Real Estate (Regulation and Development) Bill 2013

Legislative Brief

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24th December 2015 CS Sanjay H. Indulkar

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Real Estate (Regulation and Development) Bill back in

2013 is moved in the earlier government regime , The

NDA Government in December 2015 had made major

amendments the Real Estate (Regulation and

Development) Bill 2013. . In the first quarter of calendar

year 2016 maybe Real Estate (Regulation and

Development) Act will likely to come in force and will

be applicable for residential as well as commercial real

estate projects

Amendments in the December 2015

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How it will improve the real estate sector ?

• Improving the scenario of domestic and foreign

investment in the Indian realty sector

• Promoting fair play in the market

• Protecting the interests of buyers and bringing

transparency in the sector.

Present Scenario:

• Construction delays and piling up stock

• No regulatory frame work so every one enter in this

sector

• No confidence of buyers and investors.

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Closer look at bill &major amendments

The Real Estate bills calls for a

regulatory authority to be

established at state (or Union

Territories) levels to regulate

the real estate transactions in

the area..

Impact :

• The foreign investment in the

sector would also rise

• Greater transparency in the

sector

• May be the Government will

be able to make policy on the

affordable housing as the

regulator is at place .

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Registration

Under the new provisions, all

the real estate projects and

also the agents will have to be

registered with the regulatory

authority of the respective

state. Developers will have to

disclose the details of their

project including the approvals

from other government

authorities, status of the land

on which the project will be

developed, layout plans, etc

Impact

Today the this sector is

unregulated after regulator

,majority of the developers

without approved plan and the

project details will exit /or will

not survive in the regulated

market as there are lot of

compliances required from the

developers

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Escrow Account

The developers will have to

deposit 70 percent of their

project cost in an escrow

account.

Impact

Funds from one project should

be utilized to develop the same

and none else. This will

ensure timely construction of

the project and builder will not

able to divert the funds

received for one project to

others

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Disclose important information about their projects

Developers and promoters will

have to disclose important

information about their projects

to the buyers. Any change in

the project design and layout

will not be allowed without the

consent of the buyers.( At least

two-third buyers' consent to be

needed if the developer wants

to alter plans, structural

designs and specifications of

the building.)

Impact

• Delivery of the project as sold

at time of booking the project

no deviation will be allowed

• Project does not adhere to the

project design and area as

mentioned in the agreement to

sale than the builder will have

to face non compliances issue

with the regulator

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Applicability

As per the amendments,

properties with sizes greater

than 500 sq mt (or 8 flats) will

fall under the scope of the law,

as opposed to 1000 sq mt

(or 12 flats) which was the

criteria earlier i.e .before

December 2015 amendments

in the bill.

• Impact

Most of the project will be covered

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The local authorities that

provide certain approvals to

the developers will also be

under the ambit of the law.

Many a times they fail to meet

the deadlines due to a delay in

receiving necessary approval

from the authorities.

Impact

• To protect the developer’s’

interests.

• This may be one of the loop

hole under the law for the

builders to get away of their

non performance

• But now they have a legal

recourse for the same for

delays in the approval by the

local authorities

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Dispute Resolutions and Penalties

• the right to approach consumer

courts ,Civil courts jurisdiction

prohibited from taking up

matters defined in Bill,

however, consumer court

allowed to hear real estate

matters

• A fast track dispute resolution

mechanism will be established

for quick resolution of disputes

among different parties via

Appellate Tribunal and

adjucating officers

Penalties and punishments for

the violation of the provisions

of the bill. If the builders violate

it, they may be imprisoned for

three years. If the buyers or

agents do, they will be

imprisoned for one year.

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Summary

• All developers will have to register their projects with a real estate regulator.

• All states across the country will have one regulator which will settle disputes and impose

compensation. Neither housing nor commercial projects can be launched unless it got registered with

the real estate regulator of the state.

• the ongoing projects, which are yet to receive completion certificates, will also have to abide by the

same rule.

• Developers can't even advertise of their projects without prior registration with the real estate

authority.

• Developers cannot sale properties by showcasing the super area. Instead, the developers will have to

disclose the carpet area before putting any advertisements.

• The regulator authorities will monitor layout plans which should be declared during the time of

registration of the project.

• Developers need to mention all details of contractor, architect, structural engineer, etc. associated with

the project.

• Developers will be responsible for structural defects and they need to refund money in cases of

default.

• Any third party or broker, who are interested to sell flats or an apartment, will be asked to register their

names with the regulatory body. The brokers also will be penalised for non-compliance.

• Developers will have to pay refund with interest to buyers in case they fail to deliver projects on time.

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CS Sanjay H. Indulkar

Company Secretary

Corporate Advisory ,Equity & Debts

Infrastructure Advisory ,Regulatory &

Compliance

Mobile 9867161367’

email: sindulkar@hotmail.com LinkedIn-connect : in.linkedin.com/pub/sanjay-

indulkar/1a/865/811

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