RERA FULLY NOTIFIED | LANDMARK CHANGE IN
REAL ESTATE LAWS
- KEY TAKEAWAYS
The Central
Government in April 2016 partially notified Real
Estate (Regulation and Development) Act, 2016 (RERA or Act) and these
sections were effective from 1 May 2016. The rest of the sections were very
recently notified and are effective from 1 May 2017. The Maharashtra Government also notified various Rules under
RERA thus making the Act functional in Maharashtra with effect from 1 May 2017.
Following are some of
the important provisions of the Act and the newly notified Rules:
1.
Applicability:
The Act applies to all bodies (public and private) which develop real
estate projects for sale to the general public. The Act makes both, the land
owners and developers, who have executed a development agreement liable to
comply with the provisions of the Act and the rules framed thereunder.
2.
Registration:
All Real Estate Projects, for which the occupation certificate or the
completion certificate, as the case may be, has not been obtained, must be
registered with the Real Estate Regulatory Authority(Authority) within 90 days.
*
Standalone Project: Where
the project is to be developed in phases, every such phase shall be considered
as a standalone project;
*
Prohibition without Registration: If
projects are not registered, promoters are barred from (a) advertising; (b) marketing;
(c) booking, selling or offering for sale units in the said project. Further, all
ongoing projects shall have a ninety day window for completing registration of
projects, after which the promoter shall not advertise, market, book, sell or
offer for sale units in the said project. The Authority will be operational
from 1 May 2017 in Maharashtra.
*
State Registration Site: Promoters
can register on the website of the Authority (https://maharera.mahaonline.gov.in).
*
Registration not required: However,
the projects where the land area proposed to be developed is less than 500
square meters and the number of apartments to be developed is less than 8, then the same is exempted from
the Act.
3.
Registration
Fee and Documents: The Registration fee for a project is Rs 10
per sq m of land area, subject to a minimum of Rs 50,000/- and a maximum of Rs
10 lacs. Promoters are required to submit documents such as the document of
title, development agreement, PAN Card, sanctioned plan, proposed plan, etc.
4. Timeline
and Extension
*
In case of new projects, the promoter is
required to declare the time period within which he intends to complete the project
failing which the registration of the said project will automatically lapse.
*
In case of on-going projects, the promoter is
required to mention the extent of the construction work, common area, etc which
is completed along with expected period of completion and failing which the registration
of the on-going project will also lapse.
*
The period of registration may be extended by
the Authority due to specified force majeure events or in certain cases on account
of reasonable circumstances. But such extension will not exceed 1 year in
aggregate.
5. Regular
Updates and Penalty for non-registration: Once the project is
registered on the website of the Authority, it is mandatory for the promoter to
provide quarterly updates with respect to the same. If the promoter fails to
register the project as per the Act, he shall be liable to a penalty which may
extend to 10% of the estimated cost of the real estate project. A continued
violation shall be punishable with imprisonment which may extend to 3 years or
a further fine of 10% or both.
6.
Revocation
/ Lapse of Registration: Registration of the project will lapse in the
event of the following:
*
The promoter does not complete the project within
the timeline declared to the Authority;
* Authority may revoke the registration of
project on the basis of (i) Receipt of the Complaint; (ii) Suo Moto; (iii) On
recommendation of the Competent Authority in the event of promoter defaults in
his duties, violates any terms of the approval granted or is involved in any
unfair trade practice.
7.
Consequences: In the
event of the revocation / lapse of registration, the Authority shall:
*
(i) Debar the promoter from accessing the
website; (ii) Specify his name in the list of defaulters on the website; (iii)
inform other Regulatory Authorities in other states and union territories about
such cancellation.
*
Facilitate the remaining development works to
be carried out with the assistance of the competent authority / association of allotees
or any manner as may be determined by the Authority. It has to be noted that
association of allotees shall have the first right of refusal for carrying out
the remaining development works.
*
Direct the bank holding the project account to
freeze the account and thereafter take such further necessary action including
de-freezing the account towards facilitating the remaining development work.
8.
Registration
of Real Estate Agents: Real Estate Agents are also expected to
register themselves on the website of the Authority. The fee and process of registration
for real estate agents is the same as those of promoters. Failure to register
as a Real Estate Agent shall attract penalty of Rs 10,000 for every day of
continuing default which may cumulatively extend upto 5% of the cost of plot,
apartment or building, as the case may be.
9.
Filing of
Complaints: For fast track adjudication of customer grievances,
Regulatory Authority and Appellate Authority has been established. Any person
aggrieved on account of a violation of the RERA or the rules thereunder with
respect to a registered project, can file a complaint on the website of the Regulatory
Authority. Buyers may also pursue a complaint with the Consumer Forum, as an
alternative to the Authority established under the RERA.
10.
Financial
Compliance by Promoters: Promoters are required to place 70% of the
funds obtained from a project in a separate account in order to meet the cost
of construction and acquiring the land and withdrawals therefrom must be in
proportion to the construction and land costs. For the purpose of withdrawal
from the separate bank account the promoter shall submit the following certificates
to the bank where the account is opened:
*
A certificate from the project architect
certifying the completion of construction work of each building/wing of the
project;
*
A certificate from the engineer for the
actual cost incurred on the construction work in each building/wing of the
project;
*
A
certificate from a practising Chartered Accountant for the costs incurred on
construction on land and the proportion of such costs to the total estimated
cost of the project.
* Project accounts shall be audited annually
and a copy of the audit report shall be published
on the website of the
Authority.
11.
Other
important compliances by Promoters:
*
Promoters are required to form a Legal Entity
of allottees like Cooperative Society, Company, Association etc within 3 months
from the date on which 51% of the total number of Purchasers in such building
or wing have booked their apartment The Promoter shall also execute a
registered conveyance deed in favour of the allottees within 3 months from the
date of issue of occupancy certificates or 51 % of the total number of purchasers,
in such a building or a wing, has paid full consideration to the promoter,
whichever is earlier.
*
Changes to the sanctioned plans of any
apartment plot or building sold to any person shall not be made without the
consent of such person (except minor changes necessary for architectural or
structural reasons)
*
Any structural alterations to common areas can
only be made with the previous written consent of at least two thirds of the
allottees, other than the promoter.
*
A Promoter shall not accept a sum of more
than 10% of the cost of the apartment, plot or building as an advance payment
from a buyer, without entering into a written agreement for sale and register
the said agreement.
12.
Other
Important Provisions :
*
Open Parking areas cannot be sold to
allottees and must be conveyed to the Association of Allottees once the
Occupation Certificate is received. However promoters are entitled to sell
covered parking areas and garages.
*
The Act defines an allottee as one who
acquires the plot/apartment through transfer or sale but not a person who
acquires the same on rent. Therefore, the Act is applicable to those who
acquire flats/apartments/plots consequent to a sale by the original owner.
*
The buyer of a plot or apartment is entitled
to receive interest on delay in handing over the possession by the Promoter,
till the handing over of possession. The rate of interest payable by the
Promoter to allottee or vice versa, shall be SBI’s highest marginal cost of lending
rate plus 2%.
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.
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