Strict rules gov­ern devel­op­ment in the West

Builders can­not start a project un­til their fi­nan­cial sta­tus is as­sessed as no project once ap­proved can be aban­doned. Rates for sale of cov­ered area have to be spec­i­fied

HT Estates - - Front Page - Jee­van Prakash Sharma

The real es­tate sec­tor is gov­erned by strict laws and con­trols in devel­oped coun­tries as com­pared to In­dia. While in­ves­ti­gat­ing the al­le­ga­tions of the Be­laire Owner’s As­so­ci­a­tion, the then di­rec­tor gen­eral of the Com­pe­ti­tion Com­mis­sion of In­dia an­a­lysed the real es­tate build­ing per­mit pro­ce­dure of some Euro­pean coun­tries and the United States. Ac­cord­ing to the report, In some places like Florida, the de­posit with de­vel­op­ers is held in es­crow to be used for con­struc­tion. The com­mon con­di­tions that have been seen in some of the coun­tries are fol­low­ing:

Be­fore any prop­erty is al­lowed to be placed in the mar­ket for sale, the fol­low­ing have to be cleared (a) Ti­tle of land has to be clear and fully paid up, (b) Build­ing plans have to be ap­proved by the ap­pro­pri­ate land au­thor­i­ties for devel­op­ment and (c) the fi­nan­cial sta­tus of the builder has to be as­sessed as no project once ap­proved can be aban­doned other than on force ma­jeur con­di­tions.

The in­ves­ti­ga­tion report fur­ther says that once a de­vel­oper ful­fills the above three con­di­tions, only then is he granted a li­cense to an­nounce the project. At the time of an­nounce­ment he needs to clearly spec­ify: (a) The rates for sale for cov­ered area only. No su­per area/hid­den cost can be de­manded other than the set price. (b) Com­ple­tion pe­riod with pre­de­ter­mined date for com­ple­tion and hand­ing over, (c) There can be no vari­a­tion in sale price be­tween two cus­tomers and no escalation on prices. All prices are posted on the in­ter­net and avail­able on pub­lic do­main.

While de­lay in de­liv­ery is a com­mon prac­tice in In­dia, “No over­run of com­ple­tion of projects is al­lowed. How­ever, if the project is de­layed for valid rea­sons it would en­tail (a) Pre-de­ter­mined amount of penal­ties on to­tal project to be paid to the au­thor­i­ties, (b) 10% in­ter­est to the cus­tomers for the pe­riod of de­lay which is ap­proved, says the report.

Le­gal ex­perts who deal in real es­tate say In­dia has al­most sim­i­lar le­gal provi- sions but the prob­lem comes at the im­ple­men­ta­tion stage. “Devel­op­ment au­thor­i­ties are spine­less about pe­nal­is­ing the de­vel­oper for their fault. Pre-launch is a crim­i­nal of­fence in Gur­gaon. A de­vel­oper can’t ad­ver­tise or sell his project be­fore he gets all the sanc­tions but even the well-known de­vel­op­ers are in­volved in this prac­tice. The author­ity is just a mute spec­ta­tor,” says a se­nior town and coun­try plan­ning of­fi­cial in Gur­gaon.

An­other healthy prac­tice that most of the devel­oped coun­tries have adopted is re­gard­ing with­drawal of the book­ing amount. The con­sumer can book the apart­ment with pay­ment of 10% and he has three months time (can vary) to ei­ther con­tinue or with­draw from the scheme; in case of with­drawal full amount is then re­turned to him with­out any for­fei­tures.

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