The RERA bill which was drafted in 2011 finally has passed on 10th of march 2016 with some amendments. Hope for a great change and future ahead.

1. DRAFT
REAL ESTATE (REGULATION
& DEVELOPMENT) BILL.,2015
By
Mr.Rahul Reddy & Mr. Prathap Reddy

2. CORE IDEA AND PURPOSE OF THIS BILL:
• This Bill aimed to create a Real Estate Regulatory Authority and an
Appellate Tribunal that will act as a watchdog for the housing sector,
primarily towards protecting consumer interests while creating an
alternative redress mechanism for any disputes that may arise.
• This bill also aims to provide a uniform regulatory environment in the
real estate sector which is laced with black money, corruption, red
tapism, land mafias and corruption. The core objective of this Bill are
three fold., i:e to ensure sale of immovable properties in an efficient
and transparent manner and to protect the interest of consumers in
the real estate sector and to promote investments specially FDIs.

3. Before going into the study first let us discuss between a Bill
and a Draft.
 Legislative proposals are brought before either house of the
Parliament of India in the form of a bill. A bill is the draft of a
legislative proposal, which, when passed by both houses of
Parliament and assented to by the President, becomes an Act of
Parliament. As soon as the bill has been framed, it has to be
published in the news papers and the general public is asked to
comment in a democratic manner. The bill may then be amended to
incorporate the public opinion in a constructive manner and then
may be introduced in the Parliament by ministers or private
members.

4. • How a Bill becomes an Act in
Parliament: A Bill is the draft of a
legislative proposal. It has to pass
through various stages before it
becomes an Act of Parliament.
There are three stages through
which a bill has to pass in one House
of Parliament. The procedure is
similar for the of States.

5. Now Lets Discuss the contents of the Draft
Bill:
• Why is the bill needed?
• What are the chapters of the bill?
• What are the provisions incorporated in the bill?
• What are the powers conferred to the central, state and
the constituent authorities in the bill?
• Incorporation of Real Estate regulatory authority and the
appellate tribunal, its powers. &
• Its use to the public, (i.e., Promoter and allottee)
• Its salient features, key issues and Analysis.

6. NOW LETS SEE WHAT IS INCORPORATED IN THE BILL &
WHAT IT CONSISTS OFF:
A
BILL
• to establish the Real Estate Regulatory Authority for regulation and
planned development in the real estate sector and to ensure sale of
immovable properties in an efficient and transparent manner and to
protect the interest of consumers in the real estate sector and establish
an Appellate Tribunal to adjudicate disputes and hear appeals from the
decisions or orders of the Authority and for matters connected there
with or incidental thereto.

7. CHAPTER I
PRELIMINARY
1. (1) This Draft may be called the Real Estate (Regulation & Development)
Act, 2015 (drafted in 2011., passed on 10th Mar 2016).
(2) It extends to the whole of India except the State of Jammu and
Kashmir.
(3) It shall come into force on such date as the Central Government may,
by notification in the Official Gazette, appoint:
Provided that different dates may be appointed for different provisions of
this Act and any reference in any such provision to the commencement of
this Act shall be construed as a reference to the coming into force of that
provision.

8. 2. Here the Definitions of certain terms are
been defined. Lets go through those terms:
(a) Advertisement
(b) Allottee
(c) Apartment
(d) Appellate Tribunal
(e) Appropriate Government
(f) Architect
(g) Authority
(h) Building
(i) Chairperson
(j) Carpet Area
(k) Company
(l) Competent Authority

9. (m) Development
(n) Development Charges
(o) Development Works
(p) Engineer
(q) Estimated cost of Real estate project
(r) External Development Works
(s) Internal Development Works
(t) Immovable Property
(u) Interest
(v) Local Authority
(w) Member
(x) Notification

10. (y) Owner
(z) PERSON : This includes
(aa)An individual
(bb)A Hindu undivided family
(cc)A Company
(dd)A Firm
(ee)A Local authority
(ff) An association of persons or a body of individuals whether incorporated or not;
(gg)Any such other entity as the appropriate government may, by notification in the
official gazette(G.O), specify in this behalf.
(za)Project
(zb)Promoter
(zc)Real Estate Agent and Project
(zd)Rules and Regulations

11. CHAPTER II
REGISTRATION OF REAL ESTATE PROJECT AND TRANSFER OF IMMOVABLE PROPERTIES

12. 3. Prior registration with Real Estate Regulatory Authority:
No promoter shall develop any immovable property or make any
construction thereon or alteration thereof or convert any existing
undeveloped immovable property or part of it without registering the
real estate project and obtaining a certificate of registration from the
Real Estate Regulatory Authority established under this Act:
Provided that no such registration shall be required,-

13. (a) when the area of land proposed to be developed does not exceed
4000square meters, or an area as notified by the Central
Government in consultation with the States and Union Territories from
time to time, which may be different for different States or Union
Territories;
(b) where the promoter has sought all permissions and received all
requisite approvals for the development of immovable property one
year prior to the commencement of this Act;
(c) for the purpose of renovation or repair which does not involve
re-allotment and marketing of immovable property.

