RERA LAW INSIDER IN

RERA- The Estate Regulatory Authority

By Esha Dinesh-

Real Estate Regulatory Authority aims to protect home purchases and boost real estate investments. Its existence is as per Real Estate (Regulation & Development) Act 2016.

It’s an act for regulation and promotion of real estate sector, & ensure sale of property in an efficient and transparent manner. It also aims to protect the interest of consumers. The bill was passed on 10th march 2016.

It was assented to on 25th March 2016 and introduced by Dr. Girjia Vyas. It commenced from 1st May 2016 but only 59 of 92 sections were notified. The remaining were notified on 1st May 2017. On 31st October 2016, central government through HUPA (Housing and Urban Poverty Alleviation) Ministry, released general rules of Real estate act. All of these rules are equally applicable to Union territories as well.

It is mandatory for developers to get all approvals from various government agencies before launching a project, and disclose all relevant information on the official website.

It helps to fight malpractices and unfair builders. It also provides several rights to home buyers, and lays down rules and regulations to be followed by builders/developers. Most importantly, it specifies creation of Real Estate Authority, and Appellate Tribunal for each state.

According to Real Estate (Regulation and Development) Act 2016, every promoter and agent selling the property has to first get their projects registered with that respective state RERA authority.

The intention behind establishing this authority is to make builders more accountable for timely delivery of projects and to protect buyers from fraud sellers. Real estate agents are given a registration number by authority upon registration which is valid for 5 years and is to be quoted in every transaction facilitated by him/her.

Another major aim behind the establishment of this authority is to penalize for false representation of any project to buyers. Real estate agent are required to keep books of accounts of projects. They are held answerable for the same.

RERA is not applicable on renting of property. It covers all residential and commercial projects. Every state and union territory is to have its own regulation.

Real estate act has mandated for every state and union territory to make its own RERA rules for particular state within 6 months of the effective date of the act.

The states and UTs are also to notify RERA authority for respective state within 1 year of the effective date, and constitute a RERA tribunal as appellate authority for their own respective state.

Benefits of RERA

The establishment of RERA provided with several benefits to the real estate sector, which was known for its black money and malpractices :

  • Standard carpet area measurement
  • Rate of interest on default in case of default in payment by buyer or default in completion of project by builder
  • Reduces risk of builder insolvency and bankruptcy
  • Right of buyer to seek withdrawal and full refund in case of false promise
  • Advance payment is not allowed more than 10% of cost of property
  • Right of buyer to seek rectification from builder in case of any damage with 5 years of possession, with no extra cost, and to be addressed within 30 days
  • Right to information in case of defect in title and seek compensation for the same.
  • Interest to be paid in cash in case of any default
  • Grievance redressal to take place at the earliest and effectively
  • Greater accountability and increased confidence along with increased professionalism
  • Reduction in litigation
  • Increased transparency
  • Timely delivery of projects

Objectives of RERA

The objectives of RERA are as follows :

  • Transparency and generate faith and confidence of real estate buyers
  • Establish RERA for sole purpose of regulation in real estate sector
  • To establish an effective grievance system in Real estate sector
  • Protect rights of buyers
  • To keep in check the authenticity of promoters, real estate project, and real estate agents
  • To curb unnecessary delay in approval or delivery of projects
  • Set up appellate system for grievance redressal system
  • Bring confidence in real estate
  • Prescribe penalties for defaulters

Applicability of RERA

RERA is applicable to all builders and developers except :

  • Where area of land proposed to be developed does not exceed 500 sq. meter or the number of apartments proposed does not exceed 8
  • Promoter has received completion certificate before introduction of RERA
  • Purpose of renovation/repair/redevelopment which does not include marketing, advertising, selling, or new allotment of any apartment/plot/building.

Impact of RERA

The impact of RERA will be effective and positive, as foreseen. There will be fewer projects launched as promoter/builder will understand the impact of Real estate. The dishonest builders will disappear. It will help encourage financial disciple in this sector and boost confidence of customers.

