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A BRIEF PRESENTATION TO
THE REAL ESTATE DEVELOPERS’ ASSOCIATION
MEERUT
ON
SALIENT FEATURES OF
Real Estate (Regulation & Development) Act
2016
[in short “RERA”]
Prepared by
*Disclaimer on Page 22 of this Presentation Utkarsh Jain & Avnish Garg
Status of RERA
Date of the Act Coming into Force Central Govt. has to publish Section 1(3)*
and Commencement of the Act Notification in Official Gazette
Each State Government MUST establish Within 1 year from the Act Section 20(1)
Real Estate Regulatory Authority coming into force
Each State Government MUST establish Within 1 year from the Act Section 43(1)
Real Estate Appellate Tribunal coming into force
*Recommendation: Wait for the Notification in the Official Gazette for Coming into Force
of RERA and Commencement of RERA. It is unclear when RERA shall commence. 2
What Type of Projects and Activities is RERA Applicable to?
Area of Plot Proposed to be Developed is greater than 500 square meters
or
Number of Units Proposed to be Constructed on the Plot are greater than 8 [Eight]
The above limits are inclusive of all phases in a real estate project. If the project is developed in phases, every such
phase shall be considered as a project, and promoter shall obtain registration under this Act for each phase
separately.
Residential Projects & Commercial Projects, whether new or existing/ongoing, for the Purpose of Sale which are
meeting the 500/8 Rule are covered under RERA.
Plotted Colonies, Group Housing/Apartments, Shops, Offices, Godowns and Complete Buildings (for
Residential/ Commercial/ Business/ Professional Use) are covered under RERA.
All Ongoing Projects for which Completion Certificate has not been issued before Commencement of RERA are
covered. Such projects have to be registered with the State Real Estate Regulatory Authority within 3 months from
Commencement of RERA. Refer to Section 3(1).*
Registration of Project with Authority has to be done before following activities are carried out:
Advertising, Marketing, Booking, Sale or Offer for Sale, and Invitation to Purchase.
*Recommendation: Wait for the Rules regarding Existing and Ongoing Projects for which Completion
Certificate has not been taken. Till now, the status of such projects under RERA appears unclear. 3
Who is Covered under RERA?
Promoter is defined in Section 2(zk) of RERA and is liable for the Project:
-Person Developing Land into Real Estate Project (with or without StructuresThereon)
-Person constructing Building (whether Independent Building or Multi-Unit)
- Person converting Existing Building into Multiple Units for the Purpose of Sale
-Development Authority/ Public Body developing/constructing Project for Purpose of Sale
-Co-operative Housing Society developing/constructing units for its Members
-Builder/Contractor/Coloniser/Developer
-Power of Attorney Holder of the Land Owner
-J.V. Partners
-If one person is constructing/developing the units and another person is marketing/selling, both
persons shall be considered as Promoters and jointly liable for the Project
• No exemptions given to ongoing projects/existing projects (without C.C.) in the Act and
all provisions of RERA apply to them.
• However, Rules are yet to be framed which shall hopefully give more clarity in this matter.
5
When to Register the Real Estate Project?
Real Estate Projects have to be registered with the Real Estate Regulatory Authority of the State
Real Estate Regulatory Authority has to be formed by State Government within 1 year of coming
into force of the Act.
Promoter MUST REGISTER New Project with Regulatory Authority before Advertising,
Booking, Selling, Offering for Sale, Inviting to Purchase
Promoter CANNOT REGISTER Project without obtaining the Approved Sanctioned Plans/
Commencement Certificate from the Competent Authority
Penalty for Non-Registration of Project up to 10% of the Estimated Cost of the Project [S. 59]
6
Registration of Real Estate Project
Real Estate Project has to be compulsorily registered with the State Real Estate Regulatory
Authority by filing the Application for the Project as per the Prescribed Rules
Regulatory Authority shall Grant Registration within 30 days of Application and provide
Registration Number of the Project to the Promoter and unique Login ID/ Password for accessing
theWebpage of the Project on theWebsite of the Authority to fill project details
Authority may reject a Defective Application with Reasons in Writing after giving an opportunity
to the Promoter of being heard.
