Decoding The Meaning And Importance Of RERA

What is RERA?

A question which arises in every one’s minds,predominantly the customers who buy property from Real estate Agents or builders and therefore, getting directly affected by the provisions of this Act.

In simple words, RERA is an Act by which the real estate industry will be regulated. Just as Listed Companies are regulated by SEBI, likewise Real Estate Industry will be regulated by state RERA Authority.
Coverage of RERA is very extensive that covers not only theperson who develops building or plot but also the functioning of the Development Authority etc.

In RERA as per section-3(2) No registration is required of real estate project in following cases:

i) Area of Land proposed to be developed does not exceed 500 Sq.mtrs or no. of apartments proposed to be developed not exceeds 8 inclusive of all phases. Now the question arises that if area of land is 400 sq. metre and no.of apartments to be developed is 9 then whether such promoter will have to register his project or not? Or we take another case that if land area is 600 sq.mtrs and no.of apartment to be developed is 7 then whether such promoter will have to register his project or not?
As other views also exist simultaneously in this respect, as per my opinion if any of the condition is satisfied then such project is required to be registered and therefore in above cases the promoter is required to get his project registered even if only one condition persists.

ii) Promoter has received completion certificate for real estate project prior to commencement of this act.

iii) If Renovation or repair or redevelopment takes place which does not involves marketing, advertising etc.
NOTE: Many States have given additional exemption with respect to on-going projects which are not covered in this Article.

Some Important Provisions of RERA

i) None of the unregistered Projects can undertake the activities of marketing, advertising, offering for sale or inviting a person for sale etc.

ii) At the time of filing the application for registration following things are required to be disclosed:

- Brief details of the enterprise
- Brief details of project launched in last 5 years
- Copy of approvals and commencement certificate
- Performa of allotment letter, Agreement to sale
- Mention the time period within which such project will be completed Etc.

iii) 70% of the amount realised from real estate project from allottees, from time to time, shall be deposited in separate scheduled bank account.

iv) Such 70% shall be withdrawn only after it is certified by an engineer, an architect and a chartered accountant.

v) Registration shall be granted by the authority within 30 days from the date of receipt of application if not, then the project will be deemed to be registered.

vi) Extension of registration will be granted only in reasonable circumstances and such extension can only be up to 1 year.

vii) Registration of project can be revoked on receipt of complaint or in cases where according to the authority any of the provision is violated by promoter.

viii) There is no Exemption for Real estate agent for registration that means it is mandatory for all real estate agents to get themselves registered in order to execute any deal, be it in planning area or non-planning area.

ix) It is mandatory to execute agreement to sale if promoter wants to demand more than 10% of the total sale price from the allottee and such agreementshould be registered as well.

x) Real Estate Project shall not be transferred to any other party without prior written consent from 2/3 rd allottees and prior written approval of authority.

xi) Now insurance is not only limited to construction of project but the same has been extended over the title of land and building of such project.

xii) If any local laws are applicable then as per such law registered conveyance deed shall be executed and if such laws are not there then registered conveyance deed shall be carried out by the promoter within 3 month from the date of issue of occupancy certificate.

xiii) If any structural defect or any defect in workmanship, quality or provision of services or any other obligation is brought to the notice of the promoter within 5 years from the date of handing over of possession, then it shall be the duty of promoter to rectify such defect within 30 days and failure of the same can result in the right into the hands of the allottees to claim the necessary compensation accordingly.

xiv) Penal provisions are very stiff and in general such penalty can be up to 10% of the project cost and 3 years of imprisonment. So it is better to comply with the Act then to face the wrath of such stringent provisions.

CA Prateek Rawat
(RERA Consultant)
prateek_rawat@hotmail.com