Real Estate (Development And Regulation) Act, 2016

17th July, 2023 - 5:53 am Categories: RERA 0 Comments

Introduction

Urbanisation has expanded the scope of land acquisition for housing and industrial purposes, construction of multi-story commercial buildings and purchase of flats for personal use. Real Estate refers to the properties that comprise land and its improvements which include buildings, fixtures, roads, etc. and also includes the activity of its buying and selling. Real Estate plays a major role in handling the nation’s housing and infrastructure needs. In the past, there was a need for a rigid legal framework to regulate and govern the Real Estate activities and protect the rights of the parties involved in such activities. The Government along the years has formed many bodies and have passed various legislations to address the same. The Real Estate (Regulation and Development) Act 2016 was enacted on 1 May 2016 to safeguard the interests of the consumers by minimising or ensuring the absence of malpractices done by developers and on the whole, encourage uniform business practices & transactions in this sector.

[Image Sources : Getty image]

This Act played a major role towards the establishment of a Real Estate Regulatory Authority with the intent of promoting the real estate sector and ensuring a regulated sale of plot, apartment or building and to safeguard the interests of the consumers. This also encourages the establishment of the Appellate Tribunal for speedy dispute redressal and to hear appeals and decisions from the RERA and handle its related matters.

Features Of The Rera Act 2016

Real Estate sector plays a significant role in fulfilling the needs & demands for housing and infrastructure and the same is regulated through this multi-faceted Act which contains the following characteristic features which also discusses the need and scope of this Act: –

• Establishment of the Real Estate Regulatory Authority for regulation and promotion of real estate sector.
• Ensuring an efficient and transparent framework for sale of plot, apartment or building or real estate project.
• Formation of an adjudicating mechanism for speedy dispute redressal and establish the Appellate Tribunal to hear appeals of RERA decisions, directions or orders.
• Setting up state level regulatory authorities under the nomenclature of Real Estate Regulatory Authorities.
• Ensuring all forms of registration by the promoter and other related parties for residential projects and publishing the same information in its website which include the site & layout plan, completion schedule of the project.
• Maintenance of separate bank account for collection of money received from the buyers for the project. The money so collected must be utilised only for the construction of that project. The State Govt. holds the power to alter the money amount.
• Acts a representative on behalf of the Client by CS, CA or Legal practitioners.
• Imposes strict forms of penalties on promoters, real estate agents and also advises on imprisonment.

Key Provisions Of The Rera Act

The RERA Act was passed with the objective of protecting the rights & interests of consumers and promotion of uniformity & standardization of business practices and transactions in the real estate sector. The key provisions of this Act are as follows:

Chapter II – REGISTRATION OF REAL ESTATE PROJECT AND REGISTRATION OF REAL ESTATE AGENTS

• Section 3 – Prior Registration of Real Estate Project with RERA

Without registering the real estate with RERA, a promoter cannot advertise, market, book, sell or offer for sale, or invite persons to purchase the plot, apartment or building.

The Authority can order a promoter to apply for registration if the project development is beyond the planning area but it possesses the required permission of the local authority.

The following projects do not require registration: –

1. When proposed land area is not more than 500 sq. m or the no. of apartments is not more than eight.
2. When a promoter produces the completion certificate before the commencement of this Act
3. For renovation, repair or re-development

• Sec.9 – Registration of Real Estate Agents

1. A Real Estate Agent cannot involve in facilitation of transactions related to property without registering under the Act.
2. The Real Estate Registration Application must be submitted in the prescribed form and time along with proper fee and documents
3. Conditions for Application fulfilment: –
4. For the entire State or Union Territory, a single registration is granted to the Real Estate Agent.
5. The reasons for the application rejection must be recorded in writing if it does not satisfy the requirements of the Act.
6. If the deficiencies or the rejection of an application is not communicated to the applicant, it shall be deemed to have been registered.
7. A registration number is provided by the Authority for every registered Real Estate Agent for facilitation of every sale.
8. Every registration is considered valid for a prescribed period and the same can be renewed for a period through a fee payment.
9. If a registered Real Estate Agent breach any of the agreed terms and conditions or regulations and if the Authority is satisfied that such registration was made through misrepresentation or fraud, the Authority has the power to revoke the registration or suspend the same for a period.

