The Real Estate (Regulation and Development) Bill 2011 is set up through certain modifications to the existing Model Real Estate Bill of 2009. The new Bill is aimed to establish a Real Estate Regulatory Authority in each state for regulation and planned development of the real estate sector. It also proposed to organize an Appellate Tribunal to resolve disputes between the developers and buyers.
One of the key intentions of the revised Bill is to ensure transparency in real estate projects, enabling consumer protection and preventing the foul plays of land sharks and fly-by-night operators. Here are some of the concepts introduced in the new Bill.
- As per the revised draft, the builders, who are involved in constructions in land area above 4,000 square meters, should register the project with the Real Estate Regulatory Authority. (The earlier model real estate bill allowed registration for projects constructed in land above 1,000 square meters).
- While the earlier draft had proposed that the developers would submit bank guarantees, the revised draft mentions that 70 percent of the amounts realized for the real estate project from the allottees will be deposited in a scheduled bank and made sure that they are used only for the project.
Apart from these modifications, the proposals such as disclosure of information related to the project to the regulatory authority for registration, informing site plans, stage-wise schedule of completion of the project to the allottees are retained in the new Bill. Also, the proposal that the promoter cannot advertise the project without getting registration certificate from the Authority is remained. The registration should be taken under the Act for each phase of the project separately. If a developer fails to comply with the regulations of the Bill, he will be imprisoned for certain period which may extend for three years, or penalized with an amount of 10 percent of the estimated cost of the project, or face both. Some other aspects of the draft include no receipt of any deposit or advance to the promoter without entering a written agreement of sale, and compensations provided to the buyer in case of delay in delivery.
This revised draft, provided through the Ministry of Housing and Urban Poverty Alleviation, is kept open for comments and suggestions from the public. Upon approval, the Act ensures improvement in regulatory mechanism of real estate sector in India.