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India's real estate sector has seen significant growth in recent years witnessing large deals as well as investments. In conjunction, the reg- ulatory framework has also become even more stringent to maintain trans- parency in the system. This has led to numerous legal complexities and uncertainties, posing challenges for stakeholders. As Sudhir Mishra, Founder & Managing Partner, Trust Legal - Ad- vocates & Consultants, adds, “Legal aspects are crucial for the real estate sector to maintain fairness to all stake- holders and efficiency in the system. However, we frequently grapple with overlapping regulations and ambiguity.”
Further elaborating on the key challenges, the real estate sector is facing, Santosh Aggarwal,Executive Director & CFO, AlphaCorp, said, “Construction delays have become increasingly prevalent due to multiple factors. Although the IBC was introduced by the government, implementation issues persist among authorities. Despite project approv- als, authorities hesitate to obey or- ders, preferring their own whimsical regulations. The IBC's effectiveness is hindered, resulting in prolonged approval delays.”
Highlighting the importance of efficient implementation of RERA, Niraj Kumar, Partner, DSK Legal, said “The introduction of RERA has in- creased customer confidence in the real estate industry, as it enforces greater compliance and reliability among developers. This has led to a sense of responsibility within the sector, reducing the likelihood of defaults. However, issues may arise re- garding resolution plans approved by the CoC, as some agencies serve dual roles as landowners and vendors.”
Abhishek Awasthi, Senior Partner, AZB & Partners concurred, “The real estate sector can be categorized into pre-RERA and RERA periods, with corresponding data sets. RERA's im- plementation has greatly improved consumer protection and market stability, attracting credible market players. Many smaller operators have exited, while larger developers ac- quire and enhance struggling proj- ects. Despite 80% clarity, disputes between arbitration and RERA persist in areas like Maharashtra and Delhi.”
Regarding the dual nature of jurisdictions, such as consumer and arbitration, and their effects on both developers and consumers, Vaibhav Suri, Partner- Real Estate, Luthra & Luthra Law Offices, stated, “The long-standing dilemma for home buyers has been whether to opt for the Consumer Protection Act, RERA, or IBC. However, courts have largely clarified this by giving a harmonious interpretation of the various statutes.”
Siddharth Batra, Advo- cate-On-Record, Supreme Court of India, Managing Partner, Satram Dass B&Co, added, “The Supreme Court strongly advocates for consumer rights in property related cases, such as preventing builders from using le- gal arbitration provisions. Upholding overarching laws and safeguarding public interest is crucial while striving for prompt project completion to avoid disputes.”
Talking about the commercial real estate scenario, Supriya Chatterjee, Head North -Tenant Advisory Cushman & Wakefield, said, “In the office leasing sector, property con- sultant play a crucial role in creating confidence among the clients as well as the real estate developer ensuring a pragmatic approach from both ends. With significant commercial developments in areas like Gurgaon and Bangalore, the commercial real estate market has flourished only be- cause of the much more transparent regulations in existence now.”
LEGAL CHALLENGES & RESOLUTIONS
Informing on the challenges that both buyers and real estate compa- nies encounter, Santosh Aggarwal said, “Presently, numerous firms en- counter project maintenance and compliance obstacles. Builders fre- quently deal with licensing, testing, and other issue reports. Financial con- straints or unawareness may result in RWAs' inadequate management of necessary aspects. The responsibility for these matters falls on developers, raising questions about shifting it to RWAs or retaining it. Establishing dis- tinct guidelines will promote proper maintenance and decrease legal complexities in the future.”
Niraj Kumar agreed, that the laws are getting matured as we progress with primary focus on transferring ap- propriate responsibilities to respective stakeholders. “The developer holds the obligation to transfer the respon- sibilities to the Residents Welfare Association post project handover. A consistent approach should be implemented across India for setting up RWAs and determining the right interaction between developers and residents. There should be a standard procedure to ensure a smooth han- dover of maintenance to the RWA, including the legal requirement of transferring utilities. However, some- times RWAs are unprepared for this responsibility, resulting in develop- ers retaining maintenance duties. A more tailored legislative framework should be introduced for commercial and residential properties, aiming to reduce friction between RWAs and developers.”
Vaibhav Suri added about rental properties, “It should be noted that RERA does not typically cover rentals. However, a recent RERA authority ruling has extended its jurisdiction to include both rental and sale projects. Relying upon the provisions of law governing lease, the appellate tribu- nal arrived at a conclusion that lease transactions come within the purview of the RERA and the MahaRERA has the jurisdiction to entertain complaints relating to such transactions.”
