The Bill proposes to regulate
transactions in the real estate sector and is in pursuance of the powers under
Entries 6, 7 and 46 of the Concurrent List of the Constitution, which deals
with Transfer of Property, Registration of Deeds and Documents, and Contracts.
The draft Bill has been prepared after detailed deliberations with the State
Governments and concerned Central Government Ministries, and after having
suitably incorporated the suggestions received from them.
1)
The Bill will bring about standardization in the sector leading
to healthy and orderly growth of the industry through introduction of definitions such as ‘apartment’, ‘common areas’, ‘carpet
area’, ‘advertisement’, ‘real estate project’, ‘prospectus’ etc.
Introduction of the concept of using only ‘carpet area’ for sale which has till
now been ambiguously sold as super area, super built up area etc., will curb
unfair trade practices.
2)
The Bill like other sectors such as telecom,
electricity, banking, securities, insurance etc. provides for specialized
regulation and enforcement which includes both curative and preventive
measures, with powers to enforce specific performance, not available under the
consumer laws. The Authority has powers to give directions for specific
performance powers to impose penalty for non-registration of projects including
imprisonment for continuous violation upto 3 yrs and impose penalty in case of
other contraventions.
3)
The Bill proposes to register real estate agents which have
hitherto been un-regulated, with clear responsibilities and functions, thereby
leading to money trail and curbing money
laundering. This clause has been added on the recommendations of the
Department of Revenue, Ministry of Finance.
4)
The Bill aims to ensure consumer protection, by making
it mandatory for promoters to register all projects, prior to sale; and only
after having received all approvals from development/municipal authorities
thereby protecting buyer investments.
5)
The Bill will promote transparency and fair and ethical
business practices, relating to transactions, through disclosure of
project details and contractual obligations vis-à-vis the project and the
buyer, promoting informed choice for the buyers. This will substantially reduce the power asymmetry prevalent in real
estate transactions.
6)
The Bill seeks to establish a regulatory oversight mechanism,
through Real Estate Authority(s) and Appellate Tribunal in the States, to
enforce accountability norms for the promoter buyer and the real estate agents.
7)
The Bill will infuse professionalism and promote planned
development of the real estate sector through the promotional role of the Regulatory Authority.
8)
The Bill makes it mandatory upon the
promoters to deposit 70% or such lesser per cent as notified by the
Appropriate Government to cover the construction cost of the project of funds
received by the Promoter in a separate bank account, for purposes of ensuring
timely completion of projects to be used only for that project, which shall
help in timely completion of projects,
and prevent fund diversion.
9)
The Bill provides for a speedy and specialized adjudication mechanism
to settle disputes between the promoter, buyer and real estate agents,
thereby de-clogging the civil courts and consumer forums, from disputes in the
real estate sector.
10)
The Bill will catalyze domestic and foreign investment into
the sector, thereby contributing to enhanced activity, and increase in
GDP growth.