Real Estate (Regulation and Development) Act (RERA)

 

The Real Estate (Regulation and Development) Act, 2016 has recently come into force. The preamble of the Act, 2016 states that it is an Act to establish the Real Estate Regulatory Authority for regulation and promotion of the real estate sector and to ensure sale of plot, apartment or building, as the case may be, or sale of real estate project, in an efficient and transparent manner and to protect the interest of consumers in the real estate sector and to establish an adjudicating mechanism for speedy dispute redressal and also to establish the Appellate Tribunal to hear appeals from the decisions, directions or orders of the Real Estate Regulatory Authority and the adjudicating officer and for matters connected therewith or incidental thereto. It extends to the whole of India except the State of Jammu and Kashmir.

There are many important definitions in the Act like that of advertisement, allottee, apartment, building, promoter, real estate agent, carpet area. As per the definition of “advertisement”, it means 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 purposes.

“Promoter” as per the Act means a person who constructs or causes to be constructed an independent building or a building consisting of apartments, or converts an existing building or a part thereof into apartments, for the purpose of selling all or some of the apartments to other persons and includes his assignees or  a person who develops land into a project, whether or not the person also constructs structures on any of the plots, for the purpose of selling to other persons all or some of the plots in the said project, whether with or without structures thereon. It includes any other person who acts himself as a builder, coloniser, contractor, developer, estate developer or by any other name or claims to be acting as the holder of a power of attorney from the owner of the land on which the building or apartment is constructed or plot is developed for sale.

Whereas “real estate agent” means any person, who negotiates or acts on behalf of one person in a transaction of transfer of his plot, apartment or building, as the case may be, in a real estate project, by way of sale, with another person or transfer of plot, apartment or building, as the case may be, of any other person to him and receives remuneration or fees or any other charges for his services whether as commission or otherwise and includes a person who introduces, through any medium, prospective buyers and sellers to each other for negotiation for sale or purchase of plot, apartment or building, as the case may be, and includes property dealers, brokers, middlemen by whatever name called.

Definition of “allottee” in relation to a real estate project is the person to whom a plot, apartment or building, as the case may be, has been allotted, sold (whether as freehold or leasehold) or otherwise transferred by the promoter, and includes the person who subsequently acquires the said allotment through sale, transfer or otherwise but does not include a person to whom such plot, apartment or building, as the case may be, is given on rent.

“Apartment” has been defined as a separate and self-contained part of any immovable property, including one or more rooms or enclosed spaces, located on one or more floors or any part thereof, in a building or on a plot of land, used or intended to be used for any residential or commercial use such as residence, office, shop, showroom or godown or for carrying on any business, occupation, profession or trade. It might even be called block, chamber, dwelling unit, flat, office, showroom, shop, godown, premises, suit, tenement, unit or by any other name. Definition of “building” is an inclusive one and includes any structure or erection or part of a structure or erection which is intended to be used for residential, commercial or for the purpose of any business, occupation, profession or trade.

“Appropriate Government” means in respect of matters relating to the Union territory without Legislature, the Central Government, the Union territory of Delhi, the Central Ministry of Urban Development and in case of a State, the State Government.

“Carpet area” means the net usable floor area of an apartment, excluding the area covered by the external walls, areas under services shafts, exclusive balcony or verandah area and exclusive open terrace area, but includes the area covered by the internal partition walls of the apartment.

Section 3 of the Act declares that no promoter shall advertise, market, book, sell or offer for sale, or invite persons to purchase in any manner any plot, apartment or building, as the case may be, in any real estate project or part of it, in any planning area, without registering the real estate project with the Real Estate Regulatory Authority. Those projects that are ongoing on the date of commencement of the Act and for which the completion certificate has not been issued, the promoter will have to make an application to the Authority for registration of the said project within a period of three months from the date of commencement of the Act. In the interest of allottees, if the Authority thinks necessary 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

Registration  of the real estate project under the Act is not required under certain conditions like where the area of land proposed to be developed does not exceed five hundred square meters or the number of apartments proposed to be developed does not exceed eight inclusive of all phases or where the promoter has received completion certificate for a real estate project prior to commencement of the Act or 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.

