|
Rajan Ahuja
C/o Realty & Verticals
J4/2, DLF- II , Gurgaon
e mail :-
rajan.ahuja@gmail.com
info@realtyverticals.com |
 |
Are you Powerful Enough ?
The end beneficiary must
always be the consumer, that is the first fundamental of any progressive
policy change, particularly in a democracy. To the extent new methods of
trading, new scales of trading can bring benefit to the consumer, it is
desirable. But it is equally true (that) in order to empower the country
as a whole, you cannot be a party to policies that will lead to large-scale
unemployment in a time-frame which is unacceptable.
Lack of transparency has
been a problem for real estate consumers for many years now. Real estate
transactions are governed by the Transfer of Property Act, 1882, which
is outdated. Moreover, land registration is currently tied to payment of
stamp duty and numerous “no objection” certificates. High stamp duty rates
discourage timely registration of land and encourage misrepresentation
of property values. Lack of proper land records often leads to unclear
ownership, magnifying the opaqueness of records. Digitization of land records
is a step in the right direction and will help gain clarity on actual ownership.
However, there is a long way to go before all land records would be digitized
across the country.
The government plans to
introduce a new Bill called the Real Estate Management Regulation Bill
that will go a long way in protecting the consumer. There is a provision
for setting up a regulator in the Bill, whereby a real estate regulator
would be first set up in New Delhi and other states will?need to decide
on this matter.
Other provisions in the
Bill include ensuring that all apartments are sold on a carpet area basis
(not super built-up area), providing a cap on penalties relating to payment
defaults as interest on defaulted payment is often felt to be overly aggressive.
The ministry of urban development
has also proposed amendments in the Transfer of Property Act, the Indian
Stamp Act and the Indian Registration Act. Till that time, consumers could
be at the mercy of real estate brokers who decide to flaunt outdated laws.
New Proposals try to weed
out fly by night operators, the proposed law prescribes for the compulsory
licensing and registration of promoters, real estate agents and contractors.
The registration/license will have to be renewed after every five years.
The registration can be cancelled by the competent authority if the requirements
of the agreement are not fulfilled or a specific violation of the agreement
is brought to the notice of the competent authority by an aggrieved party.
There are also penal provisions against promoters for violating the Act.
Real estate consumers engaged
in plotted developments often face hardships due to delay in sanctioning
of building plans. But now under the Housing & Habitat Policy 2005,
procedures for sanctioning building plans would be simplified to eliminate
delays through strict enforcement of rules and regulations along with simplified
approval procedures. To make the whole system user friendly, single window
approach would be developed. Chartered registered architects would be allowed
to sanction building plans who would be responsible for enforcement of
the norms and professional responsibility would be vigorously enforced.
Real estate investments
can indeed be nightmarish experiences. There has been an enduring concern
with the quality of project execution and the recent boom has led to the
mushrooming of new developers. This has brought about concerns owing to
the industry’s characteristics. On the demand side, purchases tend to constitute
a major amount of a family’s wealth, while on the supply side, there are
three separate participants—builders, agents and the government. The industry
dynamic is further complicated by the significant amount of cash floating
in the system. The result is countless consumers who are unhappy with their
purchase experience in terms of quality, time and the ability to get suitable
compensation.
The common peril of property
buyers is that they get duped in terms of product pricing, quality and
delivery simply because they are not aware of the background and credibility
of the developers. This is why industry bodies like National Real Estate
Development Council (NAREDCO) has undertaken a drive with ICRA and CRISIL
to rate builders and their projects. And now to take this concept further
to protect consumers, the government as part of the National Housing and
Habitat Policy is proposing to set up an independent rating agency for
builders/promoters to inspire public confidence in their activities. Property
buyers often find themselves to be the victims of fraudulent transactions
due to unclear property titles. Even the title search done by professional
lawyers on behalf of real estate customers is not fool proof.
|
|
In order to protect property
buyers from such fraudulent transactions arising out of ambiguous titles,
the preliminary draft of Real Estate Management (Regulation and Control)
Act makes it mandatory for the promoter to clearly mention the title of
the land, besides its area, location and price, in the prospectus or the
ad for sale of property. Further the draft National Housing and Habitat
Policy 2005 calls for mandatory title insurance for housing deals. The
real estate experts believe that the proposed title insurance on the lines
of the ones in practice abroad, will provide cover to the buyer against
any loss due to defective titles of the property purchased. |
Since the agreement of sale
is a key document in any property transaction, the proposed law binds the
promoter in term of the contents of the agreement as well as registration
of agreement of sale.
As per the initial draft,
promoter who intends to offer for sale plots, buildings or apartments on
ownership basis, shall before he accepts any sum of money as advance payment
or deposit, enter into a written agreement for sale with each person who
is to take and has taken such plot, building or apartment, as the case
may be. The agreement shall be in prescribed form together with prescribed
documents. Under the law, agreement of sale has to be registered under
Registration Act 16 of 1908 at the proper registration office and execution
admitted by the person executing the document or by his representative,
assignee or agent.
All agreements entered into
before the commencement of the Act will also be registered and its execution
admitted within six months of its commencement and it will be deemed to
have been executed within time.
|
|
