Overview of & FAQ on Real Estate Regulation And Development Act

The RERA have strict guidelines for the marketing of the projects.Regulation And Development Act RERA As per section 12, anything shown in the prospectus or on basis of any model apartment, must be same with the final product

Regulation And Development Act RERA

the procedure for registering the real estate project under RERA Act 2016?

faqs-on-real-estate-regulation-and-development-act-rera-2016

Q.1    What are the objectives of RERA, 2016?

Ans.    The following are some of the objectives of RERA:Regulation And Development Act RERA

1. ensure accountability towards home-buyers and protect their interest;Regulation And Development Act RERA
   
2. infuse transparency, ensure fair-play and reduce frauds & delays;
   
3. imposing certain responsibilities on both promoter/builder and home-buyers;
   
4. establish fast- track dispute resolution mechanism;
   
5. establish symmetry of information between the promoter and home-buyers. Regulation And Development Act RERA
   

Q.2.    What is the effective date of the Act and its applicability in India ?

Ans.    The Real Estate and Regulations and Development Act, 2016 comes into effect from 1^st May, 2017. The Act is applicable to all states in India. Earlier Jammu and Kashmir was exempted but since 31.10.2019, the Act shall be applicable in Jammu and Kashmir also.

Q.3.    Does the Act covers residential and commercial projects?

Ans.     Yes, the Act is applicable to both residential and commercial real estate projects.

Q.4.    Does the term “promoter” include public bodies i.e. Housing Board or Development authority?

Ans.    Yes, the Act covers all bodies i.e. private and public who are involved in real estate sector for sale of the units to public at large. Thus, promoter as defined in section 2 (zk) includes private and public bodies dealing in building an apartments for the purpose of selling apartments.

Q.5.    Does advertisement include publication in form of e-mails and SMS? Is issuance of prospectus considered to be a case of ‘advertisement’?

Ans.    As per section 2(b) of the Act defines ‘advertisement’ as “any document described or issued as advertisement through any medium and includes any notice, circular or other documents or publicity in any form, informing persons about a real estate project or offering for sale of a plot, building or apartment or inviting persons to purchase in any manner such plot, building or apartment or to make advances or deposits for such purpose.”

Thus, from the definition it is clear that any medium adopted in soliciting for sale would be covered under the said definition, including SMS and emails. Issuance of prospectus is also considered as an advertisement, and the promoter is bound to provide all services that are mentioned in the prospectus.

Q.6.    Does the term ‘allottee’ include secondary sales?

Ans.    As per section 2(d) an allottee includes a person who acquires the said ‘apartment/plot’ through transfer or sale, but does not include a person to whom such plot, apartment is given on rent.

Q.7.    Is ‘open parking areas’ a part of ‘common areas’?

Ans.    Yes, as per Section 2(n), ‘common areas’ includes ‘open parking areas’, thus open parking areas cannot be sold to the allottees.

Q.8.    What all are included in the common areas?

Ans.    As per section 2(n) of the Act, common areas include the following:

1. the entire land for real estate project and its registration under this Act;
   
2. the stair cases, lifts, staircase and lift lobbies, fire escapes and common entrance and exits of buildings;
   
3. the common basements, terraces, parks, play areas, open parking areas and common storage spaces;
   
4. the premises for the lodging of persons employed for the management of property;
   
5. installations of central services such as electricity, gas, water and sanitation, air-conditioning and system for water conservation and renewable energy;
   
6. the water-tanks, sumps, motors, fans, compressors, ducts and all other things connected with installations for common use;
   
7. all community and commercial facilities;
   
8. all other portion of project necessary for maintenance, safety, etc. and in common use.
   

Q.9.    What is the difference between the term ‘completion certificate’ and ‘occupancy certificate’?

Ans.    Section 2(zf) defines ‘occupancy certificate’ and section 2(q) defines ‘completion certificate’. Occupancy certificate relates to the occupation of the apartment/building, which has provision for civic infrastructure such as water, sanitation and electricity and is habitable. Completion certificate relates to the completion of the entire project certifying that the project has been developed according to the sanctioned plan, layout plan and specifications, as approved by the competent authority.

Q.10. As per Act, why is it necessary to mention the carpet area over super-built up area?

