How effective Real Estate Regulatory Authority Bill would be

The cabinet has cleared the real estate regulatory authority bill and it would soon be presented in the parliament for the discussion and legislation. The question is whether it would be consumer friendly in the long run. The jury is divided.

The main reforms provided by the bill are as follows:

  1. It would setup a real estate regulatory authority.
  2. It would setup an Appellate Tribunal to adjudicate disputes and hear appeals from the decisions or orders of the Authority and for the connected matters connected.
  3. The developer would have to register the real project and get a certificate of registration from the regulatory authority.
  4. The developer would submit a request to the authority after getting necessary approval for the project and the authority should take a decision in 30 days.
  5. The bill lays down the requirements of the deed of conveyance after the getting the occupation certificate or the completion certificate.
  6. There are monetary and prison penalties for the promoters in case of violations.
  7. No civil court shall have jurisdiction in respect of any matter which the Authority or the tribunal is empowered by or under this Act to determine and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act.

 

Our analysis of the act is as follows:

  1. The act is too simplistic and too idealistic. It has come in too late (say 30 years late).
  2. It provides a framework for the model responsibilities for the developers and to some extent for the buyers. Considering the consumer court and the judiciary has been unable to take quick decision, this in ideal conditions may provide a faster resolution. The question is will it?
  3. It does have a potential to delay the projects even further and there could be additional corruption which may derail the complete bill.
  4. In our view, the following are the biggest challenges facing the real estate sector:
    1. Opaque processes at the local approval levels. How a project gets approved by the local authorities, delays in the completion certificate etc. The act does not address this biggest problem.
    2. There are contractual disputes between the buyer and sellers. the courts and consumer courts take forever to resolve these disputes. In general the appellate tribunal work faster than the courts and may provide some relief on that front.
    3. A very big challenge is the phase wise development and modifications in the plans. The act does not address this issue in any significance. It makes right noises about the same but does not define a resolution mechanism.
    4. There are three major reasons of the delay in the projects – funds unavailability or funds diversion, delay in the approval and lack of professionalism on behalf of the developers. The act is silent on these issues.

Our verdict - the act is too little and too late. It may not have any significant improvement in the processes.

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