14. 4.Application to Authority:

15. (1) Every promoter shall make an application to the Authority for
registration of the project for development of any immovable property
in such form accompanied by such fee and other information as may be
prescribed.
(2) The prescribed form referred to in sub-section (1), shall include but
not be limited to the information relating to the number and size of
Plots layout plan, proposed project and the proposed facilities to be
provided thereof.

16. (3) The promoter shall enclose the following documents along with the
application referred to in sub-section (1), namely:-
(a) an authenticated copy of the approval and sanction from the
competent authority obtained in accordance with the laws as maybe
applicable for the real estate project mentioned in the application, and
where the project is proposed to be developed in phases, an
authenticated copy of the approval and sanction from the competent
authority for each of such phases.

17. (b) a declaration which shall be signed by the promoter stating,-
(i) that he has a legal title to the land on which the development is
proposed along with a legally valid authentication of such title if
such land is owned by another person;
(ii) that the land is free from all encumbrances, or as the case may
be, of the encumbrances on such land including any rights, title,
interest or name of any party in or over such land along with
details;
(iii ) his affirmation that the project or the phase of the project
shall be completed as the case may be in accordance with the terms
and conditions of the registration;

18. (iv) the period of time within which he undertakes to complete the
project or phase thereof, provided it is within the period of
sanction by the competent authority;
(v) that seventy percent of the amounts realized for the real estate
project from the allottees, from time to time, would be deposited in
a separate account to be maintained in a scheduled bank, within
fifteen days of its realization for meeting the costs of the real estate
project and would be used only for that purpose;
Explanation.- For the purpose of this clause, the term “scheduled
bank” means a bank included in the second schedule to the
Reserve Bank of India Act, 1934.
(vi) that he has furnished such other documents as may be
prescribed by the rules or regulations made under this Act.

19. (4) On receipt of the application under sub-section (1), the Authority
shall within a period of thirty days from the date of receipt of the
applications complete the process of the scrutiny of the applications
submitted to it.
(5)The Authority, after scrutiny of the applications shall—
(a) grant registration subject to the provisions of this Act and the
rules and the regulations made thereunder; or
(b) reject the application for reasons to be recorded in writing, if
such application does not conform to the provisions of this Act:
Provided that no application shall be rejected unless
the applicant has been given an opportunity of being
heard.

20. (6) For reasons beyond its control, if the Authority fails to complete the scrutiny of
the applications within the aforesaid period, the applicants may be permitted provisional
access to the website of the Authority and allowed to enter the project details in respect of
the projects covered in the application on the website:
Provided that the Authority shall furnish a detailed report for every three
months to the Appropriate Government, with reasons for delay on
projects for which registration has not been granted within the aforesaid
period of thirty days.
(7) The Authority shall grant the registration to the promoter, if it is
satisfied that the promoter has—
(a) entered into an agreement with the Competent Authority for
completion of the development works;
(b) complied all the provisions of this Act and the rules and the
regulations made thereunder; and
(c) furnished the information required by the Authority.

21. (8) The registration granted under this section shall be valid for a
period declared by the promoter under sub--clause (iv) of clause (b) of
sub-section(3) for completion of the project or phase thereof, as the
case may be.
(9) The Authority shall, after registration, issue a Login Id and
password to the applicant for accessing the website of the Authority
and permit the promoter to access the website of the Authority to
create his web page and to fill therein the details of the proposed
project.

22. 5.Renewal of registration:
(1) The registration granted under section 4 may be renewed by
the Authority for a further period of one year on an application made by
the promoter in such form and on payment of such fee as may be
prescribed:
Provided that the registration so renewed shall not be for a period
more than that extended by the Competent Authority;
Provided further that no registration to a promoter shall be renewed
for a period of more than two years;
(2) No application for renewal of the certificate of registration
made under this section shall be rejected unless the applicant has
been given a reasonable opportunity of being heard in the matter.

23. CHAPTER III
OBLIGATIONS OF PROMOTER AND ALLOTTEE
8. (1) The promoter shall, upon receiving
his Login-Id and password under sub-section
(9) of section 4 and the Authority’s
permission to access its website, enter all
details of the proposed project in all the
fields as required, and the information and
documents as specified in sub-section (2) as
self declared.

