The Maharashtra Housing Bill 2011 - Pros & Cons

An analysis of the draft bill

The much awaited Maharashtra Housing Bill i.e The Maharashtra Housing (Regulation and Promotion of Construction, Sale, Management and Transfer) Bill, 2011, the Maharashtra Govt has finally tabled in the Assembly session of Wednesday 11 April 2012 envisaging establishment of Housing Regulatory Authority with an Housing Appellate Tribunal. Once passed this Bill shall repeal the Maharashtra Ownership Flats Act, 1963.

The Bill is being tabled within the days of Central’s Model Real Estate (Regulation & Development) Bill, 2011, which is also somewhat with similar intentions, our Parliament is enacting.

The aim seems clear but the intentions not. 

The bill is to safeguard interest of buyers by making the promoters accountable and the realty sector bit  transparent, disciplined and efficient in majority of its shadowy deals.

The Bills is going near about same way as Dubai’s Land Department and the RERA, which have implemented the regulations to control the promoters and safeguard interest of buyers in the Emirates.

However, unlike RERA of Dubai, the Govt of Maharashtra is allowing the promoters (perhaps knowingly) to play bit more freely with the hard-earned money of Flat buyers by simply submitting the statement of amount spent to Regulatory Authority, whereas it should have been the other way round that without the permission of Regulatory Authority the Promoters should not have been allowed to take out the money from the Escrow Accounts, so that to make sure that the promoters are using the money of buyers for the project it meant for.

Further, as to why the State Govt is sheltering its housing wings viz., MAHADA and MMRDA by sparing both out of purview of  the Bill? Are these bodies are not vulnerable to commit irregularities? Whereas the corruptions and irregularities are more rampant there than in the private sectors. Perhaps the State Govt wants NGOs like Anna Hazare to intervene here also.

Furthermore, the draft does not make it mandatory for developers to deposit 70 percent of payment received from the buyers in a separate escrow account within specified period of receiving the money from the flat buyers.  Besides for the violations of promoters, there are only monetary penalties instead of coupled with minimum deterrent  punishments of 1-3 years. Why the Bill goes so soft on promoters? If the Bill is passed with such drawbacks, shall certainly be more exposed to immediate criticism and amendments.

The Bill states that there shall be a 3-member Housing Regulatory Authority and an Appellate Tribunal to take care of all the property disputes which are currently the remedies are only with the consumer courts and civil courts. Which shall relax both these Courts due to diversion of property matters to Regulatory Authority and Appellate Tribunal.  

The good thing is that there will be a “Disclosure Statement” from the promoter (besides evidencing his Title to the plot of building, he is also supposed to add name and contacts of Architects, name and contacts of Structural Engineer and Main Contractor as well as total available FSI to the Plot and the FSI consumed by him (in case any additional FSI is being used, he must disclose same in the Disclosure Statement;  type of concrete and technology he will using for building. If he is going to use branded fittings and fixtures he has to disclose the names e.g. Lift of Otis or tiles of so and so brands (simply mentioning branded items will no more help him).  Flat handing over date, specified parking numbers as well as nature of organization he is going to form to which the title of the plot and building will be passed to. At least the buyers shall at least know roughly what their Builder is going to use to make their dream-home and somewhat the final stuff they may end up in getting.  Further, the Bill makes it mandatory on the part of the Builders to register with the Regulatory Authority their  Projects as well as to keep updating the project progress from time to time, so that buyers can access the information on Regulatory Authority’s website and can reconfirm the progress by site visits.

Builder is not supposed to market, advertise or sale any apartment unless the project is registered with Housing Regulatory Authority and details are uploaded on the HRA’s official website. Only projects which are less than 5 Flats or with plot size of less than 250 sq meter or being constructed for personal, or projects which are for redevelopment, renovation or repair and no new buyers are purchasing any Flat on such project, are not included for registration with HRA, else all other projects, including projects under construction or for those for which the OC (Occupation Certificates) are  not yet issued, prior to enactment of this Bill,  have to be registered with HRA.

Builder will not be able to make any alternations or additions of Floors, once the Disclosure Statement is issued, without the consent of the Flat Buyers.

Ibrahim Deshmukh

Legal Consultant

www.law-india.com

Email: ibdesh@gmail.com