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LATEST NEWS UPDATES | Leniency for tall-claim builders-Sobhana K

Leniency for tall-claim builders-Sobhana K

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published Published on Apr 30, 2012   modified Modified on Apr 30, 2012

The government has removed from a proposed bill a clause that would have made builders liable to be jailed for making false promises about houses to customers, housing ministry sources have said.

The initial draft of the Real Estate (Regulation and Development) Bill, which is awaiting cabinet clearance, provided for a jail term of up to three years as well as a compensation of up to 10 per cent of the total project cost.

If the revised draft is cleared without changes, the builders will only have to pay a compensation for making false promises. However, the revised draft has retained another clause that invites a jail term if the developers do not register themselves with a watchdog.

Real estate developers’ bodies had opposed the jail provision when the ministry held a national consultation with all the stakeholders in January. After sitting on their request for some time, the ministry has agreed to dilute the act.

The draft bill, which aims to provide a safety net to home buyers, says:

Developers must disclose the carpet area and layout of the planned apartments, their structural design, and plans for other on-site developments

They cannot make any changes to the plan after the sale agreement is in place.

Under the original draft, developers could have been jailed for defaulting on any of these promises.

Developers will have to compensate customers if there is any deviation from the advertisements and it has caused a loss to the buyer.

Regulator

However, the builders will still face a jail term if they fail to register their projects with the real estate authority — a state-level regulatory body to be formed for the first time.

The authority will regulate all developers and real estate agents, and all developers must register with it.

Each state can establish its own real estate authority but there will be an appellate tribunal at the Centre, headed by a retired Supreme Court judge or a retired high court chief justice. The tribunal can start investigations on its own if it receives a complaint.

Some of the issues the authority will oversee:

Developers cannot publish advertisements until projects are registered with the regulatory authority

They cannot force buyers to pay an advance without the sale agreement

If any “structural defects or deficiencies” develop, or are detected, in a building within “a year of allotment”, they will have to be “rectified by the promoter”

If a builder pulls out of a project, the money has to be returned with interest at not more than the prevailing rate.

Transparency

Under the draft bill, developers must upload on the proposed authority’s website all certificates and details that a prospective customer might want to access.

As there have been complaints of construction on disputed property, the bill stipulates “full and true disclosure” of the nature of the title of the land. If the land is owned by any other party, the developer has to upload the agreement with that party.

The ministry has held consultations with the state governments on the bill. “Once the consultations are over, we will present the bill to the cabinet,” an official said.

The Telegraph, 30 April, 2012, http://www.telegraphindia.com/1120430/jsp/frontpage/story_15434918.jsp#.T55AdFL5nYQ


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