Real Estate trends: RERA to now deal with defaulters before NCLT

Real Estate trends: Defending prospective buyers, and litigating builders at default, RERA comes forward as a catalyst regulatory body

State regulators set up under RERA will be the go-to redressal bodies in matters pertaining to new projects. The cases that involve builders at default for malpractices, will be handled by these primary bodies before they are addressed by NCLT’s for insolvency proceedings.

The authoritative body NARDCO made a series of suggestions during a meeting last week with the Union Ministry of Housing and Urban Affairs. The suggestions included:

  1. Disputes regarding builders to be handled by state regulators strictly set up under Real Estate (Regulations and Development) Act, called RERA, and not consumer courts
  2. Suggestions from various stakeholders to remove difficulties under RERA, which was implemented from May 2017

As per Real Estate trends, The new projects, under the provisions of the law, need necessary modifications to prevent burdening of builders with a series of lawsuits in multiple areas. Mainly implemented to make the real-estate transactions more transparent, and safeguard the interest of the consumers, the law curbs dubious activities by the builders.

“At present, complaints against builders are being taken up by consumer courts as well as real estate regulatory authorities established under the RERA. This is creating confusion,” NAREDCO President Niranjan Hiranandani told PTI. The official added, “If regulators under RERA fail to resolve, the dispute may be referred to the National Company Law Tribunal (NCLT) for adjudication.”

On defect liability of promoters till five years of possession, should limit to structural, and design flaws, along with the material being used. The exclusions to the liability are equipment like lifts, generators that come with guarantee or warranty. Fittings related to regular wear-and-tear should also be excluded, example plumbing, hardware fixtures, etc.

With RERA empowered to issue directions, Hiranandani added that the extension of registration of projects should depend upon individual cases instead of one-year extension, which the current provision states. “Sometimes the construction work in projects gets delayed because of court orders or some other issues where builders are not at fault,” he said.

The recent authority gained by RERA of reviewing projects is expected to turn out in favor of homebuyers. The regulatory authority was previously granted the right to assess builders by keeping tabs on their project completion details also.

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