Is RERA having an overriding effect on state laws?

The Real Estate Regulatory and Authority (RERA), has always been praised as a progressive provision, but certain state laws are much wide in range.The Real Estate (Regulation and Development) Act, 2016 has received Presidential acceptance on March 25, 2016. It intends to bring more lucidity and security in the market for the customer of residential and commercial projects by introducing a sectoral regulatory mechanism. In any case of inconsistency, section 89 specifically gives it the overriding effect.

Mostly, real estate project are regulated by state government.  State Governments regulate real estate projects under their individual state town and country planning or apartment ownership legislation. Provisions of RERA are in the force since May 1, 2016.

In context to above, we have dissertated briefly the constitutional validity of RERA below. We have compared determined provisions of RERA with state legislation. We also have highlighted some faults in this new legislation for real estate.

 

Constitutional validity

Before being passed by the Parliament, The RERA became an eagerly awaited and hotly contested legislation. It is believed that this Act was legislative delude by the centre in the domain of states.

It is important to discuss that Entry 18 of list 2nd of the seventh schedule of Constitution of India gives the right to states to legislate over inter alia, land, rights in or over land and colonization.

By virtue of Entries 6 and 7 in list 3rd (concurrent list) of the Seventh Schedule of the Constitution dealing with contracts and the transfer of property, The RERA has been enacted by the Centre by the power vested in it. Article 254 of the Constitution specifically provides that central laws will be prevailing over state laws on the subjects in the concurrent list, and both Central Government and State government have the power to legislate on matters under the concurrent list.

According to the above, RERA put an overriding effect on contradictory state laws. The RERA also damages the Maharashtra Housing (Regulation and Development) Act (MHRDA), despite that MHRDA has received Presidential approbation instead of the approval of the Governor.

 

According to Article 254 (2) of the Constitutions tell that state laws under the concurrent list which have received presidential assent. However, the provision of this article gives the full power to centre to amend, alter or to revoke the particular state laws.

Comparison with state legislations

The RERA has been praised as a developmental legislation. It notices concerns; inter alia penalties to be imposed on the promoters, maintenance of licenses, inspection rights, disclosures and an agreement to sell. In the RERA it is required that 70 % of the amount received should be kept in a separate escrow account and draw downs from this account will be linked to the completion of construction.

On contrary to this, MHRDA said that all amount received for a project should be kept in a separate account.  According to MHRDA, the promoter is required to make a full revelation on all transaction from that account.

The state governments do not have the independence to rectify this requirement. To give the necessary acceleration to real estate markets in their individual states, it’s meant to be that, some space should have been given to state governments.

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