Herald: Ahh…there is always a way out

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Ahh…there is always a way out

23 Sep 2018 05:49am IST
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23 Sep 2018 05:49am IST
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Till a few months back, Real Estate companies were advertising in newspapers, radios and on billboards. However, all this stopped when RERA was implemented in Goa and orders were issued to impose penalties on the companies who had not yet registered. Avinash Tavares takes a hard look at the situation on the ground

hile some say RERA is a boon for customers, others claim that because of RERA many construction companies have shut down. The reality is somewhere in-between. Herald interviewed builders and activists to find out the pros and cons of RERA and its implementation in Goa and found out flaws in the system which are hurting the construction industry and the loopholes that some builders are using to escape RERA’s Web

Projects without a Name cannot be searched on RERA website

While many ongoing projects were registered as new projects to avoid paying a penalty for late registration, other simply removed all traces of evidence that the project was ongoing which would bring the project under the ambit of RERA.

In Fatorda, 70% of projects do not have a banner or hoarding in front of their project. Even mega projects such as a 200+ unit near Housing Board Circle behind Pantaloon showroom, which is complete and undergoing painting, till a few months ago had huge posters along the metal fencing of the site. The banners have been removed and not it is completely nameless.

 Other projects that do have advertisement hoardings such as those under construction near Rebello Hospital are not registered under RERA. An ignorant customer who wants to purchase shop in the heart of the city will not know that the project is not registered under RERA and therefore expose himself to fraud.

In Ambaji, a three-phase project is currently under construction at the top of the hillock. The contractor informed that the Project is registered under RERA. When asked, he said he didn’t know the name of the project he is constructing. A permission board hung at the entrance of the project has a title heading as “Proposed Residential and Commercial Building Complex”. Under the heading, it was stated as “Project By:” along with a name of an individual. When searched, the name did not throw up any results on the RERA website.

All other projects on the Ambaji and Fatorda road had similar permission boards which did not display the name of the project.

Projects that are not for Sale don’t have to register

There were a couple of projects along the road opposite the PWD in Fatorda that had the banner “Private Property Not for Sale” even though multiple shops and flats were under construction at the site.

An engineer in a reputed Construction company in Margao informed that this is done to avoid registering under RERA. “If you don’t do any marketing you don’t have to register under RERA. A builder constructs the project on behalf of the landowner. After getting the completion certificate, the builder will give a certain number of flats and shops to the owner and sell the rest as his profit. This way, the builder doesn’t have to waste his time and money registering under RERA”. He pointed out that this can only be done for a small project. “Here the builder does not have the liability of purchasing the plot which leaves him with enough funds to construct the entire project without the need for advances from the customers.”, he explained.

The flaw in the Act is because the State government have not amended their Building Regulations to incorporate Registration under RERA as one of the conditions for issuing completion certificates.

 Silence is Golden

The High Court had temporarily banned projects with more than 6 flats along the coastal belt of Salcete because the villages don’t have a sewerage system. To circumvent the Order, many developers began constructing structures with just 6 flats along multiple shops.

This strategy has backfired since these projects have to now be registered under RERA since they exceed the limit of 8 units and therefore fall under the ambit of the RERA Act. However, these projects have escaped the RERA net so far because they are too small or in remote areas and thus out of sight. Most of the units are already sold and therefore are quietly carrying on the construction work.

Completion Certificate Vs Occupancy Certificate

The RERA Act leaves the customers partially vulnerable because it allows the promoter to withdraw the 70% amount which was paid by the customer and kept in a separate escrow account, thus removing the leverage the Act gives the customer to ensure that the builder sticks to his side of the agreement.

Completion Certificate is issued by the Town and Country Planning Department once the structure is complete whereas Occupancy Certificate is issued by the Municipality or the Local body permitting the occupation of the building which has provision for civic infrastructures such as water, sanitation and electricity.

Shriram Raiturkar, an activist from Margao says that the Act should have relied on the Occupancy Certificate instead of the Completion Certificate “RERA was meant to protect the customer and not check whether structures are completed. Completion Certificate is given only when the structure is completed. Occupancy is a must for the customer since it means that the flat he purchased is fit to occupy. Tomorrow the builder will complete the structure, withdraw the customer's money from the bank and spend it without completing other obligations such as interior works or exterior works like gutters and street lights”, he said.

