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Tuesday, April 25, 2017

The Maharashtra Real Estate Rules; Latest victim of Bureaucracy & Builder nexus

The Real Estate Act (REA) was brought to protect the interest of consumers in the real estate sector . However literary genius of mantralay have made mockery of it. Literary  genius  are those persons in Maharashtra mantralay who make mockery of good laws by cleverly drafting rules or issuing circulars without any authority. Earlier they did it with The Right to information act and The Right to Services Act. Now their latest victim is The Real Estate Act. The way rules of this act are drafted clearly indicate that these literary genius have acted as stooges of builder lobby.These rules give  an open licence for builders to strangulate innocent real estate consumers.Compared to other states only Maharashtra has given such discretionary powers to the builders.




To protect the interest of consumers in the real estate sector the REA mandates the builders and Real Estate Regulatory Authority ( RERA) to publish certain information regarding credentials of builders and their projects on the website .However latest Maharashtra rules give discretionary powers to builder of what to publish and what not to publish.



Most the times  builder creates false picture of their project and cheat innocent flat buyers. To avoid this and to enable consumer to lodge his complaint , section 11 of REA mandates builders promoters  to create their web page on the website of the RERA and enter all details of the proposed project. These details include plan of proposed project, proforma of the allotment letter, agreement for sale, the conveyance deed proposed to be signed with the allottees, drinking water facilities, number, type and the carpet area of apartments for sale etc.As well, section 34 of REA mandated RERA  to publish and maintain a website of records, for public viewing, of all real estate projects for which registration has been given, with such details as may be prescribed, including information provided in the application for which registration has been granted. 

34. The functions of the Authority shall include— 
(b) to publish and maintain a website of records, for public viewing, of all real estate projects for which registration has been given, with such details as may be prescribed, including information provided in the application for which registration has been granted

However contrary to the basic Act clause 20  Maharashtra Real Estate Rules give extraordinary powers to the builders. It says RERA should publish only those things that builders allow them to publish.

20. Details to be published on the website regarding real estate projects.- (1) For the purpose of clause (b) of section 34, the Authority shall ensure that all the disclosures made by the promoters to the authority with regard to the Real Estate project for which registration has been given, shall be made available on its website, except for the following:

(i) Details provided under clauses (b), (e), (g), (h), (i) and (l) of sub-section (2) of
Section 4;

(ii) Details provided under sub-rule (2) of rule 3 of these Rules.

Clauses (b), (e), (g), (h), (i) and (l) of sub-section (2) of Section 4 cover following information

 (b) a brief detail of the projects launched by him, in the past five years, whether already completed or being developed, as the case may be, including the current status of the said projects, any delay in its completion, details of cases pending, details of type of land and payments pending; Prior registration of real estate project with Real Estate Regulatory Authority. Application for  registration of real estate projects.

(e) the plan of development works to be executed in the proposed project and the proposed facilities to be provided thereof including fire fighting facilities, drinking water facilities, emergency evacuation services, use of renewable energy;

(g) proforma of the allotment letter, agreement for sale, and the conveyance deed proposed to be signed with the allottees;

(h) the number, type and the carpet area of apartments for sale in the project along with the area of the exclusive balcony or veranda areas and the exclusive open terrace areas apartment with the apartment, if any;

(i) the number and areas of garage for sale in the project;

(l) a declaration, supported by an affidavit, which shall be signed by the promoter or any person authorized by the promoter, stating:—

(A) that he has a legal title to the land on which the development is proposed along with legally valid documents with authentication of such title, if such land is owned by another person;

(B) that the land is free from all encumbrances, or as the case may be details of the encumbrances on such land including any rights, title, interest or name of any party in or over such land along with details; 

(C) the time period within which he undertakes to complete the project or phase thereof, as the case may be; 

(D) that seventy per cent. of the amounts realized for the real estate project from the allottees, from time to time, shall be deposited in a separate account to be maintained in a scheduled bank to cover the cost of construction and the land cost and shall be used only for that purpose: Provided that the promoter shall withdraw the amounts from the separate account, to cover the cost of the project, in proportion to the percentage of completion of the project: Provided further that the amounts from the separate account shall be withdrawn by the promoter after it is certified by an engineer, an architect and a chartered accountant in practice that the withdrawal is in proportion to the percentage of completion of the project: Provided also that the promoter shall get his accounts audited within six months after the end of every financial year by a chartered accountant in practice, and shall produce a statement of accounts duly certified and signed by such chartered accountant and it shall be verified during the audit that the amounts collected for a particular project have been utilized for the project and the withdrawal has been in compliance with the proportion to the percentage of completion of the project. Explanation.— For the purpose of this clause, the term "schedule bank" means a bank included in the Second Scheduled to the Reserve Bank of India Act, 1934; 

(E) that he shall take all the pending approvals on time, from the competent authorities; 

(F) that he has furnished such other documents as may be prescribed by the rules or regulations made under this Act; and (m) such other information and documents as may be prescribed.

