Real Estate Act
The much awaited and widely acclaimed Real
Estate (Regulation and Development) Act, 2016 has come into force from May 1,
2016. In this regard, Union Ministry of Housing and Urban Poverty Alleviation
(HUPA) has notified 69 of the total 92 sections of the Act.
The Act has set into motion the process of
making necessary operational rules and creation of the institutional
infrastructure to make the Act effective on ground. As per the notification,
Rules under the Act have to be formulated by the Union and State Governments
within a maximum period of six months from the act coming into force that is by
31 October 2016 under Section 84 of the Act.
Key features:
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The
law aims to protect homebuyers from real estate developers who fail to deliver
on time, and regulate India’s murky real estate sector in the country.
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It
ensures the timely completion and delivery of flats to the consumer by ensuring
that strict regulations will be imposed on developers to ensure timely construction
and delivery. It further provides that consumers are entitled to a full refund
with interest, if there has been a long delay in the delivery of a flat.
Ø
The
law mandates that developers need to share final project plans as part of their
disclosure terms, with no room for iterations. It also imposes a 10% project
cost penalty and upto 3 years in jail.
Ø
The
developers need to deposit 70% of the collections from buyers in separate
accounts towards the cost of construction including that of land.
Ø
The
law also ensures that all clearances are completed before the launch of a
project. Liability of developers for structural defects has been increased from
2 to 5 years and they can’t change plans without the consent of two thirds of
allottees.
Also, Real Estate
Regulatory Authority will be formulated within one year as per the mandate of
Act. Regulatory Authorities will have to dispose of complaints in 60 days and
Appellate Tribunals will be required to adjudicate cases in 60 days.
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