THE REAL ESTATE (REGULATION AND DEVELOPMENT) ACT 2016

Home buyers have so far got a raw deal, especially with regards to their dealings in the real estate sector. The Act came with the motive to embolden the buyers and make them more confident about their dealings and also help the sector to grow at macro level in the long run. PURPOSE OF ACT The real estate market is largely non transparent and the reason for the same is the absence of a regulatory authority. Thus, the act seeks to establish the Real Estate Regulatory Authority within a period of one year from the date of coming into force of this act, for regulation and promotion of the real estate sector and to ensure that all the real estate transactions are carried out in a transparent and efficient manner and to establish the Appellate Tribunal for speedy redressal of disputes. The Act came into force from 1st May, 2016 and it extends to whole of India except the State of Jammu and Kashmir. REQUIREMENTS OF THE ACT- a) The Act makes mandatory for the promoter to deposit seventy percent of the amount realised for the real estate project from the allottees, in a separate bank account maintained in a scheduled bank. Now, this will ensure that the project would complete on time. b) The promoter shall be liable to return the amount received by him along with interest in case he fails to complete or unable to give possession and the allottee also wishes to withdraw from the project. But if an allottee does not intend to withdraw, he shall only be liable to pay interest for every month of delay, till handing over of the possession. c) The current practice of selling on the basis of ambiguous super built up area will come to stop as the act comes with the definition of Carpet Area which means the net usable floor area of an apartment. REGISTRATION Real Estate agents who facilitate sale or purchase of property must take prior registration from regulatory authority. They are granted a single registration for the entire State of Union Territory. The Act makes it mandatory to register the real estate project with the Real Estate Regulatory Authority in the following cases: a) Where the area of land is over five hundred square meters or there are more than eight apartments. b) Where the ongoing projects on the date of commencement has not received completion certificate within a period of three months. c) For the purpose of advertising, marketing, booking, selling or offer for selling, or inviting persons for purchase. The registration can be granted or rejected by the regulation authority within a period of thirty days from the date of application but the authority has also reserved the right and power to revoke the registration granted by giving at least thirty days notice, suo moto or in case of any default or complaint made on part of promoter. In case of failure of registration, a penalty up to ten percent of the estimated project cost or three years of imprisonment may be imposed which may extend further. REAL ESTATE APPELLATE TRIBUNAL The Bill also proposes to establish a Real Estate Appellate Tribunal within a period of one year from the date of coming into force of this act. a) Any person aggrieved by any direction or order or decision of Authority or adjudicating officer may prefer an appeal to Appellate Tribunal within a period of sixty days from the date of receipt of copy of direction or order or decision. The promoter shall have to deposit with the appellate tribunal at least thirty percent of the penalty or such higher percentage as may be determined or the total amount including interest as the case may be before the said appeal is heard. Failure to comply with the orders or decisions of Tribunal, shall attract imprisonment for one year for the agents & allottees and three years for the promoter with a fine for everyday, which may extend up to ten percent of the estimated project cost. OTHER RELEVANT PROVISIONS a) Where any person sustains any loss or damage by the reason of any incorrect or false statement contained in the notice, advertisement or prospectus issued by the promoter, he shall be compensated by the promoter in the manner prescribed. b) The promoter shall not accept a sum of more than ten percent of the cost of the apartment, plot or building as an advance payment without entering into an agreement for sale. c) The promoter cannot make any changes in the sanctioned plans, layout plans and specifications of the proposed project without the prior consent of the allottee. d) The promoter has an obligation not to transfer or assign his majority rights and liabilities to a third party without the prior consent from two third of allottees and without the written approval of the Authority. e) The accounts of the promoter shall be audited within a period of six month from the end of every financial year by a chartered accountant in practice and that of the authority shall be audited by Comptroller and Auditor General of India at such intervals as may be specified. CONCLUSION The government appears to be working towards its promise to deliver its vision of Housing for All by 2022 and towards wide growth in the real estate sector by prohibiting the flow of unaccounted money in the long run and providing a major sense of relief to the buyers. This Article has been shared by CA Sakshi Gupta.