HOT TOPICS
SPOTLIGHT AGENCIES
Why is the link to "code of conduct" on the CREDAI site not functional?
Written By murali772 - 2 October, 2012
Bangalore urban development Citizen Reports accountability sustainable development Group Housing building regulations code of conduct CREDAI
The CREDAI, Bangalore (Confederation of Real Estate Developers’ Association of India) site is accessible here. Listed amongst various links on it is one on "code of conduct". But, if you click on it, it just takes you in circles. And, having tried it quite a few times in the past, each time without success, I am now firmly of the opinion that CREDAI has deliberately de-linked it. For all that, even as recently as on 26th Aug, “He (Karnataka CM) appreciated the CREDAI initiatives to come up with its own code of conduct and its enforcement on all its members”, vide The Hindu report, accessible here.
The code of conduct had indeed been written up once, it was put up on the net, and that's how I managed to fish it out. It's accessible here (it was called 'code of ethics'). It is a fairly well-worded document, though quite a few things more could be covered. Apparently, somewhere along however, CREDAI decided to abandon it. The reason for the same can be gleamed from a reading of this report in Sulekha blog, some excerpts from which read as below:
CREDAI national president Lalit Kumar Jain said that the expulsions were owing to the builders' stiff resistance to sign the organisation's ethical code of conduct, mandatory for all the 8,600 members spread across 105 cities in 22 states. As on date, apart from Chennai and Karnataka, Nasik is the only other city where all members of CREDAI are signatories to the code. "Based on requests from other state chapters, their members have been given time until June 30 to sign the document," said Jain.
The revolt, however, has left a dent on the organisation's ongoing mission to create greater transparency in the housing industry as the expelled members are promoters of mega projects including three integrated townships and an IT SEZ in Chennai and its outskirts. Those expelled will not be able to participate in Fairpro, the annual property fair organised by CREDAI, which is a big crowd puller in the city.
- - - A senior executive in the DLF expressed similar concerns. "Even without signing the CREDAI code of conduct, we have been following best practices in the industry". However, Suresh Kumar Jain, MD of Vijay Shanthi, has issues with CREDAI on the clauses in the ethical code. "Our panel of lawyers objected to signing the code of conduct," he said, but refused to elaborate further.
- - - "A code of conduct for the builder community was first mooted by the Chennai chapter of CREDAI two years ago. It gained momentum last year when CREDAI national decided to implement it across the country," said T Chitty Babu, CREDAI secretary. Once a builder signs the code of conduct, the customers enjoy the right to drag him to the grievance redressal forum of CREDAI in case of disputes, he said.
As for DLF's following of best practices, the following comment, which appeared in the ToI, and which can be accessed here, says it all.
The Competition Commission of India (CCI), the free trade regulator, has imposed a penalty of Rs 630 crore on real estate major DLF for misusing its dominant position in the market by drafting one-sided agreements with flat buyers in Belaire housing complex in Gurgaon.
- - - According to the flat owners, DLF violated building restriction norms. Although it had approval to build 19 floors, it constructed 29 floors and cut down the super area, common area and other facilities. Flat buyers also said that DLF announced the project and entered into agreements without getting the required clearances from the authorities. In its order issued on Friday, CCI said the agreement with buyers is not just one-sided but draconian. It has found that the penalty provision in case of delay in project as per buyers’ agreement is discriminatory and favoured the builder.
Now, a significant section of the city's population lives in multi-storied apartment complexes, and their number is multiplying by the day. But, while construction quality is generally satisfactory in most cases, with a large number of them, however, there are all kinds of problems, mostly arising out of non-conformity with the codes, originally drawn up by CREDAI itself, even as they all claim to be members of CREDAI. So, is one then to understand that CREDAI chose to dump the codes in order to retain the membership of the biggies like DLF, who seem to be out there only to exploit the loose regulatory regime, but at the cost of the buyer.
The question that arises then is doesn't CREDAI have a responsibility towards the buyer?
Muralidhar Rao
COMMENTS
sanjayv - 5 October, 2012 - 15:28
The article is interesting at several levels
I was surprised to see that Diamond District is registered as a company. Now KOFA (Karnataka Ownership Flats Act), section 10, the promoter (definition of promoter included builder, developer, promoter etc.) can form either a coop society, company or association under KAOA. So, stritly forming a company is not illegal.
BUT, note these following sections
3(h), Promoter will state in writing the precise nature of the organization of persons to be constituted and to which title is to be passed, and the terms and conditions governing such organization of persons who have taken or are to take flats.
Did the promoters do that?
AND
4. Promoter to enter into agreement of sale before taking advance, and agreement to be registered. & the rules section 5 says that the agreement of sale will contain "the precise nature of the organization to be constituted..."
