Proposed Solution for Authority to cover buyers from builder malpractices

RERA will come into force in all Indian states from 1st of May. However, the formation of a regulatory body is still awaited for states including UP, Haryana. Meantime, such states have time to further strengthen RERA which will now override some sections of existing state laws like UP Apartment act for Uttar Pradesh. UP Apartment act will continue to be the bible for dealing with builder owner engagement and buyer conduct after completion but all other rules before completion will now be governed by RERA.

Here are some key points that we feel shall be covered/appended to RERA to fully cover the buyer from malpractices. Feel free to share what you feel is still missing.

For existing projects that have not received (full) completion certificate:

Since land was allotted and further project plan was approved by Authority on basis of a contract, Authority’s control is limited to that contract. However, things beyond the scope of contract can be controlled. Here are some suggestions:

  1. No ‘offer of possession’ or ‘final demand’ without getting occupancy certificate(OC or partial completion certificate). In Builder Buyer Agreement, this ‘offer of possession’ term has been interpreted by builders as a step before possession. Authority states possession cant happen without OC and does not touch upon ‘offer of possession’ or ‘final demand’. This leaves a lot of scope for builder to misuse.
  2. No further enhancement of FAR after layout map approval.
  3. No Completion certificate unless all amenities advertised in newspapers are completed. Consult buyers association before providing completion/occupancy certificate.
  4. Authority to bear at least 50% of additional compensation demand from original land owners like farmers.
  5. Authority shall complete projects that have already went pass by the maximum period given to builders for completion as per lease contract. No further buyer payments to be made to builder in such cases (to be routed to authority to financially assist the completion).
  6. Limit advance maintenance charges to a year at time of possession.
  7. Define a standard for charging power backup charges say maximum 2.5 times of direct electricity charges.

For upcoming projects:

  1. Property cost to be borne by builder in advance similar to the case in districts like Ghaziabad.
  2. Property cost to factor in proposed or demanded farmer compensation. Similar practice adopted in Ghaziabad.
  3. No advertisements in newspaper till building plan is approved.
  4. Builder financial check to be performed. Mandatory for builder to keep additional 30% of construction cost in an Escrow account for project even before its launch/before building plan is approved.
  5. All payments by buyers to go to an Escrow account.
  6. No more than 20% of money in Escrow account can be transferred outside before the project receives Completion certificate.
  7. Mandatory for builder to disclose carpet area with a maximum carpet area variation limit set to ~5%.
  8. Amenities to be disclosed by builder during building plan approval and no Completion certificate without completion of each amenity.
  9. Mandatory for builder to attach tower/flat pictures along with demand letter.
  10. Time limit for completion else percentage of Escrow amount to be transferred to authority.
  11. No FAR enhancement after layout map approval.
  12. No ‘offer of possession’ without getting OC.
  13. Mandatory for builder to share maintenance cost details with buyers association.
  14. Limit advance maintenance charges to a year at time of possession.
  15. Define a standard for charging power backup charges say maximum 2.5 times of direct electricity charges.
  16. Any property inside the premises shall not be used for external commercial purpose.

The above suggestions are open for our reader’s scrutiny. More suggestions are appreciated.

Last updated: April 13, 2017 at 13:08 pm

One thought on “Proposed Solution for Authority to cover buyers from builder malpractices

  • April 14, 2017 at 10:47 pm
    Permalink

    can Noida Authority change ‘first approved layout plan’ to ‘revised layout plan’ in RERA?

    Reply

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