10 Things Every Indian needs to know about the Real Estate Bill

The much-awaited Real Estate (Regulation and Development) Bill 2015 was recently passed, aiming to bring in transparency and protect consumer interests in the realty sector. The passage of the Bill in the Rajya Sabha could very well revive the sector if proposals are implemented.

With this, the ambiguity surrounding who a home buyer should approach in case of any dispute with the developer or in case of a delay in delivery is set to end.

Here's what every day home-buyers need to know about the Bill:

1. The bill will establish state-level authorities called Real Estate Regulatory Authorities (RERAs) - to regulate transactions of both residential and commercial projects. This is being done to accelerate completion and handing over of the projects.

2. The bill defines carpet area as net usable area of an apartment: This means that now, you will be charged only for the carpet area of your apartment and not the other areas which include the walls, lift and garden.

3. Municipal bodies and government bodies are not included in the Bill. 

4. A minimum of 70% collections from home-buyers should be deposited in separate pass through account called the escrow account which is to be used to cover cost of construction and land.

5. The bill would prohibit unaccounted money from being pumped into the sector and as now 70% of the money has to be deposited in bank accounts through cheques.

6. Appellate Tribunals will now be required to adjudicate cases in 60 days as against the earlier provision of 90 days.

7. Regulatory Authorities to dispose of complaints in 60 days while no time frame was indicated in earlier Bill.

8. Misleading advertisements will be made punishable offense where the first-time offenders will be fined 10% of project cost and repetitive offenders could face jail term.

9. The Bill provides for imprisonment of up to three years in case of promoters and up to one year in case of real estate agents and buyers for any violation of orders of Appellate Tribunals or monetary penalties or both.

10. The developers are required to disclose project information including details of the promoter project, lay-out plan, land status, status of approvals, agreements along with details of real estate agents, contractors, architects, structural engineers.

Features of the bill, that are important to note:

• Better organised real-estate sector: The real-estate sector in India is unorganised which leads to various discrepancies in the functioning. The bill will establish state-level authorities called Real Estate Regulatory Authorities (RERAs) which will regulate transactions related to both residential and commercial projects. The authority will grade the projects helping customers to make better decisions.
• Timely completion and hand-over: One of the problems which buyers face is that they don’t get possession of property as promised by the seller because of delayed construction among other issues. The bill ensures that 70 per cent of the money taken from buyers has to be kept aside in a separate bank account and this money can only be used for construction activities. This will ensure that the sellers don’t invest the money received from one project into another project.
• Accurate information: As per the bill, it will become mandatory for sellers to disclose all information like project layout, approval, land status, contractors, schedule and completion of project with customers as well as the RERA.
• Appropriate punishment: If the developer fails to hand-over the property to the buyer on time, then he would be liable to pay same amount as interest which he is charging from the buyer on delay in payment. Also, the property cannot be sold on the basis of ‘super area’ which includes both flat area and common area. If the developer violates the orders of appellate tribunal, then he/she can get a jail term of up to three years or penalty.
• Allottees association and after-sales service: It has been made mandatory to set-up an allottees association within three months of the allotment of major units/properties so that the residents can manage common facilities like a library and a common hall. Also, if the buyer finds any structural deficiency in the property, then he/she can contact the developer for after-sales service within one year of possession. The promoters or developers cannot make any changes to the plan without consent of the buyer, the bill states.