The Maharashtra Real Estate Regulatory Authority (MahaRERA) has announced a set of standard operating procedures (SOPs) for homebuyers to recover compensation from property developers in case of orders over delay in delivery of homes or amenities.
For the first time, MahaRERA officials said that developers may face jail in case of continuous non-payment of compensation, and not furnishing details of their movable and immovable assets.
According to the SOPs, if homebuyers are not paid within 60 days of such an order by the regulator, they can file an application of non-compliance with the authority for the recovery of the amount with interest, or interest for delayed possession or compensation, depending on the case.
The authority will have four weeks to adjudicate on non-compliance concerns, and it it finds that the developer has not complied with the order, a "reasonable time" can be granted to the developer to honour the compensation order.
In case of non-compliance, the developer will be asked by MahaRERA to furnish records of their assets, investments, and bank balances, through an affidavit. The authority will also send a recovery warrant to the district collector to seize or attach the bank accounts and assets.
Finally, if the developer does not file the affidvit detailing their assets, the case can also be referred to the respective principal civil court, according to the SOP published by MahaRERA. As per the Code of Civil Procedure, defaulters in such matters can be imprisoned by the court for up to three months.
Property law experts said the new SOPs go some way in addressing concerns that state-level RERAs "lack teeth" to take action against errant developers, and they also ensure time-bound resolution for homebuyers.
"For homebuyers, this creates a clearer, time-bound, and enforceable mechanism; for developers, it introduces real consequences for non-payment, including asset attachment and heightened scrutiny. After years of criticism that RERA orders lacked teeth, the new SOP meaningfully strengthens enforcement and places compensation recovery at the centre of regulatory accountability," said Rishabh Gandhi, founder of Rishabh Gandhi and Advocates.
He added that with developers may be deterred from intentionally delaying payments as they face jail and thus personal liability.
Gandhi, however, said that the success of the SOPs will depend on the efficiency of its execution, with records under the existing mechanism, through recovery warrants from the district collectors' offices, being less-than-stellar in Maharashtra.
"True viability depends on administrative follow-through; historically, only around 31 percent of recovery warrants in the State were actually executed, reflecting systemic bottlenecks at the Collector level. The SOP provides a stronger framework than ever before, but its success will rest on how effectively the State machinery executes warrants, processes attachments and conducts auctions in a timely manner," Gandhi remarked.
Others added that the steps need to be streamlined, in order for the process to not be slow and complex, as is often the case in consumer courts.
"The need of the hour is to streamline these steps and expedite relief, because long, multi-layered execution defeats the purpose of a specialised real estate regulator. Otherwise, the enforcement process risks becoming as slow and complex as consumer forum recoveries," said Abhilash Pillai, partner, Cyril Amarchand Mangaldas.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
