With a landscape of 3.2 million sq. km. and economic prospects arising out of its huge market demand and above 7% economic growth even in times of global slump makes its real estate sector as an extremely prospective arena to invest and draw dividends.
Govt. being the regulatory regime in this sector formulates legislations, rules and timely notifications governing the sector. If a quest to draw a montage of real estate laws in India is pursued, then it is a combinatorial of central acts, local civil and municipal legislations, policies governing the FDI in the sector and relevant procedural civil laws for registration, transference etc. Off lately a Real estate (Regulation and Development) Act, 2016 is legislated and notified to boost investment in the sector by infusing confidence amongst consumers and investors, which will be discussed later in the article.
From the standing point of view of a prospective investor willing to invest in the sector, figuring out his competency to invest in a pre-requisite before investing, which is governed by Indian Contract Act, 1872 section 11 which states that for an investor to be competent to contract that requires his age to be above 18, which is of sane mind as declared by any competent authority and also not barred to contract on incidence of any other regulation. Apart from this there stands a distinction between a resident and a non-resident wherein the latter is specifically governed by subsequent Foreign Exchange Management Act (FEMA) notifications issued by the mandated department of Govt. of India. Subsequently Section 105 of the Transfer of Property Act, 1882 consists within itself the desirable canons for executing a lease agreement and duration of such leave therein. Again there are various reasonable restrictions for non-resident and people of foreign origin guided by FEMA regulations.
Further, giving a title to the property on transference of interests in such immovable property is executed under the Registration Act 1908 in which all mortgage deeds, lease deeds and sale deeds are covered and mentions clearly the title of such aforementioned immovable property. Herein a transfer in interest of immovable property wherein consideration more than 100 Rs. is provided, has to be mandatorily registered in the registry of the Govt. In case of purchasing, leasing or mortgaging an immovable property under a society, a check is desirable under the Societies Registration Act 1860 for scrutiny.
In addition to that, successful transfer of such immovable property is achieved by realising the execution of a valid agreement whether lease or transfer between parties. Such agreement again has to go through the test of validity of an agreement under Section 10 and 25 of the Indian Contract Act 1872. Also execution of sale of such immovable property is governed by Section 54 of the Property Act, a lease agreement under Section 58 of the act and a mortgage agreement under Section 107 of the same act.
And lastly a stamp duty fixed by local stamp acts has to be paid to the registrar of land registry for successful execution of the said transaction of the transference of the interest of immovable property.
In addition to all of the legislations and procedures stated above certain local authority permissions, environmental clearances, required plan approval, safety permissions, sewage layout permissions, electricity fitting permissions and fire safety permission are required. Also during the construction and development of a real estate unit, the builder also needs to fully comply with the present local labour and minimum wages laws of the said state in which activity is carried on.
Off lately, the Govt. has legislated and notified the new Real Estate (Regulation and Development) Act 2016 which creates regulatory authority and also an appellate authority to redress the grievances of the consumers and investors which has been on surge off recently. Such projects with land area more than 500 sq. m or 8 apartment buildings has to essentially get themselves registered with such created authorities by the legislation. It also envisages protection of diversion of buyer money with a timely delivery of the promised construction by the builder which would be heavily penalised if defaulted with.
The above montage of real estate laws in India though carried on from the times of the imperial rule in India till 2016 Act, set to form a matrix of legislations which are comprehensive and covers almost every aspect of real estate transaction thereby setting a regulated, predictable and a normative regime for the transformation and growth of real estate sector in India which is an inevitable event in the decades to come.