Introduction
To protect and safeguard the interests of consumers and to bring transparency to the real estate sector, the Indian Parliament passed the Real Estate (Regulation and Development) Act, 2016 which is popularly known as RERA Act. Before this Act came into force the real estate sector was highly unorganized and was governed and controlled by a translucent set of rules and regulations of different states. Thus, it is not wrong to say that this act has brought uniformity to the real estate sector. It is an Act enacted to protect both buyers as well as the developers in the real estate sector. One of the important objectives of the RERA Act is to bring regulation and discipline in the real estate sector. In order to achieve this end one of the provisions that have been added to the Act is Section 3 which mandates prior registration of a real estate project with the Real Estate Regulatory Authority (RERA).
Is it mandatory to register a real estate Project before issuing an advertisement for sales?
Section 3(1) of the RERA Act lays out that a promoter shall not advertise, market, book, sell or offer for sale, or invite persons to purchase in any manner any plot, apartment, or building in any real estate project or part of it, in any planning, development or municipal area, without registering the real estate project with the Real Estate Regulatory Authority (RERA).
Further, for the projects that were ongoing on the date of commencement of the RERA Act (i.e. 01.05.2017) and for which the completion certificate was/has not been issued, the promoters were required to file an application to the RERA for such project within a period of three months from the date of commencement of the RERA Act.
In other words Section 3 (1) of the Act makes it compulsory for the real estate developers to register their projects with the Real Estate Regulatory Authority (RERA) and it is made abundantly clear that the promoter cannot market, book, sell or offer for sale, or invite persons to purchase a property in a real estate project without getting the project’s registration done. Section 3(1) also provides for the scope of the act and states that the act will be applicable on all the ongoing projects and future projects. This act is also applicable on those projects where the completion certificate was not issued at the time of commencement of the act. The same was held by the Hon’ble Supreme Court of India in Newtech Promoters and Developers Pvt. Ltd. vs. State of UP [2022] where it is held that:
“It manifests that the legislative intent is to make the Act applicable not only to the projects which were yet to commence after the Act became operational but also to bring under its fold the ongoing projects and to protect from its inception the inter se rights of the stake holders, including allottees/home buyers, promoters and real estate agents while imposing certain duties and responsibilities on each of them and to regulate, administer and supervise the unregulated real estate sector within the fold of the real estate authority.”
“54. From the scheme of the Act 2016, its application is retroactive in character and it can safely be observed that the projects already completed or to which the completion certificate has been granted are not under its fold and therefore, vested or accrued rights, if any, in no manner are affected. At the same time, it will apply after getting the ongoing projects and future projects registered under Section 3 to prospectively follow the mandate of the Act 2016.”
Hon’ble SCI in Civil Appeals no. 6745 & 6749 OF 2021
Are projects beyond a planning area required to be registered?
The Act mandates the registration of projects which fall within a planning area viz. the projects that fall within some urban development area (Ghaziabad Development Authority etc. ), municipal area (NDMC etc.), industrial development area ( Noida etc.), etc. however, the act empowers the RERA Authority that if the Authority thinks necessary, in the interest of allottees, for projects which are developed beyond the planning area but with the requisite permission of the local authority, it may, by order, direct the promoter of such project to register with the Authority. Under such a situation, the provisions of the Act are applicable to such projects from that stage of registration.
What is the minimum threshold required for registering a project?
Section 3(2) of the RERA Act provides an exception to registration laying that no registration of the real estate project is required where:
- the area of land proposed to be developed does not exceed five hundred square meters or
- where the number of apartments proposed to be developed does not exceed eight inclusive of all phases.
W.r.t. to the above exception question arose in Geetanjali Aman Construction Vs Hrishikesh Ramesh Paranjpe[2] before Maharastra Real Estate Appellate Tribunal as to whether the requirement of minimum 8 apartments and 500sqm land for regiatration are mutually exclusive or fulfilment of either if them will require registration of the project. The REAT held that the Condition of the area of the plot and the condition of the number of flats for getting exemption from the project are not mutually exclusive to each other and both conditions must be satisfied at once for obtaining the exemption from the registration. Relevant portion from the judgment of MHREAT is reproduced below:
“Keeping in view the settled law on interpretation of a statute and language of clause (a) of Section 3(2) of the Act of 2016, we are of the firm view that on the happening of any of the two contingencies i] the area of land proposed to be developed does not exceed 500 sq.mtrs or ii] the number of apartments proposed to be developed does not exceed eight inclusive of all phases, project needs no registration under sub section (1) of Section 3 of RER Act. The unambiguous language of clause (a) of Section 3(2) of the Act of 2016 makes it clear that “or” is to be read disjunctively and not conjunctively as conjunctive reading would make legislative intent redundant and would amount to changing the texture of the fabric which is not permissible in law.”
Geetanjali Aman Construction Vs Hrishikesh Ramesh Paranjpe (2019)
Whereas in NCT of Delhi, the RERA vide its Public Notice dated 28.04.2022 has held that all real estate projects are required to be registered under the Act with RERA, NCT of Delhi if the area of land proposed to be developed either for building flats, floors, shops, commercial space or for plotting exceeds 500 square meters, in all phases. To illustrate even if six flats or two floors or four showrooms are being constructed as a real estate project on a 501 square meter plot it would require registration with RERA, NCT of Delhi.
Further, registration is also exempted in the following circumstances:
- where the promoter has received a completion certificate for a real estate project prior to commencement of this Act;
- for the purpose of renovation or repair or re-development which does not involve marketing, advertising selling or new allotment of any apartment, plot or building, as the case may be, under the real estate project.
Also, under proviso to section 3(2), if the State Government considers it necessary, it may reduce the threshold below five hundred square meters or eight apartments for exemption from registration under this Act. The state government can do so on recommendation u/s 32 of RERA from the RERA Authority.
It is be noted that 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 shall obtain registration under this Act for each phase separately.”
What is the Requirement of Registration?
Prior registration of the project with RERA secures the interests of the buyers against the corrupt practices of some builders. As the project is safeguarded from any issues of the non-approval and delays at a later stage. Moreover, with a registered project, there is increased transparency and accountability toward buyers of property. As stated already the promoter cannot advertise before registering the project with RERA. Therefore, the buyer could itself check the accurate details of the proposed property in the project like the stage of completion, facilities, etc. which cannot be altered later by the builder. Keeping all the benefits in view, it is always advisable to the buyer to choose a project that is registered with RERA.
[1] LL 2021 SC 641
[2] Complaint Number 0000691 [Maha RERA]
[3] Complaint No. SC10000672
