G Shyam Sunder is a Practising Advocate in Chennai for the past 14 years. His book “Property Registration, Land Records and Building Approval Procedures followed in Various States” is in its second edition.
I wasn’t very sure about the passage of the Real Estate Bill. Hats off that it has been passed. I would say the Bill is a game changer from a buyer’s point of view as the Bill will protect consumer interests and promote fair play in dealings. The regulatory body will also help in speedy settlements of disputes and encourage investment into the industry, especially foreign investment. The real estate industry generates employment and revenue and it definitely requires a regulatory body to ensure organisation and uniformity. The establishment of a regulator will ensure timely completion of projects as well as bring in efficiency and transparency.
The Bill stipulates that:
- Every project must be registered with the State real estate regulatory body before opening bookings
- Every developer must disclose his entire project profile like layout drawings, carpet areas, date of project completion, etc.
- Developers should also disclose documents like layout plans, commencement certificate, encumbrance certificate, title to the land, etc.
- State level regulatory bodies and appellate tribunals will be set up
- The body will regulate the entire real estate process from project development, registration up to delivery of possession to the buyer.
- Putting 70% funds of a project in an Escrow account means those builders who utilised a project’s funds to fuel other projects will be held accountable.
- Now, developers will also have to pay compensation to buyers if completion schedules are not met
- Tough penalties like a fine of upto 5% of the project cost and deregistration
- Real estate agents must register themselves; they can sell only registered properties.
While setting up a regulator is a welcome move; I think the government missed a point in not brining title assurance under the purview of the regulator. This is a practice followed in countries like the UK, Canada and Singapore under which the state guarantees property title to the buyer.