Current realty laws ignored as new ones are proposed

    The state and central governments may be forming new rules to guard homebuyers from the avarice of builders, but consumer activists doubt the possibility of their success. They point out that existing laws provide adequate protection from cheating. What is required is implementation. 

    The existing Maharashtra Ownership Flats (Regulation of the Promotion, Construction, Sale and Transfer) Act, 1963—commonly called MOFA—mandates computing flat prices on carpet area; the same stipulation is now proposed in the centre's Real Estate (Regulation and Development) Bill. "This rule was framed in MOFA in 1983 and amended in 2008. But developers still sell on build-up area and government agencies continue to approve building plans and register property on built-up area," said Ramesh Prabhu, chairman of Maharashtra Societies Welfare Association. 
    Another example of poor execution is MOFA's section 4, which requires builders to register the agreement on receiving 20% of the flat cost. In practice developers "do not register even after getting 90% of the cost," Prabhu added. "Similarly, MOFA sections 3 and 4 say that parking space cannot be sold, but developers do it and even include it in the flat cost." 
    Pranay Vakil, chairman of Praron Consultancy (India), said the central law may introduce much-needed transparency, but will be hard to implement. "MOFA governed transactions between consumers and builders. The central bill covers banks and civic officials. Unlike MOFA, this bill will allow a flat buyer to know immediately if the project has been approved or if there are any encumbrances on the land. That said, it will be a challenge for the government to maintain data on almost 3 million sq ft being developed in the city on awebsite," Vakil added. 
    Activists say that, instead of strengthening buyers' hand, the state government is in fact diluting their rights under MOFA by mooting a new housing bill. According to activist Shirish Deshpande, "The new state bill presented in April 2012 allowed a flat buyer's money to be refunded with interest from the date when money was paid to the builder. However, the bill was amended and this provision dropped, making buyers vulnerable." Activists have demanded that the state shelve the new bill—Maharashtra Housing (Regulation and Development) Bill—and strengthen MOFA by including provisions for a regulatory authority or appellate tribunal. ROOM FOR IMPROVEMENT 
The Maharashtra Ownership Flats (Regulation of the Promotion, Construction, Sale and Transfer) Act, 1963, has various provisions to protect flat buyers, but they are either not implemented or are being diluted in the state's new housing bill 
    Flats should be sold on carpet area 
LAPSE Builders write carpet area in sale deeds but sell on built-up area. Even government agencies approve fungible FSI and register property on built-up area 
    CLAUSES 4 & 5 of MOFA say the total approved developable space and area consumed on the plot should be disclosed in the sale agreement. The balance should go to the society LAPSE The facts are omitted from agreements. Also, the new state housing bill allows a builder to have a proportionate share in additional FSI, taking into account any future increase, even after executing the conveyance to the society 
    SECTION 14 asks the society to be formed within four months of sale of 60% of flats LAPSE Not done 
    SECTION 10 requires land to be conveyed to society in four monthsLAPSE Not done SECTION 5 says a builder has to maintain a separate escrow account for charges such as VAT, electricity and water bills received from buyers LAPSE Clause missing in new bill 
SECTION 13 says builders can be penalized or sentenced to three years in jail for violating MOFA LAPSE Police generally consider this a civil dispute and refuse to register an FIR. Also, clause not in the new bill 
SECTIONS 3 & 7 say a builder has to give all building plans and title reports to prospective buyers and cannot modify plans without buyers' approvalLAPSE Clause missing in the new bill. Currently, buyers get to see plans only after the flat is sold 
Times View: First implement existing rules 
    New rules to rein in builders, who take buyers for a ride, are welcome. But many of the rules that are already there can also do a good job of protecting buyers' interests only if the government was interested in implementing them. We need to know why the existing rules are not being implemented. Another set of rules, however stringent it may be, will have zero effect on the ground if there is no effort to implement it.