There is no doubt that the real estate sector has been a driving force to the country’s economy and has contributed to the GDP in a big way. This sector is also seen as an area for parking of ill-gotten wealth in the country’s parallel economy. But, definite incentives are given to the housing sector through taxation route and credit facilities. The housing sector has been unregulated with the fly by the operators playing havoc with the hard earned and borrowed money of those in hunt for independent shelter.
In this tiny Goa lakhs of real estate transactions are built around private contracts between the real estate developers and the apartment/villa purchasers, which the purchasers always found difficult to enforce due to there being no regulatory laws in place. In most cases land titles have not been transferred to the purchasers or to the housing societies. In many cases housing societies are not even formed leading to complete misery of the purchasers who are left to fend for themselves in the matter of title and services. In some cases the builders wish to take advantage of the additional FAR at a later date.
Somehow laws in that area fail to see that light of the day in most of the states due to the vested interest ruling the roost. Some states have laws in place but they have not been effective. From the year 2013 onwards a conscious attempt was made by the then UPA government by introducing the Real Estate Regulation and Development Bill 2013. In view of strong opposition, the NDA government has now approved various amendments to the contentious real estate bill to be introduced in the next session. The highlights being (a) introducing provision for depositing 70% of the project cost by the builders into an escrow account; (b) punishment for violation of the proposed law, the proposed amendments provide for imprisonment upto 3 years for the builders in case of the violation of the proposed law and upto one year in case of real estate agents and buyers and (c) equal amount of rate of interest to be paid by the builders and the buyers in case of default or delays. (d) compulsory registration of transactions with Real Estate Regulatory Authority.
The other ancillary issues include disclosure of all registered projects, details of the promoters, layout plan, land status, approvals, agreements details of contractors, architect and structural engineers and registration of real estate projects and real estate agents with the regulatory authority.
The provision for depositing 70% of the monies into the escrow account is brought in as a check against uncertainties created by the fly by night operators. The punishment provision shall create an atmosphere of fear but may instill some amount of discipline and is a desirable step.
The heart and soul of the bill is the establishment of Real Estate Regulatory Authority for oversight of real estate transactions and as a nodal agency to coordinate efforts regarding development of the real estate sector. Another highlight is establishment of fast track dispute settlement mechanism through adjudicating officers and Appellate Tribunals to hear appeals. The creation of fast track dispute resolution and the appellate tribunal is certainly a welcome move if the adjudication and the appellate Tribunal are kept in the hands of dedicated courts manned by sitting District and High Court judges. The government has all already brought fast track commercial courts law. The real estate disputes can certainly go to such commercial courts without the burden of creating more courts. Whoever wishes to go to consumer courts could avail of those fora also.
But the establishment of the Real Estate Authority which is the pivot on which the law revolves is certainly a retrograde move. There is hardly any doubt that the real estate prices have escalated due to the number of authorities that have to grant clearances and approvals. At every level without adequate amount of speed money nothing moves. (The then CM Manohar Parrikar had openly attacked the TCP under him on that count). Currently in the state of Goa there as many as twelve authorities (including TCP/PDA, Panchayat/Municipalities, GSPCB, Dy. Collector for conversion; NOCs from fire Department, Health, Water, Electricity, sewerage department and in case the project is above 20,000 sq. mts. EC from MOEF. Further for conversion the file travels from Mamlatdar, forest, survey and TCP departments). At each level what goes on under the table is anybody’s guess. The real estate industry is known to get juiced by bureaucrats and politicians. The industry passes the burden on the purchaser. Real Estate Regulatory Authority shall only be yet another hot bed of corruption if one goes by the functioning of authority in that sector. The establishment of the Real Estate Authority regulating shall send the prices north wards. There can be no two opinions on that.
The avowed objective of not adding another stage of procuring of approvals is being defeated by the proposed Real Estate Regulatory Authority. Such a authority is welcome if it is a single window clearance authority whose responsibility it would be to obtain clearances and approvals from other statutory authorities. Though the proposed law is shown as an attempt to protect the common man with the objective of the government to provide housing for all by 2020 through enhanced private participation, to my mind is neither in the interest of industry nor the common man.
Many real estate transactions are registered with the civil registration authorities. Such registration ought to be compulsory and receiving consideration under unregistered transactions ought to be made penal. The rights and obligation under the proposed law and the transactions between the parties can certainly be left to be decided by the fast track dispute resolution 0fficers and the appellate tribunal. The offences under the law can always be tried by regular courts.
(The writer is practicing
advocate)
