Apartment owners and prospective buyers are up in arms against the State government decision to keep in abeyance the proposed Kerala Apartments Regulation (Development and Maintenance) Act, which was predominantly aimed at reining in unscrupulous realtors.

Minister for Urban Affairs Manjalamkuzhi Ali said the Cabinet decided to keep the proposed legislation pending considering that the Centre had already readied a piece of legislation with similar objectives.

The Real Estate (Regulation and Development) Bill has been approved by the Union Cabinet and is pending Parliament approval. The Bill, among other things, proposes to create a Real Estate Regulatory Authority and an Appellate Tribunal to protect consumer interests.

“There was no need for a State-specific Act in view of the Central legislation that empowered States to form regulatory authority and frame necessary rules,” Law Department sources said.

However, apartment owners would have none of it.

“The government has succumbed to the real estate lobby. We had met the Chief Minister and Ministers for urban affairs and housing several times and they had assured us that the State legislation would be enacted,” said C.S. Vinod, president of Apartment Owners' Association of Kerala.

The proposed legislation would have stopped several irregularities in this field, including fleecing by some builders merely on the strength of some colourful brochures.

Another organisation of flat owners, Apartment Owners' Apex Association, has decided to formulate protest programmes against the State government's decision.

“The government move is aimed at condoning the irregularities committed by the builders. There have been several instances like the Apple-A-Day property fraud in which money was collected from the prospective investors without even buying land for the proposed project,” said V.K. Sankarankutty, president of the Association.

John Thomas, president of the Kochi chapter of CREDAI (Confederation of Real Estate Developer's Association of India), refuted allegations that builders threw spanner in the move to bring a State legislation.

“It is in the interest of the builders to have a well-defined regulatory authority since it will help weed out unscrupulous elements and uphold the reputation of credible players among us. The authority should not cover builders alone, which seem to be the case now, but all stakeholders from customers to banks that give loans, to government agencies,” he said.

Jacob Mathew Manalil, High Court lawyer who has been representing victims of apartment scams, said unscrupulous builders were taking buyers for a ride by taking advance payment even before construction had begun or land bought. “Many builders are in effect conducting illegal money chain business of sorts by investing money collected from people for one project into another and funds from that into a third one and so on. But in States like Maharashtra, builders are permitted to collect fund only for the work completed and the fund is moved into a dedicated account to avoid diversion,” he said.

The Central Bill proposes mandatory deposit by promoters to cover the construction cost of the project in a separate bank account to ensure timely completion and prevent fund diversion. It prohibits the builder/developer from collecting more than 10 per cent as advance from the buyers without a written agreement and even that should be completely refunded in the event of any delay.

The bill also proposes civil liability by imposing up to 10 per cent of the project cost on builder in case of default or violation of the provisions of the bill and criminal liability entailing imprisonment up to 3 years.

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