THE REAL ESTATE (REGULATION AND DEVELOPMENT) BILL, 2016 has been passed by RAJYA SABHA on March 10, 2016 and subsequently by Lok Sabha also.
As name suggest, intention of this bill is to regulate and develop real estate sector. Regulation and Development both word has been used in the title of this bill. The word regulation is selectively read and emphasized upon by many of us, which is not appropriate. Development of real estate sector is equally intended by this bill.
Within one year from the date of coming into force of this ACT all state governments shall establish an Authority to exercise powers conferred on it and perform the functions assigned to it to develop and regulate real estate sector.
Now it’s imperative to all promoters of real estate projects to quickly put necessary process in place to comply with provisos of this Act. Process may include educating every employee and other stake holders, reviewing and planning cost of compliance, suitably amending all contract terms with customers as well as vendors etc.
Bill requires registration of real estate projects and real estate agents, certain duties and responsibilities to be full filled by the promoter, real estate agent and by the allottee (customer). It provides for consequences of default in following provisions of this Act. It also provides process of setting up RERA, Appellate Tribunal and its functioning.
Objective of the Bill
There are five objectives of this bill
1. To establish the Real Estate Regulatory Authority (RERA).
2. To ensure sale of plot, apartment of building, as the case may be, or sale of real estate project, in an efficient and transparent manner.
3. To protect the interest of consumers in the real estate sector.
4. To establish an adjudicating mechanism for speedy dispute redressal.
5. To establish the Appellate Tribunal to hear appeals from the decisions, directions or orders of the Real Estate Regulatory Authority
Prior registration of real estate project and real estate agent
1. Prior registration of a real estate project with the Real Estate Regulatory Authority established under this Act is mandatory before advertising, marketing, accepting booking, selling or offering for sale, or inviting persons to purchase in any manner.
2. Registration is also required for ongoing projects on the date of commencement of this Act and for which the completion certificate has not been issued.
3. Registration shall not be required 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
Registration process and documents required
Application for registration needs to be submitted with Real Estate Regulatory Authority in the prescribed form with prescribed fee along with following documents/information.
1. a brief details of 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;
2. 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.
3. 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;
4. the sanctioned plan, layout plan and specifications of the proposed project or the phase thereof, and the whole project as sanctioned by the competent authority;
5. the plan of development works to be executed in the proposed project and the proposed facilities to be provided thereof including firefighting facilities drinking water facilities, emergency evacuation services, use of renewable energy;
6. the 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;
7. the 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;
8. the number and areas of garage for sale in the project;
9. the names and addresses of his real estate agents, if any, for the proposed project;
10. the names and addresses of the contractors, architect, structural engineer, if any and other persons concerned with the development of the proposed project;
12. a declaration, supported by an affidavit, which shall be signed by the promoter or any person authorised by the promoter, stating:—
a) 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;
b) 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;
c) the time period within which he undertakes to complete the project or phase thereof, as the case may be;
d) that he shall take all the pending approvals on time, from the competent authorities:
e) that he has furnished such other documents as may be prescribed by the rules or regulations made under this Act
f) that seventy per cent. of the amounts realized 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:
However the promoter shall be able to withdraw the amounts from the separate account, to cover the cost of the project, in proportion to the percentage of completion of the project after certification by an engineer, an architect and chartered accountant in practice that the withdrawal is in proportion to the percentage of completion of the project.
Promoter shall be required to get his accounts audited within six months after the end of every financial year by a chartered accountant in practice, and shall produce a statement of accounts duly certified and signed by such chartered accountant.
Chartered Accountant shall be verify during the audit that the amounts collected for a particular project have been utilized for the project and the withdrawal has been in compliance with the proportion to the percentage of completion of the project.
Grant of registration
On receipt of application RERA shall grant or reject the application within 30 days. If the Authority fails to grant the registration or reject the application, as the case may be, the project shall be deemed to have been registered.
Extension of registration
Registration can be extended by RERA for a maximum period of one year if extension is sought due to force majeure
Revocation of Registration
The Authority may, on receipt of a complaint or suo motu in this behalf or on the recommendation of the competent authority, revoke the registration of a real estate project if RERA is satisfied that - Promoter has made any default in doing anything which required by this Act or he has violated any terms or condition of the approval or he is involved in any kind of unfair practice or irregularities.
Instead of revoking the registration the RERA may permit the registration to remain in force subject to such further terms and conditions as it thinks fit in the interest of the allottees. Any such terms and conditions so imposed shall be binding upon the promoter.
Registration of real estate agents
Prior registration of a real estate agent is mandatory to facilitate the sale or purchase of any plot or apartment of any registered real estate project.
Real estate agent would be required to apply for registration with RERA in a prescribed from with required details. On registration RERA will provide unique registration number which he will require to quote for every transaction.
