WHEN GOVERNMENTS FAIL THEIR PEOPLE

As seen in last election, even 32% of total votes ensured a stable Government in Parliament. Conversely, we can also say that 68% felt the party would not be able to deliver if they are voted to power. Managing expectations of such a vast country is challenging. Each change brings a lot of discomfort. Today we debate a big change pushed into the real estate sector & what has been its effect so far on the sector.

RERA was a much awaited and delayed statute but somehow was implemented in the year 2017. The Central Government legislated and notified, in full force, the act on May 01, 2017 and then it came upon the State Governments to implement the same.

However, the State Governments of Haryana and Rajasthan have not pro-actively implemented the same. Haryana being slower than even Rajasthan. The implementation in the key area of ongoing projects where the investors were majorly stuck has been grossly overlooked by the respective governments.

The builders have in collusion with the respective Governments, found a way out to be RERA compliant.

Property Advisor

How have they worked this magic?

The simplicity of the modus operandi is baffling. It is also indicative of how crony capitalism is hand in glove with the politicians and bureaucrats in the nation.

The RERA act is applicable to ongoing projects and hence by definition completed projects would not come under the ambit of the act. This is a very agreeable position and should not be opposed. This is where it starts to get interesting.

Who determines if a project is complete or not? There has to be a technical milestone for the same. The technical milestone was determined to be the “Completion and/or Occupation Certificate” issued by the licensing authority. Again, one can say this is a fair call as the project would be fit for possession.

This is where ingenuity in circumventing the laws starts. The builders were kept out of RERA Registration if they had APPLIED for “Completion / Occupation Certificate”. Let me repeat the same, if they had APPLIED for. It was not having obtained the completion certificate but having APPLIED for.

Therefore, the builders and the authorities have created a loophole that even if the project has not been readied to fulfil the technical requisites for the “Completion/Occupation certificate” to be obtained they still can APPLY.

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The method they follow unfolds like this:

  • The builder applies for the Completion/Occupation certificate without making the project fit and ready for the same. Still the builder applies nevertheless.
  • The project is not covered under the ambit of RERA.
  • The licensing authority gives a date of inspection to provide a “Completion/Occupation certificate”. Given the bureaucracy and speed of government functioning this inspection usually gets scheduled after around 2-3 months. In any case the builder is not trying to hurry the said inspection as he is still not really prepared for the “inspection.
  • The inspection happens and a list of deficiencies/observations is raised by the inspecting officers and teams. The builder is given time to rectify the same shortcomings. Another 3 odd months pass in the process.
  • A re-inspection is done and the builder by now manages to prepare 01 tower out of 04-10 towers of the project.
  • The completion/occupation certificate is issued for 01 Tower and builder effectively claims to be out of RERA Purview.

So by allowing passage of time the builder is allowed to make a fake application and get away with it.

Home Buying Decision

All this while the buyers have been.

  1. Paying EMIs on the loans taken and no relief is in sight.
  2. The builders continue to be unresponsive and callous to the buyers’ plights.
  3. The buildings which are supposedly ready as per RERA continue to rot due to construction not being done.
  4. Buyers are bullied by non-applicable possession letters being sent and expectations being set that possession will happen. If the buyers protest they are further threatened with interests and holding charges.

Rera

This is a situation in lot of projects where the builder has already delayed the projects, and/or has delayed/defaulted on other promises made to the buyers viz increase in the sizes, adding after thought charges, defaulting on buy back and/or pre-emi payments among many other such things.

The loopholes are created and exploited precisely by the builders who otherwise also are most nefarious. The government should hence now bring under the purview of RERA all those projects which have not been able to complete and handover the projects to the buyers even after more than 09 months of RERA implementation.

The same has been recently adjudicated by the Honourable Mumbai High Court and upheld by the Honourable Supreme Court. Let us hope that the builder-bureaucrat-politician nexus does not obstruct the implementation of such an important law and stand in defect of protecting the rights and interests of the hapless and unrepresented middle class.

There is a French saying, “Le législateurdevient le transgression” that translates into English, “The legislator becomes the transgression” Hope it does not happen this way in the case of RERA implementation.