NEW DELHI: Both real estate developers and home buyers can terminate the sale agreement in case of default by any of them under the recently notified real estate regulatory Act. However, the new rules also allows home buyers and developers to amend the sales agreement with written consent of both the parties. “Agreement for sale rules seeks to eliminate the scope of such agreements being in favour of either of the parties,” said a government release.
In one of the major reliefs for home buyers, the total price of an apartment or a plot can not be increased or will be escalation free, except when development charges are increased by the competent authorities, according to the new 20-page agreement of sale. If a home buyer defaults by not paying to the developer and such a default persists for an agreed upon number of months, the developer can terminate the agreement and cancel the allotment made to buyer. Developer can then deduct the booking amount and interest liabilities from the amount to be repaid to buyer.
Also, if the real estate developer fails to give ready to move in possession of the apartment or fails to complete the project as per the stipulated time, the home buyer can terminate the agreement and is entitled to refund of amount paid with interest in 45 days of such termination. In case, the buyer does not want to withdraw from such a delayed project, he needs to be paid interest till the project is completed. This however, does not apply if the development of project is delayed by conditions like war, floods, cyclone, drought, etc., which are beyond the control of developer.
The ministry of housing and urban poverty alleviation (HUPA) on October 31 notified the final rules to implement the Real Estate (Regulation and Development) Act, 2016, which will be applicable for five Union territories without legislature of Andaman & Nicobar Islands, Dadra & Nagar Haveli, Daman & Diu, Lakshadweep and Chandigarh. While the ministry of urban development will come out with similar rules for the National Capital Region of Delhi, other state governments and Union territories with legislature will either come out with their own rules or have the option to adopt the HUPA-notified rules.
Developers will now be required to refund or pay compensation to the allottees with an interest rate of the State Bank of India’s highest marginal cost of lending rate plus 2% within 45 days of it becoming due, according to a statement from the ministry. This would effectively come to around 11%. They also need to deposit 70% of the amount collected and unused for ensuring completion of ongoing projects with the real estate regulatory authority in a separate bank account within three months of applying for registration of a project.
While home buyers are entitled for rectification of structural defects by the builder over a period of five years from the date of issuance of occupancy certificate, builders are entitled to get interest in case of delay in payments by buyer and additional payments for increase in carpet area up to 3% of corporate area originally offered to buyer, under the new sale agreement.
The Real Estate (Regulation and Development) Act, 2016, real estate regulatory authorities are required to be set up by every state by April 30, 2017, before the full Act is brought into effect on May 1, 2017.
Credits ET Realty