REAL ESTATE (REGULATION AND DEVELOPMENT) ACT, 2016 (RERA)
RERA
REAL ESTATE (REGULATION
AND DEVELOPMENT) ACT, 2016
THE PREAMBLE OF THE
ACT STATES:
An Act to establish the Real Estate Regulatory Authority for regulation
and promotion of the real estate sector and to ensure sale of plot, apartment
or building, as the case may be, or sale of real estate project, in an
efficient and transparent manner and to protect the interest of consumers in
the real estate sector and to establish an adjudicating mechanism for speedy
dispute redressal and also to establish the Appellate Tribunal to hear appeals
from the decisions, directions or orders of the Real Estate Regulatory
Authority and the adjudicating officer and for matters connected therewith or
incidental thereto.
The Act aims at protecting the rights and interests of consumers and
promotion of uniformity and standardization of business practices and
transactions in the real estate sector. It attempts to balance the interests of
consumers and promoters by imposing certain responsibilities on both. It seeks
to establish symmetry of information between the promoter and purchaser,
transparency of contractual conditions, set minimum standards of accountability
and a fast-track dispute resolution mechanism.
OBJECTS OF RERA
- ensure
accountability towards allottees and protect their interest;
- infuse
transparency, ensure fair-play and reduce frauds & delays;
- introduce
professionalism and pan India standardization;
- establish
symmetry of information between the promoter and allottee;
- imposing
certain responsibilities on both promoter and allottees;
- establish
regulatory oversight mechanism to enforce contracts;
- establish
fast- track dispute resolution mechanism;
- promote
good governance in the sector which in turn would create investor
confidence
KEY FEATURES OF
RERA
- All
developers will now have to disclose the original sanctioned plans and
changes made in the project at the later stage and duration of the time
within which they will complete the project.
- Each
state will set up its own regulatory authority that has the responsibility
to register and regulate projects under this Act. It will be the
responsibility of each state regulator to register real estate projects
and real estate agents operating in their state under RERA. The details of
all registered projects will be put up on a website for public access. No
developer can advertise/market the project, apartment or building without
registering the project with the RERA authority.
- After
registering with regulatory authority, the builder has to update all the
project details online on authority's website and update the same on
regular basis in terms of status of the project and other information.
This, in turn, will help the buyer to get accurate information about the
project and make informed decision while investing in the project. To
provide clarity to buyers, developers will have to keep them informed of
their other ongoing projects. The promoter is also required to furnish the
following additional information and documents at the time of registration
of the project with the Regulatory Authority:
- brief
details of his enterprise including its name, registered address, type of
enterprise (proprietorship, societies, partnership, companies, competent
authority), and the particulars of registration, and the names and
photographs of the promoter;
- a
brief detail of the projects launched by him, in the past five years,
whether already completed or being developed, as the case may be,
including the current status of the said projects, any delay in its
completion, details of cases pending, details of type of land and payments
pending;
- an
authenticated copy of the approvals and commencement certificate from the
competent authority obtained in accordance with the laws as may be
applicable for the real estate project mentioned in the application, and
where the project is proposed to be developed in phases, an authenticated
copy of the approvals and commencement certificate from the competent
authority for each of such phases;
- the
sanctioned plan, layout plan and specifications of the proposed project or
the phase thereof, and the whole project as sanctioned by the competent
authority; the plan of development works to be executed in the proposed
project and the proposed facilities to be provided thereof including fire
fighting facilities, drinking water facilities, emergency evacuation
services, use of renewable energy;
- the
location details of the project, with clear demarcation of land dedicated
for the project along with its boundaries including the latitude and
longitude of the end points of the project;
- proforma
of the allotment letter, agreement for sale, and the conveyance deed
proposed to be signed with the allottees;
- the
number, type and the carpet area of apartments for sale in the project
along with the area of the exclusive balcony or verandah areas and the
exclusive open terrace areas apartment with the apartment, if any;
- the
number and areas of garage for sale in the project;
- the
names and addresses of his real estate agents, if any, for the proposed
project;
- the
names and addresses of the contractors, architect, structural engineer, if
any and other persons concerned with the development of the proposed
project;
- a
declaration, supported by an affidavit, which shall be signed by the
promoter or any person authorized by the promoter, stating:--
- that
he has a legal title to the land on which the development is proposed
along with legally valid documents with authentication of such title, if
such land is owned by another person;
- that
the land is free from all encumbrances, or as the case may be details of
the encumbrances on such land including any rights, title, interest or
name of any party in or over such land along with details;
- the
time period within which he undertakes to complete the project or phase
thereof, as the case may be;
- that
seventy per cent of the amounts realized for the real estate project from
the allottees, from time to time, shall be deposited in a separate account
to be maintained in a scheduled bank to cover the cost of construction and
the land cost and shall be used only for that purpose.
