Thursday, July 30, 2015

REAL ESTATE REGULATORY BILL BRINGS PROTECTION TO HOME BUYERS

REAL ESTATE REGULATORY BILL BRINGSPROTECTION TO HOME BUYERS

The long-pending Real Estate Regulatory Bill was amended and approved by the Cabinet. The Bill offers much needed protection for home buyers and would help increase disclosures in the real estate market.

For instance, the Bill makes it mandatory for all under-construction projects to be registered. The Developer has to disclose project details, including layout plan, approvals, names of the Promoters and contractors during registration. Giving all these detailed information will help improve transparency. The Bill also limits the changes a developer can make to the original plan. Any changes require getting the consent of 2/3rds of the customers.  This is a great plus points, as in the past home-buyers were usually kept in the dark about size, floor plan and design changes.  Now, the home-buyers have to be informed about the changes and the home buyers will have the right to withhold consent, if they are unhappy with the proposed changes.

According to the Bill, the Developers must also maintain half of the amount collected for a project in an escrow account, while the share to be held was reduced from 70 percent in the original proposal to a lower share now, the chances of developer diverting the funds collected for one project to buy land or cover costs of the other developments will be minimized now.  Maintaining funds for each project individually will also help increase developer’s accountability.

Besides the developers, the Bill also covers brokers and agents who are in the business of selling the property. They are also required to register themselves with the Real Estate Regulatory Authority – a new agency to be set up by the respective State Governments to oversee compliance.Buyers can take up their grievances and issues to such Regulatory Authority along with using existing options such as approaching Consumer Courts.  The good news for many home buyers who are facing long delays in the legal system is that the dispute resolution by the Regulatory Authority is expected to be fast tracked.  The Regulator will also have rights to punish the offenders.

One important change in the revised Bill is that it covers commercial projects also in addition to residential segment. However, what is still not addressed are the issues faced due to approval delays from government departments, which is supposed to be the reason commonly cited by the developers for not meeting their commitment to the home buyers. 

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