What is the meaning of RERA (Real Estate Regulatory Act)?
To ensure the transparency and efficiency by reducing the frauds in the real estate sector as it involves high cost transactions, the Real Estate (Regulation and Development) Act, 2016 has been came into force which aims at establishing regulatory authorities at each state level that registers the residential real estate projects and seeks to regulate and monitor the agreements relating to the sale of plots, apartments or buildings, etc. between buyers and sellers in the real estate sector and are also accountable to the customers.
Certain responsibilities are imposed to protect the interest of both Promoter and Purchaser. It seeks to establish the following:
- Ease of information between the Promoter and Purchaser;
- High level of transparency of contractual Conditions;
- Set minimum standards of accountability and;
- A fast-track dispute resolution mechanism.
Why there is a requirement of Real Estate Regulatory Act in India?
Housing and Infrastructure development needs are fulfilled by the Real Estate Regulatory Act which has grown rapidly in the past years. As the consumers are not aware about the professionalism and standardization and moreover there is no adequate consumer protection mechanism under this act which results in exploitation and profiteering by unscrupulous builders. Therefore the Real Estate Act is established to protect the interest of buyers dealing in this regard.
How does Real Estate Regulatory Act impact on Real Estate Sector?
To resolve the disputes which occur while purchasing the property are solved by the Real Estate Regulatory Act and Real Estate Appellate Tribunal. To solve such matters, there are no other consumer forums and civil courts are available. The groundwork is set up by the Real Estate Regulatory Act in order for fast-tracking the disputes resolution. Its success depends upon the fat that how much time it will take to establish the new dispute resolution bodies and expeditious resolution of disputes.
Important impacts of Real Estate Regulatory Act on Real Estate Sectors:
- Project cost and Cost of Capital and project cost has been increased
- Tight liquidity has been introduced
Why Real Estate Regulatory Act came into existence?
Due to the following objectives, the Real Estate regulatory Act has been introduced:
- Objective of introducing a fast-track dispute resolution mechanism;
- Duties and responsibilities of buyers and protecting their interest;
- Aims at decreasing the possibilities of Fraud and Delay, implementing Transparency and ensuring fair transactions within the sector.
- Ensuring the sale of real estate project, in an efficient and transparent manner;
- Establishing professionalism and standardization throughout the country;
- Introducing symmetry of information between the developer and buyer;
- Provide accountability on both developer and buyers;
- Ensuring good governance in the sector and promotes the confidence of the investor.
What advantages are offered by the Real Estate Regulatory Act?
Delivery on time
In order to ensure the timely completion of the project, this act has been introduced. This act ensures that the construction should run on time and flats must be delivered to the buyer on decided time as per the bill. In case of failure to comply with this provision, the builder would be liable to refund the amount along with the interest to the buyers of the property.
Accurate Project Details
During the stage of construction of flats, developers promote their projects through various amenities and characteristics in relation to project. According to this bill, Builder cannot change their plans during this stage. Otherwise Builder would be liable to pay 10% of the cost of project or imprisonment up to 3 yrs .ÃÂ ÃÂ
Huge discounts and many offers are offered by the builders and as a result buyers get attracted towards the scheme without thinking about the clearance. Buyers do not get the flat due to delay in clearance. So the motive of this act is to ensure the timely acquisition of flat by the buyers and ensure that developers get all clearance before selling the flat.
If there is any structure defects found by the buyers in the property to be purchased then such defects shall be repaired by the developer within a period of 5 years.ÃÂ
No Advertisement without Real Estate Regulatory Act Registration.
No advertisement or promotion activities are carried out by the developers if such developer has not obtained registration under Real Estate Regulatory Act. Moreover, Real Estate Regulatory Act registration number is required to be mentioned while advertising for projects.
After registering the agreement with the developers, the buyers are required to pay the amount which has been reduced from 20% to 10%. Both the parties promoters and buyers have the right to terminate a deal in real estate in case of default by either side of the parties requiring that the buyers is required to release 15- days notice.
Who all are required to apply for Real Estate Regulatory Act Registration?
Subject to the following conditions, this Act applies on Promoters, Projects and Real Estate Agents.ÃÂ
- Applicability of this act is on real estate of commercial and residential (including plotted development).
- RERA registration become compulsory where the residential and the commercial projects exceeding 500 square meters or has more than 8 units/apartments and it also ensures that the Local promoterÃ¢â¬â¢s ÃÂ small projects get covered under this act.
- All the ongoing projects that have not obtained the completion certificate are required to take registration under this Act within three months.
- Registration of Real Estate Regulatory Act under respective state laws which provides the facilities of buying and selling of flats is required to be obtained before the commencement of this Act. This act is applicable to all over the states/union territories.
- Approval or rejection of application for Real Estate Regulatory Act is communicated within a period of 30 days from the date on which the application made.