24. (2) The information and documents referred to in sub-section (1)
amongst other documents as may be required, include,-
(a) details of the sanctions accorded by the Competent Authority;
(b) details of the registration granted by the Authority;
(c) full and true disclosure of his enterprise details including its name,
registered address, type of enterprise (proprietorship, societies,
partnership, companies, local authority etc.) and registration details
under the law registered.

25. (d) a full and true disclosure of the nature of his title to the land on
which the proposed project is developed or intended to be developed;
(e) If such land is owned by another person, the agreement with
the owner of land for the development of the proposed project.
Explanation.- For the purposes of this sub-section, documents relating
to the title to the land shall be same as submitted before the competent
authority.

26. (f) details of all encumbrances on such land, including any rights, title,
interest or claim of any party in or over such land;
(g) fortnightly up-to-date list of bookings on the basis of the agreement to
sell entered with them;
(h) proforma of the agreements proposed to be signed with the
allottees;
(i) the number and the carpet area of each unit or part of unit for sale
in the project;
(j) the layout plan of the proposed project or the phase thereof, and
also the layout plan of the whole project as sanctioned by the
competent authority;

27. (k) the plan of development works to be executed in the proposed
project;
(l) the names and addresses of his real estate agents, if any, for the
proposed project, as and when appointed by the promoter;
(m) the names and addresses of the architect, structural engineer, if
any and other persons concerned with the development of the
proposed project; and
(n) such other information and documents as may be prescribed by
rules or regulations under this Act.

28. 9. ISSUING OF ADVERTISEMENT OR PROSPECTUS
INVITING BOOKINGS, ADVANCE OR DEPOSIT.

29. (1)No promoter shall issue or publish an advertisement or
prospectus, or invite any member of the public to buy or book in such
projects to be developed or take advances or deposits without
obtaining a copy of certificate of registration with the Authority.
(2) No promoter shall issue advertisement or prospectus without first
filing a copy of such advertisement or prospectus in the office of the
Authority
(3) The advertisement or prospectus issued or published after complying
with the provisions of sub-section (1) shall mention prominently the
website address of the Authority wherein all details of the registered
project have been entered and include such other matters which are
incidental thereto.

30. 10. OBLIGATIONS OF PROMOTER REGARDING VERACITY
OF THE ADVERTISEMENT OR PROSPECTUS.
Where any person makes an advance or a deposit on the basis of the
information contained in the advertisement or prospectus and sustains any
loss or damage by reason of any incorrect, false statement included therein,
he shall be compensated by the promoter in the manner as may be
determined by the Authority:
Provided that if the person affected by such incorrect, false statement
contained in the advertisement or prospectus, intends to withdraw from
the proposed project, he shall be returned his entire investment along with
interest at such rate as may be prescribed.

31. 11. NO DEPOSIT OR ADVANCE TO BE TAKEN BY THE
PROMOTER WITHOUT FIRST ENTERING INTO AN
AGREEMENT OF SALE.
(1) Notwithstanding anything contained in any other law for the time being
in force, a promoter shall not accept any sum of money as an advance
payment or deposit, from a person without first entering into a written
agreement for sale with such person
(2) The agreement referred to in sub-section (1) shall be in such form as
may be prescribed and specify the particulars of development of the
project including the construction of building and apartments, along with
specifications and external development, works, the dates and the manner
by which payments towards the cost of the plot, building or apartment are
to be made by the allottees and the date on which the possession of the
plot, building or apartment is to be handed over and such other particulars,
as may be prescribed:

32. TRANSFER OF TITLE
(1) After obtaining the occupation certificate or completion certificate, as
the case may be, the promoter shall submit a copy thereof to the Authority
and thereafter take all necessary steps to execute a registered conveyance
deed in favour of the allottee thereby transferring the title in the
immovable property along with the undivided proportionate title in the
common areas simultaneously with the handing over of the possession of
the immovable property and the other title documents pertaining thereto.
(2) After obtaining the occupation certificate or completion certificate, as
the case may be and handing over physical possession to the allottees in
terms of this section, it shall be the responsibility of the promoter to hand
over the originals of the title documents and the plans to the association of
the allottees incorporated as per the local laws.