As per the Act, the following documents are required from the promoter –

• A brief details of his enterprise including its name, registered address, type of enterprise (proprietorship, societies, partnership, companies, competent authority), and the particulars of registration, and the names and photographs of the promoter.
• A brief detail of the projects launched by him, in the past five years, whether already completed or being developed, as the case may be, including the current status of the said projects, any delay in its completion, details of cases pending, details of type of land and payments pending.
• An authenticated copy of the approvals and commencement certificate from the competent authority obtained in accordance with the laws as may be applicable for the real estate project mentioned in the application, and where the project is proposed to be developed in phases, an authenticated copy of the approvals and commencement certificate from the competent authority for each of such phases.
• Sanctioned plan, layout plan and specifications of the proposed project or the phase thereof, and the whole project as sanctioned by the competent authority.
• Plan of development works to be executed in the proposed project and the proposed facilities to be provided thereof including fire fighting facilities, drinking water facilities, emergency evacuation services, use of renewable energy.
• Location details of the project, with clear demarcation of land dedicated for the project along with its boundaries including the latitude and longitude of the end points of the project.
• Proforma of the allotment letter, agreement for sale, and the conveyance deed proposed to be signed with the allottees.
• Number, type and the carpet area of apartments for sale in the project along with the area of the exclusive balcony or verandah areas and the exclusive open terrace areas apartment with the apartment, if any.
• Number and areas of garage for sale in the project.
• Names and addresses of his real estate agents, if any, for the proposed project.
• Names and addresses of the contractors, architect, structural engineer, if any and other persons concerned with the development of the proposed project.
• Declaration, supported by an affidavit, which shall be signed by the promoter or any person authorised by the promoter, stating :—
  • That he has a legal title to the land on which the development is proposed along with legally valid documents with authentication of such title, if such land is owned by another person.
  • That the land is free from all encumbrances, or as the case may be details of the encumbrances on such land including any rights, title, interest or name of any party in or over such land along with details.
  • The time period within which he undertakes to complete the project or phase thereof, as the case may be.
  • That seventy per cent. of the amounts realised for the real estate project from the allottees, from time to time, shall be deposited in a separate account to be maintained in a scheduled bank to cover the cost of construction and the land cost and shall be used only for that purpose.

The Authority on satisfying the conditions will grant registration and provide a registration number, including a Login Id and password to the applicant for accessing the website of the Authority and to create his web page and to fill therein the details of the proposed project.

The promoter will have to create his web page on the website of the Authority and enter all details of the proposed project as mandated in all the fields as provided, for public viewing which should include

• Details of the registration granted by the Authority.
• Quarterly up-to-date the list of number and types of apartments or plots, as the case may be, booked.
• Quarterly up-to-date the list of number of garages booked.
• Quarterly up-to-date the list of approvals taken and the approvals which are pending subsequent to commencement certificate.
• Quarterly up-to-date status of the project.

Only registered real estate agent are allowed to facilitate the sale or purchase of or act on behalf of any person to facilitate the sale or purchase of any plot, apartment or building, as the case may be, in a registered real estate project or part of it.

It has been mandated by the Act that the allottee will be entitled to obtain the information relating to sanctioned plans, layout plans along with the specifications, approved by the competent authority and also entitled to know stage-wise time schedule of completion of the project, including the provisions for water, sanitation, electricity and other amenities and services as agreed to between the promoter and the allottee in accordance with the terms and conditions of the agreement for sale. He can also claim the refund of amount paid along with interest at such rate as may be prescribed and compensation in the manner as provided under the Act, from the promoter, if the promoter fails to comply or is unable to give possession of the apartment, plot or building, as the case may be, in accordance with the terms of agreement for sale or due to discontinuance of his business as a developer on account of suspension or revocation of his registration. He can have the necessary documents and plans, including that of common areas, after handing over the physical possession of the apartment or plot or building as the case may be, by the promoter.

But certain duties have been cast on the allottees too, like one who has entered into an agreement for sale to take an apartment, plot or building, under section 13, shall be responsible to make necessary payments in the manner and within the time as specified in the said agreement for sale and shall pay at the proper time and place, the share of the registration charges, municipal taxes, water and electricity charges, maintenance charges, ground rent, and other charges, if any. He will be liable to pay interest too.

The Authority will consist of a Chairperson and not less than two whole time Members. The Chairperson and the Members of the Authority are to be appointed by the appropriate Government on the recommendations of a Selection Committee consisting of the Chief Justice of the High Court or his nominee, the Secretary of the Department dealing with Housing and the Law Secretary, in such manner as may be prescribed, from amongst persons having adequate knowledge of and professional experience of at-least twenty years in case of the Chairperson and fifteen years in the case of the Members in urban development, housing, real estate development, infrastructure, economics, technical experts from relevant fields, planning, law, commerce, accountancy, industry, management, social service, public affairs or administration.

The questions before the Authority are to be dealt within a period of sixty days from the date of receipt of the application. Any aggrieved person may file a complaint with the Authority or the adjudicating officer, as the case may be, for any violation or contravention of the provisions against any promoter allottee or real estate agent. An explanation attached to the section clarifies the scope of “person” which include the association of allottees or any voluntary consumer association registered under any law for the time being in force.