Functions and duties of promoter
Details about the real estate project on the website of RERA
1. Promoter shall be responsible to create a webpage on the website of RERA and enter all details about the proposed project including registration number. Beside this promoter shall provide update quarterly on webpage about list of apartments/plots and garages booked, list of approvals obtained and also about status of the project.
2. The advertisement or prospectus issued or published by the promoter shall mention prominently the website address of the Authority, wherein all details of the registered project have been entered and include the registration number obtained from the Authority
3. Promoter shall be responsible to provide sanctioned plan along with specifications, stage wise time schedule of completion of the project, including the provisions for civic infrastructure like water, sanitation and electricity at the time of booking to allottee.
4. Promoter shall obtain the completion certificate or the occupancy certificate, or both as applicable from the relevant competent authority and provide the same to the allottees individually or to the association of allottees. He shall obtain the lease certificate, where the real estate project is developed on a leasehold land
Maintaining the essential services till the taking over of the maintenance of the project by the association.
5. Promoter shall be responsible for providing and maintaining the essential services, on reasonable charges, till the taking over of the maintenance of the project by the association of the allottees and also enable formation of an association or society or co-operative society of the allottees.
6. Promoter shall be responsible to execute a registered conveyance deed of the apartment, plot or building as the case may be in favour of the allottee along with the undivided proportionate title in the common areas. He shall pay all outgoings until he transfers the physical possession of the real estate project to the allottee or the associations of allottees, as the case may be, which he has collected from the allottees, for the payment of outgoing (including land cost, ground rent municipal or other local taxes, charges for water or electricity, maintenance charges etc.).
7. After agreement of sale, promoter shall note mortgage or create any charge on such apartment/plot.
8. Cancellation of allotment can be done only as per terms of agreement however allottee can approach RERA for relief.
Obligations of promoter regarding veracity of the advertisement or prospectus
9. If any allotee sustain any loss due to incorrect information contained in advertisement or prospectus or model apartment and intends to withdraw from the project, he shall be returned his entire investment along with prescribed interest.
No deposit or advance to be taken by promoter without first entering into agreement for sale.
10. Promoter shall not accept a sum more than ten per cent of the cost of the apartment/ plot/ building as an advance payment or an application fee, from a person without first entering into a written agreement for sale with such person and register the said agreement for sale, under any law for the time being in force.
11. The agreement for sale shall be in the prescribed form and shall specify the particulars of development of the project including the construction of building and apartments, along with specifications and internal development works and external development works, the dates and the manner by which payments towards the cost of the apartment, plot or building, as the case may be, are to be made by the allottees and the date on which the possession of the apartment, plot or building is to be handed over, the rates of interest payable by the promoter to the allottee and the allottee to the promoter in case of default, and such other particulars, as may be prescribed.
Adherence to sanctioned plans and project specifications by the promoter.
12. The proposed project shall be developed and completed by the promoter in accordance with the sanctioned plans, layout plans and specifications as approved by the competent authorities.
13. Promoter shall not make -
(i) any additions and alterations in the sanctioned plans, layout plans and specifications and the nature of fixtures, fittings and amenities described therein in respect of the apartment, plot or building, as the case may be, which are agreed to be taken, without the previous consent of that person. However the promoter may make such minor additions or alterations as may be required by the allottee, or such minor changes or alterations as may be necessary due to architectural and structural reasons duly recommended and verified by an authorised Architect or Engineer after proper declaration and intimation to the allottee.
(ii) any other alterations or additions in the sanctioned plans, layout plans and specifications of the buildings or the common areas within the project without the previous written consent of at-least two-thirds of the allottees, other than the promoter, who have agreed to take apartments in such building.
Obligation of promoter for structural defect or any other defect brought to his notice by allottee within 5 years.
14. In case any structural defect or any other defect in workmanship, quality or provision of services or any other obligations of the promoter as per the agreement for sale relating to such development is brought to the notice of the promoter within a period of five years by the allottee from the date of handing over possession, it shall be the duty of the promoter to rectify such defects without further charge, within thirty days, and in the event of promoter's failure to rectify such defects within such time, the aggrieved allottees shall be entitled to receive appropriate compensation.
Obligations of promoter in case of transfer of a real estate project to a third party.
15. The promoter shall not transfer or assign his majority rights and liabilities in respect of a real estate project to a third party without obtaining prior written consent from two-third allottees, except the promoter, and without the prior written approval of the Authority.
16. However such transfer or assignment shall not affect the allotment or sale of the apartments, plots or buildings as the case may be, in the real estate project made by the erstwhile promoter.
Obligations of promoter regarding insurance of real estate
17. Promoter shall obtain all such insurances as notified by appropriate Government including insurance in respect of title of the land and building and construction of the real estate project.
Transfer of title
18. Promoter shall execute a registered conveyance deed in favour of the allotee and handover physical possession after obtaining completion certificate. Promoter shall handover over of all relevant documents of the project to the association of the allottee.
