Monday, August 24, 2015

Jail term for errant Real Estate developer




In what may bring relief to housing aspirants across the country, chances of home buyers being cheated by reality companies might be minimized as the proposed real estate regulator will not only be empowered to penalize errant developers by imposing fines but also recommend imprisonment upto three years if they are found guilty. The information, to be posted on the regulator's website, will also mention the names of blacklisted developers.

For any housing project exceeding 1,000 square meters or four apartments, the builder will have to procure a registration certificate from the regulator after furnishing all relevant project details and permissions from the competent authorities. This includes the number and size of plots, layout plan, carpet area and plinth area of the flats or apartments and the facilities provided. A project cannot be marketed or advertised without the registration certificate. The government has prepared a draft of the model Real Estate Bill, and has invited views of all stakeholders by November ahead of giving it a final shape.

Safeguarding the interests of buyers, the regulator makes it mandatory for the developer to enter into a sales agreement ahead of taking the deposit from a potential buyer and to provide stand-in warranty for the project for two years after handing over the possession for any construction related problems. Any buyer wishing to quit the project due to delays or false promises shall be returned the entire investment along with interest at the existing rate. Briefly, the Real Estate Regulator can [i] penalize errant developers by imposing fines if they are found guilty [ii] recommend imprisonment of up to 3 years, [iii] post names of blacklisted developers on its website; and [iv] order return of the entire investment along with interest at the existing rate if a buyer quits the project due to delays or false promises.

The builder or promoter of the project will have to submit a timeline for providing various civic services like supply for electricity and water, sewerage and drainage systems, lifts and fire-fighting equipment. Value of cost escalation in projects, if any, will have to be arrived at by mutual consent between promoter and buyer. The names and addresses of all middlemen or brokers will have to be maintained on the website. In case the developer fails to provide any of the services listed at the time of purchase, he will be asked to compensate the buyer. The builder shall furnish a bank guarantee equal to five per cent of the estimated cost of the development works to a competent authority, which may discharge it on recommendation of the regulator. The promoter will have to obtain an insurance policy for at least five years after the construction activity is complete for apartments against loss or damage by natural calamities for the cost of replacement of such property and loss of life and bodily injuries suffered by persons occupying the apartments.


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