RERA Compliance for Promoters

By Legal Cell

Of late, MAHA RERA and other RERA Authorities have started putting up huge compliance for the promoters for greater transparency and validating their titles, mortgage, CC and various permissions.

In last six months, there are many compliance introduced including but not limited to deviation reports of Agreement for Sale from Model Agreement for Sale in RER Act 2016. Major area of compliance are:

• Deviation Report from Agreement for Sale
• Periodical inventory updates
• Periodical CERSAI
• All the professional certification on quaterly basis
• Title Reports in a format
• Form 5 and statutory Auditor’s certifications
• And many other things

1. RERA Compliance:

Since Housing is a state subject, every state has its own housing Act, Rules et. Although RERA is central Act, every state have been empowered to formulate its own Regulations and Rules to execute the RER Act 2016.

In RERA, Builder and developer must register their projects if any of the following conditions are satisfied:

• The Project is more than 5000 sq ft
• The Project is having more than 8 units

 

Besides this, if the project is intended to “Sell” before getting Occupation Certificate from Local Self Government then it is mandatory to register the project under Section 3 of RER Act 2016.

Various disclosures required at the time of registration of the project and it vary from state to state.

In Maharashtra, the state government was the first in India to establish the RERA Authority to regulate the real estate business. Just like any regulatory authority like National Housing Bank for housing finance business, SEBI for capital markets, RERA is now going to regulate the real estate business.

Not only builders but also Real Estate Brokers who are selling registered projects, must get registration. This is mandatory.

We shall now discuss various sections for compliance under RERA in Maharashtra.

Section 11 of RER Act 2016 have been enacted for compliance for registration as well as material disclosure for all ongoing projects.

 

Section 11 Compliance for Registration of the projects and transparency:

(1) The promoter shall, upon receiving his Login Id and password under clause (a) of sub-section (1) or under sub-section (2) of section 5, as the case may be, create his web page on the website of the Authority and enter all details of the proposed project as provided
under sub-section (2) of section 4, in all the fields as provided, for public viewing, including- (a) details of the registration granted by the Authority;

(b) quarterly up-to-date the list of number and types of apartments or plots, as the case may be, booked;

(c) quarterly up-to-date the list of number of garages booked;

(d) quarterly up-to-date the list of approvals taken and the approvals which are pending subsequent to commencement certificate;

(e) quarterly up-to-date status of the project; and

(f) such other information and documents as may be specified by the regulations made by the Authority.

(2) The advertisement or prospectus issued or published by the promoter shall mention prominently the website address of the Authority, wherein all details of the registered project have been entered and include the registration number obtained from the Authority and such other matters incidental thereto.

(3) The promoter at the time of the booking and issue of allotment letter shall be responsible to make available to the allottee, the following information, namely:-

(a) sanctioned plans, layout plans, along with specifications, approved by the competent authority, by display at the site or such other place as may be specified by the regulations made by the Authority;

(b) the stage wise time schedule of completion of the project, including the provisions for civic infrastructure like water, sanitation and electricity.

(4) The promoter shall-

(a) be responsible for all obligations, responsibilities and functions under the provisions of this Act or the rules and regulations made thereunder or to the allottees as per the agreement for sale, or to the association of allottees, as the case may be, till the conveyance of all the apartments, plots or buildings, as the case may be, to the allottees, or the common areas to the association of allottees or the competent authority, as the case may be:

Provided that the responsibility of the promoter, with respect to the structural defect or any other defect for such period as is referred to in sub-section (3) of section 14, shall continue even after the conveyance deed of all the apartments, plots or buildings, as the case may be, to the allottees are executed.

(b) be responsible to obtain the completion certificate or the occupancy certificate, or both, as applicable, from the relevant competent authority as per local laws or other laws for the time being in force and to make it available to the allottees individually or to the association of allottees, as the case may be;

(c) be responsible to obtain the lease certificate, where the real estate project is developed on a leasehold land, specifying the period of lease, and certifying that all dues and charges in regard to the leasehold land has been paid, and to make the lease certificate available to the association of allottees;

(d) be responsible for providing and maintaining the essential services, on reasonable charges, till the taking over of the maintenance of the project by the association of the allottees;

(e) enable the formation of an association or society or co-operative society, as the case may be, of the allottees, or a federation of the same, under the laws applicable:

Provided that in the absence of local laws, the association of allottees, by whatever name called, shall be formed within a period of three months of the majority of allottees having booked their plot or apartment or building, as the case may be, in the project;

(f) execute a registered conveyance deed of the apartment, plot or building, as the case may be, in favour of the allottee along with the undivided proportionate title in the common areas to the association of allottees or competent authority, as the case may be, as provided under section 17 of this Act;

(g) pay all outgoings until he transfers the physical possession of the real estate project to the allottee or the associations of allottees, as the case may be, which he has collected from the allottees, for the payment of outgoings (including land cost, ground rent, municipal or other local taxes, charges for water or electricity, maintenance charges, including mortgage loan and interest on mortgages or other encumbrances and such other liabilities payable to competent authorities, banks and financial institutions, which are related to the project):

Provided that where any promoter fails to pay all or any of the outgoings collected by him from the allottees or any liability, mortgage loan and interest thereon before transferring the real estate project to such allottees, or the association of the allottees, as the case may be, the promoter shall continue to be liable, even after the transfer of the property, to pay such outgoings and penal charges, if any, to the authority or person to whom they are payable and be liable for the cost of any legal proceedings which may be taken therefor by such authority or person;

(h) after he executes an agreement for sale for any apartment, plot or building, as the case may be, not mortgage or create a charge on such apartment, plot or building, as the case may be, and if any such mortgage or charge is made or created then notwithstanding anything contained in any other law for the time being in force, it shall not affect the right and interest of the allottee who has taken or agreed to take such apartment, plot or building, as the case may be;

(5) The promoter may cancel the allotment only in terms of the agreement for sale: Provided that the allottee may approach the Authority for relief, if he is aggrieved by such cancellation and such cancellation is not in accordance with the terms of the agreement for sale, unilateral and without any sufficient cause.