Penalities

  1. For Buyers
  • Non-compliance with RERA – daily penalty upto 5% of approx. cost of project
  • Non-compliance with Appellate Tribunal – Imprisonment up to 1 year or 10% of approx. cost of project
  1. For promoters
    • Non registration – 10% of project’s estimated cost
    • Giving false information – 5% of project’s estimated cost
    • Violation of laws – up to 3 years of imprisonment or fine of 10% of the estimated cost of property, or both
  2. For agents
    • Non registration of projects – Rs.10,000 per day up to 5% of approx. cost of project
    • Non-compliance with RERA – daily penalty up to 5% of project’s estimated value
    • Non-compliance with Appellate Tribunal – Imprisonment up to 1 year or 10% of project’s estimated cost or both.

Market situation after one year of RERA

Since the launch of RERA, positive outcomes have surfaced. There has been fewer project launched and focus has been on execution of the projects. The developers have tried to adhere to compliances to avoid litigation.

There has been relaxed delivery timelines for existing project, which has granted developers and escape window. However, the market is yet to witness any landmark judgment that could set a precedent.

Real Estate Appellate Tribunal

According to section 43(1) of RERA act, government shall establish Appellate Tribunal in every state/union territory within 1 year of the RERA act being established.

Any person who is unhappy with the decision of the concerned RERA authority can apply an appeal to the Appellate Tribunal. This appellate authority is created in this system to bring transparency in law structure.

It has been stated that 2 or more states can jointly establish 1 single Appellate Tribunal if deemed fit. An interim Appellate Tribunal is to be set up until a full-fledged Appellate Tribunal is established. Section 43(5) states that any person including association of allottees can file an appeal.

In case a promoter feels the need to file an appeal with the Appellate Tribunal, he has to first deposit at least 30% of penalty or total amount to be paid to allottees including interest and compensation imposed on him for the said appeal to be heard.

Every appeal must be disposed off within 6 days. Section 57(1) states that every order made by the tribunal shall be executable by the Appellate Tribunal as decree of civil court. It is important to note that in this aspect, Appellate Tribunal has all the powers of that of a civil court, including the discharging functions like review of decision.

Section 53 of the said act describes the powers of tribunal. However, the tribunal isn’t bound by the procedure of civil procedure code, and is neither bound by the rules of Indian Evidence Act. It shall be guided by the principles of natural justice.

Registration process for RERA

An application is required to fill the required application and submit it along with fees and the required documents. Upon submitting, the applicant will receive a registration number from the regulator.

This registration number is to be mentioned in every property transaction. On quarterly basis, the required agent is to maintain and update the books of accounts, records, and documents. It is important to note that if any agent is found to be guilty of misrepresentation or fraud during registration process, he/she may be suspended.

Who is required to register with RERA

  • Any person who constructs or who wants to builds an independent building or a building consisting of apartments or modification of existing structure into apartments to sell apartments to the persons.
  • Any person who develops the land into a project, to sell projects to other persons.
  • Any development authority or another public body in respect of allottees of
  • Buildings or plots constructed by such authority or public body on who owns land or placed at their disposal by the government.
  • Plots owned by development authority or which is placed at their disposal by the government to sell the apartments.
  • A state-level cooperative housing finance society and a primitive cooperative housing society which constructs the apartments or buildings for its members or to the allottees.
  • Any person who acts himself as a builder, coloniser, contractor, developer, estate developer or by any different name or claims to be acting as the holder of a power of attorney from the owner of the land on which the building or apartment is constructed or plot is developed for sale.

Documents required for registration

The following documents are required to be submitted. This however may vary from state to state according to their rules and regulations :

  • Details of enterprise and particulars of such enterprise
  • Details of projects launched by promoter in previous 5 years, its status and details
  • Authenticated copy of approvals and commencement certificate from competent authority
  • Copy of sanctioned plan, layout plan, and specifications of proposed project.
  • Development plan to be executed of the proposed project, and the proposed facilities for the project like drinking facility, etc.
  • Proforma of allotted letter, an agreement for sale, conveyance deed proposed to be signed with allottees
  • Number, type and carpet area of apartment for sale in project
  • Names and addresses of contractors, architect, structural engineer, and other persons concerned.
  • Declaration supported by an affidavit, signed by promoter or any person authorised to do so by promoter, stating that the land has legal title on which development is proposed along with legally valid documents with authentication of such title
  • Details of period of project taken to complete
  • Any other document required under rules and regulations prescribed.

