Faulty contracts and refunds still continue
Real Estate laws in India:
The Real Estate (Regulation and Development) Act, 2016 (RERA) was brought into effect four years ago. The law was enacted with high hopes and aspirations. The law aimed at giving a better bargaining power to the home buyers so that their interests are not compromised against the mighty builders. It also had an objective of protecting consumer interests and a speedy mechanism for resolving the buyer-builder disputes. The situation in Maharashtra reveals something different than what was aimed at.
Overview of Maha RERA:
The Maharashtra case reveals that this has not been the case so far. The first state to implement RERA was Maharashtra. The act is called the Maharashtra Real Estate Regulatory Authority (MAHA RERA). It has a website where the buyers can lodge their complaints online. On the website one can also view rulings passed by MAHA RERA or by the Maharashtra Real Estate Appellate Tribunal. It also provides details to the viewer regarding the registered projects and documents submitted by the builder to MAHA RERA, among others.
Effectiveness of the Act:
In practice, the main objective of protecting the interest of homebuyers is not achieved. For a long time the home buyers have been troubled with toxic contracts and denial of refunds. The bargaining power of home buyers is disproportionate to that of large real estate corporations. The constitutional validity of the Act was challenged in the Bombay High court in Neelkamal Realtors Suburban Pvt vs. Union of India (2017). The court rightly pointed out that the Act was aimed at providing much needed protection to the buyer. The buyers always had less bargaining power. The Act provides protection against the one-sided terms and conditions in the Sale Agreements. That left the individual buyer with no choice except signing on the dotted line.
The Act has provided for them for templates of contractual documents to be used by the builder at the time of concluding a sale transaction. A sample template for agreement for sale is also provided for in the Act for the use of the builder. The template is so well made that it balances out the rights and obligations between the buyer and the builder.
Problems with its implementation:
Like every other law in India, implementation of its regulation has a problem.
It has been observed that the agreement made by the builders still have clauses favourable to them. Either the terms in the terms and conditions in the term are not incorporated or selectively incorporated. This situation is alarming because it is the obligation of MAHA RERA to peruse the contract specimen uploaded by the builder before granting approval of plans. It must verify whether the clauses are inline with the Regulations. If these are not complied with, the authority has the option of cancelling the registration that is granted or approval of the project.
The MAHA RERA inactiveness in taking prompt action against the builders against non-compliance of regulations has caused much hardship to homebuyers. The buyers have no option but to accept the terms as they are.
The other issue of concern is the upper hand that the builders have in unilaterally cancelling the transactions. If the homebuyer is unable to buy the property in future all the instalments that he has paid is forfeited by the builder. Sometimes builders ask for an extra amount of money from the buyers. The allotment letter given to the buyers has 30 days’ time period to complete the registration process. Usually, the Allotment Letter imposes a “burden of refusal” on the homebuyer and is deemed to be accepted if the homebuyer does not respond within the time which is usually less than two weeks.
MAHA RERA has many times failed to enforce its own orders. There are instances where MAHA RERA refused to admit disputes because they are already admitted under the Consumer Protection Act. The authorities also refuse to entertain refund requests, stating that the Act provides no powers to the Authority to grant refunds in certain situations. There are various cases which are not listed for hearing for months altogether.