Qua declaration to be submitted by the promoter, as stated above,
following further conditions are also to be met, namely:
- the
promoter shall withdraw the amounts from the separate account, to cover
the cost of the project, in proportion to the percentage of completion of
the project,
- that
the amounts from the separate account shall be withdrawn by the promoter
after it is certified by an engineer, an architect and a chartered
accountant in practice that the withdrawal is in proportion to the
percentage of completion of the project,
- that
the promoter shall get his accounts audited within six months after the
end of every financial year by a chartered accountant in practice, and
shall produce a statement of accounts duly certified and signed by such
chartered accountant and it shall be verified during the audit that the
amounts collected for a particular project have been utilized for the
project and the withdrawal has been in compliance with the proportion to
the percentage of completion of the project.
- For
new projects, the promoter is required to declare the time period within
which he intends to complete the construction of the project, failing
which, the registration will lapse. However, for ongoing projects, the
promoter is required to mention the extent of (i) the construction work
completed as per the last approved sanctioned plan of the project; and
(ii) the development of common areas, amenities etc. along with expected
period of completion of on-going project, which has to be commensurate
with the extent of development already completed.
- Under
the Act, the period of registration may be extended by the Regulatory
Authority due to specified force majeure events. In certain cases, it may
be extended on account of reasonable circumstances but such an extension
shall not exceed 1 (one) year in aggregate. In addition to this, the Rules
made under RERA provide that the registration period may be extended,
where actual work (as per the sanctioned plan) could not be carried by the
promoter due to (i) specific orders from any court of law or tribunal,
competent authority, statutory authority, relating to the project; or (ii)
due to such mitigating circumstances, as may be decided by the Regulatory
Authority.
- The
developer has to pay penalty in case of delay in giving possession or
return the total amount with interest at a defined rate, as mentioned in
the agreement of sale, to the homebuyer;
- A
developer cannot ask for more than 10 per cent of the booking amount as an
advance without making an agreement for sale. Earlier, developers asked
for 10 per cent of the total cost of property as the booking amount;
- Promoters
must have the consent of two-thirds of the buyers in a project before
making any change in the number of units or other structural changes. RERA
prescribes penalties, including imprisonment on developers who delay
projects or do not deliver on promises. Developers are required to
disclose their project details on the real estate regulator's website, and
provide updates on construction progress;
- In
case of any structural defect or poor quality, it will be the
responsibility of the developer to rectify such defects for a period of 5
years. Any structural or workmanship defects brought to the notice of a
promoter within a period of five years from the date of handing over
possession must be rectified by the promoter. For delayed possession,
developers need to pay an interest rate of 2 percentage points above State
Bank of India's lending rate;
- Developers/builders
are required to submit the original approved plans for their ongoing
projects and the alterations that they made later. They also have to
furnish details of revenue collected from allottees, how the funds were
utilized, timeline for construction, completion, and delivery that will
need to be certified by an engineer/architect/practicing chartered
accountant;
- Quality
of construction in projects has been given significance under RERA based
on protest from buyers regarding poor quality of flats over the last few
years. The regulator will ensure protection to buyers in this matter for
five years from the date of possession. If any issue is highlighted by
buyers in front of the regulator in this period including in quality of
construction and the provision of services, the developer will have to
rectify the same in a matter of 30 days;
- Developers
can't invite, advertise, sell, offer, market or book any plot, apartment,
house, building, investment in projects, without first registering it with
the regulatory authority. Furthermore, after registration, all the
advertisement inviting investment will have to bear the unique RERA
registration number. The registration no. will be provided project-wise;
- After
registering the project, developers will have to furnish details of their
financial statements, legal title deed and supporting documents;
- If
the promoter defaults on delivery within the agreed deadline, they will be
required to return the entire money invested by the buyers along with the
pre agreed interest rate mentioned in the contract based on the model
contract given by RERA;
- If
the buyer chooses not to take the money back, the builder will have to pay
monthly interest on each delay month to the buyer till they get delivery;
- After
developers register with the regulator, a page will be created for the
builder on the regulatory authority's website. The developer will be given
login credentials using which it will upload all the information regarding
the registered projects on the regulator's website. The number, type of
apartments, plots and projects and their completion status will be updated
at a maximum quarterly basis;
- The
regulator will have the power to fine and imprison errant builders based
on a case by case basis. The imprisonment can go up to a period of three
years for a project;
- Imprisonment
of up to three years prescribed for errant developers. A developer can
sell only on the basis of carpet area which will help home buyers
understand what they will be paying for each square foot they will get for
use.
and many such other aspects introduced under RERA.
Till now, Andhra Pradesh, Madhya Pradesh, Bihar, Uttar Pradesh, Gujarat,
Kerala, Odisha, and union territories of NCT of Delhi, Andaman and Nicobar
Islands, Chandigarh, Dadra and Nagar Haveli, Daman and Diu and Lakshadweep have
notified rules for implementation of RERA. Bihar and Odisha have notified rules
in complete sync with the one notified by the Ministry. While other states like
Uttar Pradesh, Haryana and Gujarat have provided certain exemptions to ongoing
projects; and states such as Delhi and Maharashtra have given relaxation in
terms of disclosures and lock-in period on investments made by developers.
With implementation of RERA, real estate industry is entering a new
regime with protection for buyers and stringent laws against promoters /
developers for noncompliance. To begin with the agreements signed between land
owners, developers, financial institutions and buyers will have to undergo a
complete makeover in order to be in accordance with RERA. Rest, time will tell.
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