Daman impact fee law triggers builder anxiety as administration shifts liability

Daman | Union Territory — A controversial provision in the newly implemented Impact Fee Law in Daman has sparked concern among builders and developers, as the administration has clearly stated that it will bear no responsibility for any accident, disaster, or legal issue arising after unauthorised constructions are regularised.

The scheme, introduced to legalise unauthorised constructions carried out in the Daman Municipal Corporation area until 2022, allows property owners and builders to regularise buildings by paying a fixed impact fee. However, a key clause states that once the fee is paid and the structure is regularised, all liability will fall solely on the builder, architect, or homeowner.

This provision has triggered strong reactions from the construction community.

“By collecting the impact fee and still refusing to accept responsibility, the administration is effectively shifting the entire risk onto builders and property owners,” said a local builder familiar with the scheme.

Six-Month Window for Regularisation

The scheme provides a six-month window for regularising unauthorised constructions, covering violations related to margin space, floor space index (FSI), building height, parking arrangements, and internal plan modifications.

The administration had been struggling for over a decade with numerous incomplete or unused buildings across Daman. To resolve the issue and revive stalled properties, the government initially attempted to introduce the impact fee system two years ago, but the proposal was withdrawn due to lack of approval from higher authorities.

Now, the administration has reintroduced the law in an attempt to unlock long-pending properties, which have trapped both property buyers and banks that financed the projects.

Uncertainty over Regulatory Violations

Despite the rollout, several important issues remain unclear. Builders say the administration has not clarified whether structures violating key regulations such as RERA rules, Coast Guard approvals, Coastal Regulation Zone (CRZ) norms, fire safety clearances, or archaeological restrictions will be eligible for regularisation.

This ambiguity has created hesitation among developers considering whether to participate in the scheme.

“Builders are worried because even after paying the impact fee, future legal complications may arise, and the administration has already distanced itself from any responsibility,” said another developer.

Builders Weigh Risk as Unsold Buildings Pile Up

Many builders are now caught in a dilemma. On one hand, the scheme provides an opportunity to regularise long-idle buildings and bring them into the market. On the other hand, the liability clause exposes them to significant legal and financial risks.

Some developers are still willing to take the risk because they hope to sell long-vacant properties and recover investments.

However, real estate experts warn that homebuyers could face potential risks if properties with unresolved regulatory issues enter the market after regularisation.

Fixed Impact Fee Structure

The administration has also announced a fixed fee structure for regularising unauthorised constructions:

Up to 50 sq m – ₹3,000

50 to 100 sq m – ₹6,000

100 to 200 sq m – ₹12,000

200 to 300 sq m – ₹18,000

Above 300 sq m – ₹18,000 plus ₹150 per sq m beyond 300 sq m

While the scheme aims to resolve a long-standing urban planning problem, the liability clause has left builders and homebuyers questioning whether regularisation truly guarantees safety and legal protection.