Approaching RERA if you have booked a Flat in an On-Going Project

Housing Society Law

Posted by Aditya Pratap Law Offices on 01 Mar 24

---

 

Money stuck in an on-going real estate project is the worst experience that a person can undergo. While every month the EMI payments go into a bottomless barrel, there is no sign of any project completion in sight. As a consequence, while Builders may run scot-free with buyer’s money, it is the consumers who are left high and dry, and back to a ‘financial square one’ in their lives.

Two Kinds of Project Categories – New and On-going Projects:

When the Real Estate Regulation Act (RERA Act) was passed in the year 2016, it divided real estate projects into two kinds of categories. In the first category came new projects, which required compulsory registration under Section 3 of the Act. In the second category came ‘on-going projects’ which, despite being started earlier, also had to be registered with the Real Estate Regulatory Authority (RERA).

On-going Projects – Where ‘Completion Certificate’ is not received:

According to Section 3 of the RERA Act, an ‘on-going project’ is a real estate project which has not received ‘completion certificate’ as on date when the Act came into force. Under Section 2(q) of the Act, a ‘completion certificate’ is issued by the local municipal authority to the project one the building and structural works are complete.

History of Builder Bankruptcies Prior to RERA:

When the RERA Act came to be passed in 2016, India had already witnessed a series of builder bankruptcies and controversies. To begin with, there was the huge Jaypee Wishtown fiasco in NOIDA, where over 35,000 flat-buyers ran the risk of losing their life savings. Moving on right next door was the gigantic but decrepit project of ‘Unitech Golf and Country Club’, which too had been in suspended animation for several years, leaving flat-buyers in the lurch.

 

Legal Standing of an ‘On-going Project’ under RERA:

Once an ‘on-going project’ is registered under RERA, it becomes equally bound by the Act as would a new project. This means that the builder has to adhere to all legal provisions such as executing RERA-compliant agreements, maintaining an escrow account, duly accounting for all receipts and payments along with a host of other compliances including execution of registered sale agreements.

Chances of Fraud Greater in On-going Projects coming under RERA:

Since the enactment of the RERA Act initiated a new wave of legal compliance among builders, those constructing on-going projects went about finding ways to avoid the strict measures contained therein. For instance, some builders would not upload fully complete building plans of the project. They would also mention misleading and incorrect possession dates far beyond what was stated it the sale agreement. Through such devious means, builders of on-going projects try to evade RERA regulation and hence, it falls on vigilant homebuyers and the RERA Authority to bring them in check.

How to Deal with Builder Irregularities in an On-going Project:

If you have invested in an ‘on-going’ real estate project which has turned bad, then the first step would be to complain to RERA under Section 31 of the RERA Act. When you file this complaint, the Authority might, in the first hearing, try to ask the parties to settle. If a settlement cannot be worked out, then in the next date the Authority will post the matter for hearing on merits.

Misleading Dates of Possession – Builder cannot do without Your Consent:

It has been observed in several cases that when builders register an on-going real estate project with RERA, they tend to alter the dates of possession without consent of homebuyers. This is at stark contrast with Section 18 of the Act, which states that the date of possession intimated to RERA should be same as that indicated in the sale agreement executed with the buyer. The builder cannot state one date in the agreement while intimating another one to RERA.

In such cases, the RERA can penalise the Developer for intimating misleading dates of possession which are at variance with the Sale Agreement. Further it is likely to assign precedence to the date mentioned in the agreement over a different date intimated by the builder. Therefore, if a penalty is imposed upon a builder for delayed possession of flat, the delay period will be computed from the date of possession as indicated in the sale agreement.

Does RERA provide an Efficacious Remedy?

Yes, RERA does provide an efficacious remedy in so far as hearing of the case is concerned. Proceedings before RERA are speedy in nature, with minimal adjournments. However, the final outcome of the proceedings depends upon how effectively the parties have presented their respective cases.

It is important that any party approaching RERA should prepare his case in a clear and precise manner. Clarity of presentation and depth of arguments will go a long way in satisfying the Authority about the maintainability and merits of the case, increasing the likelihood of a favourable order in the matter. 

Aditya Pratap is a lawyer and founder of Aditya Pratap Law Offices. He practices in the realm of real estate, corporate, and criminal law. His website is adityapratap.in and his media interviews can be accessed at http://www.youtube.com/@AdityaPratap/featured . Views expressed are personal.