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Friday, December 23, 2016

Builder bureaucrat nexus makes Maharashtra RERA Rules nightmare for home buyers

The primary object to enact the Real Estate Act was to protect the interest of consumers in the real estate sector and to establish an adjudicating mechanism for speedy dispute redressal, establish the Real Estate Regulatory Authority for regulation and to ensure sale of plot, apartment or Building in an efficient and transparent manner. However the draft rules framed by government of Maharashtra are contrary to the basic objective of the act. Instead of protecting buyers rights the rules if passed as it is, will intimidate consumers and help promoters.


Image courtesy http://timesofindia.indiatimes.com/


The last date of filling suggestion and objection on The draft Maharashtra Real Estate (Regulationand Development) (Registration of Real Estate Projects, Registration of RealEstate Agents, Rates of Interest and Disclosures on Website) Rules, 2016(“Draft Rules”) ends today i.e. 23rd December, 2016. The people concerned with drafting these rules have taken adequate care so that people should not file much suggestions and objections. Even though it is mandatory these rules are not published in Marathi language. It was expected that the Draft Rules would be based on the Centre’s rules for the Union Territories .Butit seems that the literary genius in Mantaralaya have adopted rules framed by Builder/promoters.

It is not new that builders have exploited home-buyer in this country since long. Most of the time individual buyers were cornered, threatened and coerced to give up their rights, silenced and intimidated. There are very few buyers who dare to lodge complaint against builders. Proposed rules are designed to prevent buyer from filling a complaint. For filing a complaint or an appeal with the Authority, a complainant will have to pay a fee of Rs 10,000. Actually in central rules fee of Rs 1,000 is stipulated. There is adequate provision in act to penalize frivolous complaints. Questions arise on the need for imposing a fee burden on already aggrieved complainants. 

In model form of agreement to sale there is one very dangerous provision. If the Allottee fails to rectify the breach or breaches mentioned by the Promoter within the period of notice then at the end of such notice period, promoter shall be entitled to terminate the Agreement and upon termination of this Agreement the Promoter shall be at liberty to dispose of and sell the Apartment to such person and at such price as the Promoter may in his absolute discretion thinks fit. The notice period will of seven days and by email only.

There is more dangerous proviso ahead, that upon termination of the Agreement as aforesaid, the Promoter shall refund to the allottee within a period of six months of the termination. That too subject to adjustment and recovery of any agreed liquidated damages or any other amount which may be payable to Promoter. Promoter is entitled to do this at any time of agreement period. That means even if buyer has paid 90% of the amount promoter can terminate the agreement on any ground. And refund will be without interest.

In central rules while registering the project with authority registration fee of rupees ten per square meter for residential projects where the area of land proposed to be developed does not exceed one thousand square meters; or rupees twenty per square meter for residential projects where the area of land proposed to be developed exceeds one thousand square meters has been proposed. And for commercial or any other projects rupees fifty per square meter for where the area of land proposed to be developed does not exceed one thousand square meters; or rupees one hundred per square meter where the area of land proposed to be developed exceeds one thousand square meters has been proposed.

However in Maharashtra rules for the same area registration fee of only one and two rupees has been proposed for residential project respectively and no fee has been proposed for commercial projects.

Furthermore in central rules to prevent extension for completion of project double of the fee for registration has been proposed while in Maharashtra rule it has been kept as it is for registration of project.

To protect buyers from being deceiving by real estate agents, the central  Rules mandate the revocation of registration of real estate agent in case of any default, while Maharashtra rules allow fresh application for grant of registration after a period of six months only. If such provision is allowed agents will happily allow to revoke their registration as profit made by them by deceiving innocent buyers will much more than revocation of registration.

In central rules to prevent discrimination of allotees mandates the promoter to submit the declaration to be submitted that the promoter shall not discriminate against any allottee at the time of allotment of any apartment, plot or building, as the case may be. In Maharashtra rules this provision has not been included at all. This provision may have been made to through Maharashtra people to through out of Mumbai

Central rules mandate promoter wile registering the project with authority to give brief details of the projects launched by the promoter in the last five years, whether already completed or being developed, as the case may be, including the current status of the said projects, any delay in its completion, details of cases pending, details of type of land and payments pending etc.

In Maharashtra rules in information related to the current status of the said projects, any delay in its completion, details of cases pending, details of type of land and payments pending etc. has been deleted. As well information related to audited balance sheet of the promoter for the preceding financial year and income tax returns of the promoter for three preceding financial years; and copy of balance sheet has also been deleted in Maharashtra rules

As per central rules In case the promoter applies for withdrawal of application for registration of the project before the expiry of the period of 30 days registration fee to the extent of ten percent paid or rupees fifty thousand whichever is more, shall be retained as processing fee by the regulatory authority and the remaining amount shall be refunded to the promoter within thirty days from the date of such withdrawal. In Maharashtra rules amount of retaining money has to be decided by regulatory authority.

There is also ambiguity in the definition of land cost and construction cost to be withdrawn from escrow account.

In the nutshell Maharashtra real estate rules 2016 may have been framed by some builders and if passed as are will create havoc in real estate sector.


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