Return of amount and compensation.
19. If the promoter fails to complete or is unable to give possession of an apartment, plot or building, in accordance with the terms of the agreement for sale or due to discontinuance of his business as a developer on account of suspension or revocation of the registration under this Act or for any other reason, he shall be liable on demand to the allottees, in case the allottee wishes to withdraw from the project, to return the amount received by him with interest at prescribed rate including compensation .
20. However, where an allottee does not intend to withdraw from the project, he shall be paid, by the promoter, interest for every month of delay, till the handing over of the possession.
21. The promoter shall compensate the allottees in case of any loss caused to him due to defective title of the land, on which the project is being developed or has been developed. The claim for compensation shall not be barred by limitation provided under any law for the time being in force.
Rights and duties of allottee
Allottee shall have following rights
1. Right to obtain the information relating to sanctioned plans layout plans along with the specifications, approved by the competent authority.
2. Right 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.
3. Right to claim the possession of apartment, plot or building, as the case may be, and the association of allottees shall have right to claim the possession of the common areas.
4. Right to claim the refund of amount paid along with interest
5. Right to 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.
Allottee shall have following duties
6. Allottee shall be responsible to make necessary payments in the manner and within the time as specified in the 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.
7. Allottee shall be liable to pay interest, at such rate as may be prescribed, for any delay in payment towards any amount or charges to be paid by him.
8. Every allottee of the apartment, plot or building as the case may be, shall participate towards the formation of an association or society or cooperative society of the allottees, or a federation of the same.
9. Every allottee shall take physical possession of the apartment, plot or building as the case may be, within a period of two months of the occupancy certificate issued for the said apartment, plot or buildings the case may be.
10. Every allottee shall participate towards registration of the conveyance deed of the apartment, plot or building, as the case may be.
Offences and Penalties
Punishment for non-registration
1. If any promoter fails to register his proposed real estate project in accordance with provisions of this ACT, 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.
2. If any promoter does not comply with the orders, decisions or directions of RERA in respect of registration or continues to violate the provisions of this ACT in respect of registration, he shall be punishable with imprisonment for a term which may extend up to three years or with fine which may extend up to a further ten per cent. of the estimated cost of the real estate project, or with both.
3. If any promoter provides false information while applying for registration of real estate project or contravenes the provisions of this ACT in respect of application for registration, he shall be liable to a penalty which may extend upto five per cent. of the estimated cost of the real estate project, as determined by the Authority.
4. If any promoter contravenes any other provisions of this Act, other than that of registration and application for registration, he shall be liable to a penalty which may extend upto five per cent. of the estimated cost of the real estate project as determined by the Authority.
5. If any real estate agent fails to comply with or contravenes the provisions of this Act in respect of registration, he shall be liable to a penalty of ten thousand rupees for every day during which such default continues, which may cumulatively extend upto 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.
6. If any promoter, who fails to comply with, or contravenes any of the orders or directions of the Authority, he shall be liable to a penalty for every day during which such default continues, which may cumulatively extend upto five per cent, of the estimated cost of the real estate project as determined by the Authority.
7. If any promoter, who fails to comply with, or contravenes any of the orders, decisions or directions of the Applellate Trinbunal, he shall be punishable with imprisonment for a term which may extend upto three years or with fine for every day during which such default continues, which may cumulatively extend upto ten per cent. of the estimated cost of the real estate project, or with both.
8. If any real estate agent, who fails to comply with, or contravenes any of the orders or directions of the Authority, he shall be liable to a penalty for every day during which such default continues, which may cumulatively extend upto five per cent., of the estimated cost of plot, apartment or building, as the case may be, of the real estate project, for which the sale or purchase has been facilitated and as determined by the Authority.
9. If any real estate agent, who fails to comply with, or contravenes any of the orders, decisions or directions of the Appellate Tribunal, he shall be punishable with imprisonment for a term which may extend upto one year or with fine for every day during which such default continues. which may cumulatively extend up to ten per cent. of the estimated cost of plot, apartment or building, as the case may be, of the real estate project, for which the sale or purchase has been facilitated, or with both.
10. If any allottee, who fails to comply with, or contravenes any of the orders, decisions or directions of the Authority he shall be liable to a penalty for the period during which such default continues, which may cumulatively extend up to five per cent. of the plot, apartment or building cost, as the case may be, as determined by the Authority.
11. If any allottee, who fails to comply with, or contravenes any of the orders or directions of the Applellate Tribunal, as the case may be, he shall be punishable with imprisonment for a term which may extend upto one year or with fine for every day during which such default continues, which may cumulatively extend up to ten per cent. of the plot, apartment or building cost, as the case may be, or with both.
12. Where an Offence under this Act has been committed by a company, 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, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly.
