RERA

INTRODUCTION OF RERA

The Real Estate (Regulation & Development) Act, 2016 was formulated to safeguard the interest of home buyers and to infuse transparency and credibility into the otherwise unregulated real estate sector.

The Bill was passed by Rajya Sabha on 10^th March 2016, by Lok Sabha on 15^th March 2016 after multiple amendments to the regulations  Act was executed on 1^st May 2017.

The real estate sector has been one of the top most contributions to the country’s Gross Domestic Product (GDP) and employment creation. Surprisingly, inspite of being such an important part of the economy, the real estate sector was unregulated for numerous years. In order to regulate the aforesaid sector, the Indian Parliament passed a legislation called as the Real Estate Act, 2016 which was made effective on 1^st May, 2016.

Objective of RERA

With the advent of RERA, there began a norm for strict compliance that has to be adhered by each and every developers, builder and construction giant in different part of the country. Most of the State has established their own RERA offices where they work under the establishment rules and regulations. However, the act is not retrospective in nature it mandates every people to be registered with the respective state RERA offices by the promotion of the Company within three months of the Commencement of the Act.

The RERA was enact to protect the interest of the homebuyers and boost investment in the sector. The provisions like timely completion and delivery of projects to the buyers. 

Registration under RERA

One of the feathers of RERA is the requirement of registration of the real estate project by the “Promoter” with RERA which falls with the planning areas. In the absence of such registration, the promoter of the real estate project is not permitted to advertise market, sell or offer for sale, or invite persons to purchase in any manner in any real estate project or part of it.

A “Real Estate Project” is defined as the development of building. Converting an existing building or part of apartments, development of land into agreements/plot for purpose of selling and includes common areas, development works, all improvements and structures thereon and all easement, rights and appurtenances belonging to such building or land or structure.

The terms of section 3 of RERA, the following real estate projects are not required to be registered:

1. Where the area of the land does not exceed 500 sq. Mt or number of apartments does not exceed 8.
2. Where the Promoter has received completion certificate for a real estate project prior  to commencement of RERA and
3. Where the work involved is limited only to renovation or repair or re- development and does not invoke marketing, advertising, selling or new allotment of any apartment, Plot or building.

In addition to the registration of real estate projects, every real estate Agent is also required to get itself registered before facilitating the sale/purchase of any real estate project or part of it, by making an application along with requisite information/documents and fee. 

Application for registration under RERA

In terms of Section 4 of RERA, an application require to be made by every promoter alongwith prescribed fee for registration of its real estate project and shall be inter alia accompanied with the prescribed document including:

1. An authenticated copy of the approvals and commencement certificate obtained from the competent authority.
2. Sanctioned Plan, layout Plan and specifications of the proposed real estate project as sanctioned by the Competent authority and       
3. A declaration by the Promoter supported by an affidavit inter alia stating that:
   • That the promoter has a legal title over the land on which development is proposed;
   • The details of all encumbrances on such land;
   •  The time period within which the Promoter undertakes to complete the real estate project;
   • That the promoter would deposit 70% of the amount realised for the real estate project from the allottee(s) from time to time in separate bank account.

Validity of Registration under RERA

The Registration granted shall be valid for period declared by the Promoter for completion of the real estate project or phase thereof as submitted in the affidavit along with the application for registration.

The Registration granted by the Authority may be extended by it upon receipt of application from the Promoter in this regard in the following circumstances:

1. Force Majeure: War, Flood, drought, fire, cyclone, earthquake or any other calamity caused by nature affecting the regular development of the real estate project.
2. Other than : The Authority may be extend the registration to a maximum period of one year if it feels that the circumstances and reasons for extensions of the cause as reasonable.

Revocation of Registration

RERA stipulates various compliances with respect to a real estate project. If the same are not complied with, the registration of already registered real estate project, may get revoked. The Authority may revoke a registration on the basis of a complaint received or suo moto by the Authority by giving 30 days notice in writing to the Promoter of such real estate project stating grounds of proposed revocation and instructing him to show cause as to why the registration should not be revoked. On the basis of the Promoter’s reply to the show cause notice, the Authority it’s may allow the real estate project to be registered or alternatively may cancel the registration.

Consequences of Non registration

• Liable to a penalty which may extend upto 10% of estimated cost of real estate project
• On continued violation, he shall be punishable with imprisonment for a term which may extend upto 3 years or with fine or which may extend upto further 10% of estimated cost of the real estate project, or with both.

Real Estate fails to Registrar

Section 9 and Section 10 provides that Rs. 10,000/- (Rupees Ten Thousand Only) for every day during which such default continues, which may cumulatively extend upto 5% of cost of plot of real estate project for which sale or purchase has been facilitated as determined by RERA.

Financial Discipline & Compliance

• 70% of the funds collected from allottee need to be deposited in the project account;
• Withdrawals to cover construction and land cost, to be proportion to the percentage of completion of project;
• Withdrawals to be certificate by engineer, Architect and Charter Accountant;
• Developers to share on MahaRERA website details of Projects launched in last 5 years with stats and reason for dealy;
• Provision for MahaRERA to freeze project Bank Account upon non – compliance;
• Project account to be audited annually , copy to be put upon on website;
• Maximum one year extension in case of delay due to no fault of developer;
• Promoter to compensate buyer for any false or incorrect statement along with full refund of property cost with interest.

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RERA like Act has been long overdue to reign in the real estate sector to ensure transparency and boost confidence among end users. With numerous examples of project delays, plan violations, lack of necessary approvals in commencement of a project, the Act comes as a breather for many current or future home buyers.

To eliminate promoters of low repute that seek to build shoddy projects without being accountable to anyone but are only interested in the cash inflow and who do not accept responsibility of any post construction defect. Such promoters shall find it hard to sustain themselves in the RERA regime.