- Unique registration number, a login id, and password are provided to the promoters once the application made is approved by the Real Estate Regulatory Act so that they can update the necessary details about the company and project.
10% of the cost of the project or jail upto 3 years shall be imposed as a penalty where the promoter fails to apply for registration under Real Estate Regulatory Act.
What are the criteria of registration fees defined for different category of applicants under Real Estate Regulatory Act?
A. Real Estate Regulatory Act Registration fees in Maharashtra
Fee for registration of project
MH-RERA fees for registration of projects are Rs. 10 per sq mt. or minimum Rs 50,000 and maximum Rs. 10 lakhs.
Registration Fee for Agent under Real Estate Regulatory ActÃÂ ÃÂ ÃÂ ÃÂ
Registration of Agent under Maharashtra Real Estate Regulatory Act is Rs. 10,000 in case of individual and Rs. 1 Lakh in case of others.
B. Real estate regulatory Act Registration fees in Uttar Pradesh
Fee of registration of project
In case of residential Apartments / Project in Uttar Pradesh
For Project size less than 1000 Sq. mt, the fees is Rs. 10,000 per sq. mt.
For project size exceeding 1000 sq mt, the fees is Rs. 500 per sq mt.
In case of commercial projects in Uttar Pradesh
For projects whose size is less than 1000 sq. mt, the fess is Rs. 20 per sq. mt.
For projects size more than 1000 sq. mt, the fees is 1000 per sq. mt.
Registration Fee for Agent under Real Estate Regulatory Act
Registration of Agent under Uttar Pradesh Real Estate Regulatory Act is Rs. 25,000 in case of individual and Rs. 2, 50,000 in case of others.
Which documents are required to be submitted to obtain registration under Real Estate Regulatory Act in India?
Requirement of the documents vary from state to state but here are some of the documents which are required to be submitted to obtain registration under this Act in India
From Builder to register in case of ongoing projects.
- Basic information like name, address, photograph and contact information Permanent Account Number and Aadhar number are required to be provided in case where the promoter is an individual.
- Information related to chairman, partners, directors, and authorized person including the details of entity like entity type, name and address of entity, copy of approval of entity obtained from competent authority are required to be provided in case of other than individuals.ÃÂ ÃÂ ÃÂ ÃÂ ÃÂ ÃÂ ÃÂ ÃÂ
- Plan for development.
- Details of projects like project location, layout and sanctioned plan of the project.
- Information regarding designing of standards, technology type used for construction, resistant measures in case of the uncertain event and amenities/facilities in the layout plan all are required to be submitted.
- Last three yearÃ¢â¬â¢s Audit of financial statement and Income Tax Return (ITR).
- Deed of title with chain title.
- Ownership documents such as allotment letter Performa, sale agreement, and conveyance deed.
- Architect, engineers, and others details to be provided.
- Where the promoter is not the owner then consent detail of the owner along with the collaboration agreement, development agreement, joint development agreement, title deed or any other agreement entered into by the promoter with the real owner.
- The authority may require any other documents.
For Agent Registration
- Real Estate AgentÃ¢â¬â¢s basic details are required to be submitted such as name, address, contact information and photo of individual / partners/ directors.
- Copy of Permanent Account Number (PAN) and Aadhar Number of Agent of Real Estate along with the proof of address.
Who all are not covered under Real Estate Regulatory Act registration process?
According to the section 3 of the Real Estate Regulatory Act, under the following cases registration of projects is not necessary:
- Where the completion certificate related to project has been obtained by the promoter before the commencement of Act.
- Proposed land area does not exceed 500 sq. mtr.
- Project having 8 or less than 8 apartments
- Where there is no need for marketing, advertising, and selling in case of repair/ renovation of an existing building.
What are the steps to register under Real Estate Regulatory Act?
Prescribed procedure has been defined for registration of projects and agents of real estate as state Real Estate Regulatory Act authority requires each and every promoter to obtain registration under the Real Estate Regulatory Act.
Necessary documents and prescribed fees are required to be submitted / paid while obtaining registration under REAL ESTATE REGULATORY ACT in respect of commercial projects as well as residential projects.
Registration of Projects under Real Estate Regulatory Act
These are the steps followed by the promoter:
Convene board meeting to pass the board resolution in respect of the following
- In order to cover the construction cost, bank account is required to be open separately.
- Application is required to file to obtain registration under Real Estate Regulatory Act.
- Approval of the allotment letter, sale agreement, and sale deed
- Title search report is obtained related to the proposed land.
- The government authorities such as Fire Department, Airport Authority of India, National Highway Authority of India, National Authority Disaster Management Authority etc provides the necessary license and No Objection Certificate (NOC) collection.
- All the necessary documents are collected for filing application form in Form A.
