Builders flouting law may face three-year jail
The government has approved several changes in the Real Estate (Regulation and Development) Bill including a proposal for insurance of land title to protect buyers and developers from the risk of land fraud. The legislation is expected to help regulate the unorganised real estate sector, plug loopholes, and protect buyers by setting up regulators in each state. It has also proposed a jail term of up to three years or penalty or both in case of builders, and one year for real estate agents and buyers for violating the orders of appellate tribunals.
Another major change that is expected to benefit consumers is the condition of keeping 70 per cent of the sale proceeds for a particular project in a separate account to meet the construction cost of that project, including the land cost. This has been done to minimise diversion of funds and ensure timely completion of projects. Moreover, the regulatory authorities can grade projects along with grading of promoters to help buyers make the choice while booking a property.
In order to make states comply with the norms, the bill says states will have to make the rules within six months of notification of the proposed Act. Each state will establish the real estate regulator and the appellate tribunal as per the rules. The tribunal will be the final arbiter in case of disputes between a buyer and builders or promoters. Either party can approach the tribunal if the dispute is not settled by the real estate regulator.
Besides, the consumer has the option to approach consumer forums at district level instead of only the regulatory authorities proposed to be set up under the bill for redressal of grievances. Not only this, to ensure that the regulatory authorities do not delay cases, the bill has a provision for disposing of complaints in 60 days—no such time limit was indicated in the earlier bill. Similarly, the appellate tribunals need to adjudicate cases in 60 days as against 90 days as proposed earlier.
According to the changes, the liability of promoters for structural defects has also been increased to five years from the earlier provision of two years. Another major change approved by the Cabinet includes equal rate of interest to be paid by promoters and buyers in case of default or delays. Moreover, to fast-track the projects, the proposed bill has included a section for promoting a single-window system of clearances for real estate projects by regulatory authorities. It also says that the allottees shall take possession of houses within two months of issuance of occupancy certificate.