30 March 2018

FULLY CONSTRUCTED BUILDING WITHOUT COMMON AREAS CONSTRUCTION & COMPLETION CERTIFICATE | REGISTRATION UNDER RERA REQUIRED

The Real Estate (Regulation and Development) Act, 2016 (RERA) has brought about a major transformation in the real estate sector of India, by regulating the entire process of development of real estate projects and making it more transparent for protection of the interest of consumers in the real estate sector.

Under RERA, for all projects which were ongoing on the date of commencement of RERA and for which completion certificate had not been issued, the promoters of such projects were required to apply for registration of such projects within 3 months from the date of commencement of RERA. However, The Maharashtra Real Estate Regulatory Authority (MahaRera) in one of its Order dated 21 September 2017 (Complaint No CC006000000000615) has held that building which is fully constructed and occupied and which has not received occupancy certificate (OC) does not require registration under RERA.

MahaRera contrastingly in its recent Order dated 5 February 2018 (Complaint No CC006000000000136) has held that even a building which has been fully constructed without providing common areas and agreed amenities but is occupied by all flat purchasers without OC as on the date of commencement of RERA requires registration under RERA. MahaRera brings out a subtle difference in the two orders which is briefly captured in this update below.

Facts of the Case:

• Mr Parag Pratap Mantri (Complainant) was residing in a flat in E-Wing of the project of Green Space Developers’ (Respondent) in Pune since 2013. The Complainant made a complaint to MahaRera against the Respondent, alleging that the Respondent had contravened Section 3 of RERA by not registering the project as the completion certificate for E-Wing had not been issued to the Respondent till date and further the construction of common areas and amenities was also not complete.

• The Respondent contended that (i) the Complainant had been residing in his flat in the said project since 2013; (ii) the construction of the building was complete prior to the enactment of RERA; and (iii) he had applied for the completion certificate on 16 August 2013 itself but it was still awaited. The construction of common areas and amenities was under way along with construction of a new H-Wing in the same complex which was under construction and had been registered. The Respondent therefore contended that MahaRera had no jurisdiction to entertain this complaint.

Decision:

• MahaRera held that E-Wing of the said project was an ongoing project and attracts Section 3 (Prior registration of real estate project with Real Estate Regulatory Authority) of RERA which stipulates that all ongoing projects on the date of commencement of RERA for which completion certificate had not been issued, require to be registered under RERA within 3 months from the date of commencement of RERA.

• In the present case, since the completion certificate was not issued AND the construction of common areas and provision of agreed amenities were still pending, the conditions for registration of the project under Section 3 were applicable and therefore E-Wing required registration.

• The Respondent also contended that on the date of commencement of the RERA, all the units in the E-Wing were booked and agreed to be sold and nothing remained to be sold. MahaRera observed that the Respondent had merely entered into agreements for sale for the units of E-Wing and had not executed sale deeds as yet. As a result, such agreements, though registered, did not pass any title to the buyer. Therefore, the Respondent was required to execute the conveyance deed in favour of the allottees/society by executing registered instrument under RERA.

• MahaRera further held that since the complainant was an ``aggrieved party`` under RERA the complaint was maintainable.

• On account of the above facts, MahaRera passed an order directing the Respondent to register E-Wing along with the other buildings in the project which were being/have been developed by the Respondent namely F, P, N-Wings with MahaRera within 30 days of the date of passing the order and further imposed a penalty of Rs 50,000/- on the Respondent for failure to register E-Wing with MahaRera.

MHCO COMMENT:

The aforesaid order passed by MahaRera is significant since it demonstrates that even though a building may be fully constructed, but any part of it including the common areas are yet to be constructed, it amounts to an ongoing project and therefore completion certificate for the same needs to be obtained by the promoter and the project needs to be registered under RERA. However, the previous order dated 21 September 2017 passed by MahaRera provides that a fully constructed and occupied building, though it has not received occupancy certificate, need not be registered under RERA.

The views expressed in this update are personal and should not be construed as any legal advice. Please contact us directly on +91 22 40565252 or legalupdates@mhcolaw.com for any assistance