RERA

REAL ESTATE (REGULATION AND DEVELOPMENT) ACT, 2016 (RERA)

Shelter according to one’s means requirements and status, is one of the most fundamental needs of every human being. Shelter is that basic need which distinguishes human from all other living beings. Nature equips animals and even micro- organisms with the body type and physiology, to survive in the wilderness and surroundings of the area they take birth. Plants and vegetation also grow in the environment, most suitable to their well -being and growth.

In heavily populated developing countries, supply of affordable and reasonable housing invariably trails behind the supply. It is in this sector that black money saw the maximum investments. Not only this, residential property trade saw maximum exploitation of the end user and the consumers during the last few decades. Builders who are professionals, had always been organised in their methods and tactics of exploiting their customers, most of whom are first and one- time purchasers of the property.

RERE quiet like the Right to Information Act, is a revolutionary enactment. It has so far, not been understood in its efficacy and complete perspective by the end users. This write up discusses the salient aspects which the property purchasers may find highly useful and use the information provided here to save time, effort and money while dealing in property matters. The topics and salient aspects of RERA are discussed topic wise herein below.

1. Main Aims- Aims are important to know the orientation of any enactment. The RERA is pro allottees with the only responsibility to make timely payments as agreed to the developer. The scope of Promoters’ responsibility has been enlarged substantially. It has the following revolutionary features:–

(a) priority in protection of interest of the allottees, and only thereafter those of the promoter and real estate agent;

(b) creation of a single window system for ensuring time bound project approvals and clearances for timely completion of the project;

(c) creation of a transparent and robust grievance redressal mechanism against acts of ommission and commission of competent authorities and their officials;

(d) measures to encourage investment in the real estate sector including measures to increase financial assistance to affordable housing segment;

(e) measures to encourage construction of environmentally sustainable and affordable housing, promoting standardisation and use of appropriate construction materials, fixtures, fittings and construction techniques;

(f) measures to encourage grading of projects on various parameters of development including grading of promoters;

(g) measures to facilitate amicable conciliation of disputes between the promoters and the allottees through dispute settlement forums set up by the consumer or promoter associations;

(h) measures to facilitate digitization of land records and system towards conclusive property titles with title guarantee;

2. RERA Revolutionary Points-

  1. No real estate promoter can 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, in any planning area, without registering the real estate project with the Real Estate Regulatory Authority. Where the real estate project is to be developed in phases, every such phase shall be considered a stand alone real estate project, and the promoter is required obtain registration under this Act for each phase separately.

(b) A complete history of the promoter on all relevant points in the past five years, whether already completed or being developed have to be made public.

(c) All essential information and documents i.e. approvals and commencement certificate, the sanctioned plan, layout plan and specifications of the proposed project or the phase, the whole project as sanctioned by the competent authority, the plan of development works, proposed facilities including fire fighting, drinking water, emergency evacuation, use of renewable energy, the location details of the project with clear demarcation of land dedicated for the project, have to be declared, committed and made public.

(g) The proforma of the allotment letter, agreement for sale, and the conveyance deed proposed to be signed with the allottees; has to be submitted to the RERA for prior approval.

(h) The promoter has to submit a declaration, supported by an affidavit signed by the promoter stating that he has a legal title or capacity as such to the relevant land along with legally valid documents and details of encumbrances including any rights, title, interest or name of any party in such land along with details.

(i) The promoter has to declare the time period within which he undertakes to complete the project or phase.

(j) The promoter has been bound to deposit seventy per cent of the amounts realised for the real estate project from the allottees, in a separate account in a scheduled bank to cover the cost of construction and the land cost to be used only for that purpose which he could withdraw to cover the cost of the project, in proportion to the percentage of completion of the project and that too after being 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.

(k) The project can not be delayed completion by the Promoter beyond the period stated by him except for reasonable cause and that too beyond one year of the declared date.

