Homebuyers
beware! Violating RERA provisions may land you in jail
Non-compliance with the
decisions of the Appellate Tribunal will be punishable with imprisonment for a
term that may extend up to one year or with a fine for each day any default of
payments continues.
With less than a
fortnight left for states to implement the Real Estate (Regulation and
Development) Act, 2016 (RERA), homebuyers beware! While the focus has been on
how the Act will force builders to comply with norms, there are stringent
provisions for home allottees, too.
From May 1,
non-compliance with the decisions of the appellate tribunal will be punishable
with imprisonment for a term that may extend up to one year or with a fine for
each day any default of payments continues. Under the Act, each state is
expected to set up a Regulatory Authority and an Appellate Tribunal. While the
Regulatory Authority will be empowered to address the grievances of both buyers
and builders, if either of them is dissatisfied, the matter can go up to the
Appellate Tribunal.
RERA lays down that
buyers must make payments on time including their share in the registration
charges, municipal taxes, maintenance charges etc and even the interest
prescribed.
It mandates that every
allottee will have to participate in the formation of an association of
allottees and take physical possession of the unit within two months of the
builder getting the occupancy certificate. Homebuyers will also have to
necessarily register the conveyance deed of the apartment, plot or building.
There are some
stringent penalties for homebuyers if they fail to comply with the orders or
decisions of the Appellate Tribunal. If allottees fail to omply with the orders
of the Appellate Tribunal, he shall be “punishable with imprisonment for a term
which may extend up to one year or with a fine for every day during which the
default continues, which may cumulatively extend up to 10 percent of the plot,
apartment or building cost, as the case may be, or with both,” RERA says.
"These provisions
set a level-playing field for all. Like truant developers, truant buyers will
also suffer imprisonment if they fail to act in accordance with the orders of
the Authority," says Sudip Mullick, Partner, Khaitan & Co.
Abhay Upadhyay,
National Convenor, Fight For RERA, says that most clauses are fair. There have
been instances where developers have initiated the process of forming an
association; not many people come forward to become members and pay membership
fees.
“The provision that
deals with taking possession of the unit within two months of the builder
getting the occupancy certificate, is balanced as several investors unlike end
users do not take possession of the apartment or get it registered because
their intention is to finally sell the house and make a profit," says
Upadhyay, adding most builders charge interest from buyers for not paying the
pending installments and holding charges if buyers do not take possession of
the units.
"This provision
makes it obligatory for the apartment owner to take possession within two
months after the builder communicates to him that the occupancy certificate has
been received. It makes the buyer responsible for taking possession for ‘fit outs’,"
says SK Pal, a Supreme Court lawyer.
Legal experts say that
these provisions have been framed to keep speculators at bay. Most state
apartment acts mandate that the sale deed of the housing unit will be executed
only after a buyer becomes a member of the association. “But this does not
happen as majority of people buy apartments with the intention to book profits
and sell them at a later date. Some are interested to put them up on rent and
pay bare minimum as owners," says Pal.
Builders are of the
opinion that RERA covers only two stakeholders – builders and the buyers but
not the sanctioning authorities and financial institutions. "Instead of
over regulating the builder community, RERA should have also made the
sanctioning authority that issues the occupation certificate accountable,"
says Getamber Anand, promoter, ATS Infrastructure Limited.
The government last
recently notified the 32 remaining sections of the Act through a gazette
notificaiton. It had earlier notified 59.
All sections in the Act have now been notified and states can
now appoint both the regulatory and the appellate authorities by May 1. Only 13
states and Union Territories have so far notified the rules so far. 16 states
have approved the draft rules.
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