After making a bold provision in the Real Estate Regulation Act to jail errant builders and real estate agents, the draft rules for implementation of this law made public on Friday seemed to provide an escape clause to the jittery sector.
It proposes a “compounding fine” to escape imprisonment and launch of any court proceedings against builders who continue flouting conditions such as mandatory registration of projects and non-compliance of orders by the appellate authority. By paying 10% of the estimated cost of the project, builders can avoid going to jail and similarly property dealers can also escape imprisonment by paying 10% of the plot’s or apartment’s cost.
According to the draft rules, an allotted can pay 10% of the estimated cost of the plot, apartment or building to avoid going to to jail. “On payment of the sum of money, any person in custody in connection with the offense shall be set at liberty and no proceedings shall be instituted or continued against such person in any court,” the proposed rules said.
Though the draft rules signals big relief to builders and property dealers, it says they have to comply with the orders of the regulator or appellate tribunal within 30 days. To bring parity in case of delay in payment by the promoter and buyer, it is proposed that the interest rate will be the State Bank of India prime lending rate plus 2%.
The Act had provisions three years imprisonment for builders who do not follow the rules. Similarly, the real estate agent and client can be imprisoned for one year besides paying daily fine.
The draft rules specify promoters can’t discriminate against anyone in the allotment of apartment, plot or building on any ground. It also requires the Real Estate Regulatory Authority to be set up in states and UT’s so that buyers can have access to information in respect of 60 aspects relating to promoters and projects for taking informed decision. Similarly, the real estate agents also have to submit details including their photographs, income tax return and registration amount.
The information that builders need to provide include the profile of developer or group, track record, details of litigation relating to real estate projects, apartment and garage related details, location, details of registered agents and consultants, development plan, financials of the promoter, status of project along with that of approvals, contact details and copies of legal title deed.
The final rules notified by the housing ministry will be implemented for five UTs without legislatures such as Chandigarh, Lakshadweep, Andaman and Nicobar Islands, Daman and Diu, and Dadra and Nagar Haveli. Housing ministry will also share this with urban development ministry, which will notify rules for Delhi, and for other states for adoption.
The rules provide for payments to be made for registration of projects and real estate agents with the regulatory authority, procedures to be followed for registration, extension and renewal of registration, procedures for filing and hearing of complaints and appeals, appointment and service conditions of the chairpersons and members of the regulator and appellate tribunals.
Draft Rule of RERA Implementation made public: Fine for Jail