Real Estate (Regulation & Development) Act, 2016
The regulation of real estate sector involving over 76,000 companies across the country becomes a reality from May 1, 2017, with the Real Estate (Regulation & Development) Act, 2016 coming into force. With all the 92 sections of the Act coming into effect, developers shall get all the ongoing projects that have not received Completion Certificate and the new projects registered with Regulatory Authorities within three months i.e. by July end. This enables the buyers to enforce their rights and seek redressal of grievances after such registration.
Ahead of the Act coming into force, Ministry of Housing & Urban Poverty Alleviation has formulated and circulated Model Real Estate Regulations for adoption by the Regulatory Authorities in the States/UTs. Under these Regulations, developers are required to display sanctioned plans and layout plans of at least 3 feet x 2 feet size at all marketing offices, other offices where properties are sold, all branch offices and head office of the promoters in addition to the site of the project.
Real Estate Regulatory Authorities may take decisions on all issues preferably through consensus failing which through voting with Chairman using Casting Vote in case of a tie. There shall be a quorum for the meetings of the Regulatory Authorities and if a meeting is adjourned due to lack of such quorum, such meeting can take place without a quorum.
Members of Regulatory Authorities shall declare an interest if any in the matters coming up for discussion and shall not participate therein. Some of the major provisions of the Act, besides mandatory registration of projects and Real Estate Agents, include:
- Depositing 70% of the funds collected from buyers in a separate bank account in case of new projects and 70% of unused funds in case of ongoing projects;
- Projects with plot size of minimum 500 sq.mt or 8 apartments shall be registered with Regulatory Authorities;
- Both developers and buyers to pay the same penal interest of SBI’s Marginal Cost of Lending Rate plus 2% in case of delays;
- Liability of developers for structural defects for five years; and
- Imprisonment of up to three years for developers and up to one year in the case of agents and buyers for violation of orders of Appellate Tribunals and Regulatory Authorities.
