home-buyers
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Dated: 04/09/2020

This summary is written by Ruchi Mulye, University of Mumbai Law Academy.

The Guest Speaker: Mohammed Zain Khan has been a Senior Associate with Little & Co. and is an alumnus of Mumbai University. He has handled a lot of real estate work including registering and structuring transactions and redevelopment work. He is also an alumnus of the LawSikho RERA course.

The Host: Komal Shah is the Co-Founder and Content Head at LawSikho and has an experience of over 15 years working with and leading company secretarial and corporate governance teams across India and Ireland.

What are the kind of projects that need to be registered and what is the difference between ongoing projects and new projects for registration?

Ongoing projects are the ones where the Completion or Occupation Certificate has not been received yet. A new project is a project which is freshly promoted by the developer. The registration process and the functioning of the authority is clear as the whole process is online. The developer has to make an application to register new projects under Section 4 read with Rules 3 and 4 of the MahaRERA rules.

Under the Section 4 read with Rule 3, the developer has to provide a lot of details with respect to his enterprise, the project, approvals, permissions from the competent authority, commencement certificate, the nature of the project, title of the project, FSI that will be used, layout of the plans, amenities provided, etc. There is a comprehensive list of details that need to be provided by the developer for the project to be registered.

For ongoing projects, the developer has to provide or disclose the balance amount of work, the amount of work carried out in respect of the sanctioned plan, development time needed, etc. The developer also has to disclose the original timeline provided to purchasers and submit certificates from Chartered Accountants and Architects stating the amount of money that is yet to be received by the purchasers and the incomplete percentage of the pending work.

When all the details and disclosures are provided by the developer, necessary fees has to be paid. The minimum amount is Rs. 50,000 and the maximum is Rs. 10 lakhs, depending on the size of the project.

What is the risk if a purchaser buys a non-RERA project, despite it being mandatory?

The purchasers’ would lose the security and protection that the Act provides them for being an  Allottee. Complaints are registered only for registered projects. Supposedly, a person enters into an agreement with a developer in a non-RERA project and the developer claims to hand over possession after a year and then fails to deliver the person may not have any remedy with RERA. The purchaser would not be able to approach the Civil Court either as the Act under Section 79 bars the jurisdiction of the Civil Court. The purchaser would only have remedy left under Consumer Forum which may be an inconvenient process.

Does an SRA project require to be registered under RERA?

If the saleable area is promoted by the developer then the project needs to be registered under RERA. Section 3 does not distinguish between a redevelopment project or an SRA projector or a completely fresh project. The rehabilitation component is excluded because it is rehabilitation which has been provided to the slum dwellers and if the area exceeds 500 square meters and the parameters laid down under Section 3 are complied with, then it is mandatory for a developer to promote a project. 

What kinds of projects are not required to be registered under RERA? 

If the area of the plot is less than 500 square meters or where the apartments do not exceed eight in number, it does not need to be registered under RERA. In case where the Occupation Certificate has already been received before the Act coming into force and when a project is being redeveloped which does not entail any marketing or promoting of any area, it does not need to be registered under RERA.

Under the light of Covid-19, can RERA extend the completion dates for projects?

A project registration states three things – the proposed date of completion, revised proposed date of completion and extended date of completion. The extended date of completion comes into force when an application is made by the developer under Section 6, in the event of force majeure. The authorities go through the details and confirm that there is no default on behalf of the developers and then grant an extension. If an extension is not granted, the developer can appeal to the Appellate Forum under Section 44 of the Act.

Is there any limit to extension?

Section 6, states that an extension can only be granted in event of  ‘Force Majeure’ and there should be no default on the part of the developer. t an extension can be granted under up to a period of one year in reasonable circumstances by passing an order to that effect.

In case of a delay in execution of an agreement to sale, how can an allottee under RERA ask the developer to execute the agreement?

An agreement for sale has a provision, which states that “the purchaser can approach the tribunal for seeking execution of the agreement”. Maha RERA  has passed judgements and orders where directions have been issued for execution of agreements for sale. In a few cases, RERA has executed an agreement with the purchaser in the event of default by the developer. The developer has a statutory obligation to execute the agreement for sale.

Can an allottee ask for a refund even after the builder has transferred the possession of the flat but the possession has been delivered after a delay?

It is difficult to approach the authority after the possession has been granted. A purchaser should approach RERA before the Occupation Certificate has been granted to the project. If the authority is approached after the Occupation Certificate has been granted to the project, the authority is of the view that the possession should be taken. 

Can an allottee pray for ‘interest in delay of transferring possession’ in complaint to authority wherein directions have been sought to direct the builder to hand over the possession or does the allottee has to file a separate complaint with the adjudicating officer?

Section 18 states that if the purchaser is not satisfied with the developer’s work, he can seek the refund amount with interest from the time when possession was promised. Alternatively, the purchaser can seek compensation for delay in possession. If a purchaser has suffered losses in renting an apartment during the time of construction, then that separate complaint is maintainable before an adjudicating officer under Section 71 where the purchaser will have to make out a case that the damages that have been suffered by the purchaser and he ought to be granted those damages.

Which forum should a purchaser approach?

Once a project is registered, it is better to approach the RERA tribunal. The court fee for RERA is Rs. 5000 irrespective of claims and the entire scheme is covered under the Act. Although the reliefs are better under the Consumer forum as it has evolved under law, but the difficulty of fitting into the definition of consumer arises. There can also be jurisdictional difficulties with respect to the Consumer Forum. RERA is based in Mumbai and the Appellate tribunal is in Fort (in Mumbai ), it is easier to approach RERA. The second appeal is in the Bombay High Court hence it is easy for the purchasers in Mumbai to approach RERA. It is also less time consuming than the Consumer Forum.

At what stage a project registered with RERA? What are the kinds of approval that are needed for registration?

The project has to be registered with RERA before the developer starts marketing the project. Section 4 read with Rule 3, states that the Commencement Certificate, sanction plan, layout plan and all the permissions from the competent authority as the case may be are necessary. There are vital documents like the legal title of the developer, the FSI to be consumed, the nature of the apartments, etc. that need to be submitted. The approvals and permissions required vary depending on the area, nature and location of the project. It is an exhaustive process on a case to case basis where CRZ permissions, collector permissions, permissions from MHADA, defense, railways, etc. may be required depending on the location and nature of the project. 

Can RERA cancel a project’s registration?

Section 7 provides for revocation of registration of projects, Suo Motu by the authority or complaint by allottees or organization of purchasers, if incorrect details are submitted for registration or when a developer has changed certain amenities or engaged in unfair trade practices. The authority can revoke the registration due to non-compliance. Section 8 of the Act states consequences that are followed in case of revocation of registration. The authority may bar the developer from accessing the site after the registration has been revoked. 

Can a developer withdraw the registration with RERA?

If a developer withdraws the registration, he comes under a plethora of legal proceedings, civil and criminal that he will be burdened with. He would lose all rights to the project. The builder would rather have the registration revoked by the authority.

If registration is cancelled by RERA, what happens to people who have already paid money to the builder for their units?

The developer loses his right in respect of the project, not the purchaser. The rights of the purchaser remain intact and the consequences under Section 8 follow, where the authority can appoint a competent authority or a group or association of purchasers for completing the balance project either by pulling in the monies or by using the monies lying with the developer. The project can be completed and then the possession is handed over.


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