The Real Estate (Regulation and Development) Bill, 2013

The Union Cabinet recently approved the amendments to the The Real Estate (Regulation and Development) Bill, 2013.  The Real Estate (Regulation and Development) Bill, 2013 was first introduced in the month of August in Rajya Sabha, to bring in the accountability and transparency, access to capital and financial markets for the sake of long term growth.  Bill also enacted to establish a regulatory mechanism to regulate contracts and transfer of property and to provide the suitable reliefs expeditiously in the Real Estate sector as we see in other sectors such as Insurance and telecom services.

Few major amendments brought in the Bill in order to protect the buyer’s interest are, Commercial Real Estate transactions as well as the smaller projects brought under the purview of the Bill. Current projects which have not received the Completion Certificates also come within the scope of the Bill.

The other important aspect is, under the present bill, it is mandatory upon the promoters to obtain consent of at least 2/3rd of consumers of a project for making any changes to the plan or structural designs.  The Bill provided the establishment of State level regulatory authorities by name Real Estate Regulatory Authorities (RERA) to regulate the contracts and transactions between the real estate promoters and buyers of real estate projects.  Bill also mandated that real estate projects should be registered under with RERA, by which, promoters are not allowed to sale without registering the projects with the RERA.  Upon registering the projects, the promoter is required to upload the details of the project such as site address, plan, pro-forma agreements, schedule of completion of the project work, addresses of agents, contractors, architects, builders on the website of RERA.

Bill also aimed at safeguarding the amount of the buyers paid to the promoter, by making strict provision for depositing 70% of the amount collected from buyers to maintain in a separate account to ensure that such amount to be used only for that particular project. However, the state government under Bill is empowered to reduce such percentage. Bill also provided for the establishment of Real Estate Appellate Tribunals for filing appeals against the decisions of RERA. The Bill prevailed over the provisions of State laws that were enacted to regulate the real estate projects. The Real Estate agents must register under the Act. The Bill also imposed 5% cost of the project for wrong disclosure of the details of the project on RERA website. RERA may cancel the registration of projects if there are any continuous violations, and decides on its own the course of action for completion of the such projects.  Amendments to the Bill also stipulates that State should formulate rules within a year, and also to provide facilities for online submission of applications for registration of projects within one year from the date of establishment of RERA, which needs to decided within 60 days. Bill also has provisions for fast track dispute settlement, adjudicating officers who are appointed under the Bill, who has power to settle the matters and to award compensation and interest.  Bill also provides for Appeals against Regulatory Authority Regulatory Authority.  Appeal against the RERA decisions lie with the Appellate Tribunals and final appeals will lie only with High Courts.

Hopefully, we assume that these provisions would help the buyers to ensure that there fund is properly utilized for their property and proper implementation of the mechanism provided in the Bill may ensure the transparency in dealings of the promoter and also ensures the speedy disposal of the grievances addressed by the buyers with RERA.  Registration of the projects is an appreciable effort to bring the transparency in the real estate sector.

by Anitha Gutti.