Mahbubuddin Ahmad

One of the meanings of the word "real" is stated in Oxford Advanced Learner's Dictionary as "having all the important qualities that it should have to deserve to be called what it is called". "Real Estate" is described in the same dictionary as "property in the form of land or building". From what I have learnt living in a number of countries of the world I can quite confidently say that "real estate" is really "real" in all its implications. Life without 'real estate' is really miserable. To make your life comfortable you need a piece of 'real estate' as your place of abode and your address. The real property that one owns is one's real possession.

Ever since man began to think of living an organized, comfortable, happy and meaningful life, the idea of a home of his own has always been thought to be indispensable. An independent and exclusive home means an opportunity for an individual to have his own establishment for him and the members of his family to live in, grow up and exert themselves in every way with full physical and mental freedom. When after a day's hustle and bustle you go back home your body and mind craves for rest and comfort and a good night's sleep to wake up relaxed to begin a new day.

The house that you live in is not only a place which provides you shelter, it is also your much-needed source of strength, both mental and otherwise. In times of acute financial crisis, the real property that you have serves as your ultimate security. It is a common economic reality all over the world that the landed properties keep on appreciating in value. This explains why banks and financial institutions, when extending credit facilities to their clients, place so much importance on landed properties as collateral securities. Secondly, immovable properties are of permanent existence unless a severe quake or tsunami brings an end to them.

Having a home of one's own adds to one's social standing in modern thinking and it goes beyond that social evaluation. Having a place of abode, be it a palace or a thatched cottage, fills our hearts with a deep pride - a sense of fulfillment. We develop a deep sense of belonging and attachment to our homes by living there over the years. So, the singer has sung "Country Road, Take me Home, To the place, I belong". Feelings for our dear homes make all of us nostalgic and a home-coming is a great occasion for any sensitive person coming back home after a long absence. The home that one lives in is one's address and one's identity. It does not matter whether your home is gorgeous or humble. I am reminded of the followings lines I read when I was a young boy :

The idea of having one's own home now seems a far cry in the capital City of Dhaka. Accommodating more than a crore of people within the capital city is no easy task. People living in the suburbs of the city have to get up early in the morning and travel in packed public transports to go to the Government Offices and commercial centres. The early eighties saw the beginning of a hitherto unknown phenomenon in the private housing sector : Construction of large number of flats in a multi-storied building on a not very large plot of land. In a short span of time, a good number of real estate developer organizations cropped up. Multi-storied apartment complexes, one after another sprang up in various parts of Dhaka. The real estate developer companies have multiplied many times and with the gradual increase of the number of multi-storied residential and commercial buildings, the city of Dhaka is changing its face. A few years ago the Rules of Building Construction were changed to allow high rise buildings (and some extending upto the 14th or the 15th floor) to be constructed in the City of Dhaka. The decision to allow the construction of high-rise buildings was in part due to realisation that the vertical extension of Dhaka in the present circumstances is more advisable than horizontal expansion.
Real estate development in the form it is being carried on in Dhaka has also begun in a significant manner in Chittagong and other major cities of the country. The typical real estate development system in the country is a tripartite situation involving the land owner offering his land to a developer company for its development into multi-storied or high rise residential or commercial complex at the responsibility and expenses of the developer. Under the contractual arrangement made between the land owner and the developer, they share the land and the built-up spaces. After the completion of the construction of a building, the developer sells its share of the built-up spaces (i.e. apartments or large commercial spaces) along with the proportionate share of the land to buyers.
Until the year 2008 there was no separate piece of legislation concerning the real estate development sector. The Real Estate Development and Management Ordinance 2008 was promulgated by the last caretaker government of the country. After the present government came to power the Ordinance was repealed and the Real Estate Development and Management Act 2010 was enacted by the parliament.
Generally speaking the Act has fulfilled a long-standing necessity of a separate piece of legislation to bring real estate development, management and transfers under legal control. The Act is not exhaustive enough to deal with all conceivable situations that may arise in dealings between the owner and the developer and the developer and the buyer. However, it is heartening to note that a beginning has been made.
The Real Estate Development and Management Act 2010 is an embodiment of the rights and obligations of the three sections of people who are the land owners, the developers and the purchasers of real estate. This write-up is in the nature of commentary on the provisions of the Act along with some suggestions for amendments. It is felt that it would be convenient to proceed from the beginning of the Act through the various sections to the end.

