promote a single window system of clearances, grade projects, and promoters and ensure digitization of land records.

Real Estate Appellate tribunals:

1. To hear appeals against the decisions of RERAs, each state/UT has to establish one or more Real Estate Appellate Tribunals. Each Tribunal will consist of a chairperson and two members (one with a judicial background and one with a technical background)
2. An issue impacting competition may be referred to the Competition Commission by RERA
3. Appellate tribunals must adjudicate cases within 60 days and regulatory authorities must dispose of complaints within 60 days

Central advisory council:

1. Under this bill, a Central Advisory Council is to be constituted to advise the central government on major questions of policy and protection of consumer interests. The council will have representatives from union ministries, state governments, RERAs and representatives of the real estate industry, consumers, and laborers

Registration of projects and agents:

1. All the residential projects are to be registered under this act. Without registration, the promoters cannot book or sell the projects. However, registration is not required for the projects:

• Where the area of land does not exceed five hundred square meters or the number of apartments does not exceed eight inclusive of all phases
• Involve renovation/repair/re-development without re-allotment or marketing.

2. Also, the state governments can prescribe the lower limits for exemption. Real estate agents must also register with a RERA in order to facilitate the sale or purchase of property in registered real estate projects

Duties of the promoter:

1. Promoters should make the site and layout plans for the project and upload all the relevant details of the project on the website of RERA. They should also update quarterly updates on status of the project
2. In case, if a buyer wishes to withdraw from the project due to loss incurred by him because of a false advertising, then the promoter must return the amount collected with interest to the buyer
3. Promoters must deposit at least 70% of their funds, including land cost, in a separate escrow account to be used for construction purposes only. However, state governments can change this amount below 70%
4. Promoters should not accept more than 10% of the total cost of the property as advance without a written agreement
5. Promoters should help in providing essential services to the association of buyers takes over the maintenance activities
6. Promoters should obtain a completion certificate from the relevant authority
7. In case, if a promoter is unable to give possession of the property, then the money received for the property along with interest has to be returned to the buyer
8. Promoters are responsible for fixing structural defects for five years after transferring the property to a buyer

Duties of buyer:

1. The buyer has to make the required payments as per the agreement signed with the promoter. If there is a delay in payment, then the buyer will be liable to pay interest for the delayed period. Buyers must also cooperate and participate in the formation of an association/society/cooperative society

Offences and Penalties:

1. If a promoter fails to register the property, he has to pay up to 10% of the estimated cost of the project as a penalty
2. Failure to register the property despite orders issued by RERA will attract imprisonment up to 3 years and or an additional fine of 10% of the estimated cost of the project
3. If a promoter violates any other provision he has to pay up to 5% of the estimated cost of the project
4. Real estate agents have to pay a fine of 10,000 for each day for the violation of provisions of the act

References & details:

1. For more details about Real Estate Bill visit: http://indiacode.nic.in/
2. Real Estate Bill: http://www.indiacode.nic.in/acts-in-pdf/2016/201616.pdf