33. RETURN OF AMOUNT
(1) If the promoter fails to complete or is unable to give possession of a
plot or building,-
(a) in accordance with the terms of the agreement or, as the case may
be, duly completed by the date specified therein or any further date
agreed to by the parties; or
(b) due to discontinuance of his business as a developer on account of
suspension or revocation of his license under this Act or for any other
reason,
he shall be liable on demand, without prejudice to any other remedy to
which he may be liable, to return the amount received by him in respect
of that plot, building, with interest at such rate as may be prescribed in
this behalf and also penalty as may be determined by the Authority;
(2) The interest referred to in sub-section (1) shall be chargeable from the
date the promoter received the amount or any part thereof, till the date the
amount or part thereof and interest thereon is returned and such amount
and interest shall be a charge on the land and other structures thereon and
be recoverable as arrears of land revenue.

34. OBLIGATIONS OF ALLOTTEES
(1) Every allottee who has entered into an agreement of sale to take a plot
or a building under section 11 shall be responsible to make necessary
payments in the manner and within the time as specified in the said
agreement and shall after taking possession of the plot or building under
section 14 pay at the proper time and place, the proportionate share of the
registration charges, municipal taxes, water and electricity charges, ground
rent, if any, and other charges, in accordance with such agreement.
(2) The allottee shall be liable to pay interest, at such rate as may be
prescribed, for any delay in payment towards any amount or charges to be
paid under sub-section (1).
(3) The obligations of the allottee under sub-section (1) and the liability
towards interest under sub-section (2) may be reduced when mutually
agreed to between the promoter and such allottee.

35. CHAPTER IV & V
ESTABLISHMENT OF REAL ESTATE REGULATORY
AUTHORITY AND APPELLATE TRIBUNAL
It comprises of:
• Incorporation of real estate regulatory authority
• Qualifications of chairperson and members of authority
• Term of office of chairperson and members
• Salary and allowances
• Administrative powers
• Removal of chairperson
• Functions of authority for planned lands development & promotion of real estate sector
• Powers of authority for amicable settlement of disputes
• Power of authority to call for information and issue directions
• Execution of orders of authority

36. • Establishment of real estate appellate tribunal
• Application for settlement of disputes and appeals to appellate
tribunal
• Composition of appellate tribunal
• Qualification for appointment of chairperson and members
• Term of office of chairperson and members
• Salary and allowances payable
• Removal of chairperson and members
• Officers and other members of the tribunal
• Administrative powers of chairperson of
Appellate tribunal
• Vacancies

37. (1) The Appellate Tribunal shall not be bound by the procedure laid down
by the Code of Civil Procedure, 1908 but shall be guided by the principles
of natural justice.
(2) Subject to the provisions of this Act, the Appellate Tribunal shall have
power to regulate its own procedure.
(3) The Appellate Tribunal shall also not be bound by the rules of evidence
contained in the Indian Evidence Act, 1872.
(4) The Appellate Tribunal shall have, for the purpose of discharging its
functions under this Act, the same powers as are vested in a civil court
under the Code of Civil Procedure, 1908 in respect of the following
matters,
Namely:

38. (a) summoning and enforcing the attendance of any person and
examining him on oath;
(b) requiring the discovery and production of documents;
(c) receiving evidence on affidavits; and
(d) issuing commissions for the examination of witnesses or
documents;
(e) reviewing its decisions;
(f) dismissing an application for default or directing it ex-parte; and
(h) any other matter which may be prescribed.
(5) All proceedings before the Appellate Tribunal shall be deemed to be
judicial proceedings within the meaning of sections 193, 219 and 228 for
the purposes of section 196 of the Indian Penal Code, and the Appellate
Tribunal shall be deemed to be civil court for the purposes of section 195
and Chapter XXVI of the Code of Criminal Procedure, 1973.

39. Orders passed by Appellate Tribunal to be executable as a Decree:
(1) Every order made by the Appellate Tribunal under the Act shall be
executable by the Appellate Tribunal as a decree of civil court, and for this
Purpose, the Appellate Tribunal shall have all the powers of a civil court.
(2) Notwithstanding anything contained in sub-section (1), the Appellate
Tribunal may transmit any order made by it to a civil court having local
jurisdiction and such civil court shall execute the order as if it were a
decree made by that court.

40. APPEAL TO SUPREME COURT:
(1) Notwithstanding anything contained in the Code of Civil Procedure,1908
or in any other law for the time being force, an appeal shall lie against any
order, (not being an interlocutory order) of the Appellate Tribunal to the
Supreme Court on one or more of the grounds specified in section 100 of that
Code.
(2) No appeal shall lie against any decision or order made by the Appellate
Tribunal with the consent of the parties.
(3) Every appeal under this section shall be preferred within a period of
ninety days from the date of the decision or order appealed against:
Provided that the Supreme Court may entertain the appeal after the expiry of the said period of ninety days, if it is
satisfied that the appellant was prevented by sufficient cause from preferring the appeal in time.

