MahaRERA Frames Procedure To Let Homebuyers Take Over Projects  

The Maharashtra real estate regulator released guidelines that will allow homebuyers to remove a developer in case of delays, strengthening the housing law that protects consumers against fraud.

An association of homebuyers with a consent of at least 51 percent of the members can come together to remove a builder from the project, according to the new standard operating procedures—BloombergQuint has reviewed a copy of the circular. The relief will be applicable only if apartment owners have not filed complaints before any other forums such as company law or debt recovery tribunals.

The members can also seek cancellation of the developer's registration under the Maharashtra Real Estate Regulation Act. The builder will be given 30 days to respond, and banks and any other parties with interest in the project will also receive a copy of the notice.

“This circular is framed by keeping in mind the moto of RERA—that is to get homebuyers their homes,” Vasant Prabhu, secretary at MahaRERA, told BloombergQuint. “There are at least 50-60 cases before MahaRERA where buyers have complained about project delays.”

RERA was rolled out last year to arm buyers against delays, malpractices and not providing what was promised. The new housing law also bars developers from transferring funds from one project to another, one of the major causes of delay.

Once the homebuyers decide to take over, MahaRERA also plans to help them in preparing a blue print for completing the stalled project. For that, the regulator may constitute a designated resolution panel comprising one member from the association and one from the consumer forum.

The blue print will review the current financial state, besides providing a road map with a timeline to complete the project. It has to be prepared and submitted to MahaRERA in four months.

After studying the blueprint, the regulator may:

• Allow the same developer to continue with certain conditions.
• Revoke the registration of the project.

The intention of MahaRERA is certainly laudable but much will depend on how far the delinquent builder will cooperate and share details of the project, Shirish Deshpande, chairman, Mumbai Grahak Panchayat, a consumer body, said. “Availability of funds is going to be a major issue.”

Deshpande said it will be a daunting task for the designated resolution panels to deal with such cases involving stakeholders with conflicting interests. “But it is worth experimenting. Onus now shifts on to homebuyers and old residents in rehab portion of redevelopment on how they salvage their sinking project.”