Pro-Builder Norms in Ma­ha­rash­tra Re­alty Law Likely to Be Dis­carded

Consumer Voice - - Contents -

The Real Es­tate Reg­u­la­tion and De­vel­op­ment Act was in­tro­duced to help the com­mon man. Its pri­mary goal is to bring tighter reg­u­la­tions into the sys­tem, thereby bring­ing trans­parency and ac­count­abil­ity to the whole home-own­er­ship ex­pe­ri­ence. The Act ap­plies to both res­i­den­tial and com­mer­cial real es­tate projects. It aims to pro­vide safe­guards against de­lays and fraud­u­lent prac­tices, and to im­pose var­i­ous dis­ci­plinary mea­sures to pro­tect con­sumers’ in­ter­ests.

The ba­sic prin­ci­ples and vi­sion for this Act was drafted by the cen­tre, with each of the states to in­di­vid­u­ally set up a Real Es­tate Reg­u­la­tory Author­ity (RERA), an ap­pel­late tri­bunal and RERA rules.

One of the most con­tro­ver­sial has per­haps been the Ma­ha­rash­tra Real Es­tate (Reg­u­la­tion & De­vel­op­ment) Act 2016 (RERA). It has been ar­gued that there is a vast dif­fer­ence be­tween the rules framed by the cen­tre and those framed by the state. Most of the clauses in the state rules were found to be an­ti­con­sumer. That de­feated the main ob­jec­tive of the Act, which was to bring trans­parency in the real es­tate busi­ness and pro­tect con­sumers’ in­ter­ests.

Many hous­ing ex­perts and groups who fight for con­sumer rights, such as Mum­bai Gra­hak Pan­chayat, have ac­cused the state gov­ern­ment of di­lut­ing the pro­vi­sions of the Act and mak­ing it more like an an­ti­con­sumer act. Mum­bai Gra­hak Pan­chayat op­posed the RERA rules formed by the state gov­ern­ment on the ground that they were not only pro-de­vel­op­ers but also in clear vi­o­la­tion of con­sumers’ rights. They de­manded im­me­di­ate with­drawal of the pro­posed rules. The ob­jec­tions they raised are sum­marised be­low: • The old state law had per­mit­ted the builder to can­cel the agree­ment af­ter giv­ing a 15 days’ no­tice, and he could re­sell the flat only af­ter re­fund­ing money to the orig­i­nal buyer. How­ever, un­der the new draft rules, a builder can im­me­di­ately sell the flat af­ter ter­mi­nat­ing the agree­ment. • As per the new draft rules, a buyer must pay 30 per cent of the to­tal cost while sign­ing the agree­ment, and 45 per cent when the plinth of the build­ing is con­structed, whereas the ear­lier state law stip­u­lated 20 per cent pay­ment when the agree­ment was signed with the de­vel­oper. The cen­tre’s rules do not stip­u­late any pay­ment sched­ule; it left it to the states to for­mu­late it. • The new state draft says builders can pay Re 1 per square me­tre for the reg­is­tra­tion fee, which means for a 100,000 square feet project he has to pay ap­prox­i­mately Rs 10,000. How­ever, the cen­tral rules pre­scribe a fee of be­tween Rs 5 lakh and Rs 10 lakh for res­i­den­tial and com­mer­cial projects. • Cen­tral rules pro­pose a fee of Rs 1,000 for fil­ing com­plaints be­fore hous­ing author­ity, whereas the state draft has pro­posed to in­crease this fee to Rs 10,000. • The cen­tral rule re­quires a builder to sub­mit an an­nual re­port in­clud­ing profit-and-loss ac­count, bal­ance sheet, cash-flow state­ment, di­rec­tors’ re­port and au­di­tors’ re­port for the pre­ced­ing three fi­nan­cial years, among other things. How­ever, the new state rule is silent on such a re­quire­ment.

This clearly shows that the state’s draft RERA rules are bi­ased to­wards the builder and run con­trary to the very essence of the Act, where the buyer is sup­posed to be king. The clauses pointed out by Mum­bai Gra­hak Pan­chayat sug­gest that the state is more con­cerned about safe­guard­ing the in­ter­ests of real es­tate de­vel­op­ers.

Gov­ern­ment sources claim that most of the ob­jec­tions and sug­ges­tions sub­mit­ted by Mum­bai Gra­hak Pan­chayat have been in­cor­po­rated in the re­vised rules and await the chief min­is­ter’s ap­proval. Hope­fully, the new state law has all the pro­vi­sions that are in favour of flat buy­ers so that they can have a reg­u­la­tory body un­der which easy and fast re­course is avail­able.

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