RERA – Real Estate Regulatory Authority
The Real Estate Regulatory Authority is a state-level Government body set up to regulate and govern the real estate sector. It was established under the Real Estate Regulation Act, 2016, as a result of widespread exploitation of home-buyers by real estate developers (or Builders). The RERA Act (as it is commonly called) has put in place a comprehensive legal framework to govern developer-buyer relations and any violation of its norms attracts heavy penalties.
For the purposes of this article, the Real Estate Regulation Act shall be referred to as the “RERA Act, 2016. Likewise the Real Estate Regulatory Authority shall be referred to as the ‘RERA’. Further, the relevant terms and references used in the Act are highlighted below:
- Flat Buyers (Residential or Commercial) are known as “Allottees”;
- Builders and Developers are referred to as “Promoters”;
Compulsory Registration of Real Estate Projects:
Section 3 of the RERA Act, 2016 states that any ‘Real Estate Project’ having more than eight (8) flats or plots for sale must be registered with RERA. No developer can advertise or market his project unless it is registered under Section 3. If a developer violates this provision, he can be penalised up to ten per cent of the project cost by RERA. Further, failure to pay this penalty amount would result in imprisonment of up to three years with fine and additional penalty of another ten per cent of the project cost.
Registration under Section 3 is mandatory not only for new but also for under-construction projects. An ‘under construction’ project is defined as one where construction activity is ongoing and ‘completion certificate’ has not yet been issued. Such projects also have to register and will be treated at par with the new projects.
Submissions and Declarations by the Developer while registering the Real Estate Project:
A real estate developer has to perform several obligations and duties under the RERA Act. Under Section 4 of the Act, every application for registration must be accompanied by detailed project information, plans, affidavits and declarations. In particular, the builder must provide:
- Copy of the latest sanction plan from the municipal authorities along with all permissions, approvals and clearances (including Environment Clearance, if applicable);
- Proforma of the Draft Allotment Letter and Sale Deed proposed to be signed with the Allottee;
- Number and types of apartments for sale and garages in the project;
- Carpet area of each apartment;
- Names and addresses of real estate agents, engineers, architects and contractors involved with the project;
In addition to the above, the Developer also has to submit a declaration stating that:
- He (Developer) has a valid legal title to the land;
- There are no encumbrances or claims to the land; Disputes, if any, to be mentioned;
- The time within which the project will be completed;
- Seventy per cent (70%) of amounts received from Allottees will be deposited in an Escrow Account;
- All pending approvals will be taken on time.
Once the above information has been supplied, the RERA will proceed to grant registration to the project under Section 5 of the Act. A time limit of thirty days has been prescribed within which the RERA has to decide whether it will register the project or not.
Appeal against Rejection of Registration:
If for any reason the RERA refuses to grant registration to the project, the Developer can file an appeal with the Real Estate Appellate Tribunal (REAT) under Section 43(5) of the RERA Act.
Revocation of Registration of a Project
The RERA has powers to revoke registration of the project if the Developer violates the law or indulges in malpractices. Under Section 7 of the RERA Act, the Real Estate Regulatory Authority (RERA) can initiate such action either on the basis of a complaint or on its own accord.
Transfer of Project if Builder fails to Deliver:
If the Builder is unable to complete the project within the five (5) year registration period, his registration will lapse. In such a scenario, the RERA can consult the State Government and decide who shall complete the remaining construction of the project. Under Section 8(3), the Association of Allottees will have the first right of refusal for carrying out the remaining construction work. If this right is exercised, the Association of Flat Buyers (Allottees) can take over the project and complete the remaining construction under the supervision of RERA.