Registration of Project shall be Valid for Declared Time Period of the Project Completion in the
Application
Registration may be extended for up to one year due to force majeure by Regulatory Authority
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Details to be Filed by Promoter in Application for Registration
Promoter and Company Details Project Details Declaration of Promoter on
Affidavit
Name and Registered Address Authenticated Copy of Approvals & He has Legal Title to the Land of the
Commencement Certificate Project
Enterprise Type (Proprietorship, Sanctioned Plan, Layout Plan and Land of the Project is Free from
Partnership Firm, LLP, Company, etc). Specifications of the Project. Location Encumbrances
& Registration Number Details with Clear Demarcation Details of Encumbrances, if any
Names & Photographs of Promoters Details of the Development Works Time Period for Completion of
Plan and the Proposed Facilities Project/ Phase
Details of Projects launched in Last 5 Proforma of Allotment Letter, He shall deposit 70% of Amount
Years (completed and under Agreement for Sale and Conveyance Realised from Allottees in a Separate
development) and their Current Deed Proposed to be Signed Bank Account to be used to cover
Status construction cost & land cost
-Details of Land of Project
Number, Type and Carpet Area of He shall get Accounts of the Project
-Details of Cases Pending in respect to
Apartments, Exclusive Balcony, Open Audited by C..A. within 6 months
Project
Terraces and Garages from the end of every FinancialYear
Details of Real Estate Agents, He shall take all pending approvals in
Architects, Structural Engineer, time from the competent authorities
Contractors, etc. for the Project
He has furnished all relevant
documents as per RERA
Promoter has to also regularly update details on Project’s Webpage on Website of the Authority
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Utilisation of 70% deposited in Separate Bank Account
70% of Amounts Realized from Allottees to be Deposited in a Separate Bank Account
Provision Implication
Purpose of depositing 70% is to cover “Cost of Payment of Land Cost and Withdrawal of Land
Project”, i.e., Construction Cost + Land Cost Cost from Separate Account possible
Amount may be withdrawn from Separate Account Percentage of Completion of the Project has to
based on Percentage of Project Completion Method be certified by Chartered Accountant, Architect
and Engineer
If separate registration numbers have been taken for separate phases in a single project, accounting for
each phase has to be done separately.
Funds from one phase cannot be utilised for works of another phase.
ISSUE: It is unclear what will be the withdrawal allowed if the opinions of the Chartered Accountant,
the Architect and the Engineer differ about the percentage of completion of project.
ISSUE: It has not been explicitly stated in the Act when the complete funds can be withdrawn from the
separate bank account.
It is unclear whether the funds can be withdrawn and Separate Bank Account closed if:
- 100% work completion as per certificate of C.A., Architect and Engineer
- Completion Certificate obtained from the competent authority
- Sale of All Units in the Project and Possession Granted to Allottees
- Handover of Project to the Association of Allottees 9
Cost of the Project
Items that will be included in Cost for Purpose of Withdrawal from Separate Account
*Care should be taken while constructing Model/Show Flats and even 3D Walkthroughs of Project 11
After Registration: Booking
Guidelines for Booking under RERA
No Booking Amount/ Application Fee/ Advance Payment can be taken from Allottee
without first Registering the Project with the Regulatory Authority
No Investor Sale/Pre-Launch Allowed
Promoter shall not accept a sum more than 10% of the cost of the unit as advance
payment/application fee from a person without first executing Registered Agreement
for Sale with the Allottee.
At the Time of Booking/Issue of Allotment Letter, Promoter shall provide to the Allottee:
a) Sanctioned Plans and Layout Plans, along with Specifications by Display at the Site
b) Stage-wise Time Schedule of Project Completion including Provisions for Civic
Infrastructure like Water, Sanitation and Electricity
Booking can be cancelled only in terms of the Registered Agreement for Sale. Effectively,
the Agreement to Sale has to be cancelled for Cancellation of Booking.
List of Bookings in the Project shall be displayed on the Project Webpage every quarter.
12
After Registration: WebPage
Activities under RERA
Updated Information has to be provided regularly about the Project Status
onWebpage of the Project on the Authority’sWebsite –
Details of Registration granted by the Authority
Quarterly Up-to-Date Information regarding the following:
a) List of Number and Types of Apartments/Plots/Garages Booked
in the Project
b) List of Approvals AlreadyTaken and Pending Approvals
c) Status of the Project
d) Any other Information as per Act and Rules made by the
Authority
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After Registration: Responsibilities of Promoter
Activities under RERA
The Promoter shall be responsible for all obligations, responsibilities and
functions under the provisions of RERA and Rules or as per the
Agreement for Sale till the Conveyance of All Units
The Promoter shall be responsible for providing and maintaining essential
services, on reasonable charges, till the taking over of the maintenance of
the Project by the Association of Allottees.