Ans.    As per Section 2(k) of the Act, carpet area is the net usable floor area of an apartment excluding the area covered by the external walls, area under service shafts, exclusive balcony area and open terrace area but includes the area covered by internal partition walls of the apartment. Thus, the intention behind this is that the home-buyer should know what is he paying for, and in return what he will receive, in order to maintain transparency.

Q.11.    Which projects are required to be registered under RERA Act, 2016?

Ans.    All new and ongoing projects are required to be registered under the Act, since 1^st May, 2017. As per section 3, no promoter shall advertise, market, book, sell or offer for sale any plot, apartment or building without registering the real estate project with the Act.

Q.12.     What is the procedure for registering the real estate project under RERA Act 2016?

Ans.    As per section 4 of the Act, every promoter shall make an application to the Authority for registration of the real estate project in the manner as specified in the Act accompanied by the fees prescribed therein. The promoter shall enclose the following documents along with application:Regulation And Development Act RERA

1. details of his enterprise i.e. its name, registered address, types of
   

   enterprise and particulars of registration, details of promoters etc.
   

2. details of the project completed or under construction by the promoter for the last five years, including the current status of the said project, any delay, etc.
   
3. authenticated copy of the approvals and commencement certificate from competent authority.
   
4. the sanctioned plan, layout plan and specifications of proposed project.
   
5. the plan of development works to be executed including fire fighting facilities, drinking water facilities, emergency evacuation services.
   
6. location details of the project with demarcations of land.
   
7. Proforma of the allotment letter, agreement for sale, and conveyance deed.
   
8. Number, type, and carpet area of apartment for sale alongwith area of exclusive balcony or verandah areas and open terrace area.
   
9. Number and areas of garage for sale.
   
10. Name and address of his real estate agents if any,
    
11. Name and addresses of contractors, architect, structural engineer and other persons concerned with development of proposed project.
    
12. Declaration alongwith affidavit signed by the promoters stating that:
    
    1. he has legal title on the land on which the proposed project being developed;
       
    2. the land is free from all encumbrances;
       
    3. the time period within which he undertakes to complete the project;
       
    4. that 70% of amount realised for the project from the allottees shall be deposited in separate account maintained in scheduled bank;
       
    5. that he shall take all pending approvals from concerned authorities;
       
    6. that he shall furnish other documents as prescribed by the rules;
       
    7. such other information as prescribed.
       

The Authority shall operationalise a web based online system for submitting registration application within one year from its establishment.

Q.13. What do you mean by ‘ongoing projects? Are they required to be registered under RERA Act, 2016?

Ans.    Ongoing project means that projects which are pending or ongoing on the date of commencement of this Act and for which completion certificate has not been issued all those projects will come under the purview of ongoing projects. Such promoters are required to file an application to the Authority within a period of 3 months from date of commencement of this Act.

Q.14.    Who are exempted from the registering the project under RERA Act,2016?

Ans.    As per section 3(2) of the Act, no registration of real estate project shall be required:

1. where the area of land for proposed project does not exceed 500 sq. meters or the number of apartments proposed to be developed does not exceed eight inclusive of all phases;
   
2. where the promoter has received completion certificate for such project prior to commencement of this Act;
   
3. for the purpose of renovation or repair or re-development which does not involve marketing, advertising, selling, new allotment of any apartment.
   

Q.15. What is the time period for grant of registration?

Ans.    The Authority shall within a period of 30 days from the receipt of an application may:

1. allow the application and grant registration number, login ID, password, for accessing the website of Authority;
   

   OR
   

2. reject the application for reasons to be recorded in writing, after giving due opportunity of being heard.
   

If the authority fails to take cognizance of an application within 30 days, then it is deemed that the Authority has granted permission and that within 7 days the Authority is required to provide the registration number.

The registration is valid for the period declared by the promoter for completion of project.

Q.16. Can the promoter get extension of registration to complete the proposed project?

Ans.     Yes, the Authority can extend the registration on an application made by promoter due to force majeure, in such form and on payment of prescribed fees. The extended time shall not exceed a period of one year.

Q.17 Can the Authority revoke the registration once granted by them?

