(By Advocate Ravindra Pandharkar)

REAL ESTATE (REGULATION AND DEVELOPMENT) ACT, 2016

For the Union Territories in 2016, the Central Government, through HUPA (Housing & Urban Poverty Alleviation) Ministry, released the general rules of the Real Estate (Regulation and Development) Act, 2016 which were made applicable to Chandigarh, Lakshadweep, Daman & Diu, Dadra & Nagar Haveli and Andaman & Nicobar Islands.

To Whom Applicable :

The act is applicable to the real estate projects and real estate agents.

A] Registration of Real Estate Project by the Promoter of the Project :

As per Section 3 of this Act every promoter has to register any r eal estate project or part of it promoted by him with the Real Estate Regulatory Authority established under this Act, which is having the jurisdiction and control at the location of the project. Without registration , the promoter can not advertise, market, book, sell or offer for sale, or invite persons to purchase in any manner any plot, apartment or building, as the case may be, in any real estate project or part of it. As as per Section 3 of the Act promoters have to register all their projects with the respective Real Estate Regulatory Authority. However the exception for registration is available in following cases :

1. Total area of project does not exceed 500 Square Meters
2. Total units of apartments is not more than 8
3. The completed projects where OC (Occupancy Certificate is issued)

B] Registration of Real Estate Agent :

As per Section 9 of this Act No Real Estate Agent shall facilitate the sale or purchase of or act on behalf of any person to facilitate the sale or purchase of any plot, apartment or building, as the case may be, in a real estate project or part of it, being the part of the real estate project, being sold by the promoter in any planning area, without obtaining registration.

The Impact of the Provisions of the Act :

1. Safety of Investment & Security: Under the RERA act, a minimum of 70% of the buyers’ and investors’ money will be kept in a separate account. This money will then be allotted to the builders only for construction and land related costs. Developers and builders cannot ask for more than 10% of the property’s cost as an advance payment before the sale agreement is signed.
2. Transparency as to Title of Property : Builders are supposed to submit the original documents for all projects they undertake. Builders are not supposed to make any changes to the plans without the consent of the buyer.
3. Fairness and Uniformity : The developers have to sell properties based on carpet area and not super built up area. In the event that the project has been delayed, buyers are entitled to get back the entire money invested or they can choose to be invested and receive monthly investment on their money.
4. Quality of Construction as promised : The builder has to rectify any defects or issue faced by the buyer within 5 years of purchase. This issue must be rectified within 30 days of the complaint.
5. Offences, Penalties And Adjudication : Are clearly defined in the Act and therefore the strict discipline is maintained in all types of transactions of Real Estate between promoters, buyers, agents etc. Dishonest builders will disappear as they will fail to sustain in the market due to this Act.

The Contents and the Chapters in the Act :

For Details of the Act (“Real Estate (Regulation and Development) Act, 2016”) the copy is available for download. Important chapters of the Act are as under.

 

Important Definitions under the Act :

As per Section 2 (z) "immovable property" includes land, buildings, rights of ways, lights or any other benefit arising out of land and things attached to the earth or permanently fastened to anything which is attached to the earth, but not standing timber, standing crops or grass;

As per Section 2 (j) "building" includes any structure or erection or part of a structure or erection which is intended to be used for residential, commercial or for the purpose of any business, occupation, profession or trade, or for any other related purposes;

As per Section 2 (e) "apartment" whether called block, chamber, dwelling unit, flat, office, showroom, shop, godown, premises, suit, tenement, unit or by any other name, means a separate and self-contained part of any immovable property, including one or more rooms or enclosed spaces, located on one or more floors or any part thereof, in a building or on a plot of land, used or intended to be used for any residential or commercial use such as residence, office, shop, showroom or godown or for carrying on any business, occupation, profession or trade, or for any other type of use ancillary to the purpose specified;

As per Section 2 (k) "carpet area" means the net usable floor area of an apartment, excluding the area covered by the external walls, areas under services shafts, exclusive balcony or verandah area and exclusive open terrace area, but includes the area covered by the internal partition walls of the apartment.

As per Section 2 (d) "allottee" in relation to a real estate project, means the person to whom a plot, apartment or building, as the case may be, has been allotted, sold (whether as freehold or leasehold) or otherwise transferred by the promoter, and includes the person who subsequently acquires the said allotment through sale, transfer or otherwise but does not include a person to whom such plot, apartment or building, as the case may be, is given on rent;

As per Section 2 (zg) "Person" includes an individual, a Hindu undivided family, a company, a firm under the Indian Partnership Act, 1932, a firm under the Limited Liability Partnership Act, 2008, a competent authority, an association of persons or a body of individuals whether incorporated or not, a co-operative society registered under any law relating to co-operative societies or any such other entity as the appropriate Government may, by notification, specify in this behalf;

As per Section 2 (zn) "real estate project" means the development of a building or a building consisting of apartments, or converting an existing building or a part thereof into apartments, or the development of land into plots or apartment, as the case may be, for the purpose of selling all or some of the said apartments or plots or building, as the case may be, and includes the common areas, the development works, all improvements and structures thereon, and all easement, rights and appurtenances belonging thereto.

