Real Estate Act Failing Karnataka Owners

Bangalore City Crime

The Real Estate Regulation Act (RERA) was enacted to regulate the real estate sector in India in 2017 – however, it is far from being a success.

By Ajay Ramanathan

Bengaluru, Jan. 29, 2019.

The RERA is nearing its two year anniversary. Coming into effect in May 2017, the Act aimed to ‘establish the Real Estate Regulatory Authority for regulation and promotion of the real estate sector and to ensure the sale of a plot, apartment or building, as the case may be, or sale of real estate project, in an efficient and transparent manner.’

However, experts believe that the legislation is a long way from delivering on what it had promised.

“The way I see it, RERA has become another money-making tool,” a Mangalore-based advocate remarked. “The provisions under RERA are very stringent,” she added.  “Since many of the buildings do not satisfy the requisite criteria to attain an Occupancy Certificate (OC), promoters pay off builders and avoid coming under the ambit of RERA altogether.” Furthermore, the former believed the OC(s) were being granted even to unfinished projects.

The issue becomes pertinent in the wake of a recent report suggesting the builders were selling unfinished houses as completed projects.  The aforementioned report contends that sale deeds were executed even when only 75 percent of the projects had been completed.  There was no effective system in place to verify whether projects were completed or not.

“There are many loopholes as far as RERA is concerned.  The promoters are going scot-free while the buyers suffer,” she affirmed. However, an advocate working with a Bengaluru based real estate firm believes otherwise.  “There doesn’t seem to be a systemic fault,” he said. “For starters, the OC is being granted by the Local Municipal bodies. So, RERA will not apply in this instance,” he added.

However, there is more than meets the eye. “Many of the local municipal laws have not been amended in accordance with RERA,” MS Shankar, General Secretary of The Forum for People’s Collective Action Efforts noted.

“For eg; Under Section 2(z)(f) the OC under RERA can only be granted on the completion of all amenities including water, sanitation, and electricity. But the BBMP by-laws do not specify on the availability of these amenities,” he clarified.  Shankar was of the view that many promoters have attained the OC for projects that are in reality, unlivable. “These houses have no water or sanitation. Only electricity is supplied for a temporary period,” he remarked.

Referring to himself as being one among these aggrieved buyers, Shankar noted that in essence, these houses are being handed out without the work having been completed on them.

Shankar believes that there is an issue in the mechanism of grievance redress wherein aggrieved buyers are unable to achieve complete recourse “Of the 1,800 complaints that have come in, only 630 have been adjudicated.  However, 430 of these aggrieved complainants allege that their money has not been refunded.”  Shankar is amidst a survey that is due to conclude on the 25 of this month.

Shankar cites the lackadaisical attitude of the authorities as the reason for RERA’s ineffectiveness. “The authorities are lenient and not stringent enough,” he remarked. “There is no accountability or transparency,” he added.

In the aforementioned report, the Secretary of RERA for Karnataka, Latha Kumari, revealed plans to set up a special task force to monitor the sector. However, experts are skeptical. “The RERA was set up as a mechanism to maintain checks and balances in the real estate sector. I don’t see the point of instituting a separate authority to monitor RERA itself,” The Mangalore-based advocate added.

Shankar, on the other hand, believed that the task force must be consumer-centric.  “There must be a significant representation of home buyers and activists,” he noted. “Currently, there is no system in place to verify the authenticity of documents from builders. The task force should assist RERA authorities in verifying these documents.”

Elaborating on the need for compliance, he explained – “The RERA is nearly two years old. If stringent action is not taken against defaulters, its purpose is not served. Then, RERA will be a law, only on paper.”