INTRODUCING MODEL AGREEMENT IN REAL ESTATE: PRACTICAL OR NOT?
Over 5.5 lakh cases are pending across various consumer courts in the country, with over 54,000 cases specific to the housing sector alone. Real estate has always been a dynamic and complex industry. The process of buying a home is not as straightforward as it seems, with many factors influencing the decision-making process. In recent years, the government and industry bodies have taken steps to bring transparency and standardization to the real estate sector, with the introduction of RERA (Real Estate Regulation and Development Act) being a prime example. However, the practicality of introducing a model agreement for real estate transactions has been a topic of debate. While the intention behind introducing a model agreement is noble - to bring transparency, and professionalism, and safeguard the interests of customers - it may not be practical. Here is why: Real estate transactions are unique, and each transaction has very different dynamics. The entire structure of the transaction, the way the land has exchanged hands, and the proposed development will differ every single time. Based on that, the entire legal transcription changes, making it difficult to have a one-size-fits-all model agreement. In fact, just in Pune, there are at least 3 entities that govern the land regulations like the Pune Municipal Authorities (PMC/PCMC), The PMRDA, and in some cases the Gram Panchayat. In many cases, the land may come under the Gram Panchayat or PMRDA regions at the time of purchase but may get included in the PMC when it is being proposed for development. Even the development itself has so many different types. Redevelopment, regular development, plotting, JVs etc. all have different implications, and even parking regulations vary from city to city. No transaction is exactly the same as any other and every time the legal framework is customized to suit a particular transaction, keeping in mind the then regulating guidelines. There are too many factors that are dynamic and are likely to keep evolving from time to time. On the other hand, the home-buying process is not only complex but also influenced by various factors. Location, resale value, home features, interest rates, and size of the apartment are just a few of the factors that influence the decision-making process. In 2023, we can expect to see a few key factors that will have a significant impact on home buyers. Another current trend in recent years has been work-from-home, which has gained momentum due to the pandemic. As more and more people opt for remote work, the need for larger homes with designated office spaces has increased. This trend is likely to continue in 2023 and beyond. In conclusion, we feel that real estate development and home buying are both very complex and dynamic activities, and implementing a Model Agreement Draft may create more chaos than bring simplicity and sanity. While the intention behind introducing the model agreement in the real estate sector is idealistic, it may not be practical. Every real estate transaction is unique as well as varies in scale making it difficult to have a one-size-fits-all approach. However, it's a benign thought and a positive idea but will need to be mulled over and have a lot of dynamic attributes taken into deep consideration, and buy-in from various State and City level land regulating authorities will be required. That onboarding may be a long drawn process in itself.
Tags : model agreement real estate Sachin Bhandari Executive Director and CEO VTP Realty