Kerala has become the only State other than Maharashtra to have a law intended to prevent fraudulent practices in the real estate sector.
The State Cabinet approved the Kerala Real Estate (Development and Regulation) Ordinance on Wednesday and forwarded the same to the Governor.
Chief Minister Oommen Chandy told newspersons here that Ordinance mandates the constitution of a Real Estate Regulatory Authority and a Real Estate Appellate Tribunal.
“The Ordinance has been cleared by the cabinet and through this we expect to prevent frauds taking place in the real estate sector. The two regulatory structures will look into all aspects of construction, sale, and maintenance of new flats, villas and commercial buildings,” Chandy said.
The Ordinance will aim at legalising the construction, sale, maintenance, and transfer of buildings constructed for domestic, commercial, office, and business purposes.
Meanwhile, Minister for Urban Affairs Manjalamkuzhi Ali said the ordinance was designed to promote investments in the real estate sector and ensure transparency in operations.
Spate of complaints
The legislative effort comes in the context of a spate of complaints by investors who have been duped after putting in money to buy flats and villas promoted by real estate companies.
The most affected include non-residents who are far removed from the scene of construction, Ali said.
“The Real Estate Appellate Tribunal will be a quasi-judicial body and would have enormous powers to ensure that land deals are fair,” he said.
Everything from the time advertisements appear from real estate developers, the period of construction extending well after the property is handed over, will be under scrutiny. Those who do not complete their project on time will be fined, Ali said.
The public can move the regulatory authority in case of delay in construction, use of substandard material, or violation of rules. Buildings will have to be registered with the authority before sale.
The authority will also have the power to cancel the registration if the builder is found to have violated rules or delayed construction.
The ordinance also requires that at least 70 per cent of the advance amount collected from buyers has to be deposited in a scheduled bank.
Only 10 per cent of the sale price can be collected as advance before registration, the ordinance stipulates.
The builder will be liable to return the advance with interest if the building is not handed over in time. He will also have to rectify faults in construction for a period of up to two years after transfer of ownership.
Real estate agents will be required to register themselves with the authority. The ordinance has provisions to make the constitution of an owners association mandatory after transfer of ownership.
But buildings on plots less than 25 cents and those with less than 12 apartments will not come under the provisions of the ordinance.