• Sec.10 – Functions of Real Estate Agents

All registered Real Estate Agents under Sec. 9 shall perform the following functions:

1. Dismiss any form of transaction for a property not registered under the Authority
2. Maintain books of account, records and documents
3. Not involving in any unfair trade practices through misrepresentation, fraud or coercion
4. The allottee must be facilitated with all key documents and information during booking of plot, apartment or building.
5. Discharge other key functions

Chapter III – FUNCTIONS AND DUTIES OF PROMOTER

• Sec.11 – Functions and Duties of Promoter

1. The promoter must create a web page on the Authority’s website and must mention all key details about the proposed project as per Sec. 4(2) for public viewing after receiving the login credentials from the Authority as per Sec. 5(1)(a) or (2): –
2. Registration details approved by the Authority
3. Quarterly update on number and types of apartments or plots booked
4. Quarterly update on number of garages booked
5. Quarterly update on the approvals granted and pending after the granting of the commencement certificate
6. Quarterly update on project status
7. Other major information and documents as mentioned in the Authority’s regulations
8. The advertisement or prospectus published must mention all key details about the registered project and the website including the Project Registration No.
9. The promoter must facilitate the allottee with the following information during the allotment letter booking & issue: –
10. Sanctioned and Layout plans containing all specification about the registered project as per the regulations of the Authority
11. The Stage wise time project completion schedule along with all required infrastructure must be mentioned.
12. The promoter shall:
13. Respect the provisions & regulations of the Act by facilitating the allottees with all obligations, responsibilities and functions till the conveyance of the apartments, plots, and buildings or common association areas.
14. The allottees should be able to view the completion or occupancy certificate acquired from the Authority as per the local and other laws.
15. After completion of the Real Estate Project on the leasehold land, the Lease Certificate should be made available to the allottees which contains the lease, period, dues and charges regarding leasehold land and other major details.
16. Be responsible for providing essential services till the project maintenance is taken over by the association of allottees.
17. Facilitate the formation of an association or co-operative society or a federation of allottees
18. Execute a Registered conveyance deed of the apartment, plot or building with the undivided proportionate title for the common association areas in favour of the allottees.
19. Perform the payment of outgoings until the physical possession of the project is made to the allottee or the association.
20. Not mortgage or create a charge on the apartment, plot or building once the sale agreement has been executed. In case of any mortgage or creation of charge through coercion, the allottee’s rights will not be affected in any manner.
21. The promoter can cancel the allotment made through the sale agreement if the allottee approaches the Authority for claiming relief for cancellation which is not in accordance with the agreement terms.
22. The promotor must maintain all other key details as per the regulations of the Authority.

Obligations of Promoter

• 12 – Veracity of advertisement or prospectus
• 14 – Adherence to sanction plans and project specification
• 15 – Transfer of a Real Estate project to a third party
• 16 – Insurance of Real Estate project

Chapter IV – RIGHTS AND DUTIES OF ALLOTTEES

• Sec.19 – Rights and duties of allottees

1. Acquire information about the sanctioned, layout plans which contains the specifications approved by the competent authority or the rules & regulations or about the agreement for sale signed with the promoter.
2. Enquire about stage-wise project completion schedule including all basic infrastructure amenities and services as per agreement for sale terms & conditions.
3. Claim possession of apartment, plot or building which may be given by the association of allottees.
4. Claim refund or compensation from the promoter for compliance failure of possession of apartment, plot or building.
5. Entitled to all important documents & plans after physical possession of apartment, plot or building.
6. After entering into sale agreement, all allottees shall be responsible for all key payments within the specified time period and shall pay all forms charges & taxes.
7. Liable to pay interest for any delay in the payment of charges & taxes.
8. The obligations & liability of the allottees gets reduced after an agreement between the promoter and allottee.
9. Participation in formation of association, society or cooperative society of the allottees.
10. Physical possession within 2 months of issue of occupancy certificate.
11. Participation in registration process of the apartment, plot or building’s conveyance deed.

Chapter V – THE REAL ESTATE REGULATORY AUTHORTIY

• Sec.20 – Establishment and incorporation of Real Estate Regulatory Authority

1. Within one year of the implementation of this Act, the appropriate Government shall establish an Authority to be named as Real Estate Regulatory Authority to perform & hold the assigned powers & functions.