(l) Common mal practices by Promoters and non- adherence to RERA provisions have been listed and defined as misdeeds and penalties have been specified.

(m) All requisite documents, plans etc have to be handed over by the Promoter to the appropriate allottees or RWAs.

(n) In case of violation of RERA provisions, cancellation of Promoter license has been prescribed and safeguards have been provided so that no allottee suffers due to the default of the builder.

(o) Monetary penalty and compensation to allottees has been prescribed for violations and default as also imprisonment for failure to comply with, or contravention any of the orders, decisions or directions of the Applellate Tribunal.

(n) Time bound i.e. within 60 days disposal of complaints brought before the RARA as matter of routine.

3. Removal of ambiguity by defining all material aspects –Prior to the enactment of RERA promoters were using certain essential terms in the most dubious and misleading manner due to which the purchaser or the allottee of a real estate project was never able to discern about the actual price he was paying for per square foot of the usable area under his direct possession. Builders were declaring projects ready for possession merely upon raising the basic concrete construction. Parking areas were undefined leading to disputes. Essential internal and external area facilities, amenities were indefinitely left unfinished and uncompleted. RERA, has besides other terms defined the following essential ones which bind the promoters and bring ample transparency in the builder -purchaser contracts and dealings.

(a) “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.

Explanation.— For the purpose of this clause, the expression “exclusive balcony or verandah area” means the area of the balcony or verandah, as the case may be, which is appurtenant to the net usable floor area of an apartment, meant for the exclusive use of the allottee; and “exclusive open terrace area” means the area of open terrace which is appurtenant to the net usable floor area of an apartment, meant for the exclusive use of the allottee;

(b) “commencement certificate” means the commencement certificate or the building permit or the construction permit, by whatever name called issued by the competent authority to allow or permit the promoter to begin development works on an immovable property, as per the sanctioned plan;

(c) common areas” mean—

(i) the entire land for the real estate project or where the project is developed in phases and registration under this Act is sought for a phase, the entire land for that phase;

(ii) the stair cases, lifts, staircase and lift lobbies, fir escapes, and common entrances and exits of buildings;

(iii) the common basements, terraces, parks, play areas, open parking areas and common storage spaces;

(iv) the premises for the lodging of persons employed for the management of the property including accommodation for watch and ward staffs or for the lodging of community service personnel;

(v) installations of central services such as electricity, gas, water and sanitation, air-conditioning and incinerating, system for water conservation and renewable energy;

(vi) the water tanks, sumps, motors, fans, compressors, ducts and all apparatus connected with installations for common use;

(vii) all community and commercial facilities as provided in the real estate project;

(viii)all other portion of the project necessary or convenient for its maintenance, safety, etc., and in common use;

(d) “completion certificate” means the completion certificate, or such other certificate, by whatever name called, issued by the competent authority certifying that the real estate project has been developed according to the sanctioned plan, layout plan and specifications, as approved by the competent authority under the local laws;

Explanation.— For the purpose of this section, the expression “force majeure” shall mean a case of war, flood, drought, fire, cyclone, earthquake or any other calamity caused by nature affecting the regular development of the real estate project.

(e) “external development works” includes roads and road systems landscaping, water supply, sewerage and drainage systems, electricity supply transformer, sub-station, solid waste management and disposal or any other work which may have to be executed in the periphery of, or outside, a project for its benefit, as may be provided under the local laws;

(f) “garage” means a place within a project having a roof and walls on three sides for parking any vehicle, but does not include an unenclosed or uncovered parking space such as open parking areas;

(g) “internal development works” means roads, footpaths, water supply, sewers, drains, parks, tree planting, street lighting, provision for community buildings and for treatment and disposal of sewage and sullage water, solid waste management and disposal, water conservation, energy management, fire protection and fire safety requirements, social infrastructure such as educational health and other public amenities or any other work in a project for its benefit, as per sanctioned plans;

(h) “estimated cost of real estate project” means the total cost involved in developing the real estate project and includes the land cost, taxes, cess, development and other charges;

(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;

(zq) “sanctioned plan” means the site plan, building plan, service plan, parking and circulation plan, landscape plan, layout plan, zoning plan and such other plan and includes structural designs, if applicable, permissions such as environment permission and such other permissions, which are approved by the competent authority prior to start of a real estate project;

(a) “interest” means the rates of interest payable by the promoter or the allottee, as the case may be.

