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India – Buying home to get safer, new real estate bill mooted

Mahendra Kumar Singh

NEW DELHI: The aam aadmi looking to own a piece of real estate might be able to breathe easier. The possibility of being hoodwinked by a
smooth-talking builder or salesman might be reduced sharply as developers will soon be required to post project details, including civic clearances, on the website of the real estate regulator.

This should also reduce the chances of honest property buyers being duped by developers hiding behind terms like “super area” and fine print about various “charges” to conceal actual floor area and the final costs.

The model Real Estate (Regulation of Development) Bill has been long awaited and states are expected to legislate in keeping with the detailed provisions of the proposed law. They will also set up regulators to give effect to the bill which even recommends a three-year jail term or penalty which may amount to a percentage of project cost for failure to register.

The law to regulate real estate developers will call on builders to provide details of the number and size of plots, layout plan, carpet area and plinth area of flats, apartments or any other housing complexes.

Importantly, it will prevent builders from changing the plans or inserting charges as the sale agreement will be considered binding. They will also post authorised brokers and dealers.

The legislation will prevent advance payments being extracted from buyers without a written sale agreement containing project timeline, payment details and possession date. The promoter will not be able to cancel the sale deed unilaterally. If there is sufficient reason to do so, a notice will have to be given and the money paid will be returned with interest fixed to bank rate. The promoters would furnish a bank guarantee equal to 5% of estimated cost of projects.

The proposed bill mooted by housing ministry, a draft of which has been circulated to all stakeholders, has asked promoters to submit the details of approval and sanctions from civic agencies and bank guarantee furnished.

The draft bill has maintained the power of civic agencies to approve the project. It will be the responsibility of the developer to give information to buyers relating to nature of the title to land, layout plan sanctioned by local authority and plan of development works. The big advantage of the law would be that civic agency details will be given to the regulator.

The developers also cannot hide the “actual living space” they are offering to buyers as they have to distinguish the carpet area, super area and common area along with the plan and specifications of
apartments.

The consumer can ask promoters to spell out the details of common services like supply of electricity, water, sewage and drainage, lift, light in passages and staircases, sanitary services and fire-fighting instruments in the project. And if developers fail to provide these services, consumers can approach the regulator, which can also take suo-moto cognizance and inquire into the matter and pass order as it may find necessary.

If there is any deviation from the advertisement, the promoter has to compensate buyers for any loss due to false information. In case of pulling out of a project, the builder has to return the money with interest at a rate not more than current rate.

The buyer can also directly apply to local body for occupation certificate if the developer is delaying even after completion of the project and the cost incurred by the allottee will be recovered from the promoter. After a sale agreement is concluded, the builder will not be able to mortgage or create a charge on plot or apartment without written consent of the buyer.

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September 26, 2009 - Posted by | Uncategorized |

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