Conditions

• Appropriate Governments of 2 or more States/UTs shall establish the Authority.
• Appropriate Government establishes more than one Authority in the State/UT
• Until the Regulatory Authority establishment, the appropriate Government shall appoint any Authority or officer mostly the Secretary of the Housing Dept. as the Regulatory Authority for performing the functions under the Act.
• After Regulatory Authority establishment, all applications, complaints or pending cases with the Authority shall be transferred to the Regulatory Authority.

2. The RERA shall be a body corporate having perpetual succession and common seal. They hold the authority to acquire, hold and dispose both movable & immovable property and to contract sue or be sued.

• Sec.34 – Functions of Authority

1. Register and regulate real estate projects and agents
2. Publish and maintain a website of records of all real estate projects and their registration details and documents for public viewing.
3. Maintain a website database and enter details & photos of promoters.
4. Maintain a website database and enter details & photos of real estate agents.
5. Fix regulations for areas under its jurisdiction for the standard fees to be levied on the allottees or promoter or real estate agent.
6. Compliance of obligations of the promoters, allottees and real estate agents.
7. Compliance of regulations, orders or directions passed through its powers
8. Perform other such functions as entrusted by the Authority through the appropriate Govt.

Chapter VI – CENTRAL ADVISORY COUNCIL

• Sec.42 – Functions of Central Advisory Council

Advise and recommend the Central Government –

Advisory Matters: –

• Matters concerning the implementation of the Act.
• Major questions of policy
• Protection of Consumer interest
• Fostering growth and development of the real estate sector
• Any other matter as assigned by the Central Government

Chapter VII – THE REAL ESTATE APPELLATE TRIBUNAL

• Sec.43 – Establishment of Real Estate Appellate Tribunal

1. Within one year of implementation of the Act, the appropriate Govt. shall establish an Appellate Tribunal to be named as the (name of the State/UT) Real Estate Appellate Tribunal.
2. The appropriate Govt. may establish one or more benches of Appellate Tribunal for various jurisdictions in the State or UT.
3. Tribunal consist of at least one Judicial Member and one Administrative or Technical Member.
4. Two or more States or UTs may establish a single Appellate Tribunal to hear appeals under the Act and pending cases in the individual tribunal may be transferred to the established combine Appellate Tribunal.
5. Any aggrieved party can go for an appeal before the Tribunal for any decision order passed by an Authority, adjudicating officer having jurisdiction.

• Sec.53 – Powers of Tribunal

1. Not bound by the procedure mentioned in the Code of Civil Procedure (1908) but shall be guided by the principles of natural justice.
2. The appropriate Govt. may establish one or more benches of Appellate Tribunal for various jurisdictions in the State or UT.
3. Tribunal consist of at least one Judicial Member and one Administrative or Technical Member.
4. The powers of the Appellate Tribunal can be equated to the powers vested in a civil court as per CPC, 1908 for the following: –

(a) summoning and enforcing the attendance of any person and examining him on oath;

(b) requiring the discovery and production of documents;

(c) receiving evidence on affidavits;

(d) issuing commissions for the examinations of witnesses or documents;

(e) reviewing its decisions;

(f) dismissing an application for default or directing it ex parte; and

(g) any other matter which may be prescribed.

5. The proceedings of the Tribunal shall be considered to be within the purview of S. 193, 196, 219, 228 of the IPC and S. 195 and Chapter XXVI of the CPC.

• Sec.58 – Appeal to High Court

1. An aggrieved person by the decision/order of the Appellate Tribunal can file an appeal to the High Court within the limitation period of 60 days from the date of communication of decision/order of the Tribunal or any other grounds mentioned in S. 100 of the CPC, 1908.
2. No appeal shall lie against any decision or order made by the Appellate Tribunal with the consent of the parties.

Chapter X – MISCELLANEOUS

Sec.79 – Bar of jurisdiction

A civil court does not have the jurisdiction to entertain a suit or proceeding which the Authority, adjudicating officer or Appellate Tribunal possesses the power to take action.

