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06 Jul 2017

The Karnataka Government has finally passed the Real Estate Regulation Act here on Wednesday the 5th of July, 2017; an Act described as customer-centric which aims to protect homebuyers and encourage genuine private players in the fast-growing sector. The state cabinet passed the bill on Wednesday evening—though with a few changes—ending months of uncertainty that led several people to question if the Siddaramaiah-led Congress government was divesting the state of conceivable aids of RERA.

The Karnataka Government has stated that delays caused in the implementation of the RERA were on account of prolonged discussions and confusion. A gazette notification is still impending and is to be issued within the next 3-4 days.

Few of the factors from Real Estate Regulation Act that has caught the attention of countless developers and buyers are stated below –

•             The Government of Karnataka has decided that projects that are 60% realised or have executed 60% of the sale deed will be exempted from RERA rules formulated by the state OF Karnataka.

•             Karnataka RERA rules are on the lines of Gujarat and Rajasthan but the state has largely adopted the central law.

•             Even though Karnataka was one of the first states to notify the draft rules it has delayed the approval of final rules and also the setting up of the state-level regulatory authority.

There are also many issues which have not received concrete clarification until now, a few of the instances have been listed below –

•             What is the mechanism put in place to determine the level of completion of a project? This situation opens the project’s status to much interpretation and clarification.

•             Should the projects be 60% complete and sale deeds executed or, will a project be exempted if it satisfies either of the conditions?

•             Many allegations are being pointed at the government that loopholes will be evaluated by the developers to evade provisions of the Real Estate Regulation Act (RERA).

The rules have clarified few of the essential factors though – These will definitely cleanse the real estate sector of a huge chunk of fraudulent and cheap tactics -

•             All the approvals have to be acquired by the developer before starting registrations.

•             The Real Estate Regulatory Authority must be notified of the deadlines for projects even ongoing projects.

•             One the registration begins, 70% of the amount collected from a buyer must be used for the current ongoing project only.

•             Developers can take away only 10% in the name of advance from the buyers.

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