Section 12 – Obligation of Developer to comply with Project Brochure

Aditya Pratap is a lawyer practising in the Bombay High Court. He can be reached at aditya@adityapratap.com

What is The Real Estate (Regulation and Development) Act, 2016?

The Real Estate (Regulation and Development) Act, 2016 (RERA) was passed by the Rajya Sabha on 10 March 2016 and by the Lok Sabha on 15 March 2016. The Act came into force on 1 May 2016 to regulate the still largely unregulated real estate sector. 

RERA has brought in confidence not only with real estate consumers but also within other stakeholder communities like Banks, Financial Institutions and Foreign Investors. It allows the home buyer to make an informed decision while investing in a particular project.

Problems that were in existence before The Real Estate (Regulation and Development) Act, 2016

Problems that were in existence before RERA are as follows:-

  • Builders used to decamp and abscond after taking the money from the buyers.
  • Projects were abandoned after their construction.
  • There were long term delays up to 3-5 years.
  • Changes were made in the building without informing the buyer about it.
  • Dishonoring of many Terms and conditions that was laid down without any provision for compensation and no explanation for such thing to happen.
  • Poor quality of project execution.
  • Sometimes the builder failed to provide buyers with Occupancy certificates and Completion certificates.

Obligations of Promoter regarding veracity of the Advertisement or Prospectus

Section 12 of the The Real Estate (Regulation and Development) Act, 2016 states the Obligations of Promoter regarding veracity of the Advertisement or Prospectus. It provides a remedy to the buyer if he has been deceived by the builder. If the builder made a false promise, prepared frivolous prospectus or advertisement about his apartment, building or plots then he shall return entire investment of the buyer along with interest. 

Incorrect information towards the real estate project, false statement of builder and exhibition of false model apartment or flat are the basis to claim a refund. The buyer can invoke section 12 of RERA if the above elements are existing. If the builder has been delaying the project or fails to give the possession of the apartment on the date specified in the agreement then the buyer may invoke Section 18 of RERA Act instead of Section 12.

Return of entire investment along with the interest

The buyer has a right to claim the whole investment along with the interest at such rate as prescribed under the RERA. Buyer sustains loss or damages if the builder gives false statement or incorrect information regarding the building or apartment. It is in the interest of buyer to give him an option to withdraw from such project and get entire investment along with interest. Consequently, section 12 of the RERA Act provide such a remedy to the buyer.

Norms for Advertisements under The Real Estate (Regulation and Development) Act, 2016

Some norms according to advertisement in light of section 12 of The Real Estate (Regulation and Development) Act, 2016 are-

  • No Advertisement without Registration
  • Mentioning of the Registration number is compulsory for advertisement.
  • Copy of the brochure to be submitted to the authority not later than 15 days of its publication.
  • False Facts should not be advertised

Maharashtra Real Estate Regulatory Authority

An order was passed by Shri B.D. Kapadnis, the Member & Adjudicating Officer (MAHRERA), regarding the complaint filed under Section 12 of Real Estate (Regulation and Development) Act, 2016, for refund of the advance paid by the complainants. They were seeking a refund from a developer after the cancellation of the booking on the ground that the home buyer learned that the developer did not have approvals from the Forest Wildlife Department for the project.

MAHARERA ordered the developer to pay Rs 7.28 lakhs with a lending rate of interest of SBI namely 8.15 per cent plus 2 per cent and also Rs 20,000 towards the cost of complaint.

Additionally, when compared to other states, Maharashtra RERA is currently maintaining a lead with the highest registrations of the projects. As per the records, 79% of the real estate projects 99.7% of the real estate agents in Maharashtra are registered under RERA.

About the Author – Aditya Pratap

Aditya Pratap is a lawyer practising in Mumbai. He argues cases in the Bombay High Court, Sessions and Magistrate Courts, along with appearances before RERA, NCLT and the Family Court. For further information one may visit his website adityapratap.in or view his YouTube Channel to see his interviews. Questions can be emailed to him at aditya@adityapratap.com.

Cases argued by Aditya Pratap can be viewed here.

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