Maharashtra Bill to set up real estate watchdog

The country’s first real estate watchdog will not only ensure that flat purchasers are compensated for delayed or abandoned building projects but will also empower buyers to get together and appoint contractors and consultants to complete construction of such projects. While the proposed law on setting up a housing regulator in Maharashtra originally included penalties of up to Rs 10 lakh for non-compliance with its orders, the revised draft of the Bill, to be discussed in the legislature during the ongoing session, also proposes imprisonment of up to three years.

The move to set up the regulatory authority got a boost with a joint select committee of the Maharashtra legislature submitting a report to the Assembly on Friday. The panel is chaired by Minister of State for Housing Sachin Ahir. “The Maharashtra Housing (Regulation and Development) Bill, 2012 will be reintroduced in Assembly on Monday. All members of the panel were very supportive. We are very hopeful of a smooth passage in the ongoing session itself,” he said.

One of the key amendments in the Bill pertains to a clause on penalising builders for abandoned projects. Here, it introduces a provision on how to complete these to avert purchasers’ losses and “to fulfill their dream of a home”. If the housing regulator is satisfied that the builder is unable to complete a project, it can pass an order forming a legal entity comprising 60 per cent of the buyers, appointing this entity as an escrow agent for taking over possession of the building, directing the transfer of the retained flats in the name of the escrow agent within a prescribed period and authorising the escrow agent to appoint contractors, consultants and other agencies required to complete the construction and obtain occupation certificate. Stamp duty or other taxes shall not be payable on these retained flats transferred to the escrow agent, the joint select committee has proposed.

“Instead of only granting compensation to the purchasers, a provision should be made to impose penalty on the promoters,” the report of the committee says.

Also, while the original draft Bill provided for builders to cut off essential services if the purchaser fails to pay any outgoings for over three months, the committee has now recommended that, in order to ensure that builders do not take disadvantage of this provision, the action of discontinuing any essential services be permitted only after the matter is heard by a competent authority.

Congress MLA Amin Patel from South Mumbai, one of the members of the joint select committee, said the effort had been to ensure that the proposed regulator would be effective in stemming malpractice by builders but also simultaneously giving the industry a boost.

Another key amendment among the 26 changes introduced is to increase the post-sale period during which builders will be held liable to rectify any defects in construction from three years to five years. Also, a cap of Rs 50,000 has been introduced on the maximum fees to be paid to the regulator for registering a project on the regulatory authority’s website.

A clause on punishment of up to three years’ imprisonment, apart from a fine of up to Rs 10 lakh, for non-compliance with the directions of the regulator was included in the earlier Maharashtra Ownership of Flats Act and has now been introduced in this Bill too.

Source: www.indianexpress.com