RERA- A Revolution

The Central Government has enacted The Real Estate (Regulation and Development) Act 2016 for regulation and promotion of the real estate sector, for protecting the interest of the consumers purchasing any plot, apartment or building and to ensure that the transactions take place in an efficient and transparent manner. This Act came into force from 1st May 2017. Maharashtra Government has constituted Maharashtra Real Estate Regulatory Authority and has also notified the Rules and Regulation under this Act. This act applies to any person, who is constructing a building or apartments for the purpose of selling, or developing a land for the purpose of selling and includes Development Authorities or Co-operative Housing Societies, or any person who acts like a builder, coloniser, contractor or estate developer. All these persons are defined as Promoters under the Act.

KEY HIGHLIGHTS

• Mandatory Registration of Promoters and Real Estate Agents.
• Contains provisions for Revocation of Registration of the Promoter and Real Estate Agents, when they commit default or violate any laws or is involved in mal-practices.
• Disclosure of all the statutory approvals, timelines and master plans of the project.
• Keep 70% of sale proceeds from every project in a Escrow Account.
• Upon revocation the bank account of the promoter will be freezed and the Authority can pass such orders as it may deem fit for completion of remaining work.
• The Promoters are entitled to sell plot, apartment or building only on the Carpet Area.
• The Promoter shall not accept more than 10% of the cost of plot, apartment or building without entering into an Agreement for Sale with the purchaser.
• The Promoter cannot transfer his rights and liabilities in the project to a third party without obtaining a prior written approval from two-third of the purchasers and the Authority.
• The Promoter cannot make any additions or alteration in the sanctioned plan without prior approval of the Purchasers.
• Interest shall be payable by the promoter to the purchasers, or by the purchaser to the promoter, as the case maybe, at SBI Marginal Cost of Lending Rate + 2%.
• No Civil Court shall have Jurisdiction to decide the dispute under this Act.

REGISTRATION OF PROMOTER

Without registration with the Authority, the Promoter cannot sell plot, apartment or building to any person. The ongoing projects are also required to be registered unless they have procured a completion certificate. Where no such certificate has been procured the promoter of the ongoing projects are required to register within 3 months from the date of commencement of this act i.e. on or before 31.07.2017.

If the project is related to re-development which does not involve selling or new allotment, or if the area of construction/development is less than 500 sq. meters or 8 apartments then the promoter is exempted from registration under this Act.

In the application for Registration with the Authority, the promoters are required to describe the brief details of the enterprise, the names & photographs of the promoters of the enterprise, brief details of the projects launched in the last 5 years and their present status, authenticated copies of the approvals from competent authority & commencement certificate, sanctioned plan, location details of the plan, number of apartments/plot and their carpet area for sale and details of contractor & architect appointed for the project.

An affidavit is to be submitted by the promoter stating that the promoter is entitled to develop the land, the land is free from encumbrances and if not the details of the same has to be furnished, the duration in which the project will be completed and that 70% of the amount received from the purchasers will be deposited in separate bank account (i.e. in an escrow account). An exception for the on-going projects is being provided in the rules i.e. 70% of the amount to be realised will only be required to be deposited. Thus, the promoter need not deposit the amount already received by him.

The Maharashtra Rules in addition to this requires the promoters to submit the details of PAN (Permanent Account Number), title report reflecting title on the property, development agreement (if any), number of floors & open space proposed.

The application for registration has be filed and submitted to the authority in FORM A, the application has to be approved or rejected by the authority within 30 days and if no reply is received it would be deemed as if the authority has granted the registration.

After granting of registration a Login ID and password of the website would be provided by the authority, where the promoter will have to upload the details of the project.

Where the promoter fails to complete the project on time, an extension of the project may be granted by the Authority in genuine cases, and such extension shall not be beyond one year.

OBLIGATION OF PROMOTER

The Agreement for Sale shall be in conformity with the model agreement for sale as specified in Annexure A of Maharashtra Real Estate (Regulation and Development)(Registration of real estate agents, rate of interest and disclosure on website) Rules, 2017. The promoters shall ensure insurance in respect of title of the land & building, construction of real estate project or with respect to any other aspect which may be prescribed by the state government. The promoter shall hand over the possession and execute a registered conveyance deed in favour of the purchaser along with the undivided proportionate title in common areas within the time specified in local laws, and in absence of local laws the possession shall be handed over within 30 days and the registration of conveyance deed shall be executed within three months from the date of issue of occupancy certificate. Where the promoter fails to complete the project within the time specified, the purchaser would be entitled to either ask for refund of entire money paid with interest and compensation. Interest shall be payable by the promoter to the purchasers at SBI Marginal Cost of Lending Rate + 2%. With the implementation of RERA, many of the promoters have restructured their projects. The promoters are now dividing their large projects into multiple smaller phases and registering them individually. This is done in order to ease the release of cash flow from the escrow account and to avoid stringent penalties in case the large project gets delayed.

RIGHTS AND DUTIES OF PURCHASER

The purchaser will be entitled to obtain all information related to sanctioned plan, stage-wise time schedule of completion of the project, provisions for various amenities (like water, electricity, sanitation, etc.). The purchasers have a right to claim possession of the plot, apartment or building upon expiry of time period of the project as given by the promoter in his affidavit. The purchasers are also entitled to have necessary plans and documents. The purchaser is also required to make the payment to the promoter in the manner prescribed in the agreement, and if a default is committed by the purchaser, he shall be liable to pay to the promoter at SBI Marginal Cost of Lending Rate + 2%. This liability to pay the money with interest may be reduced if both purchaser and promoter agree’s for the same.

JURISDICTION

No civil court has the jurisdiction to entertain any suit related to any matter on which the Adjudicating Authority or the Tribunal is empowered to deal with under this Act. The offences punishable with imprisonment cannot be tried by a court unless the Authority has made, complain in writing to the court.