Thursday, February 4, 2016

UNION HOUSING MINISTRY UNVEILS MODEL REAL ESTATE REGULATION ACT

UNION HOUSING MINISTRY UNVEILS MODEL REAL ESTATE REGULATION ACT

To prevent unscrupulous real estate developers from deceiving gullible buyers, the Union Ministry of Housing and Urban Poverty Alleviation has proposed a bill-Real Estate (regulation of development) Act. No buildings or townships meant for sale, in future,can be undertaken, without registering them with the Real Estate Regulatory Authority to be set up in each State.
The Union Ministry of Housing and Urban Poverty Alleviation has published the draft Model Real Estate (Regulation of Development) Act to control and promote construction, sale, transfer and management of colonies, residential buildings, apartments and other similar properties through a regulatory authority which will protect public interest "in relation to the conduct and integrity" of realty firms developing housing colonies and facilitate "smooth and speedy construction and maintenance" of colonies.
The Act makes it mandatory for all promoters to submit details of the approved plans of projects along with a bank guarantee equivalent to 5 per cent of the estimated cost of construction to the authority. Besides, the promoter will also give an undertaking to complete the work in accordance with the conditions of registration. Without registration, reality firms are not authorized to sell property. After verifying the authenticity of the approved plan, the title of the property and other relevant details, the authority will register the project.
This registration will be valid for three years and has to be renewed after that. The details of the projects will be made public through the authority's website. Also, documents relating to permission from the local authority as well as building plans will be made available to public. The model Act also prevents the promoters from advertising the project before it is registered with the authority.
When violations of rules, failure to provide essential services to the developed plots are noticed or complained about, the registration will be cancelled after due verification. Failure to comply with the provisions of the Act will attract imprisonment for a term extending up to three years or a penalty. The bank guarantee provided will be forfeited, and the names of the promoters will be included in the defaulters' list and published on the authority's website. The act also provides for appeal and setting up of appellate tribunal.
This draft Act has been published for soliciting stakeholders' opinion and the Ministry expects the State governments to pass their respective Acts, based on this model Acts, after it is finalized.
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