Section 2 is the definition section. According to Section 2(2) Real Estate means residential or institutional or commercial plot or apartment or flat or institutional or mixed floor space in the nature of immovable landed properties for development, management or sale or purchase. 'Common Space' is defined under section 2 subsection(2) as Spaces attached to real estate e.g. Lift, lobby, landing, lift machine room generator sub-station, caretaker room, guard room, spaces used for common facilities. 'Roof top' and 'Drive ways' should have been specifically mentioned under 'Common Space'. Subsection(4) defines a buyer of real estate as a person who has entered into a contract with a developer to buy real estate. A buyer entering into a contract with a land owner for the purpose does not seem to be covered by the definition of 'Buyer', although it is quite common that people buy real estate from land owners who share built-up spaces with developers. Although under subsection 2 of section 7 an owner of a plot of land, who without being a developer in the business or legal sense develops his land into real estate in the sense it is defined in the Act and he develops the land for the purpose of selling real estate to a buyer or buyers, he is deemed to be a developer within the meaning of the Act. In the event the provisions of the Act shall apply to him.
A little reflection will show that two cases do not fall within the scope of the definition of 'a developer' as defined in the Act. First, a land owner who develops his land into real estate through a developer will not be treated as a developer for the purpose of the Act when he sells one or more apartments to a buyer or buyers. Second, there may be a case where a land owner develops his land into an apartment or commercial complex for the purpose of his own use and subsequently decides to sell one or more of the same. In such situation he cannot be said to have had any business intention at the time he engaged in the development of his land.
Section 6 subsection(1) uses, the expression 'Aby‡gvw`Z bK&kv' and subsections (2), (3) and (4) speak of 'cÖKí Aby‡gv`b'. Reading these two expressions in the same section an ordinary person would be confused not knowing whether or not the two expressions mean the same. What is 'cÖKí Aby‡gv`b' should have been defined under the definition section. If 'cÖKí Aby‡gv`b' is different from approving a plan there should have been separate provisions in the Act about 'cÖKí Aby‡gv`b'.
Subsection 4 of section 6 requires a developer to produce deeds and documents relating to the title of an owner of land before a buyer for his inspection. But there is no provision in 2010 Act laying down the requirement on the part of the land owner to furnish such deeds and documents to the developer. Experience shows that in many cases land owners do not supply a complete set of deeds and documents relating to their title in respect of their land. The constraint of the non-availability of good plots often forces the developers to sign contracts with the land owners who are reluctant to furnish all the deeds and documents to the developers. Ignorance of any vital information concerning the title to the land may lead to the making of a bad bargain by a developer. Moreover, if a developer is not furnished with all relevant deeds and documents, how would he discharge his obligation to produce documents in respect of the land.
Section 8 of the Real Estate Development and Management Act 2010 provides some terms and conditions of the transfer of real estate. The section does not provide many terms, although it states that deeds of agreement made between parties connected with real estate development shall contain detailed terms and conditions. Subsection 4 says that no developer shall receive any money in contravention of the terms of a contract. A proviso, however, says that if two parties to a deed agree on an arrangement made between them for the provision of any better amenities and a supplementary deed of contract is executed between them the prohibition against receiving further payments shall not apply. It is worth noting that the Act makes no provision prohibiting the land owner from making a demand for an additional sum of money i.e. beyond the sum of money agreed to be paid by a developer as part of consideration under the contract.
Section 9 of the 2010 Act is about the execution and registration of the deed of transfer. It lays down that the Developer shall deliver possession of real estate, execute and register a deed of transfer in favour of the buyer within three months of the payment in full of the price of real estate. Real life situation sometimes makes it difficult for the developer to go by this statutory requirement. As for instance receiving transfer permission from an authority may take unusually long time and prevent the developer to perform his obligation within the limited period of three months. The section fails to make it a statutory duty for the land owner to execute and register a power of attorney in accordance with the terms of the contract in favour of the developer. This leaves a scope for the land owner to open a matter settled by the terms of contract and demand further advantages, financial or otherwise. In this regard section 10 is relevant. Section 10 relates to the contract that a land owner and a developer are required to execute between them. It does not lay down many terms and conditions that such a contract should contain. Considering the nature and value of real estate it appears to be highly desirable that the agreements between land owners and developers should be made compulsorily registrable. 