Explanation.—For the purpose of this clause—

(i) the rate of interest chargeable from the allottee by the promoter, in case of default, shall be equal to the rate of interest which the promoter shall be liable to pay the allottee, in case of default;

(ii) the interest payable by the promoter to the allottee shall be from the date the promoter received the amount or any part thereof till the date the amount or part thereof and interest thereon is refunded, and the interest payable by the allottee to the promoter shall be from the date the allottee defaults in payment to the promoter till the date it is paid;

(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.

4. Promoter’s Primary Responsibility towards Allotte- 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.

5. RIGHTS AND DUTIES OF ALLOTTEES

(a) The allottee shall be entitled to obtain the information relating to sanctioned plans, layout plans along with the specifications, approved by the competent authority and such other information.

(b) The allottee shall be entitled to 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.

(c) The allottee shall be entitled to claim the possession of apartment, plot or building, as the case may be, and the association of allottees shall be entitled to claim the possession of the common areas as per the declaration given by the promoter.

(d) The allottee shall be entitled to claim the refund of amount paid along with interest at such rate as may be prescribed and compensation in the manner as provided under RERA, from the promoter, if the promoter fails to comply or is unable to give possession of the apartment, plot or building, 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.

(e) The allottee shall be entitled to have the necessary documents and plans, including that of common areas, after handing over the physical possession of the apartment or plot or building as the case may be, by the promoter.

(f) Every allottee, who has entered into an agreement for sale to take an apartment, plot or building shall be responsible to make necessary payments in the manner and within the time as specified in the said agreement for sale and shall pay at the proper time and place, the share of the registration charges, municipal taxes, water and electricity charges, maintenance charges, ground rent, and other charges, if any.

(g) The allottee shall be liable to pay interest, at such rate as may be prescribed, for any delay in payment towards any amount or charges to be paid.

(h) The obligations of the allottee under sub-section (6) and the liability towards interest under sub-section (7) may be reduced when mutually agreed to between the promoter and such allottee.

(i) 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.

(j) 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.

(k) Every allottee shall participate towards registration of the conveyance deed of the apartment, plot or building, as the case may be.

6. Complaints and Appeals-

  1. Any aggrieved person may file a complaint with the Authority or the adjudicating officer, as the case may be, for any violation or contravention of the provisions of this Act or the rules and regulations made thereunder against any promoter allottee or real estate agent, as the case may be.

The Authority shall dispose of the same within a period of sixty days from the date of receipt of the application and in case of delay the Authority shall record its reasons in writing for not disposing of the application within that period.

(b) Any person aggrieved by any direction or decision or order made by the Authority or by an adjudicating officer may prefer an appeal before the Appellate Tribunal having jurisdiction over the matter:

However where a promoter files an appeal with the Appellate Tribunal, it shall not be entertained, without the promoter first having deposited with the Appellate Tribunal atleast thirty per cent. of the penalty, or such higher percentage as may be determined by the Appellate Tribunal, or the total amount to be paid to the allottee including interest and compensation imposed on him, if any, or with both, as the case may be, before the said appeal is heard.

Explanation.—For the purpose of this sub-section “person” shall include the association of allottees or any voluntary consumer association registered under any law for the time being in force.

  1. Any person aggrieved by any decision or order of the Appellate Tribunal, may, file an appeal to the High Court, within a period of sixty days from the date of communication of the decision or order only on the involvement of substantial questions of law. However no appeal lies against any decision or order made with the consent of the parties.