41. Real estate regulatory authority – powers and functions
 The Authority will act as a nodal agency to co-ordinate efforts regarding
development of the real estate sector and render necessary advice to the appropriate
Government to ensure the growth and promotion of a transparent, efficient and
competitive real estate sector.
 The authority shall ensure compliance of the obligations cast upon the promoters
and the allottees and to cause an inquiry to be made into compliance of its orders or
directions made in exercise of its powers
 To host and maintain a website of records of all real estate projects within its
jurisdiction as database, with all details as provided in the application for registration
under the Act, for projects, for which registration has either been granted or cancelled as
the case may be;
 To make recommendations on protection of interest of the allottees, measures to
improve the processes and procedures for clearance and sanction of building plans and
development projects from the Competent Authority; and construction and maintenance
of structurally safe, environmentally sustainable, and low cost buildings, apartments and
properties and any other form of assistance or advocacy to promote competition and
efficiency in the real estate sector.

42.  Regulatory Authority has the power to Issue directions to
promoters and allottees from time to time and such directions are
binding on all concerned.
 Powers of the Regulatory Authority consequent upon lapse of or
cancellation of registration of the promoter to recommend to the
Competent Authority to have the remaining development works,
carried out from the proceeds of the enforcement of bank guarantee
and recover charges incurred on the said development works due
from the promoter.
 The Regulatory Authority shall have powers to regulate its own
procedure and shall be guided by the principles of natural justice and
shall have all the powers as are vested in a Civil Court under the Code
of Civil Procedure,1908

43. CHAPTER VII
OFFENCES AND PENALTIES
Punishment for nonregistration under section 3:
If any promoter willfully fails to comply with or
contravenes the provisions of section 3, he shall be
punishable with imprisonment for a term which may
extend to three years, or a penalty which may extend
to ten per cent of the estimated cost of the real estate
project, or with both.

44. PENALTY FOR CONTRAVENTION OF OTHER PROVISIONS OF ACT:
If any promoter contravenes any other provisions of this Act, other
than that provided under Section 3, or the Rules or Regulations made
There under, he shall be liable to a penalty which may extend to five
percent of the estimated cost of the real estate project.
PUNISHMENT FOR WILLFULL FAILURE TO COMPLY WITH ORDERS
OF AUTHORITY:
If any promoter, who willfully fails to comply with, or contravenes any of
the orders or directions of the Authority, he shall be liable to a minimum
penalty of one lakh rupees for every day during which such default
continues, which may extend to five percent of the estimated cost of the
real estate project.

45. PUNISHMENTS FOR WILLFULL FAILURE TO COMPLY WITH ORDERS
OF APPELLATE TRIBUNAL:
If any promoter, who willfully fails to comply with the orders of the
Appellate Tribunal, he shall be punishable with imprisonment for a
term which may extend to one year or with a penalty which may
extend to ten percent of the estimated cost of the real estate project,
or with both.
COMPOUNDING OFFENCES:
Notwithstanding anything contained in the Code of Criminal Procedure,
1973, any offence punishable under this Act, not being an offence
punishable with imprisonment only, or with imprisonment and also fine,
may either before or after the institution of the proceeding, be
compounded by the court before which such proceedings are pending.

46. CONCLUSION- Major Highlight of the Bill
• Real Estate sector is the second largest employer in the country, next only to agriculture and accounts for about 9 per cent
of GDP and the construction sector supports 250 ancillary industries.
• Such an important sector, over decades has been marked by lack of trust and confidence between the consumers and
project developers. In the process, this sector has acquired certain notoriety, adversely impacting investment climate and
hurting the interests of lakhs of home buyers every year where 2,349 to 4,488 new housing projects were launched every
year between 2011 and 2015. A total of 17,526 projects were launched with a total investment value of Rs 13,69,820
crore.
The provisions of this Bill are applicable only to residential projects.
• Prior approval before launch and advertisement- This bill contains provisions restricting launch of projects or advertisements
unless all approvals are received and all the agents are not expected to facilitate the sale of immovable property which are not
registered with the Authority and to maintain books of accounts, records and documents.
• Mandatory deposit of fund- It makes mandatory upon the promoters to deposit 70 per cent or such lesser per cent as notified by
the government to cover the construction cost of the project of funds in a separate bank account to ensure timely completion and
prevent fund diversion.
• Registration of real estate project and real estate agent - The bill also ensures mandatory registration of real-estate projects and
real-estate agents with the Authority, except when the land proposed to be developed is less than 1000 square meters. This
provision is likely to provide another level of protection to buyers while also preventing concerns regarding money laundering by
the non-organised broker community.