Section 12 of the 2010 Act is about the payment of the price of real estate. In the section both the expressions "prospectus" and "Letter of Allotment" are mentioned. Since section 8 subsection (2) speaks of "contract" setting out detailed terms and conditions between the land owner and the developer or the developer and the purchaser, the legal implication appears to be that there must be a deed of contract between the parties. As far as the development of land into residential or commercial complex by private organizations is concerned, it appears to be an invariable practice that legally effective contracts are made between parties through the execution of deeds of contract. Even though a prospectus and/or a letter of allotment may be issued by a developer a prospectus is not treated as a legal document for the insufficiency of terms and conditions and a letter of allotment, although treated as a legal document, is normally followed by the execution of a deed of agreement setting out the terms and conditions in details. Having regard to this, it is stated that payment of the price of real estate is normally made in accordance with the payment schedule set out in the deed of agreement.
Subsection 2 of section 12 of the Act prohibits the receipt of any interest by the developer from the purchaser until the infrastructural development and utility systems are completely done so that any real estate is capable of being transferred to a buyer. The prohibition appears to be in conflict with subsection 4 which speaks of the payment of interest along with any installment. A default in the payment of an installment may occur at any time during the period of construction under a real estate development project.
Section 14 relates to the payment of price of real estate in lumpsum or in installments. Subsection 1 lays down that the consequences of the failure of the buyer to pay the price shall be stated either in the prospectus or the letter of allotment. As stated above, in the majority of cases real estate contracts are made through the execution of a deed of an agreement and such a deed of agreement sets out the details of payment. If there is a conflict between a provision in a prospectus or letter of allotment and a deed of agreement, it will no doubt be considered that the provision in a deed of agreement (executed subsequently) shall prevail over that of a prospectus or a letter of allotment.
There is vagueness and confusion about section 14. Subsection 2 provides that the allotment of a real estate shall not be cancelled without serving a prior notice of at least sixty days upon the buyer. Subsection 4 says that if a buyer desires to delay the payment of an installment in accordance with the terms of subsection 2, he may do so provided he pays interest @ 10% on the installment. It is not clearly stated whether the buyer making a default shall get at least sixty days before he starts making payment or the buyer shall have at least 60 days within which he shall settle the installment. Subsection 4 seems to give the buyer an opportunity / right to defer the payment of the installment to a time in future provided he pays interest @ 10%. No limit appears to have been imposed on the period of time that the buyer may defer the payment. If a developer is dependent on the money of buyers for the financing of a real estate development project, will not the developer be adversely affected by delayed payments? The section does not say anything about the case of defaults made in respect of more than one installment, although it is possible to argue that if a developer does not give a notice immediately after the first default is made by a buyer, he will suffer for that. But a difficult situation arises when the time gap between two installment is less that 60 days, say, for example, three or four weeks. If a notice is given on the first default and the next installment becomes due before the period of sixty days expires, will the developer need to give another notice ?
Subsection 3 of section 14 states that in the event an allotment of real estate is cancelled the developer shall refund to the purchaser within 3 (three) months of the cancellation all the money that the purchaser has paid to the developer. Nothing is said whether the developer may deduct a small per centage of the money as penalty. The provision of the law does not take into account the reality that most of the developers in the country depend to a great extent on the advance payments made by purchasers of real estate for the purpose of financing real estate projects. If a developer has, after receiving advances, invested them in the project and the project is on-going, would the developer not find itself in great hardship to refund the money to the purchaser. It is not unlikely that in such an event a developer may be simply unable to pay the money within the stated period of three months. The financing of the project may be adversely affected and such a situation will jeopardize all those who have a stake in the project. It may justifiably be argued that the developer, the land owner and the purchasers having a stake in a real estate project should not suffer on account of a default made by a single purchaser.
Subsection 4 provides for the payment of interest at the rate of 10% in the event a purchaser makes a delayed payment of any installment. The provision does not say whether the interest @ 10% is required to be per anum or per month or otherwise.
Subsection 5 of section 14 is not sufficiently clear. It gives a right to the developer to cancel an allotment where a buyer makes default for three times in the payment of installments. Are the installments the ones that are payable by a purchaser under the contract with the developer or the ones that become payable under an arrangement made between the developer and the buyer following a default of payment by the purchaser? Subsection 5 makes a reference to subsection 4 and the reference to the latter makes the meaning unclear.
Section 15 speaks of the failure of a developer to transfer real estate within the time specified in the contract. If such failure occurs, a developer is required to refund all the money paid by a buyer along with compensation stipulated in the contract within a period of six months. The proviso to section 15 says that a developer and a buyer may mutually agree to extend the time limit for making the transfer through the execution of a supplementary deed of agreement. The section is silent about failures occasioned by causes beyond the control of the developer. The question that arises is : why should a developer suffer any adverse consequence without any fault on the part of the developer?
