Real Estate Disputes: Know the Benefits of Conciliation Benches in Every RERA

Every Indian has the ambition of owning a home. However, the majority of them fear the procedure because they believe it is rigged against them. The problems are many and overwhelming, ranging from not receiving the home they were promised to not receiving it on time. When homebuyers and builders have different expectations, it often results in expensive disagreements that take years to settle. In the worst-case scenarios, builders fail to deliver the home, forcing the purchasers to battle other creditors in bankruptcy court.

Real Estate Regulatory Authority (RERA) was established, which has completely changed the game and greatly lowered the variety of concerns that prospective homeowners must deal with. RERA has dramatically increased homeowners’ power by compelling builders to keep their commitments and holding them responsible via fines. Purchasers may now resolve their problems outside of the judicial system by going to RERA and its appellate benches. On paper, the implementation of RERA was a brilliant move to lessen the industry’s notoriety and was genuinely unique worldwide. The devil is in the details, as it is with everything in India.

Since RERA was a state-level issue, not every state has embraced this new law with the same fervor. More aggressively than others, some governments have taken action against builders for infractions. Similar to this, despite the legislation’s main objective of minimizing information asymmetry, some governments have made an effort to provide consumers with more information than others.

While some jurisdictions have adopted quicker alternative dispute resolution (ADR) systems, others have reverted to slower, more formal legal court-like procedures. To put it mildly, the lack of consistency in how RERA has been applied is perplexing. Why can’t governments use tried-and-true techniques and procedures rather than inventing the wheel? Why can’t we organize the adoption instead of letting the current RERA’s preferences dictate it? The public should, at the absolute least, be given information on how one technique compares to another in terms of performance.

We conducted a research of this kind investigating RERA’s ADR mechanisms. Arbitration, conciliation, and mediation are permitted as alternatives to the usual legal processes under Section 32(g) of the RERA Act. They enable a speedy resolution without limiting any party’s ability to pursue legal action down the road. The effectiveness of ADR mechanisms, however, relies on how skillfully they are created.

Soon after it was established, the MahaRERA in Maharashtra was a pioneer in the use of conciliation. It established 45 conciliation benches around the state and had an initial resolution rate of an astounding 75%. Unlike RERA orders, which take 8–10 months to complete, cases were finished in under two months. Its novel design, which matched the motivations of conflicting parties, is responsible for its success.

It was initially optional. They only let in purchasers and builders who wanted to settle.Second, it required the participation of a builder and consumer group representative in order to foster trust and lessen knowledge asymmetry. More crucially, it deterred attorneys from participating.Third, the conciliation’s moderators received training in bargaining techniques.

Fourth, a conciliation request has to be made prior to the disagreement being legally recorded with RERA. This made sure that the conflict was kept private. While complicated situations continued to seek judicial solutions, regular disagreements like project completion delays, compensation, and agreement breaches were best resolved via conciliation.

Despite being successful in Maharashtra, just 6 of the 28 states in the nation (Maharashtra, Gujarat, Uttar Pradesh, Haryana, Karnataka, and Madhya Pradesh) have embraced the conciliation approach. Only Maharashtra and Uttar Pradesh have taken special initiative to make conciliation the cornerstone of their conflict resolution policy. The Lok Adalat method, which depends on retired judges and legal experts to settle issues via a court-like procedure, has been implemented by Karnataka RERA.

In contrast to conciliation, which discouraged attorneys, Lok Adalats solely included attorneys, whose motivations are not always in line with expeditious results. The type of open-ended conversations you see in a conciliation procedure are not possible in Lok Adalats because to the absence of anonymity and short time allotments. The primary benefit of Lok Adalat is that it is conclusive. Orders made by the Lok Adalat are final and cannot be contested in court. Due to the lack of publicly available statistics on unresolved cases, we were unable to assess Lok Adalat’s effectiveness as a substitute dispute mechanism.

Every RERA should prioritize using ADR methods, particularly conciliation, to settle conflicts and shorten the length of time cases are pending. The motivations of both builders and developers may be aligned via a well-designed procedure, which can also aid in overcoming the trust gap that afflicts this industry. Builder groups like CREDAI and NAREDCO should encourage its members to seek a confidential, agreeable resolution.