47. • Disclosing of mandatory information - The real - estate agents / developers are now
required to disclose material information such as details of the promoters, project, layout
plan, plan of development works, land status, carpet area (as opposed to super area) and
number of the apartments booked, status of the statutory approvals and disclosure of
proforma agreements, names and addresses of the real estate agents, contractors,
architect, structural engineer etc on the Authority's website.
• Restriction on taking advance - Prohibition on taking more than ten percent as advance
from the buyers without a written agreement and also the developers/ agents are
required to refund to buyers the full amount in case of delay of projects.
• Liability/ Penalty – The Bill prescribed for Civil and criminal liability for the contravention
of various provisions of the Bill, such as, imprisonment up to three years or a penalty up
to ten per cent of the estimated cost of the real estate project for projecting out
misleading information in advertisements or prospectus
• Real estate regulatory authority – The Bill give the power to establish one or more Real
Estate Regulatory Authority in each State/UT, or one Authority for two or more
States/UT, by the Appropriate Government, specifying their functions, powers, and
responsibilities to exercise oversight of real estate transactions. The Bill shall also appoint
adjudicating officers to settle disputes between parties, and to impose penalty and
interest.

48. Applicability of the bill
• The proposed Bill has limited its applicability to residential real estate only
i.e. housing and any other independent use ancillary to housing. The Bill
defines
• "real estate project" as the development of a building or a building
consisting of apartments, or converting an existing building or a part
thereof into apartments, or the development of a colony into plots or
apartments, as the case may be, for the purpose of selling all or some of
the said apartments or plots or buildings and includes the development
works thereof
• ''apartment" whether called dwelling unit, flat, premises, suite, tenement,
unit or by any other name, means a separate and self-contained part of any
immovable property located on one or more floors or any part thereof, in a
building or on a plot of land, used or intended to be used for residential
purposes, or for any other type of independent use ancillary to the purpose
specified and includes any covered garage, whether or not adjacent to the
building in which such apartment is located which has been provided by
the promoter for the use of the allottee for parking any vehicle, or as the
case may be, for the residence of any domestic help employed in such
apartment

49. HIGHLIGHTS OF THE BILL:
 The Bill regulates transactions between buyers and promoters of
residential real estate projects. It establishes state level regulatory
authorities called Real Estate Regulatory Authorities (RERAs).
 Residential real estate projects, with some exceptions, need to be
registered with RERAs. Promoters cannot book or offer these projects for
sale without registering them. Real estate agents dealing in these projects
also need to register with RERAs.
 On registration, the promoter must upload details of the project on
the website of the RERA. These include the site and layout plan, and
schedule for completion of the real estate project.
 70% of the amount collected from buyers for a project must be
maintained in a separate bank account and must only be used for
construction of that project. The state government can alter this amount
to less than 70%.
 The Bill establishes state level tribunals called Real Estate Appellate
Tribunals. Decisions of RERAs can be appealed in these tribunals.

50. KEY ISSUES AND ANALYSIS:
• One may question Parliament’s jurisdiction to make laws related to real estate as “land”
is in the State List of the Constitution. However, it may be argued that the primary aim
of this Bill is to regulate contracts and transfer of property, both of which are in the
Concurrent List.
• Some states have enacted laws to regulate real estate projects. The Bill differs from
these state laws on several grounds. It will override the provisions of these state laws in
case of any inconsistencies.
• The Bill mandates that 70% of the amount collected from buyers of a project be used
only for construction of that project. In certain cases, the cost of construction could be
less than 70% and the cost of land more than 30% of the total amount collected. This
implies that part of the funds collected could remain unutilized, necessitating some
financing from other sources. This could raise the project cost.
• The Standing Committee examining the Bill has made several recommendations. These
include: (a) the Bill should also regulate commercial real estate, (b) smaller projects
should also be covered, and (c) all real estate agents must be required to register.
• The real estate sector has some other issues such as a lengthy process for project
approvals, lack of clear land titles, and prevalence of black money. Some of these fall
under the State List.

51. How does this bill help us?
Ritwik and Shalini Saluja are a young working
couple and a potential real estate buyer. With so
many cases of forgery, fraud, builder’s default and
possession delay, they have turned extremely
cautious of investing in property market. The Real
Estate Regulatory Bill as they have heard will make
investment in real estate industry safer. The
Salujas, however, have little knowledge of the Bill
and its positives.
Many such prospective investors who had
withheld buying properties might venture to do so
now. Although, investors are pinning hopes that
post the passage of the Bill, the situation will
improve, the implementation process will take a
long time.