- With the respective state authority and along with the prescribed fees, Real Estate Regulatory Act registration application is filed
Note:ÃÂ There is completely online process to obtain registration under RERA Act in Maharashtra while physical copies of documents are submitted in Uttar Pradesh.
- According to section 5 of the Real Estate (Regulation and Development) Act, 2016, ProjectÃ¢â¬â¢s Registration certificate is obtained in Form C.
Registration of Agents under Real Estate Regulatory Act
These are the steps required to be followed:
- Along with necessary documents and prescribed fees, application form is submitted for obtaining registration under Real Estate Regulatory Act.
- The regulator shall provide you a registration number once the application form is filed and such number should be mentioned in all the documents relate to the sale of property.
- Maintenance of books of accounts, records and other transaction-related documents should be done on a quarterly basis.
- ProjectÃ¢â¬â¢s detailed information along with documents is required to be submitted.
- While obtaining registration under Real Estate Regulatory Act registration, agents may be suspended in case of misrepresentation of facts or fraud.
Heavy penalties may be imposed in case of failure to obtain registration under Real Estate Regulatory Authority Act.
How long the registration obtained under RERA remain valid? And what are the provisions regarding extension?
The certificate remains valid for a period as defined by the affidavit and application or as per the time period which the project would require to complete. Extension of certificate may be granted by the authority under below-mentioned circumstances after receiving the application from the Promoter.
- Force Majeure:ÃÂ The situation in which the real estate project cannot be developed by the promoter due to war, flood, drought, fire, cyclone, earthquake, a natural calamity.
- Other than force majeure: Maximum extension of 1 year period shall be provided by the authority, only when the authority finds that such reasons are reasonable.
Revocation provisions regarding Real Estate Regulatory Act registration?
Revocation may be done either on the basis of complaint received or on suo-moto basis where the provision of Real Estate Regulatory Act is not complied with which requires 30 days written notice to the promoter. Such written notice may be given on the basis of the proposed revocation.
Show cause notice indicating the reasons of why registration under Real Estate Authority Act should not be revoked shall be provided by the developer once the notice has been received by him.
After this either registration of real estate project shall be allowed by the authority or it will cancel the Real Estate Regulatory Act registration.
Show cause notice may be issued on the following grounds:
- Where the promoter makes any defaults;
- Where the promoter violates any terms and conditions of the Act;
- Where the promoter is engaged in unfair practice or in any fraudulent practices such as misrepresentation / publication of any advertisement which are not allowed by this act to do so.
What will happen if registration is not obtained under RERA Act?
Penalty of up to 10% of the estimated project cost and in case of continuous default additional fine of up to 10% of the estimated project cost or 3 years imprisonment or both shall be imposed according to section 59 of the Real Estate Regulatory Act.
Where the promoter violates any of the provision of the Real Estate Regulatory Act then aggrieved party may file a complaint according to section 31 of the Real Estate Regulatory Act. Where there is non-compliance by the promoter, authority is entrusted with wide powers. Authority may levy a penalty or remedial measures/safeguards as may be deemed fit may be levied upon the promoter or he may be asked to refund the amount received from the buyer.
What provisions are required to be followed while obtaining loan from banks or financial institutions?
High risk and uncertainties shall be involved in the loans obtained by the banks or institutions regarding the completion of project where the registration has not been obtained or the registration has been cancelled by the authority. It would be detrimental to the interest of such bank / financial institution where any action taken by the Real Estate Regulatory Act authority.
It is always recommended by the banks to obtain registration under Real Estate Regulatory Act registration before they grant loan to them so that their interest gets remain interested.
Does the buyer feel secure after obtaining registration under Real Estate Regulatory Authority?
As it improves the transparency in the Real Estate Sectors due to which buyers feel more secure as it allows the developers to make rectification in the construction process which comes to the notice of the buyer after obtaining the possession of the property.
Do You Have Any Questions?
Such act came into existence to establish Real Estate Regulatory Authority.
All types of projects are included under this act whether it is a residential project or a commercial project including offices, shops, buildings etc.
Ongoing objects to which completion certificate has not been issued are also covered under this act. But once they received the completion certificate, then they are required to register within 3 months from the implementation of this act.
In order to sell the complexes, registration under Real Estate Regulatory Act is compulsory.
The certificate remains valid till the project gets completed.
Fine or penalties shall be imposed on the builders where the mentioned time period is not followed.
Registration number obtained under Real Estate Regulatory Act is required to mention on advertisements and promotions by the developer.
When buyer approves the 2/3rd of the project in writing, the developer can sell the project to the buyer. The developer shall be liable for previous promoter’s all the rights and liabilities.
To hear the appeal, another appellate tribunal shall be appointed by the government.
Maximum 1 year period shall be provided as a period of extension in case of natural calamities.