9 September 2017

RERA UPDATE | PENALTY FOR DELAYED REGISTRATION

The Real Estate (Regulation & Development) Act 2016 (RERA) read with the Maharashtra Real Estate (Regulation and Development) (Registration of Real Estate Projects, Registration of Real Estate Agents, Rates of Interest and Disclosures on Website) Rules, 2017 (Rules) provides for mandatory registration of ongoing projects for which a Completion Certificate has not been issued. Application for registration of such ongoing projects was supposed to be made within a period of three months commencing from 1 May 2017.

The Maharashtra Real Estate Regulatory Authority (MahaRERA) while taking into consideration various difficulties faced by the Promoters for making online application for registration, by its Order No. 2 dated 2 August 2017, decided that (a) penalty of Rs. 50,000/- (Rupees Fifty Thousand only) shall be levied as penalty on the Application received on 1 August 2017 and 2 August 2017, (b) failure to pay the penalty within a period of seven days, shall cause their application to be rejected as per the provisions of Section 5 (1) (b) of RERA. MahaRERA further decided to keep the process of registration open.  

MahaRERA, by its Order No. 3 dated 10 August 2017 clarified the status of Application received after 2 August 2017, and held that (a) penalty of Rs. 1,00,000/- (Rupees One Lakh only) or amount equivalent to registration fee of the ongoing project, whichever is higher shall be levied on the Promoter in addition to the registration fee of project, (b) such penalty shall be applicable for the Applications received after 2 August 2017 until 17:00 hrs of 16 August 2017 and (c) if the penalty is not received by 19 August 2017, their application shall be rejected as per the provisions of Section 5 (1) (b) of RERA.  

Recently, MahaRERA, by its Order No. 4 dated 8 August 2017 observed that the delay in registering projects jeopardizes the interest of allotees. MahaRERA adopted a similar procedure for application filed from 17 August 2017 until 31 August 2017 and held that penalty of Rs. 1,00,000/- (Rupees One Lakh only) or amount equivalent to registration fee of the ongoing project, whichever is higher shall be levied on the Promoter in addition to the registration fee of project.  

For Applications filed after 1 September 2017 until 30 September 2017, MahaRERA ordered that the quantum of penalty should be commensurate to the size of project and thereby increased the penalty on such applications to Rs. 2,00,000/- (Rupees Two Lacs only) or amount equivalent to twice the registration fee, whichever is higher, subject to a maximum cap of Rs. 10,00,000/- (Rupees Ten lacs only) in addition to the registration fees.

MahaRERA further clarified that in the event, Promoter does not agree to pay the said penalty or in the eventthe application for registration is received after 30 September 2017 then the same shall be rejected as per the provisions of Section 5 (1) (b) of RERA. However, no application shall be rejected unless the applicant has been given an opportunity of being heard.  

MHCO COMMENT:

With the intent to ensure registration of maximum projects across Maharashtra, the recent order passed by MahaRERA gives yet another opportunity to the Promoters to register their ongoing projects albeit with a penalty on or before 30 September 2017 which is way beyond the original deadline intended by 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.