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01 May 2017 Question Bank


1st MAY 2017 


(1 Question)

Answer questions in NOT MORE than 200 words each. Content of the answer is more important than its length.

Links are provided for reference. You can also use the Internet fruitfully to further enhance and strengthen your answers.



1.      The Real Estate (Regulation & Development) Act, 2016 largely addresses consumer interests, but some creases are still to be ironed out. Elaborate.


  • As one of the largest job creators, the real estate sector contributes almost 6% towards the GDP.
  • The much awaited Real Estate (Regulation & Development) Act is now in effect. The Ministry of Housing and Urban Poverty Alleviation recently notified 69 out of the 92 sections in total, which set the ball rolling for States to formulate, within six months, rules and regulations as statutorily mandated.

Reasons for Real Estate suffering:

  • Once 100% foreign direct investment was permitted in real estate, international money flooded the market.
  • Builders/developers overstretched themselves and diverted funds while some began to cross-invest in non-core activities.
  • In the race to announce the next “mega project” one came across, in many instances, real estate companies embarking on projects without even consolidating land.

Key provisions of the Act :

1.      The Act’s preamble details the legislative intention which is to primarily protect the interests of consumers and bring in efficiency and transparency in the sale/purchase of real estate.

2.      The Act also attempts to establish an adjudicatory mechanism for the speedy redress of disputes. Real Estate Regulatory Authority’s (RERA) and the Real Estate Appellate Tribunals are expected to decide on complaints within an ambitious period of 60 days.

3.       It places a requirement for developers to now register projects with RERA prior to any advertisement and sale.

4.      Developers are also expected to have all sanction plans approved and regulatory clearances in place prior to commencement of sale.

5.      Subsequent changes have to be approved by a majority of buyers and the regulator.

6.      The Act again ambitiously stipulates an electronic system, maintained on the website of RERA, where developers are expected to update on a quarterly basis the status of their projects, and submit regular audits and architectural reports.

7.      Notably, non-registration of projects is a serious matter. If there is non-compliance, RERA has the power to order up to three years imprisonment of the promoters of a project. 

8.      Importantly, it requires developers to maintain separate escrow accounts in relation to each project and deposit 70% of the collections in such an account to ensure that funds collected are utilised only for the specific project.

9.      The Act also requires real estate brokers and agents to register themselves with the regulator.

Builder grievances

  • While consumer interests have been protected, developers find provisions of the Act to be exceptionally burdensome on a sector already ailing from a paucity of funds and multiple regulatory challenges.

1.      The builder lobby has been demanding “industry” status for the real estate sector as it would help in the availability of bank loans.

2.      Real estate companies say that most delays are because of the failure of authorities to grant approvals/sanctions on time.

3.      While the Act addresses some of this, it does not deal with the concerns of developers regarding force majeure (acts of god outside their control) which result in a shortage of labour or issues on account of there not being a central repository of land titles/deeds.

Effective implementation needed:

  • Eventually the benefit of any statute is contingent on its effective implementation.
  • Since land is a State subject under the Constitution, even after the Centre enacts the legislation, State governments will have to ratify them.
  • States will have to set up the Real Estate Regulatory Authority’s (RERA) and the Real Estate Appellate Tribunals and have only a maximum of a year from the coming into effect of the Act to do so.
  • Despite a model set of rules, only a few States have notified their rules.
  • The onus is now on States to formulate rules and establish the regulatory authorities on time.

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