(6) The promoter shall prepare and maintain all such other details as may be specified, from time to time, by regulations made by the Authority.

 

 

For Real Estate Brokers, Section 10 was inserted for compliance purpose. The provisions of Section 10 are:

Section 10. Every real estate agent registered under section 9 shall—

(a) not 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 sold by the promoter in any planning area, which is not registered with the Authority;

(b) maintain and preserve such books of account, records and documents as may prescribed;

(c) not involve himself in any unfair trade practices, namely:—

(i) the practice of making any statement, whether orally or in writing or by

visible representation which—

(A) falsely represents that the services are of a particular standard or

grade;

(B) represents that the promoter or himself has approval or affiliation

which such promoter or himself does not have;

(C) makes a false or misleading representation concerning the services;

(ii) permitting the publication of any advertisement whether in any newspaper or otherwise of services that are not intended to be offered.

(d) facilitate the possession of all the information and documents, as the allottee, is entitled to, at the time of booking of any plot, apartment or building, as the case may be;

(e) discharge such other functions as may be prescribed.

 

The first question before you plan a complaint with RERA authorities in India is whether it is registered with the state authorities or not. The question is which are the projects needs to qualify for registration.

• In accordance with the Section 3(1) the RERA Act aims at demanding  the promoters  to  register each of their real estate projects be it commercial or residential with the RERA authority and thus barring the developers from advertising  or offering for sale or inviting any such proposal for sale of  any project before such registration. With an exception that such builder shouldn’t have received the completion certificate of the project so advertised. If you think and have proof that your builder have advertised in Print, Digital, Social Media, Hoardings, outdoor media, calls, messages, email or anything which you can prove on paper.
• Mind you, if the project is falling between Commencement Certificate and Occupation Certificate (OC) by whatever name called on 1st May 2017 then the project must be registered with State RERA concerned. By no means, the date was extended and it is statutory obligation of the builder to register the project.
• Section4 (2)(c-f) has provisions for the promoters to provide all necessary and important information relating to the project- sanctioned plan, allotment letter, and the appropriate specifications of the proposed project along with the authenticated approvals and the commencement certificate thus imparting important information of the project to the consumers. Make sure you see that Plan he has uploaded matches with the plan you got in your agreement for sale. If there are deviations then you qualify for complain. Also, builder has to take NOC from 2/3rd buyers at whatever stage the project is.
• With respect to the consumers interest the builder as mentioned in Section4 also has to provide the carpet area for each unit, the verandah or balconies if any, the garages or parking as to be provided to the consumers promoting transparency for the consumers and to gain access to all necessary information before investing their capital in the project. The carpet area must be as per the definition of RERA Act. It says inner surface of the wall to inner surface of the wall and space below internal wall. It varies from state to state as to the definition includes inner column. The Architect certificate uploaded must be seen.
• The provisions as mentioned in Section11 (4) holds the promoter responsible for the obligations, and all the promises made to the allottees and thus assuring the consumers against unfair trade practices of the builders. Keep all the statement made by the builder to you either in written, expression and oral.
• The Act in section 11 provides for the builders being responsible for the repair work of all the structural defects or any such defect that may arise in a period of 5 years from the date of conveyance of all flats in the particular project. Many developers have put conditions in agreement for sale that if without written permission you are not allowed to do any repair. Also a usual wear and tear conditions are imposed. But nothing will stand against this provisions. Builder has to obey the section and give repair to default in workmanship and for every successive occupant within five years.
• Section 14(2)(i) of the Act prohibits the developers from making any alterations or modifications in the approved plans , fixtures, fittings or amenities of a proposed project without the mutual consent of the allottees, so as to safeguard the interest of the consumers unfamiliar to such alteration. It requires 2/3rd member NOC to do so.
• The aim of the act is to ensure that the allottees are provided with their respective units according to the stipulated time as provided by the developer at the time of the registration, failure of which penalizes the promoter under Section 18 to compensate such allottee for the delay in possession of such property. Almost every developer took the liberty to raise possession date by four to five years. But if ou have entered into agreement and the date is given then you can always go to court for recourse irrespective of date filled by builder at the time of Registration.
• Section 19 (4) entitles the consumer to claim refund of the amount of the property along with the interest from the promoter, if the promoter fails to comply or is unable to give possession of the apartment, plot or building, as the case may be, in accordance with the terms of agreement for sale or due to discontinuance of his business as a developer on account of suspension or revocation of his registration under the provisions of this Act, thus securing the capital funds of the allottees who invested in the project.
• The Act provides for establishment of an authority to be known as Real Estate Regulatory Authority under Section 20 for the effective functioning of the provisions of the act and also securing the interests of the buyers against the ill fitted plans and intentions of the project builders. The authority is having qusi judicial powers to make any arrangement to complete the project and charge penalties.
• The provisions in S.29 empowers the aggrieved allottees to file a complaint against a developer to the authority, thus enabling the authority to deal with such a subject of protection of a consumer expeditiously and ensuring the disposal of such complaints within sixty days from the date of filing of the complaint with the appropriate authority. In Maharashtra, its online with a fees of Rs5000/- and in other states, the fees varies and sometime off line.
• Under Section 31 Any aggrieved person can file a complaint before the Authority in prescribed form. “Person” is already defined under section 2 (zg) of RER Act 2016.
• Under Section 38, the Authority has power to impose penalties, interest and direct the parties according to the provisions of the Act.