As per Section 2 (zm) "real estate agent" means any person, who negotiates or acts on behalf of one person in a transaction of transfer of his plot, apartment or building, as the case may be, in a real estate project, by way of sale, with another person or transfer of plot, apartment or building, as the case may be, of any other person to him and receives remuneration or fees or any other charges for his services whether as commission or otherwise and includes a person who introduces, through any medium, prospective buyers and sellers to each other for negotiation for sale or purchase of plot, apartment or building, as the case may be, and includes property dealers, brokers, middlemen by whatever name called.

As per Section 2 (zk) "promoter" means:

(i) a person who constructs or causes to be constructed an independent building or a building consisting of apartments, or converts an existing building or a part thereof into apartments, for the purpose of selling all or some of the apartments to other persons and includes his assignees.OR

(ii) a person who develops land into a project, whether or not the person also constructs structures on any of the plots, for the purpose of selling to other persons all or some of the plots in the said project, whether with or without structures thereon.OR

(iii) any development authority or any other public body in respect of allottees of

(a) buildings or apartments, as the case may be, constructed by such authority or body on lands owned by them or placed at their disposal by the Government.OR

(b) plots owned by such authority or body or placed at their disposal by the Government, for the purpose of selling all or some of the apartments or plots. OR

(iv) an apex State level co-operative housing finance society and a primary co-operative housing society which constructs apartments or buildings for its Members or in respect of the allottees of such apartments or buildings.OR

(v) any other person who acts himself as a builder, coloniser, contractor, developer, estate developer or by any other name or claims to be acting as the holder of a power of attorney from the owner of the land on which the building or apartment is constructed or plot is developed for sale.OR

(vi) such other person who constructs any building or apartment for sale to the general public.

Explanation.—For the purposes of this clause, where the person who constructs or converts a building into apartments or develops a plot for sale and the persons who sells apartments or plots are different persons, both of them shall be deemed to be the promoters and shall be jointly liable as such for the functions and responsibilities specified, under this Act or the rules and regulations made thereunder.

As per Section 2 (zf) "occupancy certificate" means the occupancy certificate, or such other certificate by whatever name called, issued by the competent authority permitting occupation of any building, as provided under local laws, which has provision for civic infrastructure such as water, sanitation and electricity.

Rights & Duties of Allottees (As per Section 19)

Rights of Allottees :

1. The allottee has a right to obtain the information relating to sanctioned plans, layout plans along with the specifications, approved by the competent authority and the related information or mentioned in the agreement for sale signed with the promoter. The allottee has a right to obtain the related documents, plans including of of common areas even after taking the physical possession of the apartment, plot, flat as the case may be.
2. The allottee has a rightto know stage-wise time schedule of completion of the project, including the provisions for water, sanitation, electricity and other amenities and services as agreed to between the promoter and the allottee in accordance with the terms and conditions of the agreement for sale.
3. The allottee has a rightto claim the possession of apartment, plot or building, as the case may be, and the association of allottees have also a joint rightto claim the possession of the common areas, as per the declarations given by the promoter.
4. The allottee has a right to claim from the promoter if he is unable to give possession of the apartment, plot or building as per the terms of agreement of Sale
5. a) The refund of amount paid along with interest.

b) Compensation in the manner as provided under this Act :

Duties of Allottees

1. The allottee, who has entered into an agreement for sale to take an apartment, plot or building as the case may be, is responsible to make necessary payments as per time schedule mentioned inthe agreement for sale including the share of the registration charges, municipal taxes, water and electricity charges, maintenance charges, ground rent, and other charges, if any payable by the allottee.
2. The allottee is liable to pay interest as per the provisions of this act for any delay in payments to the promoter. However the promoter may reduce the obligation of interest when the promoter and allottee mutually agree.
3. Every allottee of the apartment, plot or building as the case may be, shall participate towards the formation of an association or society or cooperative society of the allottees, or a federation of the same.
4. Every allottee shall take physical possession of the apartment, plot or building as the case may be, within a period of two months of the occupancy certificate issued for the said apartment, plot or building, as the case may be.
5. Every allottee shall participate towards registration of the conveyance deed of the apartment, plot or building.

