FPCE urges RERA law changes, seeks rules to verify promoters' record

Homebuyers' body FPCE has demanded that real estate law 'RERA' should be amended to incorporate a mechanism for verifying the track record of builders before granting permission to launch projects for sale.

It also sought a new provision in the legislation to ensure compensation to homebuyers if builders fail to meet their promise of providing certain facilities and amenities.

The association has also demanded a uniform rule for refund of money in case of cancellation of units by property buyers.

Forum For People's Collective Efforts (FPCE) President Abhay Upadhyay has written a letter to Union Minister of Housing and Urban Affairs Manohar Lal, seeking amendments in the Real Estate (Regulation and Development) Act, 2016 (RERA) to give more teeth to regulators for protecting the interest of consumers.

Through his letter, Upadhyay, who is also a member of Central Advisory Council, RERA formed by the ministry, has tried to highlight certain critical gaps in the RERA Act, causing significant injustice to homebuyers across India.

The association has suggested introduction of a separate section in the Act to specifically address the issue of failure of builders in providing promised facilities and amenities in their projects.

As amendments in the Act might take time, the FPCE said the ministry should issue an SOP (standard operating procedure) to all RERA authorities directing them to ensure builders deposit adequate funds in an escrow account to complete pending facilities. The regulators should monitor and enforce timely completion of such facilities.

Further, the FPCE pointed out that there is no mechanism to verify a promoter's track record before a new project registration.

RERA authorities currently do not verify whether a promoter has cleared all dues to allottees of other projects as well as charges levied by the central or state authorities or any courts/forums/quasi-judicial bodies.

As a result, Upadhyay said, "Errant developers with poor track records continue launching new projects, perpetuating injustice to new buyers."  He suggested that the ministry mandate all RERA authorities to obtain a declaration from promoters before registering any new project.

In the declaration, the promoters must confirm that they have cleared all dues payable to the allottees, including under any order of any forum, court or any quasi-judicial bodies across pan-India jurisdiction.

Promoters should also declare that they have cleared all dues payable to any authorities/forums/courts across India, including any penalty levied by any such bodies, it suggested.

The declaration should apply not only to the promoter company but also to group companies with same brand name; entities with common promoters/shareholders, the FPCE said.

If any promoter submits false declaration, there must be legal provision to permanently bar such promoter pan-India from real estate business, it added.

"These gaps need urgent policy intervention through amendments to the Act or, in the interim, through Standard Operating Procedures (SOPs) to all state RERA Authorities," Upadhyay said in the letter.

The FPCE president noted that this is a wake-up call for the ministry.

"Builders are brazenly exploiting homebuyers -- ?delaying projects, misappropriating funds, and violating agreements -- right under the nose of RERA authorities...," he said.

Upadhyay rued that many authorities remain passive spectators, despite having sweeping powers under the RERA Act to investigate, penalise, and pass binding orders.

"Their (regulators) silence and inaction, in the face of glaring violations, raise serious questions about regulatory will, ?and in some cases, suggest a troubling nexus that shields errant builders from accountability," the president said.

Upadhyay said the RERA registration number has not become a symbol of trust for consumers, "unlike FSSAI, where the stamp itself instills confidence that the product is safe for consumption, the RERA registration number has failed to become a symbol of trust".

In the letter, Upadhyay said the state RERA authorities have failed to rein in these exploitative practices and it is now imperative that the Union ministry urgently steps in.