A draft model law by the Union Ministry of Housing
and Urban Affairs provides for greater transparency in dealing with
housing properties. File photo of housing complexes and IT malls under
construction in Chennai. A draft model law by the Union Ministry of
Housing and Urban Affairs provides for greater transparency in dealing
with housing properties. File photo of housing complexes and IT malls
under construction in Chennai. No buildings or townships meant for sale,
in the near future, can be undertaken without registering them with
the Real Estate Regulatory Authority to be set up in each State.
The Ministry of Housing and Urban Poverty Alleviation
has published the draft Model Real Estate (Regulation of Development)
Act to control and promote construction, sale, transfer and management
of colonies, residential buildings, apartments and other similar properties
through a regulatory authority. This draft Act has been published for
soliciting stake holders' opinion and the Ministry expects the State
governments to pass their respective Acts, based on this model Act,
after it is finalised.
The Model Act makes it mandatory for all promoters
to submit the details of the approved plans of projects along with a
bank guarantee equivalent to five per cent of the estimated cost of
the development to the regulatory authority. In addition, the promoter
will also give an undertaking to complete the work in accordance with
the conditions of registration. After verifying the authenticity of
the approved plan, the title of the property and other relevant details,
the authority will register the project. The details of the projects
will be made public through the authority's web site.
When violations of rules, failure to provide essential
services to the developed plots are noticed or complained about, the
registration will be cancelled after due verification. The bank guarantee
provided will be forfeited and the names of the promoters will be included
in the defaulters list and published in the authority's website. Failure
to comply with the rules of the Act will attract imprisonment for a
term which may extend to three years or a penalty which will be computed
in terms of percentage cost of development.
The model Act also prevents the promoters from advertising
the project before it is registered with the authority. If the information
contained in the advertisement or the prospectus is found untrue and
causes loss or damage to the buyer, the promoter will be asked to compensate
for the loss. The model act also provides for appeal and setting up
of appellate tribunal.