Precautions and Care to be observed by the Allottees :

1. Before booking, verify builder’s registration
2. Not to buy apartment in unregistered projects
3. Not to pay more than 10% of cost before agreement and payment should be made by banking channels only.

Other Important Provisions of the ACT :

Promoters may be private or public : The Act covers all bodies (private and public) which develop real estate projects for sale to the general public. Thus, both Development Authorities and the Housing Boards, when involved in sale are covered under the Act.

Allottee : Anallottee includes a person who acquires the apartment / plot through transfer or sale, only and not a person to whom such plot, apartment is given on rent. The Act doesn’t include rental projects, lease / leave and License deals.

Open Parking Area is treated as "Common Areas" and the sale or allotment of Open Parking Areas by the Promoter is notpermissible. Covered Parking or the Garage is however permitted to be sold.

No Jurisdiction of Civil Courts : The Civil Courts have no jurisdiction and they are barred in dealing the disputes in real estate projects as per the Act. The allottee can however consumer forum for any disputes, but in this case he has to select either of the adjudication machinery under the Act or Consumer Forum. If the aggrieved person selects to move to adjudicating officer, he has to withdraw the complaint from the Consumer Forum.

When to Register the project : The Promoter has to obtain Commencement Certificate from the Competent Authority before registering his project with RERA.

Penalty for Non-registration : Ifanypromoter fails to register as per Act, he shall be liable to a penalty which may extend up to ten per cent of the estimated cost of the real estate project. On continued violation, he shall be punishable with imprisonment for a term which may extend up to three years or with fine which may extend up to a further ten per cent of the estimated cost of the real estate project, or with both.

Information of Registered Projects : In Maharashtra, the MahaRERA website would display all the registered projects. It is mandatory that the advertisement for marketing of apartments in the real estate project must carry the MahaRERA registration number. The buyers can verify authenticity of registration from the website – https://maharera.mahaonline.gov.in

Time for Completion of the Project :As per the provisions of the Act, the promoter, while applying for registrationto MahaRERA, has to give a declaration, supported by an affidavit, indicating the time period within which he undertakes to complete the project or phase thereof, as the case may be.

Interest to Allottee in case of Delay by promoters : In case of delay in getting possession from the promoter, the buyer will be entitled to get interest on the amount paid by him, for such delayedperiod as per the model form of agreement. The buyer may have to file a complaint to MahaRERA if there is a grievance.

Interest to be paid by Allottee in case of Delayed Payments : Similarly the Allottee has to pay to the Promoter, a rate of interest equal to the State Bank of India highest Marginal Cost of LendingRateplus two percent, on all the amounts which become due and payable by the Allottee to the Promoter under the terms of the Agreement from the date the said amount is payable by the allottee(s) to the Promoter.

Filing Complaint : As per Section 31 of the Act and the relevant rules framed by respective State RERA, the aggrieved person (the promoter or the allottee) can file the complaint online in the format provided for any violation or contravention of the provisions of the Act or the Rules or Regulations made there under. It shall include Registration number of the project to which the complaint pertains, Particulars of the complainant and respondent, Facts of the case, Relief Sought, List of Enclosures etc. Section 29 of the Act provides that complaints should be disposed off as expeditiously as possible but not later than sixty days from the date of filing the same.

Land owners and promoters : both are liable to adhere to the provisions of the Act.

Maximum amount payable by buyer before agreement : Section 13(1) of the Act prohibits the promoter from taking more than 10% of the cost of apartment without entering into a written agreement for sale, duly registered.

Referral bookings : Existing customers referring to others for buying the flat in same project or other project of same developer for consideration will be treated as Real EstateAgents.

Registration of Agents Compulsory : Every Real Estate Agent who intends to facilitate the sale or purchase of or act on behalf of any person to facilitate the sale or purchase of any plot, apartment or building, as the case may be, in a registered real estate project being sold by the promoter in any planning area in Maharashtra, shall have to apply for registration to Maharashtra Real Estate Regulatory Authority (MahaRERA). The registration of Real Estate Agent is valid for Maharashtra State only and is not valid for other states.

Agent cannot sign for promoter : The Agent is not authorized to sign on behalf of his promoter /builder.

Time limit for Issue of Registration by RERA : The Authority has to decide the registration applications. If it fails to issue any communication about deficiencies, within 30 days of the receipt of the application for registration the project will be deemed to be registered.

Disclaimer by the Writer of Article :

This was an attempt made to cover the important provisions of the law. The material contained herein is not exhaustive, and contains certain generalizations and descriptions. The latest Provisions, Rules and Notifications must be viewed to get the exact information for interpretation. The presenter is not responsible for any loss incurred on the actions taken based on the material presented above.

- Advocate Ravindra Pandharkar