Ans.    Yes, as per section 7 of the act, the Authority suo motu or on receipt of a complaint or on recommendation of competent authority can revoke/cancel the registration.

Q.18.    What are the reasons for revocation of the registration by the Authority?

Ans.    The following are some of the reasons for revocation:

1. the promoter make default in doing anything required by this Act;
   
2. the promoter violates the terms and conditions of the approval given by the competent authority;
   
3. the promoter is involved in any kind of unfair trade practice.
   
4. The promoter indulges in any fraudulent practices.
   

Q.19.    What constitute as an unfair trade practice?

Ans.    The term unfair trade practice means a practice which for the purpose of promoting the sale or development of any real estate project adopts any unfair method or deceptive practice which includes:

1. The practice of making any statement, in writing or by visible representation which
   
   1. falsely represents that the services are of a particular standard ;
      
   2. represent that the promoter has approval which he does not have;
      
   3. makes false or misleading representation about services.
      
2. The promoter permits the publication of any advertisement or prospectus of services that are not intended to be offered.
   

Q.20.    What are the obligations of promoters, at the time of booking and issuance of allotment letter, towards the home-buyers?

Ans.     The promoter at the time of booking or at the time of issuance of allotment letter shall make available the following information to the allottees:

1. Sanctioned plans, layout plans approved by competent authority by way of display at site or other places as specified by Authority.
   
2. The stage wise time schedule of completion of project with provisions for civic infrastructure.
   

Q.21.    Is it compulsory for promoter to mention the registration number on advertisement or prospectus?

Ans.    Yes, as per section 11(2) of the Act, it is compulsory for the promoter to specifically mention the website address of the Authority and also the details of registration number and other details.

Q.22.    What are the responsibilities of the Promoters?

Ans.     As per section 11(4) of the Act, the promoter shall be responsible for:

1. All obligations towards the allottees or association of allottees or rules and regulations under the Act till the conveyance of all apartments to the allottes;
   
2. To obtain completion certificate or occupancy certificate from competent authority and to make available to allottees or association of allottees;
   
3. To obtain lease certificate, where the concerned project is developed on leasehold land;
   
4. Provide essential services on reasonable charges, till taking over by the association of allottees;
   
5. Enable formation of an association or society of allottees, within a period of 3 months of the majority of allottees having booked their apartment/plot;
   
6. Execute registered conveyance deed in favour of alloottees with undivided proportionate title in common areas to association of allottees;
   
7. Pay all outgoings until its transfer to association of allottees;
   
8. After the execution of agreement of sale, he should not create any third party interest by way of mortgage or charge, which shall not affect the rights of allottee.
   

Q.23.    What are the norms led down by RERA on advertisement or promotions on real estate projects?

Ans.    The RERA have strict guidelines for the marketing of the projects. As per section 12, anything shown in the prospectus or on basis of any model apartment, must be same with the final product. If the allottee sustain any loss by reason of such false statements made by the promoter, then the promoter is liable for penalties under the Act. The allottee may withdraw from the project, and shall receive the entire investment along with interest and compensation in the manner provided by the Act.

Q.24.    Is it necessary for the promoter to register agreement of sale before accepting the advance amount?

Ans.    Yes, as per section 13 of the Act, the Promoter shall not accept a sum not more than ten percent of the cost of apartment, as an advance payment or an application fees, without entering into written agreement of sale. The agreement of sale should mention the date of possession, the rate of interest payable at the time of default, particulars of payment, etc.

Q.25.    Can the promoter modify / amend the sanctioned plans or project specifications after having been approved by the competent authority and disclosed to the allottees?

Ans.    As per section 14 of the Act, the promoter can only modify/amend the sanctioned plan, after the approval of competent authority and its disclosure to the allottees, in case of minor additions or alterations. In case of major modifications / alterations, the promoter can modify the sanctioned plans or projects after having written approval from two-third of the allottees.

Q.26.    What is the period for which the promoter is liable for any structural defect in the project/apartment?

Regulation And Development Act RERA

Ans.    As per section 14(3) of the Act, the promoter shall be liable for 5 years from the date of handing over of the possession to the allottee is liable for structural defects or any other defects as specified therein.

Q.27.     What is the obligation of the promoter as regard transfer of the project to a third party?