52. For others like Saluja, here are few points that make RERA a win-win situation for
investors-
1. It provides for the establishment of a real estate regulator in each state to settle
disputes and order compensation or penalties. This will keep a check on errant
developers.
2. All residential and commercial projects will have to be compulsorily registered with
the regulator. Developers will have to disclose layout plans and submit clearances for the
project with the regulator. This will usher in greater transparency in projects.
3. Developers will have the responsibility to rectify structural defects and refund money
in cases of default.
4. Developers will need the consent of two-third of the buyers to alter plans, structural
designs and specifications of the building. This will stop developers from making
unapproved changes.
5. Brokers, who intend to sell flats and plots in a project, will also have to register with
the real estate regulator, and will be punished for non-compliance of regulatory orders.
6. For wrong disclosure of information or non-compliance with requirements, the
regulator has the authority to de-register the projects and impose penalties on the
developer.
7. Promoters to deposit 70% of amount from buyers. To ensure projects are completed
on time, promoters will have to deposit 70% of the amount received from buyers in a
separate bank account within 15 days. This will deter developers from diverting funds
elsewhere and ensure timely completion.

53. MARKET VIEWS
Though this has all the positive aspects which can survive the purpose of the
investors and the common people, and keep them in safe hands,as the real
estate sector definitely needs a regulator on the lines of the one controlling
telecom, banking, stock markets and insurance sectors.
There is also a criticism from the sector stating that the discretionary powers
for registering or deregistering projects and adjudication by a bureaucrat
could become breeding grounds for corruption. Moreover, the provision for
criminal prosecution of developers could lead to the exit of professional and
qualified developers.
"Our fear is that those with expertise to handle political influencers will only
survive, thus leaving the all important industry in the hands of corrupt
people," Mr. Jain who is also the Chairman and Managing Director of
Mumbai-Pune developer Kumar Urban Development Limited (KUL), said .

54. Real estate regulatory bill: close to the finish
line and added recommendations
• New recommendations on the Real Estate Regulatory Bill were made by
the ministry and sent to PMO for approval, and the cabinet has now
approved it. Next, it will be tabled in the Parliament for passing the bill and
making it an Act. In essence, reduction of minimum balance to be
maintained in the escrow account of a project has been reduced from 70% to
50%. This amount from the monies collected from the buyers must be placed
in an escrow account within 15 days.
• This provision will effectively allow developers to continue their practice of
diverting funds collected for a project towards land acquisition or other
projects, and will work in their favour by also allowing them to grow their
land and/or project portfolio. However, the 50% mandate will still place
enough restriction on developers to divert funds elsewhere and ensure
better completion records.

55. • For the buyers, the concerns regarding funds diversion will be higher now.
The end result is that the bill will be slightly less protectionist towards
buyers. Other revisions include bringing in commercial projects under the
purview of the bill, which will provide protection to investors of commercial
assets, as well.
• The Bill now covers commercial real estate, as well; also, brokers and
agents have been now been included under its purview as well, and are
effectively rendered punishable in case of non-compliance with the
authority's and tribunal ruling. All under-construction projects have to be
compulsorily registered within three months of setting up of the regulator,
and developer cannot make changes to original plans or the structural design
unless he gets the consent of two third of the customers. The states have to
set up the regulatory bodies within one year of the Bill’s enactment while
also setting up a web-based online registration facility within a further
period of one year from setting up of the bodies.

56. • Failure to register a project will cause the developer to attract a penalty of 10% of the overall
project cost, and an additional penalty of 10% penalty and/or a three-year prison term in case of
continued non-compliance. Incorrect or incomplete disclosures will attract a penalty of 5% of the
project cost. Project cancellation has been stated as possibility in case of continued non-
compliance.
• One issue pointed out in the bill by stakeholders was that it aimed to place itself as the sole
course of action for redressal of grievances by customers, with no recourse to other consumer
forums. It was correctly pointed out that such a stance could lead to pressure on this regulatory
body in terms of an increased log of cases, though it would certainly reduce instances of
multiplicity of suits. This clause has been done away with in the version that the cabinet has
cleared, so customers can now seek recourse with consumer courts and forums as well. All
projects which have not received their completion certificates will also be now covered under
the bill, so it now allows bigger umbrella coverage for buyers and investors.
• The Bill will provide a renewed boost to transparency levels in the Indian Real Estate sector.
India which lies in the middle in a survey of 90 countries for the JLL Transparency Index will make
further progress up the rankings. This will instil more confidence among global investors, thus
providing better access to structured capital for this sector. However, though, the new amended
Bill reads very positively for inducing transparency and better governance, the continued non-
inclusion of government agencies whose slow approval processes are a major contributors to
project delays, remains an issue and needs to be addressed.

