7 Surprises That Real Estate Law Came Up With

While the Real Estate Law may have materialised, PropGuide shares some facts that will help you understand the progress of the law so far in the Indian real estate sector:

Bank calling for additional collateral

Previously, a developer could use 100 per cent of his money reserve. Now, a 70 per cent cash reserve in a separate account mandates that only 30 per cent of the sales proceeds can be used for any other purpose. Therefore, banks are seeking additional collaterals, sometimes even the personal properties of developers on loans disbursed to them.

The much-awaited regulator is absent

The deadline of the formation of the Real Estate Regulatory Authority under the law is July 31, 2017 and even while most Indian states are waiting to avail of the benefits that the regulator promises to meet, the regulatory body hasn't materialised yet. Some developers in Noida and Greater Noida have come to the fore saying their papers are RERA-ready but the authority has not been set up. Meanwhile, pressure groups are fighting for the cause.

When the authority is present, the developers are absent

By the end of June, two months after a fully-operational regulatory body was formed in Rajasthan, only three projects and 11 real estate agents have registered with the Authority. As is clear by the provisions of the law, only registered projects can be marketed, but, given the slow pace, RERA's success in states is questionable.

Occupation Certificate vs Completion Certificate

All projects without a completion certificate have to be registered with the regulatory authority. However, there are still doubts about whether a completed project without a completion certificate and probably with cent per cent sold inventory is included in this purview.

Mumbai pulls up one already

MahaRERA has already pulled up a property consultancy for advertising projects that aren't RERA registered. Though the firm itself has been registered, RERA provisions lay down that an agent can market only registered projects. A fine of Rs 1.20 lakh was imposed.

New launches slow down

A report by a leading consultancy shows that new launches in Maharashtra dipped due to RERA impact. The report said that there were just about 4,900 new launches across the state in QI of 2017-18 while last year, same time, it stood at 6,500.

You aren't exempt from due diligence

Despite the fact that only registered projects could be marketed, reports suggest that it may not be a wise idea to turn a blind eye towards the authenticity of the developer or his project. For instance, while RERA provisions have laid out that promoters should provide all information pertaining to their projects, some haven't obliged and some information is incomplete. Therefore, the onus of double checking the authenticity of a project is on the home buyer.