Grant of registration

An applicant it to request application in Form A & Form B to authority. The grant of registration takes place within 30 days from the date of application submitted.

The registration number issued include the login ID and password, using which one can access the website and fill in the relevant required details of the project.

Exemption from Registration

The following conditions are exempted from registration under RERA :

  • The area of land proposed for developing does not exceed 500 square meters or the number of apartments developed does not exceed eight apartments.
  • The promoter has received the completion certificate for a real estate project prior before the commencement of RERA.
  • The real estate project requested for remodelling/replacement/development of projects are those projects which do not require marketing, advertising, selling or new allotment of an apartment.

Cancellation of Registration

The registration may be cancelled by the authorities for the following conditions, i.e., if a promoter :-

  • Defaults in performing anything under RERA
  • Violates the terms and conditions of approval granted by authority
  • Is involved in unfair practice or irregularities
  • Entertains any fraudulent practices.

A notice of 30 days shall be sent to the promoter, stating the reasons and details of cancellation of registration in writing.

Penalties for Non-Registration with RERA

Under section 59 of the act, a penalty is imposed on the defaulters of up to 10% of estimated project cost. In case of continued default, an additional fine of up to 10% of estimate project cost, or imprisonment up to 3 years, or both may be imposed.

Carpet area under RERA act

This provision under RERA at is mandatory to be followed by the concerned people. Carpet area is the total area of floor that can be used within the walls of the apartment. It does not include open terrace, balconies, etc. This method ensures that the buyers are not misled by the unlawful promoters.

Filing of complaint

Under section 31 of RERA act, an aggrieved person may file the complaint to either RERA authority or adjudicating officer. The complaint may be filed against promoter, allottee, and/or real estate agent.

The complaint must be in the form prescribed as per the respective state government’s rules. The fees for filing the same may vary from state to state. The details required to fill shall be – filing complaint against, house/flat no:, total value of flat, amount paid till date, date of possession, relief sought, pending court case, etc.

Benefits of filing complaint under RERA

The benefits of filing a complaint under RERA include fast disposal of cases, and efficient dispute resolution body. It also ensures that promoters cannot manipulate the law, given that the transparency is high. It also helps buyers claim compensation for delayed projects.

Recent changes regarding RERA

The recent changes inculcated by the RERA bodies are enlisted :

  • No need to register small projects

The Maharashtra Real Estate Appellate Tribunal, has ruled that projects which are in developable area of less than 500 sq meters or is less than eight flats, need not come under MahaRERA’s purview.

  • Long term lease properties now covered under law

Recently, the court stated that the provisions of the real estate regulatory law are applicable to long-term lease or ‘agreement to lease’. It’s a relief for those buyers who have registered with the development authority and have entered into an agreement of lease but are kept on hold for the possession.

  • Complaints against unregistered projects allowed

After a court hearing it was decided that the MahaRERA, also known as Maharashtra RERA will now allow homebuyers to file complaints against unregistered builders and projects as well.

  • Mandatory to obtain occupancy certificate within 3 months

The MahaRERA has directed all the builders in Mumbai to obtain the occupancy certificate (OC) within three months or pay an interest amount to residents of the building.

  • Force majeure clause not applicable anymore

The Maharashtra RERA authority had also ruled that the developers can’t use the force majeure clause for lack of approvals or financial crises.

  • Stay on order of Hike of registration fees for brokers

The Punjab & Haryana High Court had stayed Haryana RERA authority’s order to hike registration fee for brokers. The court had come to the rescue of realty agents who moved the court after the state real estate regulator asked them to pay higher registration charge.

  • Housing society is now a promoter.

Recently the Maharashtra RERA authority had said that a housing society will be considered as a promoter.

  • Home buyers to pay according to the project’s progress

The Madhya Pradesh RERA had ordered that a government agency can charge money as per a dated schedule, only if the project is complete. In case a project has been announced or is ongoing, the money demanded from buyers has to be linked with construction.

  • Home buyers can now remove developers from the project.

The MahaRERA authority had issued a standard operating procedure which allows homebuyers to remove a developer, in case the project was delayed. The project is then to be handed over to an expert panel for its completion.