RERA,2017
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In this article, Aditya Shrivastava, Manager Content Marketing at iPleaders discusses some of the most important compliances and their repercussions of Real Estate Regulation Act, 2016 (RERA).

In the year 2016, real estate developers faced a massive change in the way things were functioning. If you look at any newspaper before 2016, it was possible to find at least one report which would talk about the way the real estate developers have been functioning and their constant failure to keep up with the promises relating to possession of the developed property or amenities or returning a buyer his money in case of cancellation.

With a view to regulating real estate under one regime, and aim to establish the Real Estate Regulatory Authority (RERA) for regulation and promotion of the real estate sector and to ensure the sale of the plot, apartment or building, in an efficient and transparent manner the Real Estate Regulation Act, 2016 was enacted.

The initial aim of the act is to protect the interest of consumers in the real estate sector and to establish an adjudicating mechanism for speedy dispute redressal in order to establish the Appellate Tribunal to hear appeals from the decisions, directions or orders of the Real Estate Regulatory Authority and the adjudicating officer for matters connected therewith or incidental thereto.

What are some of the important definitions under the Real Estate Regulation Act?

RERA is one of its kind attempt to ensure that every ambiguity is taken care of. For the first time, it brought in a number of definitions which the real estate owners were unaware of:

Section 2(f) “Appellate Tribunal” means the Real Estate Appellate Tribunal established under section 43

Section 2(I)”Authority” means the Real Estate Regulatory Authority established under sub-section (1) of section 20;

Section 2 (g) “appropriate Government” means in respect of matters relating to,— (i) the Union territory without Legislature, the Central Government; (ii) the Union territory of Puducherry, the Union Territory Government; (iii) the Union territory of Delhi, the Central Ministry of Urban Development; (iv) the State, the State Government.

What are the main duties or compliances mentioned in the Act for a real estate developer?

The Act has brought in a number of compliances which the real estate developers are required to comply with. Here are the most required compliances along with compliances which a real estate developer cannot ignore:

Serial Number Section Number Compliance/Duty/Right of the Promoter
1. 3 – Prior registration of the real estate with the Real Estate Regulatory Authority

59 – Punishment for Non-registration

  • Cannot advertise, market, sell or offer to sell without registration.
  • In case the project is ongoing before the enactment, and CC has been not issued, Promoter needs to make an application to the authority for registration in 3 months.
  • In case of development beyond the planning area, with local authorities permission, permission may be granted in allottees interest.
  • Land-500 Sq. Mtrs, 8 Apartments, where CC has been received prior, for repair or re-development purpose no registration necessary.
  • 59 – Contravention of Section 3 – Penalty extending up to 10% of the estimated cost of the project.
  • Contravention of order, or continuance of violation of S.3, imprisonment up to 3 years, further extension of 10% of the fine.
2. 4 – Application for registration of real estate projects

60 – Penalty for contravention of Section 4

  • The compulsion of a promoter to apply for registration, a fee as specified by the regulations, made by an authority with a List of documents (mentioned at the end) to be enclosed:
  • The promoter shall withdraw from the separate account only in proportion to the work complete, with certification from an engineer, architect, and CA.
  • Promoter required to get accounts audited within 6 months of every financial year.
  • 60 – In case of false information or contravention of section 4 –penalty up to 5% of the estimated cost
3. 11 – Functions and duties of a promoter
  • After receiving Log in ID and Password, create a web page on the website of the authority – all details to be entered as under section 4, for public viewing, including the list at the end of this article.
  • The Advertisement issued by promoter shall have prominent website address of the authority.
  • List of enclosures to be provided to the allottee
  • Promoter – Responsible for all obligations, responsibilities and functions,  till conveyance and common areas thereof, Responsibility with respect to defect continues as mentioned in section 14.
  • To obtain Completion/Occupancy certificate and make it available to the allottees.
  • To obtain lease certificate, in case of leasehold land, specifying the period of the lease, clearance of dues etc.
  • Maintain essential services on the reasonable charge, till taken over the association of allottees.
  • Enable the formation of the association.
  • Execute a registered deed of conveyance of apartments, plot, building etc to the allottees, with the undivided proportionate title in the common places to the association/competent authority.
  • Pay all outgoings till the transfer of physical possession is made, in case of delay in such payment, promoter liable to pay even after such transfer is made.
  • After the agreement for sale is executed, any charge created on the said property, shall not affect the rights of the allottee.
  • An allotment can cancelled as per the terms of the agreement of sale – allottee may approach authority in case of aggravation by such cancellation.
4. Obligations of Promoter

12 – Obligations of promoter regarding the veracity of the advertisement or prospectus

13- No deposit or advance to be taken by promoter without first entering into the agreement for sale

14- Adherence to sanctioned plans and project specifications by the promoter

15 – Obligations of a promoter in case of transfer of a real estate project to a third party