Other major provisions of the RERA Act: –

• Sec.82 – Power of appropriate Government to supersede Authority
• Sec.83 – Powers of appropriate Government to issue directions to Authority and obtain reports and returns
• Sec.84 – Power of appropriate Government to make rules

RERA ACT – ENHANCEMENT AREAS:

• The RERA Act places more focus on the buyer compared to the other parties involved in the Real estate & construction sector. A balance between all parties is much appreciable for a collaborative environment.
• There is a high scope for a conflict between the provisions of the RERA Act and the respective State/local laws which may cause ambiguity and confusion. There are few States & UTs like Arunachal Pradesh, Lakshadweep, etc who do not have their own State RERA Website.
• The Act mandates that the money collected from the buyers must be deposited in the escrow account and the same must be utilised only for construction of the said project. This may cause time, work and economic delays.
• The provisions of the Act show less interest over addressing the aspect of delay in government approval and related procedures.

CASE LAWS:

1. GEETANJALI AMAN CONSTRUCTION v. HRISHIKESH RAMESH PARANJAPE – [I.A. NO. 451 OF 2021][i]

Section 3 of the RERA mandates the registration of real estate projects with a clause under S. 3(2) which states that registration is not compulsory for projects which is within 500 sq. m area or if the does not contain more than 8 apartments inclusive of all phases in the whole project.

The defendant argued that the project satisfies the first condition of area within 500 sq. m. On the other hand, the allottees have filed a suit as there were 22 flats and 9 shops, and hence it became violative of the second condition of not more than 8 apartments in the whole project.

The Court held that Section 3(2) will be interpreted in its truest sense in this case and the developer must satisfy both the conditions to get approval. It ordered the developer to pay Rs. 30 Lakhs and to complete the real estate project registration process within a month.

2. VINOD KUMAR AGARWAL v. JAIPUR DEVELOPMENT AUTHORITY – [RAJ-RERA-C-2020-3622][ii]

There was a discussion happening to understand the overriding effect of the RERA Act provisions over the Local laws placing S. 13 of the Act in the spotlight.

In this case, the Authority demanded for higher consideration amount than the 10 percent rule mentioned in S. 13 and the reason stated was the power granted by the local Act of Rajasthan Improvement Trust Rules, 1974 which allows the same.

1. 13 states that the project promoter shall not accept an amount more than 10 percent of the total amount unless the agreement for sale and other key conditions have been satisfied.

It was contended that the respondent could not perform any form of development activities in and around the area. The argument placed stated that the RERA Act and its provisions were formulated and passed by the Parliament and thus would have an overriding effect over the State/local laws.

Hence, the Tribunal held that the Central Law would prevail and S. 13 holds a significant position in the Act and is mandatory for the execution of the agreement of sale.

CONCLUSION:

According to the Report of the Standing Committee on Urban Development (2013-14), the Government was unable to meet the nation’s rising housing and infrastructure demands despite the implementation of various schemes & projects. This created scope for entry of private players who began to exploit the consumers through arbitrary practices with a profit motive.

The RERA Act was passed to regulate the unorganised Indian Real estate market and forming an adjudicatory body to address conflicts between the parties in an efficient manner. In theory, the framework of the RERA Act is classic, but in practice, due to non-compliance to the rules & procedures by States and parties of the Real estate sector, it became difficult to realise the ultimate objective and potential of the Act.

On the other hand, it provided different kinds of approaches to regulate and organise the transactions involved in all types of projects which aimed at timely completion and handing over of the property to the consumer without any issues. This Act requires a collaborative amendment procedure involving all stakeholders to make this an efficient, well-organized and coherent Act which can be applied with ease in the modern-day daily life.

Thus, to summarise, this multi-dimensional Act attempts to balance the interests of the promoters and consumers, establish an equilibrium of information between all stakeholders, transparency in contractual conditions, and set up a fast-track dispute resolution mechanism

Author: B. Sanjit Ram – Student Of Vit School Of Law, Chennai, in case of any queries please contact/write back to us via email to chhavi@khuranaandkhurana.com or at Khurana & Khurana, Advocates and IP Attorney.

[i]. GEETANJALI AMAN CONSTRUCTION v. HRISHIKESH RAMESH PARANJAPE – [I.A. NO. 451 OF 2021]

[ii].  VINOD KUMAR AGARWAL v. JAIPUR DEVELOPMENT AUTHORITY – [RAJ-RERA-C-2020-3622]