Regulatory Authority for real estate or corruption?

By Cleofato A Coutinho
15 February 2016 19:52 IST

There is no doubt that the real estate sector has been a driving force to the country’s economy and has contributed to the GDP in a big way. This sector is also seen as an area for parking of ill-gotten wealth in the country’s parallel economy. But, definite incentives are given to the housing sector through taxation route and credit facilities. The housing sector has been unregulated with the fly-by-night operators playing havoc with the hard earned and borrowed money of those in hunt for independent shelter.

In this tiny Goa, lakhs of real estate transactions are built around private contracts between the real estate developers and the apartment/villa purchasers, which the purchasers always found difficult to enforce due to there being no regulatory laws in place.  In most cases land titles have not been transferred to the purchasers or to the Housing societies. In very many cases housing societies are not even formed leading to complete misery of the purchasers who are left to fend for themselves in the matter of title and services. In some cases, the builders wish to take advantage of the additional FAR at a later date.

Somehow laws in that area fail to see that light of the day in most of the states due to the vested interest ruling the roost. Some states have laws in place but they have not been effective.  From the year 2013 onwards a conscious attempt was made by the then UPA government by introducing the Real Estate Regulation and Development Bill 2013. In view of strong opposition, the NDA government has now approved various amendments to the contentious real estate bill to be introduced in the next session.

The highlights being (a) Introducing provision for depositing 70% of the project cost by the builders into an escrow account;   (b) Punishment for violation of the proposed law, the proposed amendments provide for imprisonment up to 3 years for the builders in case of the violation of the proposed law and up to one year in case of real estate agents and buyers (c) Equal amount of rate of interest to be paid by the builders and the buyers in case of default or delays and (d) Compulsory registration of transactions with Real Estate Regulatory Authority.  

The other ancillary issues include disclosure of all registered projects, details of the promoters, layout plan, land status, approvals, agreements details of contractors, architect and structural engineers and registration of real estate projects and real estate agents with the regulatory authority.

The provision for depositing 70% of the monies into the escrow account is brought in as a check against uncertainties created by the fly-by-night operators. The punishment provision shall create an atmosphere of fear but may instil some amount of discipline and is a desirable step.


The heart and soul of the bill is the establishment of Real Estate Regulatory Authority for oversight of real estate transactions and as a nodal agency to coordinate efforts regarding development of the real estate sector. Another highlight is establishment of fast track dispute settlement mechanism through adjudicating officers and Appellate Tribunals to hear appeals.

The creation of fast track dispute resolution and the appellate tribunal is certainly a welcome move if the adjudication and the appellate Tribunal are kept in the hands of dedicated courts manned by sitting District   and High Court judges. The government has all already brought fast track commercial courts law. The real estate disputes can certainly go to such commercial courts without the burden of creating more courts. Whoever wishes to go to consumer courts could avail of those fora also.

But the establishment of the Real Estate Authority which is the pivot on which the law revolves is certainly a retrograde move. There is hardly any doubt that the real estate prices have escalated due to the number of authorities that have to grant clearances and approvals. At every level without adequate amount of speed money nothing moves. (The then CM Manohar Parrikar had openly attacked the TCP under him on that count).  

Currently in the state of Goa there are as many as 12 authorities, including TCP/PDA, Panchayat/Municipalities, GSPCB, Dy. Collector for conversion; NOCs from fire Department, Health, Water, Electricity, sewerage department and in case the project is above 20,000 sq. mts. EC from MOEF. Further for conversion the file travels from Mamlatdar, forest, survey and TCP departments. At each level what goes on under the table as anybody’s guess. The real estate industry is known to get juiced by bureaucrats and politicians. The industry passes the burden on the purchaser. Real Estate Regulatory Authority shall only be yet another hot bed of corruption if one goes by the functioning of authority in that sector. The establishment of the Real Estate Authority regulating shall send the prices north wards. There can be no two opinions on that.   

The avowed objective of not adding another stage of procuring of approvals is being defeated by the proposed Real Estate Regulatory Authority. Such an authority is welcome if it is a single window clearance authority whose responsibility would be to obtain clearances and approvals from other statutory authorities.  Though the proposed law is shown as an attempt to protect the common man with the   objective of the government   to provide housing for all by 2020 through enhanced private participation, to my mind it is neither in the interest of industry nor the common man.

 Many real estate transactions are registered with the civil registration authorities. Such registration ought to be compulsory and receiving consideration under unregistered transactions ought to be made penal. The rights and obligation under the proposed law and the transactions between the parties can certainly be left to be decided by the fast track dispute resolution officers and the appellate tribunal.     The offences under the law can always be tried by regular courts.

 The solution lies in disciplining the sector through penal measures and dedicated courts; not more authorities.  

Disclaimer: Views expressed above are the author's own.

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Cleofato A Coutinho

Cleofato Almeida Coutinho is a senior lawyer and one of the constitutional expert in Goa. A member of Law Commission of Goa, he also teaches at Kare College of Law in Madgao.

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Congratulations Adv.Cleofato for your excellent description of the real estate situation in Goa particularly. Lots of black money have been dumped into the real estate market in Goa since many outsiders allegedly come to Goa with suitcases filled with cash and they buy apartments and villas and then leave them closed and return to their own states.

In other cases builders have sold apartments to original purchasers with "Special Benefits" like private parking, commercial units, etc. and later when others buy apartments in the same Apartments Association (AA) they find such a lot of illegal practices by the original purchasers, but the new buyers cannot do much (other than going to Court) since the builder has not transferred the land rights to form a society.


So, the original purchasers control the Maintenance ("Managing" Committee) and are not willing to let others take over since all the financial records and banking information are kept secret and they are reluctant to divulge critical information to all the members. Most of the members of the AA are "absentee landlords" and therefore are not living in the AA to actually see what is happening. So the "Managing" Committee is allegedly getting away with several illegal practices.

The Registrar of Cooperative Housing Society is well aware of what is happening but cannot interfere unless the Apartments Association (AA) forms a Society and the AA is not fully committed to forming a Society since all the alleged illegal and underhand activities would come to light.

Mind you in this AA there are doctors, accountants, college professor, company secretary, ex police officer, teachers, etc. and many of these professionals are on the "Managing" Committee and are allegedly controlling the illegal practices by not paying maintenance fees for the commercial units and reserved parking that have been "given to them by the builder". Further, they have created their own version of charging all members a uniform maintenance fee even though some own two bedroom flats and others own three bedroom flats with terraces, parking, etc. They have even been harassing a senior citizen with blocking his thoroughfare with paving stones and further lodged a false police complaint just to harass him since they are aware that he suffers from heart issues, etc.

This is the sorry state of affairs of the housing situation in Goa even when there are professionals like doctors, college professor, accountants, company secretary, etc. controlling the "Managing" Committee, etc. Can you imagine what could be happening in the rest of Goa??

- Tino Sequeira, Panaji, Goa | 18 th February 2016 21:20


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