Objections / Suggestions re: proposed Model Real Estate (Regulation of Development) Act.
OBJECTIONS
1. The proposed Act limits the scope and quantum of reliefs-remedies to a buyer of property to “….. interest at a rate not exceeding the current rate of interest.” This proposed remedy is far less than what is already available under various other laws of the land, such as under the Consumer Protection Act where there is scope for damages and removal of all defects and deficiencies.
2. The purchase of a property typically involves the investment of one’s life savings for shelter for one’s family, and prices of property rise with time. Therefore, if a developer/builder defaults in his contractual obligations, the negative impact on the purchaser is devastating as in the meantime the prices of property might have gone up by 40, 50 or even 100%, which is not covered by payment of interest alone. There is no provision for damages in the proposed Act to cover the consequences of breach of contract. On the other hand, the builder would benefit by reselling the property at new and higher prices.
3. There is no provision to compel a builder to transfer the title to a purchaser according to his choice by Sale Deed.
SUGGESTIONS
1. Prices of property often shoot up very sharply. Therefore, in the event of breach of contract by the builder, the purchaser needs to be covered for all losses (including opportunity cost). There should be provision of, say 50% of consideration amount as damages to cover for increased property prices on the one hand, and payment of interest @ say, 2% per month so the builder does not use a buyer’s money as a cheap source of funds.
2. There should be provision to make a builder either provide an alternate similar property to the buyer + interest @ 2% per month, OR refund of present market value of similar property + tax implications + interest @ 2% per month.
3. The builder should be compelled to transfer title to a buyer as per the buyer’s choice by way of Sale Deed within 30 days of having received full consideration for the property.
4. In the event the concerned ministry is unable/unwilling to incorporate such suggestions, they should keep in abeyance this toothless piece of proposed legislation as it is detrimental to the interests of a purchaser of property, as reliefs already available to a purchaser of a property under other already existing laws (Consumer Protection Act, etc.) are much more.
