Real Estate Regulation Act.

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The Government has drafted (not yet passed) the Real Estate Regulation Act. This is very good news for purchasers.

A lot of excesses by developers will get controlled.

  1. No advance amount can be demanded for booking flats / sites etc, unless a registered agreement is entered into. So you do not have to pay any money just to get the documents before you decide to buy. 

  1. All information about the project will be available on a government website because it is mandatory for the builder to register it there. 

  1. The title of the project, sanctioned plan and bank guarantee will have to be shown to the government to get the registration by the builder. 

  1. There will be penalties for delay and full disclosure has to be made on the time schedule of the project on a stage by stage basis including getting water, electricity and sewage connections. 

  1. There can be no deviations from sanctioned plan because the occupation certificate will be mandatory. 

  1. The warranty for the building or development has been increased from 1 to 2 years. 

  1. The builder cannot create a prior mortgage of the property (normally resorted to raise capital to complete the construction) without the knowledge of the purchasers. 

  1. All common areas have to be completed within 1 year of getting the completion certificate or when 75% of the project is sold out. 

  1. The builder cannot reserve any terrace or garden rights on the property. 

  1. Now the agreement of sale also has to be registered apart from the sale deed. 

  1. Any false promise in the advertisement will be punishable. 

  1. The punishment for non compliance can extend upto 3 years in prison and daily fines. 

Next Blog: Foreign Investment in Real Estate in India.