Real estate act needs more work


Parveen Mahtani argues that some basic issues are yet to be adequately addressed

The Real Estate (Regulation and Development) Act, 2016, has received presidential assent and certain sections have been notified. The act is a significant move towards ensuring consumer protection and standardizing business practices in the real estate sector. The existing practice of soft launches may end due to the restriction on advertising, marketing, booking or offering for sale any real estate project without registration with the real estate authority and various approvals.

parveen_mahtani_-_wadia_groupThough the act is a significant move, it falls a long way short in addressing some fundamental issues.

Promoter: The term promoter has been expanded to include any person who “causes to be constructed” a building or apartment. The term promoter suggests the inclusion of landowners in the case of a joint development agreement, or investors or independent directors. Since a promoter is liable to comply with all the obligations under the act and consequently for penalties for contravention of the act’s provisions, the real estate sector will see changes in the structuring of investments and a rethink by independent directors on the board of such companies.

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Parveen Mahtani is a corporate counsel with extensive experience in real estate laws.