The new real estate bill includes provisions for awarding compensation and damages for failure to deliver housing projects by the agreed-upon completion date.
The bill submitted to Parliament on behalf of the government by Thoddoo MP Hassan Shiyan was the first law devised specifically for the real estate business.
According to the government, the purpose of the bill is to sustainably develop, strengthen and advance the real estate sector in the Maldives and to establish the legal framework for determining rules needed to facilitate conducting the business under a highly transparent and accountable system.
The bill states the responsibilities of promoters, developers and buyers in the real estate sector. In addition, it also includes monitoring and complaints mechanisms as well as rules for penalizing offenders.
The problems that the real estate bill aims to solve include protecting the rights of housing unit buyers and introducing rules for developers to use payments made by clients of real estate projects.
At present, buyers of units pay directly to developers, after which the use of the funds cannot be monitored. The solution proposed in the bill is to keep the funds in an escrow account.
Funds collected by the developers from unit owners would have to be kept in a separate escrow account. The developer could only withdraw the funds as needed at the time based on work progress and the stage of the project. Detailed rules on how the funds could be used would be specified in regulations to be enacted by the Construction Ministry after the bill becomes law.
Other responsibilities of developers include informing flat buyers of delays with an explanation of the reasons. Compensation would also have to be provided in accordance with regulations made under the law. The bill states that the regulations must specify rules for notification and calculation of compensation due to failure to complete flats on schedule as well as procedures to follow in cases where projects are delayed due to forces beyond the developer’s control.
In addition to compensation, flat buyers would also have the discretion to leave a project if the unit is not completed within the agreed-upon period. Such buyers would also have the right to recover the invested funds along with compensation and fines accumulated monthly due to delays from the developer.
Notably, once the bill is ratified, real estate projects that started before the law comes into force would also have to register. The law would also apply to projects that fail to register before a deadline set in the bill. Moreover, the owners of the units in the project would be entitled to all the rights granted by the new law.
The real estate law will come into force six months after it is gazetted. A further three months will be granted to publish regulations and guidelines required by the law. Despite the submission of the bill, the first reading to introduce the bill to Parliament has yet to take place.
