The Real Estate Bill, 2013

The Ministry of housing and Urban Poverty Alleviation recently introduced the Real Estate (Regulation and Development) Bill 2013. The object of the bill is to step up a Real Estate Regulatory Authority for regulation and promotion of the real estate sector and to protect the interest of consumers in the real estate sector. The bill also seeks to standardize business practices and transaction in the real estate sector. Though, the subject “land” comes under schedule VII, list II (state list), entry 18 but the current bill is drafted on the grounds of “transfer of property” and “to regulate contracts” heads which falls under the concurrent list i.e. list III.

The bill has introduced and defined a new term “promoter” which means a person who constructs or causes to be constructed any independent building or a building consisting of apartments, or converts an existing building or a part thereof into apartments, for the purpose of selling all or some of the apartments to other persons and includes its assignees and also includes a buyer who purchase in bulkfor resale; it also includes a person who develops a colony for the purpose of selling to other persons all or some of the plots weather with or without structures thereon or any development of polity or any other public body in respect of allottees.

The bill only regulates for the purpose of residential real estate, the bill excludes projects made smaller than 1000 m² or 12 apartments from its purview.The bill also has made a compulsion that the promoter can only deal in those real estate projects or part of it or any planning area if the same is registered with the Real Estate Regulatory Authority under this act. As per the section 9 all Real Estate Agents have to register with the Real Estate Regulatory Authority and then can deal with any property which is under the purview of this Act.

Section 11 dictates the Functions and Duties of the promoter; that after being registered with the authority, a promoter will receive a login ID and password and will also create a web page on the website of the authority and then enter all details of the proposed project as provided.  The promoter shall also have to update that web page regarding the development of the project. This clause has been inserted to induct transparency in all the processes of construction and handing over the possession.

In furtherance section 13 imposes a condition on the promoter, that a promoter cannot accept more than 10% of the cost of the apartment,plot or building as the case maybe as an advance payment or an application fees from a person without first entering into a written agreement for sale from such person. It is also introduced that the promoter would be liable for any structural defect in the building if occurred within 2 years of the handing over of possession..

The Bill mandates that 70% of the amount collected from buyers of the project have to be used only for construction of that project. The function of the Real Estate Regulatory Authority (i) ensuring that residential projects are registered and their details are uploaded on the authority website, (ii)ensuring the buyers, sellers  and agents comply with the obligations under the Act, (iii) advising the government on matters related to the development of real estate. If, the Real Estate Authority observes that a particular issue needs to be addressed by the competition commission, the same issue can be referred to the competition commission for its observations. To induce time bound functioning in the working of the Authority a provision has been incorporated that if the applicant does not receives any reply within 15 days, after filling, from the Authority,the project will be considered as accepted. The notice of denial or revocation of registration has to be followed by 30 days' time for hearing to be followed by any action.

The promoter also has to obtain a completion certificate from the relevant authority, from the Association of buyers or Society of buyers and to provide essential services till the association of buyers takes over the maintenance of the project from the promoter. 

-Rahul Dubey, Advocate