57. Comparison to the regulatory bills of other countries:
As the home property is the largest single investment most people will ever
make, and thus it is vital that consumers receive the best possible advice,
protection and service in the process with growing number of cases, many
countries now look forward for setting up the necessary regulatory
authorities to protect the consumers rights and control the crimes.
Countries like Singapore, Australia and Sharjah have already set up their
authorities, and when we compare those to our country the key observation
is that they did not only focus on the rights and security of customers but
also the quality of market.
They have set up institutes of real estate to train and examine the people
who are involved into the business such as agents, middle men or the
promoter and examinations are also conducted, which enables the quality of
it such as professional client care, code of practice and practice guide lines
which we lack on. Though the guidelines and focus on Regulatory practice,
development and ethical advertisements seems to be same.

58. The Real Estate Regulation and Development Bill, 2013 has been approved by
cabinet and is now with a 21 Select Panel of the Rajya Sabha and yet to be passed.
The much awaited Real Estate Regulatory Bill(RERA) is now a
step close to the finish line. As the Cabinet approved the
Draft with 20 odd key amendments much to the
recommendations of Rajya Sabha panel on 9th of December
2015. After much ambiguity on this bill from few years it has
now again came into light with the ray of hope to get passed
in the parliament. This bill can essentially be a key factor
which may help the sector further attracting investments
both from industry wide and also FDIs and households would
be the key obviously. Which would be a great push for the
growth of Infrastructure sector.

59. Have a look on the recent amendments:
Builders will now have to pay equal rate of
interest in case of default or delays as home
buyers.
Which really provides a value and security to
new and young investors.

60. This is the other important aspect that adds the safety and value
for the investors savings from faulty constructions and may
increase the transactions in the market by the assurance provided
and may gain boom to the sector.
What has also been changed is the liability of builders for structural
defects that has been increased from the earlier two to five years now.

61. draft were rectified…
Carpet area has now been clearly defined to include usable spaces
like kitchen and toilets to make it clear.
Garage is now to be kept out of the purview of definition of
apartment and is separately defined.
Formation of allottees associations is now mandatory within three
months of allotment of majority of units in a project so that buyers
get to manage facilities in the housing project.
The bill stands on 7 pillars - mutual trust and confidence,
credibility, efficiency, accountability and transparency and timely
execution of projects.

62. Bill now allows aggrieved buyers to approach 644 consumer courts which are
available at the district level instead of only the real estate regulatory authorities
proposed to be set up under the bill, mostly in capital cities, for redressal of
grievances.
Leaving the usual civil courts out.
The government had earlier added a few changes to the bill in December 2014.
It had brought commercial real estate projects under the ambit of the bill; had
made the provisions of the bill applicable to all existing projects wherein sales are
still in progress, and put in place a system that would require consent of two thirds
of the buyers in a project for changing project plans.

63. The revised bill now includes an enabling provision for arranging insurance of land
title, which is currently not available in the market.
This will benefit buyers and
sellers both in situations where the title of the land is held invalid.
The regulatory
authorities would promote single window system of clearances for real estate
projects that is likely to speed up construction work that now lags because of
delays in getting permissions.
Regulatory Authorities can now grade projects along
with grading of promoters besides ensuring much desired digitization of land
records.

64. They will now be required to make regulations within three months of its formation
as against six months proposed earlier.
States will now have to make rules within six months of notification of the
proposed Act as against one year earlier proposed; Allottees shall take possession
of houses in two months of issuance of occupancy certificate.
The bill now states that additional benches of Appellate Tribunals can be set up in a
state if required for speedy adjudication of grievances.
A new provision has been created for imprisonment up to three years in case of
promoters and up to one year in case of real estate agents and buyers for violation
of orders of Appellate Tribunals or monetary penalties or both.

65. Appellate tribunals will now have to adjudicate cases in 60 days as against 90 days proposed earlier and Regulatory
Authorities to dispose of complaints in 60 days while no such time limit was indicated earlier.
Where all these amendments added the real value to the proposed bill.
And finally passed in the parliament on 10th March 2016.
After this the consumer shall be the king as had happened in sectors like telecom after a regulatory mechanism was
put in place. There is an imperative need for consumer to be the king in real estate sector also.
"When there is a king, there got to be a queen also”. The queen obviously is the developer. And there shall be a happy
marriage between the king and the queen, for both to live happily ever after.
A total of 76,044 companies which are involved in the real estate sector will come under the purview of the bill.
A regulation is coming in a field in which this country's money is being pumped in. With the beginning made today,
things will become transparent. Through this bill, there will be no difference between what the developer shows and
what he sells.
©Mr. Rahul Reddy & Mr. Prathap Reddy