RERA, 2016 is an act, recently passed by the Parliament which aims to constitute a Real Estate regulating authority for every state (except J&K) under the direction of respective State Government. It intends to streamline the real estate market in the country. It has been enacted to safeguard the interest of the masses and prevent any chicanery in real estate dealings. Several new guidelines have been laid for the ‘Allottee’, as well as the ‘Promoter’ or ‘Real Estate Agent’. The act will infuse transparency in the real estate sector.
Click on the link to read FAQs on RERA Act – For General Public
Click on the link to read rules stated under RERA Act – Specifically for ‘Promoters’
Key – Notes
- Earlier several deals involving black money used to happen and often went unnoticed.
- The new system focuses on publicizing the project details thus preventing secret deals from happening.
- A unique Id would be assigned to every ‘Promoter’ and the ‘project’ as well.
- And no deal would be considered legal unless registered with the regulating authority.
- Project details would also be displayed on RERA’s website hence nullifying any chances of deception.
RERA, 2016 Act Highlights
Registration of Real Estate Projects
(1). Without the registering the real estate project no promoter can advertise, market, book, sell, or offer for sale or invite persons to purchase any manner any plot, apartment or building.
(2). For projects that are ongoing on the date of commencement of this act and for which completion certificate has not been issued, the promoter shall make an application to the Authority for the registration of the said project within 3 months from the date of commencement.
(3). No registration of the real estate project shall be required –
- where the area of land proposed does not exceed 500 sq. mtrs. or number of apartment to be developed does not exceed 8 inclusive of all phases.
- for projects completed (completion certificate received) before the commencement of the act.
- where the real estate project is to be developed in phases, every such phase shall be considered a stand alone project and registration should be obtained for each phase.
(4). On receipt of application, the Authority shall within a period of 30 days –
- grant registration subject to provisions of the act and provide a registration number, including 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.
Registration of Real Estate Agents
(1). Every real estate agent shall make an application to the Authority for registration in such form ,manner within such time and accompanied by such fee and documents as may be prescribed.
(2). The Authority upon satisfying itself grant a single registration to the real estate agent for the entire State of Union territory, as the case may be.
(3). Every real estate agent who is registered under the act, shall be granted a registration number by the Authority which shall be quoted by the real estate agent in every sale facilitated by him/her under this act.
Functions & Duties of ‘Promoter’
(1). The promoter shall, upon receiving his/her Login Id and password, create his/her web page on the website of the Authority and enter all details of the proposed project for public viewing including –
- 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 &
- such other info and documents as may be specified by the regulation made by the Authority.
(2). A promoter shall not accept a sum of more than 10% of the cost of the apartment, plot as an advance payment or an application fee.
(3). The promoter cannot transfer or assign his majority rights and liabilities of a real estate project to a third party without obtaining prior written consent from 2/3rd allottees, and without the prior written approval of the Authority.
Note :- Allottee booking multiple plots, apartments, etc shall be considered as single allottee only.
(4). It is the responsibility of the promoter to ensure 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 –
- Provided that the promoter shall withdraw the amounts from the separate account, to cover the cost of the project, in proportion to the percentage of completion of the project.
- Provided further that the amounts from the separate account shall be withdrawn by the promoter after it is certified by an engineer, an architect and a chartered accountant in practice that the withdrawal is in proportion to the percentage of completion of the project.
- Provided also that the promoter shall 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 and it shall be verified 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.
Penalty for non-compliance
(1). If the promoter fails to complete or is unable to give possession of an apartment, plot or building –
- he shall be liable to return the amount received by him with interest at such rate as may be prescribed, to the allottee.
- in case the allottee does not intend to withdraw from project, he shall be paid by the promoter, interest for every month of delay, till the handing over of the possession.
(2). The 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 for purchase.
RERA – A Game Changer
Secret land deals are always accompanied by misappropriation of costs involved. To avoid stamp duty tax in some cases and dispense black money in others, the amount of transaction is often concealed. The dealing parties with mutual consent used to make such transactions. But with the introduction of this act, the deals would no longer happen covertly.
Following are some of the desired consequences of this act.
Check on Secret Deals
Earlier black money was easily dispensed in the real estate market. Huge part of black economy is in form of real estate holdings. The RERA act puts a check on such deals and prevents further stacking of illegal cash in form of real estate holdings. Publicizing projects details on the internet further strengthens the official check.
Misappropriation of Transaction Value
Mutual consent in order to dilute stamp duty tax, ultimately leads to misappropriation of costs. Hence, the part of money on which tax is not paid becomes black money. Publicizing details would put a check on such ploys.
Chicanery in real estate project
A check on hidden conditions, transfer of liabilities to other contractors, deception after receiving payments, etc will be dealt with stringent norms and heavy penalties.
Hence with the enactment of this act, the Govt. intends to plug all the loopholes in the real estate market which earlier used to draw a lot of black money in inappropriate land and property deals.
According to the opinion of the author, this act will emerge as a game changer in real estate sector, improve transparency and put a check on black money investment. Moreover the RERA Appellate Tribunal would lower the burden of land and property cases as it would exclusively and speedily dispense justice to the aggrieved.