Impressed by the advertisement in a magazine and the company’s brochure that promised various facilities like a gym, a supermarket and a swimming pool within the premises, Prasad booked an apartment with a renowned promoter two years back. Possession was assured within 11 months. But, there were innumerable problems. To begin with, there was inordinate delay in the work progress and later he came to know that building was not as per the approved plan. There was no space left for a swimming pool and the place depicted as a supermarket in the plan was sold as a flat. Prasad’s representations to the promoter fell on deaf ears. Left with no choice, he approached the consumer forum.

I am sure there are any number of Prasads in our country who have and are facing similar situations and are at their tether’s end. With real estate companies burgeoning, illegal constructions are on the rampage and people are often taken for a ride. There is total lack of transparency leading to destructive, unscrupulous business practices, the main reason for which is absence of a standard guideline.

However, with the intention to put an end to this, the Ministry of Housing & Urban Poverty Alleviation (Housing Section), Government of India, has formulated A Model Real Estate (Regulation of Development) Act. The draft legislation is posted on the ministry’s website dir_hsg_mud@nic.in and us-housing.muepa@nic.in for comments.

This initiative is aimed at ensuring more discipline and ethics in the business. According to the proposed Bill, no real estate project or buildings for sale can be developed without registering them with the real estate regulatory authority (to be set up in each state) established under the Act. This is meant to control and promote construction, sale, transfer and management of colonies, residential apartments and other similar properties.

The proposed Real Estate (Regulation of Development) Act aims at more discipline and ethics in the business

The Act makes it mandatory for all promoters to submit details of approved project plans along with a bank guarantee equivalent to 5 per cent of the estimated cost of the development to the authority. In addition, the promoter also has to 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 regulator will register the project. Project details will be made public through the authority’s website.

In case of a violation, the registration will be cancelled after due verification and the bank guarantee forfeited. Failure to comply with the rules could also attract a penalty or imprisonment. Any person aggrieved by the order of the Authority can approach the Appellate Tribunal to be established under the Act.

The Act will help buyers who are promised the moon by the builders and later subjected to great harassment. However, it is also crucial for the buyers to be aware of their rights and make proper enquiries before entering into deals.

The authority is expected to take all possible measures for the growth and promotion of a healthy, transparent, efficient and competitive real estate market. It is, however, vital that the implementation part is worked out to the smallest detail before the Act is enacted, as this is where many problems arise. Take the Consumer Protection Act for instance. The legislation speaks of speedy remedy but, in practice, there are inordinate delays in disposal of cases. Many reasons like lack of proper infrastructure, pending cases or vacancies in the Forums, are attributed to this. Only through proper execution can unsuspecting buyers be protected from perfidious promoters.

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The author is legal coordinator, complaints’ desk, Citizen consumer and civic Action Group (CAG), Chennai.

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