The Real Estate (Regulation and Development) Bill, 2013

1. The Real Estate (Regulation and Development) Bill, 2013 (Approved by Union Cabinet on 4th June 2013) Presented By - Shantilal Kataria MD : Aditya Group, Pune Vice President : CREDAI-Maharashtra Vice President : CREDAI-Pune Metro

2. The Union Cabinet has approved the Bill on 4th June 2013. It will be tabled before the Parliament in the coming session and after the Parliament approves it, it will go to the consent of the President. Once the act is passed, the regulatory authority and appellate tribunal will be formed and rules and regulations will be framed. Hence, the act is not likely to come into force for the next 9-12 months. • Where a State has enacted such law of regulation of the real estate sector and it is not inconsistent with this act then state may apply all or any of the provisions of this act in the State. • This act shall have an overriding effect. • The provisions of this act shall be in addition to and not in derogation of the provisions of any other law. • The Real Estate Regulatory Authority shall have the same powers as that of the Civil court. • The Appellate Tribunal shall not be bound by the procedure of the Code of Civil Procedure, 1908. But shall be guided by the principles of natural justice. It shall also have the same powers as that of the Civil court. • The Appellate Tribunal shall not be bound by the rules of Indian Evidence Act, 1872. • No civil court shall have jurisdiction to entertain any suit.

3. Features Though the Act as a whole will be passed, different dates may be appointed for different provisions of the Act. According to the Act, Advertisement of the sale of apartment means any document including notice, circular or letter offering for sale. Carpet area means net usable floor area of an apartment excluding the area covered by walls. Common area covers every thing (excluding the flat area) in the project; including basement, car parks, open area around the building, all forms of construction etc. Estimated cost of project means the total cost involved in developing the project including land cost.

4. Promoter: • Promoter includes the builder and his assignees and also the buyer who purchases in bulk for sale and also a person who develops plots. A person who constructs a building for sale and a person who sale; If both are different then both of them will be promoter. • Promoter cannot sell without registering the project with Real Estate Regulatory Authority except - a) Where area of the land does not exceed 1000 sq.mtr. or no. of apartments does not exceed 12. b) Where the promoter has received all requisite approvals an commencement certificate prior to commencement of Act. c) Where the project is of nature of renovation or repair or re-development, but does not have flats for sale.

5. If the project is in phases then each phase shall be considered as stand alone project and promoter has to obtain registration for each phase separately. The application for registration of the project mainly requires- a) Copy of commencement certificate from the authority. b) Sanctioned layout and building plan of the project. c) Number and Carpet area of the apartments for sale. d) Name and address of contractor, architect, structural engineer and other consultants concerned with the project. e) Declaration supported by Affidavit stating- i) Legal title of the land ii) Likely period of time to complete the project or phase thereof. iii) Confirming that 70% or lesser percent notified by government of the amount realized from the sale of flats from time to time to be deposited in separate account to cover cost of construction.

6. Grant of Registration: a) The authority shall within 15 days grant registration (and provide registration no. including login id and password to the applicant for accessing the website of the authority and to create his web page and to fill details of the project) or reject the project failing which the project shall be deemed to have been registered. b) Registration shall be valid for the period declared by promoter for completion of project or phase and it may be extended on application made by promoter on payment of fee.

7. Revocation: The authority may revoke the registration in following circumstances - a) Promoter makes willful default under the Act / rules and regulations. b) Violates any of the terms of the approval given by the Authority. c) He is involved in unfair practice or irregularities [unfair practice includes (a) oral or written false representation about services of particular standard or grade (b) False representation about approval or affiliation (c) False or misleading representation concerning services (d) Publish advertisement or prospectus about services that are not intended to be offered] Authority may instead of revoking registration of promoter, permit it to remain in force subject to terms and conditions as it think fit to impose in the interest of the purchaser.

8. If the revocation happens then - a) Authority shall debar the promoter from accessing its website and declare his name as defaulter and inform other Regulatory Authorities in India about such cancellation. b) May recommend to the competent authority to facilitate completion of the remaining development work. c) May issue other directions as deem necessary.

9. Registration of Real Estate Agent : Even Real Estate Agent shall have to take registration of the project for sale of the apartments. Functions and Duties of promoter Promoter has to enter details of the project on Website including- a) Details of registration. b) Quarterly update list of number and of type of apartments/plots. c) Quarterly update status of project. d) In advertise to mention website address & registration no. of the project.

10. Obligations of Promoter a) If the purchaser sustains loss or damage because of incorrect and false terms in the advertisement / prospectus, promoter shall return him his entire investment along with interest. b) Promoter shall not accept sum more than 10% of the cost of apartment as advance from purchaser without entering into written agreement. Guarantee period a) Promoter shall ratify the structural defects in construction work if brought to the notice within a period of 2 years from date of possession of the apartment. b) If the promoter fails to complete or unable to give possession of the apartment he shall be liable to return the amount with interest including compensation as may be determined by the Authority.

11. Real Estate Regulatory Authority Government shall within a period of 1 year from the date of coming into force of the Act form Real Estate Regulatory Authority. Central Advisory Council Central Government shall establish Central Advisory Council. The Central Advisory Council shall advise and recommend the Central Government on- a) Implementation of Act b) Major complaint of policy c) Protection of consumer interest d) To foster growth and development of Real Estate Sector Real Estate Appellate Tribunal Government shall establish Real Estate Appellate Tribunal.

12. Penalties: a) Upto 10% of the estimated cost of the project if the promoter contravenes Section 3 (Sale without non-registration of project) b) Imprisonment upto 3 yrs. or fine upto 10% or both, if does not comply with the orders or directions, decisions under Sub-Section(1) continues to violate provisions of Section 3. c) Upto 5% if promoter knowingly provides false information or contravenes the provision of Section 4 (Application to authority for registration of project). d) Upto 5% if contravenes any other provision of the act other than Section 3 or 4 or the rules and regulations under it. e) An everyday penalty of amount ordered by the authority which may be cumulatively extended upto 5% if the promoter willfully fails to comply or contravenes any order of the authority. f) An everyday penalty of amount determined by appellate tribunal during the entire default time, which may cumulatively extend upto 10% if the promoter willfully fails to comply or contravenes any order of the appellate tribunal.

13. Where an offence under this act has been committed by the company, every person who was incharge or was responsible to the company at that time shall be deemed to be guilty of the offence, unless he proves that the offence was committed without his knowledge or he had exercised all due diligence to prevent the commission of such offence. • Notwithstanding anything contained in sub-section(1), where an offence under this Act has been committed by a company, and it is proved that the offence has been committed with the consent or connivance of, or is attributable to, any neglect on the part of any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.