And Sub-rule (2) of rule 3 of these Rules cover following 

(a) Authenticated copy of the PAN card of the promoter;

(b) Name, photograph, contact details and address of the promoter if he is an individual or authorized representative; or the name, photograph, contact details and address of the chairman, partners, directors, as the case may be, and the authorized representative in case of other entities.

(c) A copy of the legal title report reflecting the flow of title of the owner or promoter to the land on which development is proposed, with authentication of such title by practicing advocate;

(d) Where the promoter is not the owner of the land on which development is proposed, a copy of the collaboration agreement, development agreement, joint development agreement or any other form of agreement, as the case may be, entered into between the promoter and such owner, reflecting the consent of the owner of the land and authenticated copies of legal title report reflecting the title of such owner, on the land proposed to be developed;

(e) The information relating to the encumbrances in respect of the land where the real estate project is proposed to be undertaken and the details regarding the proceedings which are sub-judice (if any) in respect of such land;

(f) (i) sanctioned plan where the project is being developed along with information relating to the FSI/ TDR and other entitlements which are proposed to be utilized in accordance with the relevant Development Control Regulations for the time being in force, for carrying out such sanctioned plan and the amenities and common facilities (including common areas, parking spaces) to be provided in accordance with the
sanctioned plan;

(ii) the Proposed Plan, Proposed Layout Plan of the whole project and Floor Space Index proposed to be consumed in the whole project, as proposed by the promoter;

(iii) proposed Floor Space Index to be consumed and sanctioned Floor Space Index. In case the sanctioned Floor Space Index is different than what is proposed to be consumed by the promoter, then the proposed Floor Space Index shall be disclosed at the time of registration and as and when the Floor Space Index is sanctioned, the same shall be uploaded on the website of the Authority by the promoter from time to time;

(iv) proposed Number of building(s) or wing(s) to be constructed and sanctioned number of the building(s) or wing(s). In case the sanctioned number of building(s) or wing(s) is different than what is proposed to be constructed by the promoter, then the proposed number of building(s) or wing(s) shall be disclosed at the time of registration and as and when the additional number of building(s) or wing(s) are sanctioned, the same shall be uploaded on the website of the Authority by the promoter from time to time;

(v) proposed number of floors in respect of each of the building or wing to be constructed and sanctioned number of floors in respect of each of the building or wing. In case the sanctioned number of floors is different than what is proposed to be constructed by the promoter, then the proposed number of floors shall be disclosed at the time of registration and as and when the additional number of floors are sanctioned, the same shall be uploaded on the website of the Authority by the
promoter from time to time;

(vi) Aggregate area in sq. meters of the recreation open space;

(vii) The number of covered parking spaces,

(g ) the particulars in respect of Architecture and Design Standards, Type of construction Technology, Earthquake Resistant Measures and the like to be adopted for Buildings and for Common Areas and of amenities / facilities in the Layout Plan of the real estate project;

(h) the nature of the organization of allottees to be constituted and to which the title of such land parcels is to be conveyed and the specific local laws to govern such organization of allottees on completion of real estate project;

(i) the promoter shall also provide such other information and documents, as may be required by the Authority under these rules or the regulations.

If all this information is excluded from publishing , what remains to publish? . And without this information how the consumer is supposed lodge his/her grievance or ask for the justice? .In the nutshell, builders wanted to  keep away consumers from the affairs of REA and  to keep it  the matter between RERA and them only. They have succeeded in it by making rules favorable to them only. 

Another major factor is, as per  REA where the area of land proposed to be developed does not exceed five hundred square meters or the number of apartments proposed to be developed does not exceed eight inclusive of all phases are not supposed to be registered with RERA. However in Maharashtra rules the way registration fee has been described is quite confusing.It say "At the time of application for registration, the promoter shall pay a registration fee, calculated on the area of the land proposed to be developed at the rate of, rupees ten per square meter, subject to a minimum of rupees fifty thousand only and a maximum of rupees ten lakhs". What does that mean. Does that mean all the projects above  five thousand square meter only are to be register with RERA or even if project is of less than  five thousand square meter he has to pay fee of fifty thousand? .Rules are silent on whether project below five hundred square meter are to be registered with RERA or not. Like wise why the  projects between five hundred and five thousand square meter should bear additional burden of fees. There are thousands of projects fall in this category. (For project of one thousand square meter registration fee should be ten thousand rupees but because of minimum limit of fifty thousand he will have to bear additional burden of forty thousand rupees) contrary to that even if bigger projects like town ships that run in to more that hundred acres will pay much lower amount because of ceiling of ten lakh rupees.

Reduction in penalty charges for compounding of offences uder the act is another issue that builders managed to insert inthese rules

Even after Union housing minister Venkaiah Naidu’s warnings serious implications in case of any compromise with REA to the state governments, Government of Maharashtra  has diluted provisions of it. Naidu had also termed watering down of the legislation by states as anti-people. Now as the the new REA rules have come in to force only thing people of Maharashtra can do is to write to Venkaiah Naidu for immediate intervention or go to the court of law.

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Builder bureaucrat nexus makes Maharashtra RERA Rules nightmare for home buyers



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