Ans.    As per section 15 of the Act, the promoter is not entitled to transfer or assign his majority rights and liabilities in the project to a third party, without obtaining the prior written consent of two-third of allottees and the Regulatory Authority.

Q.28.    What is the obligation of the promoter as regards insurance of real estate project?

Ans.    As per section 16 of the Act and as so notified by the appropriate Government, the promoter is required to seek an insurance of the real estate project towards title of the land and towards construction of the project.

Q.29.    What is the time period for executing conveyance deed after receipt of occupancy certificate?

Ans.     As per section 17 of the Act, the promoter shall execute registered conveyance deed in favour of the allottee along with undivided proportionate share in common areas to the association of allottees, within a period of 30 days from the date of issue of occupancy certificate/completion certificate.

Q.30.    What are the remedies available to home-buyers if the promoter fails to perform his part of contract?

Ans.    If the promoter fails to complete or is unable to give possession of an apartment, plot or building, and if the allottee wishes to withdraw from the project, he can get the refund of his investment along with the interest at such rate as prescribed in the Act including compensation.

    If the allottee does not wish to withdraw from the project, then the promoter is liable to pay interest for every month of delay till handing over of the possession.

Q.31.    Can the Authority pass interim orders against the promoter? Regulation And Development Act RERA

Ans.    As provided by section 36, if the Authority is satisfied that any such act is in contravention of this Act, then the Authority can pass restraining order against the promoter, allottee or real estate agent from carrying any act until the conclusion of such inquiry.Regulation And Development Act RERA

Q.32.    Whether an appeal can be filed against the order of the Authority or adjudicating officer?

Ans.     Yes, as per section 44 (1) & (2) of the Act, the appropriate Government or competent authority or any person aggrieved by the order or decision of the Authority or the adjudicating officer may prefer an appeal to Appellate Tribunal within sixty (60) days from the date of order of the Authority or adjudicating officer. Regulation And Development Act RERA

Q33.    What is the time period within which the Appellate Tribunal is required to dispose of the appeal?

Ans.    Section 44 provides that the Appellate Tribunal should endeavour to dispose of the appeal as expeditiously as possible, but not later than sixty days from filing the appeal.Regulation And Development Act RERA

However, where the same could not be disposed of during the said period the Appellate Tribunal is required to record its reasons for the same.

Q.34.    Are the civil courts barred from entertaining disputes under the Act?

Ans.    Yes, as per section 79 of the Act, civil courts are barred from entertaining disputes (suits or proceedings) in respect of matters which the Authority or the adjudicating officer or the Appellate Tribunal is empowered under the Act to determine.

Q.34.    Are consumer forums barred from entertaining disputes under the Act?

Ans.    The consumer forums (National, State or District) have not been barred from the ambit of the Act. Section 71 proviso permits the complainant to withdraw his complaint as regards matters under section 12, 14, 18 and section 19, from the consumer forum and file it with the adjudicating officer appointed under the Act.

Q.35    Can a complainant approach the Regulatory Authority / adjudicating officer and the consumer forums, both for the same disputes?

Ans.    The laws of the country do not permit forum shopping, thus, an aggrieved can only approach one of the two for disputes over the same matter.

Q.36.    Can the order passed by the Appellate Tribunal be executed and treated as decree?

Ans.     Yes, as per section 57 of the Act, the order passed by the Appellate Tribunal shall be executable by the Appellate Tribunal or civil court (if transferred by the Appellate Tribunal to civil court for executing the order) shall be treated as a decree of civil court and for this purpose Appellate Tribunal shall have all powers of a civil court.Regulation And Development Act RERA

Q.37.    Does an appeal lie from the order of Appellate Tribunal?

Ans.    As per section 58 of the Act, any person aggrieved by any decision or order of Appellate Tribunal may file an appeal to the High Court within a period of sixty (60) days from the date of communication of the order.

Q.38.    What are modes of recovery of the outstanding interest amounts?

Ans.    As per section 40 of the Act, if a promoter or real estate agent or an allottee fails to pay the interest or penalty or compensation as imposed by the adjudicating officer or Regulatory Authority or appellate Authority, shall recoverable in such manner as may be prescribed as an arrears of land revenue.