Subsection 2 of section 15 provides that if the amount or rate of compensation is not stated in the contract the developer shall pay compensation @ 15% within a period of not more than six months in not more than three installments.
Section 16 of the 2010 Act prohibits a developer from selling any real estate to a buyer if the real estate has been mortgaged by the developer. An exception has been made to the effect that with the consent of the buyer any real estate allotted to him may be placed under mortgage to a bank or any financial organization. It is not clear why real estate mortgaged by a developer should not be transferred to a buyer if the buyer is willing to take it subject to the mortgage after executing a tripartite agreement involving the developer, the buyer and the mortgage.
Section 17 permits a developer to deduct an amount equal to the 10% of the money paid by a buyer to the developer when the latter wants to cancel an allotment. It may incidentally be noted that subsection 3 of section 14 does not allow any deduction by a developer when refunding the money paid by the buyer following the cancellation of the allotment on account of the failure of the buyer to pay any installment in time.
Chapter 6 of the 2010 Act deals with offences, trial and punishment. Twelve offences have been created by the Act and the punishment provided in the Act ranges from 10 year's imprisonment to 3 years and the fine of Tk. 5 lac to Tk. 20 lac.
Section 19 says that carrying on real estate business without registration in the office of the authority concerned under section 5 of the Act amounts to an offence for which the punishment provided is two (2) years imprisonment and/or a fine not exceeding Tk. 1.0 million (10 lakh). It may be mentioned here that  applications made by many developers to RAJUK have been pending for decision by RAJUK. Under section 20 if a developer commences the work of a real estate development project without first obtaining approval from a competent authority or publicises an unapproved real estate project through advertisement for the purpose of sale or sells any real estate he shall be liable to imprisonment for not more than two (2) years and/or a fine not exceeding Tk. 1.0 million (10 lakh).
Section 21 provides that if a developer fails to establish utility services connection he will be liable to imprisonment for a term not exceeding 1 year and/or a fine not exceeding Tk. 0.5 million (5.0 lakh).
Section 22 lays down that in the event a developer cancels an allotment without first issuing a notice of 60 days as stated in section 14 such an act will attract imprisonment for a term not exceeding one (1) year and/or a fine not exceeding Taka 0.5 million (5.0 lakh).
For placing real estate under mortgage in contravention of section 16 has been made punishable by imprisonment for a term of 1 (one) year and/or a fine of a sum of money not exceeding Taka 0.5 million (5.0 lakh).
Selling any real estate contracted for by a buyer to someone else and using building materials lower than the quality or standard specified in a contract have been made punishable by imprisonment upto three (3) years and/or a fine not exceeding Taka 2.0 million (20 lakh).
Constructing real estate outside an approved plan is punishable by upto 3 years' imprisonment and/or a fine upto Taka 2.0 million (20 lakh).
Section 27 provides that if a developer, after making a contract with a land owner for the development of real estate or executing a letter of allotment in favour of a buyer, fails to undertake any construction work or after carrying out construction work in part fails to accomplish the same fully and for such failure on his part the developer provides no financial benefits to the land owner or the buyer, such a failure shall be deemed an offence of fraud. The punishment for the offence is two (2) years' imprisonment and/or a fine of a sum of money not exceeding Taka 20 lac. The section is not happily formulated. The section seems to make a failure on the part of a developer an offence even though he cannot be held liable for the failure. A developer may fail to commence construction work in time owing to an unduly belated approval of the plan by RAJUK or issue of clearances from the various authorities. The expression 'webv Kvi‡Y' appears to qualify the second limb of the offence i.e. leaving the work unfinished. A developer may be forced to delay construction work for lack of funds caused by buyers not paying installments in time. The section does not say how the 'financial advantages' is to be computed.
Section 28 penalizes a land owner for his failure to make over the possession of a plot of land to the developer within the time stipulated in a contract. The punishment provided in the section is imprisonment for a period not exceeding two (2) years and/or a fine of upto Tk. 1.0 million (10 lakh).
Section 29 makes it an offence for a land owner to revoke a registered power of attorney executed by him in favour of a developer without first serving a 30 days' notice upon the developer. Such an act will make a land owner liable to an imprisonment of a period upto two (2) years and/or a fine not exceeding Tk. 1.0 million (10 lakh). It should be noted that it is the revocation of a power of attorney without a notice that has been made an offence. A revocation of a power of attorney after the issue of such a notice is not an offence, although the revocation may be unjust and unlawful.
