Errant builders can escape jail with fine

NEW DELHI: After making a bold provision in the Real Estate Regulation Act to jail errant builders and real estate agents, the draft rules for implementation of this law made public on Friday seemed to provide an escape clause to the jittery sector.
It proposes a “compounding fine” to escape imprisonment. By paying 10 per cent of the estimated cost of the project, builders can avoid going to jail.Similarly, property dealers can also escape imprisonment by paying 10 per cent of the plot’s or apartment’s cost. According to the draft rules, a builder can pay 10 per cent of the estimated cost of the plot, apartment or building to avoid going to the jail.
“On payment of the sum of money, any person in custody in connection with the offence shall be set at liberty and no proceedings shall be instituted or continued against such person in any court,” the proposed rules said. Though the draft rules signal a big relief to builders and property dealers,they have to comply with the orders of the regulator or appellate tribunal within 30 days.
To bring parity in case of delay in payment by the promoter and buyer, it is proposed that the interest rate will be the State Bank of India’s prime lending rate plus 2 per cent. The act provides for imprisonment of up to three years for builders who do not follow the rules, and up to one year for real estate agents and buyers and/ or monetary penalties if they violate orders of appellate tribunals.
The draft rules specify promoters can’t discriminate against anyone in the allotment of apartment, plot or building on any ground. A real estate regulatory authority will also have to be set up in states and UTs so that buyers can have access to information relating to promoters and projects.