Now, if the flst takers say that they were unaware that a company was going to be formed, were all the above steps followed?
Finally section 10 and 11 of the act says that the promoter has to form the company as soon as a minimum number of persons required has taken flats and that the promoter has to convey his right, title and interest in the building and the land to the company within the agreed period, or if no period is agreed, within 4 months as per rules.
Finally, where the article says "Moreover, since we’re not being given the legal rights of ownership, we end up paying property tax to BBMP twice the rate charged to owners as we are considered tenants"...
If the law has been followed, then the owners are indeed the owners. They are considered "tenants" and shareholders of the company, but the definition of tenants is different here under the law and not how we understand it.
Now, I am not clear here where the registration fees is to be paid. most probably at the time of registration of agrement of sale?
Naveen - 6 October, 2012 - 04:55
The buildings have also developed cracks - more about the Diamond district story here, here & here.
The buyers should have verified full details & legal implications before entering into agreements. They seem to have gone along with the developer's ideas either without sufficient information or knowingly to escape registration fees & annual taxes, but after BBMP's raids, they have realized & now want ownership with individual khatas.
murali772 - 6 October, 2012 - 11:17
The high court on Thursday asked the Credai, the apex body of organized real estate developers / builders across the country, to file an affidavit on the regulatory measures visà-vis construction in and around Bangalore.
“You must do your business and at the same time citizens must also have a peaceful life. Think over it. Discuss what you can do about it and file a better affidavit,” the division bench headed by Chief Justice Vikramajit Sen observed while adjourning the hearing to next week.
- - - The bench left it to the association to come up with acceptable, self-regulatory practices.
For the full report in the ToI, click here.
An organisation that dumped the 'code of conduct', that was there on its web-site earlier, is being asked to come up with "acceptable", self-regulatory practices. Can this organisation be expected to make it acceptable to the buyers? In which case, shouldn't they be asked to put out an "acceptable (to the buyer)" 'code of conduct out' on their web-site, first?
Diamond District - property tax etc.
sanjayv - 6 October, 2012 - 17:19
Thanks for the links Naveen. This is getting even more interesting. It says that Diamond District has not paid property tax since there is a single Khatha. if you have a company, the compnay is liable to pay property tax and collect from their shareholders, right? This definitely point to poor due dilligence by the residents as well.
Of course, we do not ereally know all the details, so this is all conjecture by us.
Secondly, the Bangalore mirror article among the links in Naveen's post says -> To tackle the problem of flat-owners being seen as share-holders, common in Bangalore’s apartments and housing co-operative societies, the state government brought a bill in 2001 barring the transfer of shares by the housing cooperative societies/apartments to its buyers, instead of giving actual ownership.
Anybody have any idea what this bill is? KOFA anyway requires the agreement of sale to be registered. Why not simply put a registration fee on the agreement of sale? There are so many other solutions...Many times I feel our government itslef complicates rules without understanding the laws on the books.
sanjayv - 2 October, 2012 - 07:05
Great question Murali. Poor behaviour by builders is rampant in Bengaluru. If CREDAI claims to play a self regulatory role (as is evident from that code of ethics), the CREDai has along way to go to build CREDibility.
Of late, every Tom, Dick and Harry builder seems to have a "CREDAI" tagline in his advert. Is this not misleading to the public?
I can share my own story. Couple of years back, when we were having a sipute with our builder, I tried contacting CREDAI on their phone line, after seeing that (a) our builder was a CREDAI member and (b) What we were arguing about with the builder was a clear violation of the CREDAI code of ethics, not to mention our agreement of sale. The lady who picked the line was a bit flummoxed by my request and very straightforward. She said some along the lines of " Sir, this is an organization of builder. If you are calling from Dubai or some place like that and would like to buy an apartment, we can help you". I kid you not! She fianlly asked me to send an email, which I did, but nothing happened. We even wrote to our builder and cited this CREDAI code of ethics to spur them to act differently.
Shortly after that the CREDAI webpage changed and the code of ethics disappeared off the CREDAI (Karnataka/Bangalore) page Now they have a swanky page, but the story is all still the same. The link to the code is a circular one. it brings you back to the same page.
I personally have very low regard for CREDAI at this point in time.
PRAJA.IN COMMENT GUIDELINES
Posting Guidelines apply for comments as well. No foul language, hate mongering or personal attacks. If criticizing third person or an authority, you must be fact based, as constructive as possible, and use gentle words. Avoid going off-topic no matter how nice your comment is. Moderators reserve the right to either edit or simply delete comments that don't meet these guidelines. If you are nice enough to realize you violated the guidelines, please save Moderators some time by editing and fixing yourself. Thanks!