The Authority can also make certain recommendations to the appropriate Government like:

• Protection of interest of the allottees, promoter and real estate agent.
• Creation of a single window system for ensuring time bound project approvals and clearances for timely completion of the project.
• Creation of a transparent and robust grievance redressal mechanism against acts of ommission and commission of competent authorities and their officials.
• Measures to encourage investment in the real estate sector including measures to increase financial assistance to affordable housing segment.
• Measures to encourage construction of environmentally sustainable and affordable housing, promoting standardisation and use of appropriate construction materials, fixtures, fittings and construction techniques.
• Measures to encourage grading of projects on various parameters of development including grading of promoters.
• Measures to facilitate amicable conciliation of disputes between the promoters and the allottees through dispute settlement forums set up by the consumer or promoter associations.
• Measures to facilitate digitization of land records and system towards conclusive property titles with title guarantee.
• To render advice to the appropriate Government in matters relating to the development of real estate sector.

The following are the functions of the Authority —

• To register and regulate real estate projects and real estate agents registered under the Act.
• To publish and maintain a website of records, for public viewing, of all real estate projects for which registration has been given, with such details as may be prescribed, including information provided in the application for which registration has been granted.
• To maintain a database, on its website, for public viewing, and enter the names and photographs of promoters as defaulters including the project details, registration for which has been revoked or have been penalised under this Act, with reasons therefor, for access to the general public.
• To maintain a database, on its website, for public viewing, and enter the names and photograhps of real estate agents who have applied and registered under this Act, with such details as may be prescribed, including those whose registration has been rejected or revoked.
• To fix through regulations for each areas under its jurisdiction the standard fees to be levied on the allottees or the promoter or the real estate agent, as the case may be.
• To ensure compliance of the obligations cast upon the promoters, the allottees and the real estate agents under this Act and the rules and regulations made thereunder.
• To ensure compliance of its regulations or orders or directions made in exercise of its powers under this Act.

The Authority has been given powers to impose penalty or interest, in regard to any contravention of obligations cast upon the promoters, the allottees and the real estate agents. It has to be guided by the principles of natural justice and will have powers to regulate its own procedure.

Any person aggrieved by any direction or order or decision of the Authority or the adjudicating officer may prefer an appeal to the Appellate Tribunal within a period of sixty days from the date on which a copy of the direction or order or decision made by the Authority or the adjudicating officer is received. On receipt of such appeal, the Appellate Tribunal may after giving the parties an opportunity of being heard, pass such orders, including interim orders, as it thinks fit. The Appellate Tribunal is not be bound by the procedure laid down by the Code of Civil Procedure, 1908 but will be guided by the principles of natural justice. It can regulate its own procedure and will not be bound by the rules of evidence contained in the Indian Evidence Act, 1872. Any person aggrieved by any decision of the Appellate Tribunal can file an appeal to the High Court on any one or more of the grounds specified in section 100 of the Code of Civil Procedure.

The applicant may either appear in person or authorise one or more chartered accountants or company secretaries or cost accountants or legal practitioners or any of its officers to present his or its case before the Appellate Tribunal or the Regulatory Authority or the adjudicating officer

If any promoter contravenes the provisions of section 3, he shall be liable to a penalty which may extend up to ten per cent of the estimated cost of the real estate project as determined by the Authority. If any promoter provides false information or contravenes the provisions of section 4, he shall be liable to a penalty which may extend up to five per cent of the estimated cost of the real estate project. If any promoter contravenes any other provisions of the Act, other than that provided under section 3 or section 4, or the rules or regulations made there under, he shall be liable to a penalty which may extend up to five per cent of the estimated cost. Again if any real estate agent fails to comply with or contravenes the provisions of section 9 or section 10, he shall be liable to a penalty of ten thousand rupees for every day during which such default continues, which may cumulatively extend up to five per cent of the cost of plot, apartment or buildings, as the case may be, of the real estate project, for which the sale or purchase has been facilitated as determined by the Authority. If an offence is committed by a company, then every person who, at the time, the offence was committed was in charge of, or was responsible to the company for the conduct of, the business of the company, as well as the company, are to be deemed to be guilty of the offence and liable to be proceeded against and punished accordingly. There are provisions for compounding of offences. If any person is punished with imprisonment under the Act, the punishment may, either before or after the institution of the prosecution, be compounded by the court on such terms and conditions and on payment of such sums as may be prescribed.

Civil courts have no jurisdiction to entertain any suit or proceeding in respect of any matter which the Authority or the adjudicating officer or the Appellate Tribunal is empowered to determine and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under the Act. Also the provisions of the Act are in addition to, and not in derogation of, the provisions of any other law for the time being in force and further they are to have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force. It can be sincerely hoped that this new Act can bring the much needed reforms in the real estate sector.