According to section 30 of the 2010 Act if a developer after execution a contract with a land owner fails to complete the real estate development work in compliance with the terms and conditions of the contract and deliver the possession of the portion reserved for the owner, the developer shall be liable to an imprisonment for a period not exceeding two (2) years and/or a fine of sum of money not exceeding Tk. 2.0 million (20 lakh). The section is not well-formulated, for it makes no distinction between a case where the developer is solely responsible for his failure and a case where he is partially or not at all responsible.  An external cause may make it impossible for a developer to complete the construction and to deliver the possession of the portion reserved for the land owner to the land owner.
Section 36 of the Real Estate Development and Management Act 2010 deals with the settlement of disputes arising at any stage of the implementation of a real estate project between the landlord, the developer and the buyer. Subsection 1 of the section 36 says that if there arises a difference of opinion or dispute between them over the commission of any of the offences stated in sections 21 (failure to set up connections for the supply of utility services), 22 (cancelling an allotment of real estate without a notice), 23 (mortgaging real estate without the consent of the buyer), 24 (selling real estate allotted to a buyer to a third party), 25 (using lower quality building materials in breach of the contract), 27 (fraudulent acts by the developer) 28 (failure to deliver possession of land to developer) 29 (Revoking a power of attorney without prior notice) and 30 (failure to deliver possession of the portion reserved for the owner) OR over the breach of any provision of the contract the parties concerned shall at the first instance make efforts for bringing about an amicable settlement of the dispute. If the efforts fail on account of the non-cooperation of a party, the other party shall issue a notice to his opponent stating the former's intention to refer the dispute to an arbitration tribunal in accordance with the provisions of the Arbitration Act 2001. The party to whom the notice is issued shall, within 30 days of the receipt thereof, jointly with the sender of the notice constitute an arbitration tribunal.
Subsection 4 of section 36 provides that notwithstanding anything in the Arbitration Act 2001, the award of the arbitration tribunal constituted by the parties shall be binding upon the parties and any other person who through any of them or under them makes any claim and no party shall have any right to raise any objection to the award before any court of law. Subsection 5 says that if the parties fail to constitute an arbitration tribunal pursuant to subsection 3, any party to the dispute may institute a suit in any competent court for the adjudication of the dispute.
About the settlement of any dispute between the parties involved in a real estate development project, the Real Estate Development and Management Act 2010 requires them to make efforts for an amicable settlement of the dispute. In other words, any parties involved in a dispute over the alleged commission of an offence or breach of the contract should not resort to legal action in the first instance. The parties in dispute are required to make efforts for an amicable settlement. Since it is a provision of law, this requirement must be complied with. In the event the parties fail to achieve an amicable settlement despite their efforts, the dispute is required by the Act to be resolved through the process of arbitration in accordance with the Arbitration Act 2001. It is only when no arbitration takes place on account of some valid reason, any party may commence legal proceedings in a competent court of law.
The formation of the trade organization Real Estate and Housing Association of Bangladesh (REHAB) was a welcome move by the real estate developers of the country. In order to ensure the proper development of the real estate development sector, the role of REHAB as a watch-dog cannot be overemphasized. REHAB must stand as a well-organized and unified force. Its focus must be on the interests of all those connected with the real estate development business, namely land owners, developers and buyers. In that sense, REHAB has a social responsibility to shoulder.
If you go round the posh areas of Dhaka and look for the recently constructed multi-storied buildings or some of the buildings now under construction you will be surprised by the ingenuity with which some of them have been created. Not only the amenities provided in them the aesthetic appeal of each of them is remarkable. One cannot but be highly impressed by the architectural and engineering skills that have gone into their making. It is a matter of pride for us all that a few of the multi-storied apartment complexes developed by South Breeze Housing (Pvt.) Limited have received international recognition.
There is no denying the fact that the real estate development sector has contributed significantly to the economy of the country. Both the government and all those who are connected with this sector should do all that is necessary to do to give it a firm footing to enable it to make more contributions to the economy. What is really surprising and deserving a high degree of recognition is that the real estate developers operating in a private sector of the economy have proved themselves that they are capable of performing the challenging task of real estate development without depending on any government funding and any other help of substantial nature.
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The writer is a practising
barrister-at-law