SHELTER FOR THE REAL ESTATE BUYER: A BRIEF ANALYSIS OF THE REAL ESTATE (REGULATION AND DEVELOPMENT) ACT, 2016 – Adv Sherry Samuel Oommen

Upon their formation, the Authority and the appellate tribunal shall be bound to follow specific timelines for adjudication of disputes. The disputes shall be adjudication with sixty days by both the Authority and the appellate tribunal.

• Impact on the Real Estate Sector

Once the above regulatory framework has been established, the full impact of the enactment shall be faced by the real estate, expectably by May, 2017.The salient features of such impact are:

• Project Registration Requirements: As provided under Section 3, a real estate project is required to be registered with the Authority under the Act, if any of the following conditions are satisfied:
  • If the area of land proposed to be developed therein exceeds 500 square meters;or
  • The number of apartments proposed to be developed therein exceeds 8, inclusive of all phases; or
  • If the completion certificate with respect to such project has not been obtained on the date of commencement of the Act.

Under Section 3, if such registration requirements are not met, the promoters cannot advertise, market, book, sell or offer for sale, or invite persons to purchase in any manner in the property.

The registration process, as provided under Section 4, may be construed as onerous. Inter-alia, it requires the submission of a declaration, supported by an affidavit from the promoter stating that:

• Promoter has legal title to the land on which the development is proposed
• Land is free from all encumbrances, or details of the encumbrances (if any)
• Time period for completion of the projector phase thereof, as the case may be;
• A declaration that seventy per cent of the amounts realized for the real estate project from the allottees, shall be placed in a bank account to cover the cost of construction and the land cost and shall be used only for that purpose.

• Agent Registration Requirements: Real estate agents are also required to register with the Authority under Section 9 of the Act. Without such registration, agents shall not facilitate the sale or purchase of or act on behalf of any person to facilitate the sale or purchase of any plot, apartment or building. Upon registration, the agent binds himself not to practice any unfair practices, as provided under Section 10.

• Written Agreement with Buyer: Under Section 13, a promoter cannot accept an advance payment or an application fee exceeding ten per cent of the cost of the apartment or plot from the buyer, without executing a written agreement with such buyer.

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