Two years on, RERA still under construction

In 2014, Piyush and his brother Ankur (both names changed) had booked a flat in a multi-storey apartment complex that was being built by one of Bengaluru’s top builders, which has interests in both residential and commercial properties, under a buyback scheme. They had paid 99% of the cost through a mix of 24% own money and 75% bank loan. When the developer failed to deliver the flat by 2016, they asked for refund, which the builder rejected.

In November 2018, Piyush filed a complaint with the Real Estate Development and Regulatory Authority, Karnataka (RERA-K) for relief in the form of refund of his investment. After conducting hearings, RERA-K in March 2019 ordered for refund of the complainant’s investment as per Section 18 of the RERA Act. However, the developer filed an appeal in the Appellate Tribunal.

Piyush is among over 500 buyers affected in this project and more than 50 of them have registered complaints with the RERA. All the affected homebuyers have formed an association and are fighting for their rights.

While RERA-K, set up two years ago, has delivered the verdict in favour of Piyush, it has, however, not been able to ensure that the builder honours its verdict. There are provisions for either of the affected party to contest the verdict in Appellate Tribunal and later in the higher courts.

In Karnataka, more than 3,200 homebuyers have filed complaints with RERA Authority and half of them are still waiting for the verdict.

“RERA is just on papers and not useful for homebuyers. I have also filed a complaint with the police and consumer court and waiting for some relief,” Piyush says.

This is not an isolated case where homebuyers are struggling to get their properties delivered on time. There are hundreds of builders across the country who have defaulted on their promise of delivering homes in a stipulated time. The real estate development and regulatory authorities in a majority of the states including Karnataka have remained ineffective in providing relief to affected property buyers.

In the last two years of its existence, RERA-K has delivered 1,500 judgements in favour of buyers. Only 4-5 judgements have been recovered through the recovery process. There is a need for appointing an exclusive Recovery Officer under RERA-K, which is still under the consideration of the government of Karnataka. Despite many provisions for imposition of penalty, revocation of registration or even confiscation of the properties available in the RERA Act, none of these was strictly enforced against any builder, say activists.“Many complaints registered by buyers close to two years ago are yet to be heard. It is evident that RERA-K is not serious about implementing and enforcing the RERA Act, and is allowing the builders to complete the project and escape from RERA registration. New projects are being launched by erring promoters,” says M S Shankar, secretary, Forum for People’s Collective Efforts (FPCE), Karnataka.

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According to FPCE, there are many issues affecting the implementation of RERA rules in Karnataka. The government of Karnataka has not yet notified the draft agreement for sale. The format for the same should have been part of the RERA-K rules notified on July 10, 2017. There is an inordinate delay for over two years.

There are many lacunae in the draft sale agreement and the same has not been brought to the notice of the
RERA-K authority and the secretary of the housing department.

“The government of Karnataka notified the RERA Rules on July 10, 2017 without synchronising the required provisions of various real estate related Acts in the state with the provisions of the Central Act. This is the real hurdle faced in the implementation of Central RERA Act. Hence, revamping of the existing Karnataka RERA Rules and synchronising the required provisions of the state’s Act with the provisions of the Central Act should be the priority of the state government,” Shankar adds.

The Forum for People’s Collective Efforts (FPCE) has brought this to the notice of the state housing secretary and Chief Minister B S Yediyurappa recently and urged them to sort out the issues hindering the proper implementation of the RERA Act in Karnataka.

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As many as 1,069 projects, mostly considered ‘Ongoing Projects’, are categorised as projects under investigation. These projects are consistently shown in the RERA-K website, and so far, no stringent actions have been initiated. Earlier, some of these projects were classified as rejected projects. “RERA-K should find out a way to protect the homebuyers’ interests, who have already invested in these ongoing projects, by recommending suitable stringent actions as per prevalent Acts of Karnataka, including recommending criminal action. We are of opinion that these projects should be thoroughly investigated by handing over to CID,” Shankar says.

Most of the aggrieved homebuyers are from the salaried and middle-income group who are already in debts and they must earn their livelihood and pay the EMI. It is inconvenient for people to attend hearings repeatedly. Hence, there should not be any adjournment. If the buyer is present, the person must be heard on the same day. RERA-K should extend legal help to draft and file complaints, as buyers cannot afford to hire an advocate, he says.

The RERA Authority in Karnataka, however, is ill-equipped to deal with the growing number of complaints. As many as 3,269 complaints have been filed with the RERA-K and it has so far resolved 1,668 complaints. As on date, it has admitted 2,948 projects out of 3,534 applications for registration and rejected 172. As many as 414 applications are in process.

Short-staffed

Currently, the Authority faces a severe shortage of qualified technical staff to deal with various types of cases that includes inspection of projects where RERA registration is done. Out of a sanctioned 80 posts, the RERA-K Authority has just about 40 officials. Many of them are posted on deputation from other departments.

Admitting that the RERA-K is facing a severe dearth of qualified officials, M R Kamble, Chairman, RERA-K said, “We are in the process of recruiting the required number of officials. I have written to the Department of Housing to fast-track the process. Some of the officials who are on deputation are not ready to serve here for long.”

The RERA-K needs to recruit on a permanent basis a registrar, chartered accountants, civil engineers, architects, personal assistants and stenographers. Currently, it is hiring these professionals on a temporary basis.

Even the Appellate Tribunal is presently operating in the premises of Karnataka Appellate Tribunal due to shortage of experienced judicial manpower.

RERA-K is also in need of technical officers’ to make on-spot inspections of real estate projects registered with the RERA. Many ongoing projects whose registration has expired and those applied for “the extended date for completion” of the projects have to be physically inspected. The decision on renewal of Registration of Projects which is not completed as per the dates committed by the builders must be taken by RERA authorities based on the physical spot inspection report.

There are many complaints from homebuyers on unregistered projects in which they have paid money to builders. Such projects must also be inspected by the technical officers.

Technical experts

It is very much necessary for the government of Karnataka to depute enough technical officers to complete this task in a time-bound manner and clear the piled-up cases as currently RERA-K is not equipped with sufficient humanpower to undertake this task. This system is being followed in Tamil Nadu.

“We are empowered to appoint consultants wherever required. We are hiring CAs to look into escrow account details of builders. We are also outsourcing town planners, engineers, FDAs and SDAs on deputation from other departments. We have written to the government for appointing permanent staff,” Kamble says.

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RERA Act is a new law and it will evolve gradually. It will crystallise itself over a period of time, he adds.

The RERA Act enables the authorities and adjudicating officers and tribunal to parallelly initiate actions on those who do not comply with the orders under RERA Section 63 and 64 by imposing a penalty of up to 5% of the project cost on whoever contravenes the orders of RERA Authority. This provision is yet to be exercised by
RERA-K.

Currently, there are over 1,000 unregistered projects with RERA-K Authority and many of the project developers are absconding or not receiving or taking cognisance of its notices. The FPCE has suggested that RERA-K seek the support of police force to help investigate and serve notices. “It is our humble appeal to equip RERA-K with sufficient police force to suitably handle these project developers and complaints to bring justice to all those homebuyers of Karnataka who have already invested in these projects,” Shankar said in an appeal to Karnataka chief minister.

The success of RERA implementation depends on the cooperation extended by various departments of the government of Karnataka. The RERA authority needs to roar like a lion on defaulted project developers, whereas it is observed that RERA-K is still a “toothless tiger”, and builders have no fear or care for RERA enactment.