The Promoter shall be liable for Payment of all Outgoings collected from
Allottees for this purpose and related to the Project until Physical
Possession of the Project has been given to the Allottees/Association.
The Promoter shall not mortgage/create a charge on any unit for which
Agreement for Sale has already been executed and he shall solely be
responsible for any charge created by him.
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Defects & Development Obligations
For 5 years from Handover to Allottee, the Promoter shall be responsible
for:
a) Structural Defect
b) Defect inWorkmanship, Quality or Provision of Services
c) Any Other Obligation as per the Agreement for Sale relating to the
Development
Promoter shall rectify such defects without charge, within 30 DAYS from
the date of knowledge.
If the Promoter fails to rectify such defects within such time, the Allottee
shall be entitled to receive Compensation as provided under RERA.
15
Restrictions on Transfer & Assignment of Project
16
Granting Possession/ Transfer of Title
The Promoter shall HAND-OVER Physical Possession of the Unit to the Allottee AND
of the Project and Necessary Documents & Plans including Common Areas to Association
of Allottees or Competent Authority:
within the period as specified under the local laws; or
within 3 months from date of issue of the Occupancy Certificate.
Every allottee shall take Physical Possession of his Unit within a period of 2 months of the
Issuance of Occupancy Certificate.
Every allottee shall participate towards Registration of the Conveyance Deed as per RERA.
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Other Relevant Provisions
1. Rate of Interest chargeable from the Allottee by the Promoter, in case of default,
shall be equal to the Rate of Interest which the Promoter shall be liable to pay the
Allottee, in case of default.
2. Promoter shall ensure Formation of an Association/ Society/ Cooperative Society
of the Allottees within a period of 3 months from the majority of allottees having
booked a unit in the Project.
3. Promoter shall Compensate the Allottees for any loss caused to Allottee due to
Defective Title of the Land and such Claim for Compensation shall not be barred
by Limitation.
4. If Promoter fails to hand over possession of the Unit to the Allottee:
(i) In accordance with the terms of the Agreement for Sale; or
(ii) Due to Discontinuance of his Business as a Promoter; or
(iii) Revocation of his Registration; or
(iv) For any Other Reason
Promoter shall be Liable, on Demand being made by the Allottee, to Refund the
Amount received from Allottee with Interest and Compensation as per RERA.
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Penalties
REGULATORY AUTHORITY Penalty
Not taking Prior Registration under Section 3 Up to 10% of Estimated Cost of the Project as
decided by the Authority
Not paying Penalty imposed as above - Imprisonment upto 3 years
Or - Further penalty of 10% of Estimated Project Cost
Continues to violate Section 3 - Or Both
Giving False Information to Authority/ Allottees Up to 5% of Estimated Cost of the Project as
Or Contravention of Provisions of Section 4 decided by the Authority
Any OtherViolations of RERA or Rules Up to 5% of Estimated Cost of the Project as
decided by the Authority
Note the Date of Last Sale Deed Executed/Advance Taken in the Project
Try to obtain Full or Partial Completion Certificate from M.D.A., wherever possible
Review internal processes as per RERA including your typical Buyer Agreements/ Deeds
Wait for the Rules to be drafted under RERA for more clarity as there are several
discrepancies/ difficulties in the Act which need to be removed
2
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12 April, 2016 For Private Circulation Only
DISCLAIMER
All views and opinions expressed in this presentation are personal views and opinions of the Author based on information available till this date and his
understanding of the subject matter.
The Author is not responsible/liable in any manner if any facts/details/information emerge which may be contrary to views expressed by him in this
presentation.
The viewer/reader is advised to place utmost caution while following in any manner any of the advices, opinions or views of the author as presented in this
presentation.
The viewer/reader is advised to strictly follow the Act [“Real Estate (Regulation and Development) Act, 2016”] and the rules and regulations which may be
framed thereunder and any other law of the land as may be applicable before committing any action/deed in respect to matters under the Act. The author of
this presentation is not liable in any manner for commission/omission of any act by the reader/viewer/third party on the basis of this presentation.
Several matters in respect to the Act have not been covered under this presentation as per Author’s discretion.