16 – Obligations of promoter regarding insurance of real estate project

17 – Transfer of title

  • In case of any advance payment on the basis of false statement/advertisement/model house, the loss suffered therein shall be compensated by the promoter.
  • In case of withdrawal on the same grounds, entire investment along with interest rate to be provided.
  • The amount more than 10% shall not be accepted as advance/application fee, without entering into a written agreement for sale.
  • Agreement of sale requires having all specifications of the development of the project.
  • The proposed project to e completed in accordance with the sanctioned plans.
  • After the said sanctions, and disclosure to the said allottee, no alterations to be made except without the consent of that person, except minor alterations/additions can be done on due recommendation and verification of engineer/architect.
  • Any alteration/addition to the sanctioned plans, layout plans or building specifications cannot be changed with the written consent of 2/3rd of the allottees.
  • In case of structural defects or other obligations is brought to the notice of the promoter, within a period of 5 years, the duty of the promoter to rectify it – in case of failure, allottees entitled to apt compensation.
  • No transfer/assignment of majority rights and liabilities without the written consent from 2/3rd allottees.
  • Such transfer shall not result in the extension of time.
  • Intending promoter needs to independently comply with all the pending obligations, and no changes in the allotment shall effect with the transfer of the erstwhile promoter.
  • Insurance in respect of land and building as a part of the real estate project and construction of the real estate, insurance to obtained and premium to be paid by the promoter, before transferring it to the association. The transfer shall stand transfer on entering of the agreement for sale. On the formation of the association, all documents related to insurance to be handed over the association.
  • Execute a registered conveyance deed in favor of the allottee along with the undivided proportionate title of the common areas to the association and other title documents within 3 months (in absence of local laws)
  • After obtaining the occupancy certificate and handing over physical possession shall be the duty of the promoter to hand over  necessary documents and plans within 30 days (in absence of local laws)
5. 18. Return of Amount and Compensation
  • In case of failure to complete/handover the possession in accordance with the agreement/deal to discontinuance of business/cancellation, liable, on demand of allottees:

1. On withdrawal, the amount received so far, along with interest in a manner provided by the act.

2. On non-withdrawal, interest for every month.

  • The promoter shall compensate for the loss, due to the defective title, and such claim not barred by limitation.
  • In case of failure to discharge any duties, compensate as provided by the act.
6. Offenses, Penalties & Adjudication

61. The penalty for contravention of other provisions of this Act.

  • In cases of contravention of sections other than 3, 4 – penalty up to 5% of the estimated cost.

What are the list of documents to be enclosed?

  1. List of Documents to be enclosed under Section 4.

 

  • a brief details of his enterprise
  • a brief detail of the projects launched by him, in the past five years
  • an authenticated copy of the approvals and commencement certificate from the competent authority, for each of such phases.
  • the sanctioned plan, layout plan and specifications of the proposed project or the phase thereof
  • the sanctioned plan, layout plan and specifications of the proposed project or the phase thereof including fire fighting facilities, drinking water facilities, emergency evacuation services, use of renewable energy.
  • the location details of the project, with clear demarcation of land dedicated for the project including the latitude and longitude of the end points of the project.
  • proforma of the allotment letter, an agreement for sale, and the conveyance deed proposed to be signed with the allottees.
  • the number, type and the carpet area of apartments for sale
  • the number and areas of a garage for sale in the project
  • The names and addresses of his real estate agents, if any
  • The names and addresses of the contractors, architect, structural engineer, and other persons concerned with the project.
  • A declaration, supported by an affidavit, which shall be signed by the promoter, stating his:

(A) The legal title along with documents validating such authentication

(B) No declaration or details of encumbrances, if any,

(C) time period estimate

(D) 70% amounts deposited by allottees, from time to time be deposited in a separate account to cover the cost of construction/land.

  1. List of Disclosures to be made under Section 11
  • Details of the registration granted by the Authority
  • Quarterly up-to-date the list of number and types of apartments or plots, as the case may be booked
  • Quarterly up-to-date the list of the number of garages booked
  • Quarterly up-to-date the list of approvals taken and the approvals which are pending subsequent to commencement certificate
  • Quarterly up-to-date status of the project; and
  • Such other information and documents as may be specified by the regulations made by the Authority.
  1. List of enclosures to be made by the promoter, at the time of booking/issue of allotment letter:
  • Sanctioned plans, layout plans, along with specifications, approved by the competent authority, by the display at the site or such other place as may be specified by the regulations made by the Authority
  • The stage-wise time schedule of completion of the project, including the provisions for civic infrastructure like water, sanitation, and electricity.

Be it big or small, Real Estate Regulation Act, 2016 has impacted real estate developers across the country. While 15 states have already notified the Act, others are still in the process of doing it. At a very novice stage, even lawyers are struggling very hard to come up with a list of do’s and don’ts. In such a scenario, if you are a property lawyer or a real estate developer, it is important that you gear up for it. Keep a track of all the current affairs or take up courses like these which can help you grow a long way.

It is not that difficult to be in compliance of the laws as long as you know them!

Good luck!

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