Raiturkar pointed out that there are many buildings in Goa where the people are living without occupancy certificate because the owner had demanded more money from the builder for transferring the land. ”These flat owners have not yet signed sale deed or even formed societies because the builder has not given them the occupancy certificate”, he said.

RERA in Goa has flaws

According to Kashinath Shetye, the activist who has filed a PIL in the High court regarding RERA, some projects are getting approvals under RERA without any due diligence. “Once the project file is uploaded, if the project is not rejected or approved within a month it is deemed approved. The authority is using this loophole in the RERA Act to approve projects”, he said.

He also pointed out that these deemed approvals are granted in cases when the promoters have submitted incomplete information. “Some projects don’t have the name of the owner. Once the money is collected, the promoter can run away without completing the project. Who will the customer go after? There are cases where escrow account details of the amount collected from the customers are not submitted on the website.”.

Shetye also stated that the officials do not visit the project site to confirm the project’s progress. “The RERA authority accepts whatever is submitted to them without checking. How can customers rely on the information of the Project on the website if there are no inspectors to check and verify the information”, he questioned.

Shetye also pointed out that many projects which were under construction and had not registered before the last date in Feb 2018 tried to register as new projects to avoid the penalty. He has filed a PIL in this matter in order to bring all the ongoing projects under RERA and also to impose a fine proportionate to the value of the project. This was because smaller projects were imposed the same amount of fine for registering after the last as projects that were considerably larger.

From the customer’s point of view, the website is flawed. There is no provision to search for a project using construction license number, survey number, the name of the city, name of the owner etc. Thus a customer is not able to see all the RERA approved projects in a particular town.

From the builder’s point of view, in order to comply with RERA, they either have to employ dedicated staff or they have to hire RERA consultants. “We have hired a RERA consultant. They come once a month, collect all the files and upload it onto the site. We don’t have to break our heads on it”, said the Engineer working for a construction firm in Margao.

RERA Act is killing the smaller and newer builders

Herald interviewed an entrepreneur who is constructing his first project in Margao. “We decided to register the project under RERA even though our advocate told us not to.”, he said. He and his partner had gone to the RERA office with the file. “We were made to wait for more than an hour. Then we were told to file it online. There was no one at the office who could answer our queries”, he said.

As they were told, they registered online and even paid the Rs 50000 fine and another Rs 2 lakhs additional fine. “After paying the fine, it showed on the screen that payment was successful but even after three months we still haven’t got an acknowledgement for it”,  he said in frustration.

Since the time they paid the fine, their file is pending. “The website does not tell us why our file is pending. We have been told verbally that our file is pending because of a PIL filed in High Court but we have not got anything in writing”, he said.

When asked what he thought of the Act he said that the RERA Act just like GST and Demonetisation is killing the small and new players. “It makes no difference to the big players. We small builders have to make multiple trips to Panjim to get our files approved. We have already wasted 3 to 4 days travelling to Panjim. A RERA office is needed in Margao.”, he said

The builder suggested that the government should have exempted projects not on the number of units but on the area and zone. “If a property is less than 500sqmts and is in S1 or S2 zone, it should be exempted irrespective of the number of units. Only those projects which are either in a commercial zone or having more than 500 sqmts area should have had to be registered under RERA ”, he said

Bigger companies have restructured their projects to make compliance easier and avoid fines. For example, the builder of the biggest megaproject in Sancoal has restructured their project into 9 smaller individual projects ranging from 600 sqmts to 8000sqmts. That way they have shown most of these projects as new projects even though the construction license for the entire project was obtained in 2016.

But what’s shocking is that the company on whose name the construction license is obtained does not feature in the list under Promoters Details or anywhere else in the Project details page.

Kashinath Shetye had pointed out this loophole too. “The date when the construction license has been granted should be taken as the start date of the project. How will RERA authority be able to tell whether a project is new or ongoing? RERA currently has no mechanism to check whether a project is new or ongoing and is relying entirely on the declaration by the promoter” he said.

While RERA has several flaws and loopholes, it has come at a time when several innocent people were being cheated by builders and agents. The Act still needs to be ironed out but till then, Builders feel that there will be a dip in the real estate market which will affect prices, the customers and the economy of the State.


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