Do changes in UP Apartment Act compromise homebuyers’ interests?
Recent amendments to the UP Apartment Act 2010 do away with the 24-month project completion deadline. Homebuyer approvals for changes in project will also not be requiredreal estate Updated: Sep 12, 2016 12:01 IST
At a time when state governments are framing rules for the Real Estate Regulatory Act (RERA), which calls for timely delivery of projects and stringent punishment for builders who violate housing rules, the UP Assembly last week cleared amendments to what will now be called the Uttar Pradesh Apartment (Promotion of Construction, Ownership and Maintenance) (Amendment) Act, 2015. A unique provision for completion of housing projects within 24 months has now been done away with.
Sources in the UP government housing department say that the amendments to the UP Apartment (Promotion of Construction, Ownership and Maintenance) Act 2010 were necessary as it had been made in a hurry. Now that RERA is binding on all states, an attempt has been made to ensure that there are no contradictions and both are supportive of each other.
Legal experts say that the earlier version of the Act – Uttar Pradesh Apartment (Promotion of Construction, Ownership and Maintenance) Act, 2010 – had stated that for an apartment “the completion certificate shall be obtained by promoter from prescribed authority within the period of two years from the date of sale agreement.” But under the amended Act, there is no control or restriction over the time a builder will now take to complete the project and the number of changes he can make.
“Instead of the specified 24-months, he can now take up to seven or eight years to complete the project. No assurance is required, everything is flexible,” says SK Pal, a Supreme Court lawyer. Usually, the life span of a building/sanction plan is three to five years. Under the amended Act, a builder can now take seven to eight years to complete a project. Here the government has diluted the Act and gone back to the Development Act, say legal experts. “This has probably been done to bail out builders who have delayed projects. The Apartment Act 2010 had a unique feature which was that the project had to be specifically completed within 24 months which made many to prefer Uttar Pradesh over other states in the NCR. They have now been given six additional years,” say experts.
The amended Act states that once a completion certificate has been received by the builder, he cannot make any changes to a project. The inference one can draw from this is that a builder can make changes in the original project plan till he decides to apply for a completion certificate. “What this means is that in Uttar Pradesh there will be no sanctity for the original plan and that is a dangerous thing for buyers’ confidence,” says Pal.
“This is contrary to the basic civil jurisprudence that says that no changes can be made without consent having civil consequences. Now the builder can change the layout, add new towers/apartments till he obtains a completion certificate,” he adds.
The amended Act replaces the word ‘intending purchaser’ with the word ‘allottee’. In place of the written agreement, it speaks of the allotment letter as being enough to establish the rights of the homebuyer. That is a positive move as it will help nullify the delay in signing the agreement to sale by developers, say real estate experts.
The amended Act also does away with the consent provision wherein permission of the homebuyers was mandatory to bring about any changes to the project. Changes can now be brought about by obtaining the permission of the sanctioning authority. “Provided that the promoter shall not make any alterations in the plans, specifications and other particulars without (the Act has deleted the previous consent of the intending purchaser, project architect, project engineer and) obtaining the required permission of the prescribed sanctioning authority,” says the new Act.
The amended Act also states that the promoter cannot make any alterations to the buildings and common areas and facilities after the builder has received the completion certificate. The change here is important. Under the earlier version, the city authority was bound to approach the residents’ welfare association for the consent of homebuyers in case the builder intended to make changes in the project. Now that consent will no longer be necessary as no changes can be made after the completion certificate has been received.
These amendments have changed the collective intent of the law makers who passed the 2010 Act where the urgency was to get the housing projects completed in time bound manner without any changes in the original plan till possession. Now the intent is to allow maximum exploitation of the plot by the authority and developers without any hindrance from the buyers who invested their hard earned money for the house. But the violations committed between 2010 till 2016 will be difficult to avoid, say real estate experts.
The new Act also allows a builder to divide a project into phases and receive a partial completion certificate for different phases. “Now a builder can simply take a partial completion certificate and take a deed of declaration to the extent of that phase of the project and not the entire project. He can now simply file a deed of declaration for partial completion of the project and keep changing the remaining phases. A person who has bought an apartment in phase 1 will have no control over the remaining phases. Earlier, a homebuyer had a right over the entire project, which is not tenable,” says Pal.
The amended Act specifies the general duties of the builder to include communicating to the buyer (information on) the built-up and common areas of the apartment. “It does not specify the carpet area and that continues to be a lacunae and is contrary to the RERA norms,” say legal experts.