Sudhir Mishra was of the view that perception has become a signifi- cant concern in as many buyers base their decisions on the reputations of developers and the online research. We are aware of increasing violations in cities like Mumbai and Amritsar, surpassing the once notorious NCR region. So, it is important to ensure that all legal formalities are followed meticulously for which engaging the services of a legal expert can provide valuable guidance and assistance throughout the process, safeguarding your rights and interests.”
Siddharth Batra agreed, “The Gu- rugram and Noida areas have expe- rienced impressive property growth. However, some real estate players have faced consequences following negative perceptions. Recent court decisions have tended to focus on punishing builders for delays, without considering defaults by homebuyers. This has created challenges for build- ers, who experience rising costs and rely on customer’s timely payments to complete projects. Furthermore, agencies like the Enforcement Direc- torate may overstep their boundaries in taking action against developers, which can exacerbate problems in the industry. To ensure success, devel- opers must adhere strictly to contract clauses, maintain timeliness, while navigating potential challenges from external forces.”
Supriya Chatterjee added, “I believe we should all approach the issue positively. Legal professionals, developers, and occupiers must collaborate in supporting sustainable development. For instance, many commercial buildings initially have green certifications but, their condi- tion often declines over time that in a sense breaches the lease agree- ment clauses. This would require the developer, occupiers and property management as well certification agencies working together.”
Abhishek Awasthi highlighting the importance of thorough research and planning concluded, “The real estate sector continues to evolve and attract interest, with valuations soar- ing and office space demand increas- ing. Regulators need to recognize the diverse needs of developers, investors, and customers, and ensure a smooth project journey. Approvals such as environment impact assessments should be pragmatic and reviewed on a case-by-case basis. Overall, fa- cilitating projects to reach completion.
IN ADDITION TO CODIFIED LAWS INDIA HAS DIVERSE LAWS RELATING TO DEVOLUTION, INHERITANCE, ETC AS PER DIFFERENT SECTS AS WELL AS VARIOUS JUDICIAL PRONOUNCEMENTS
ON MATTERS RELATING TO REAL ESTATE LAW, WHICH ACT AS JUDICIAL PRECEDENTS, COMPLICATING THE LEGAL ECOSYSTEM- SUDHIR MISHRA
REAL ESTATE BUYING INVOLVES NAVIGATING VARIOUS LEGAL CONSIDERATIONS, SUCH AS RERA, TRANSFER OF PROPERTY ACT, INDIAN CONTRACT ACT, REGISTRATION ACT, AND THE STAMP DUTY ACT, FOR A LEGALLY SOUND PROPERTY TRANSACTION- ABHISHEK AWASTHI
THE ONCE COMPLICATED LEASING PROCESS HAS BEEN SIMPLIFIED WITH DEVELOPERS RETAINING LEASING RIGHTS AND THE EMERGENCE OF CO- WORKING ENTERPRISE OPERATORS ACTING AS INTERMEDIARIES BETWEEN OCCUPIERS AND DEVELOPERS- SUPRIYA CHATTERJEE
THE SUPREME COURT HAS ESTABLISHED THAT IT IS A DOCTRINE OF ELECTION; THE DECISION RESTS WITH HOME BUYERS TO CHOOSE BETWEEN RERA, CONSUMER PROTECTION ACT,
OR IBC ACCORDING TO THEIR UNIQUE CIRCUMSTANCES AND REQUIREMENTS- VAIBHAV SURI
IT IS CRUCIAL TO RECOGNIZE THE POTENTIAL FOR NONCOMPLIANCE AND VULNERABILITIES IN BIDDING FOR ASSETS AND ENSURE THAT LEGALITIES ARE PROPERLY ADDRESSED TO AVOID COMPLICATIONS WITH AUTHORITIES SUCH AS NCLT- NIRAJ KUMAR
ALTHOUGH RERA HAS PROGRESSED, FURTHER IMPROVEMENTS ARE NEEDED TO ADDRESS BUILDERS' CHALLENGES AND CLARIFY RESPONSIBILITIES OF SUBSIDIARY ENTITIES- SIDDHARTH BATRA
RERA'S ENFORCEMENT REMAINS UNCLEAR, PARTICULARLY REGARDING MAINTENANCE RESPONSIBILITY TRANSFERS, POTENTIALLY AFFECTING CONSTRUCTION QUALITY AND MANAGEMENT OF THE PROJECT- SANTOSH AGGARWAL
ACTS THAT MATTER
Real Estate (Regulation and
Development) Act (RERA) 2016
The Transfer of Property Act, 1882
The Indian Contract Act, 1872
The Registration Act, 1908
The Stamp Duty Act
