Influence of RERA on Real Estate Sector

The real estate sector plays a catalytic role in fulfilling the need and demand for housing and infrastructure in the country. While this sector has grown significantly in recent years, it has been largely unregulated. There is, thus, absence of professionalism and standardization and lack of adequate consumer protection. Though the Consumer Protection Act, 1986 is available as a forum to the buyers in the real estate market, the recourse is only curative and is inadequate to address all the concerns of buyers and promoters in that sector. The lack of standardization has been a constraint to the healthy and orderly growth of industry. Therefore, the need for regulating the sector has been emphasized in various forums. The proposed Bill provides for the establishment of the Real Estate Regulatory Authority (the Authority) for regulation and promotion of real estate sector and to ensure sale of plots, apartments or buildings, as the case may be, in an efficient and transparent manner and to protect the interest of consumers in real estate sector and establish the Real Estate Appellate Tribunal to hear appeals from the decisions, directions or orders of the Authority. This Bill will ensure greater accountability towards consumers, and significantly reduce frauds, arrest delays and the current high transaction costs. It attempts to balance the interests of consumers and promoters by imposing certain responsibilities on both. It seeks to establish symmetry of information between the promoter and purchaser, transparency of contractual conditions, set minimum standards of accountability and a fast track disputer solution mechanism

1. To establish the Real Estate Regulatory Authority for regulation and promotion of the real Estate sector. 2. To compare the MOFA with Maha RERA on various aspects

Sr. No Date Event 1 May, 2008 Ministry of HUPA first prepared a Concept Paper on Regulation of real estate sector and a model law for Legislation by States/UTs. 2 2011 Conference of Ministers of Housing suggested a central law for regulation of real estate sector 3 July, 2011 Ministry of Law & Justice too suggested central legislation for regulation

August, 2013 introduced in Rajya Sabha and was referred to Standing Committee Report of Standing Committee was laid on the Tables of both Houses of Parliament 6 February, 2014 Report of Standing Committee was laid on the Tables of both Houses of Parliament 7 February, 2014 Attorney General upheld validity of central law for regulation of the sector 8 April, 2015 Union Cabinet approved official amendments based on recommendations of Standing Committee 9 May, 2015 Matter referred to the Select Committee of Rajya Sabha 10 July, 2015 Report of Select Committee tabled in RajyaSabha 11 December, 2015 Real Estate Bill, 2015 incorporating several modifications based on Select Committee report and stakeholder consultations was approved by the Union Cabinet 12 10 March, 2016 The Real Estate (Regulation & Development) Bill, 2016 passed by Rajya Sabha 13 15 March, 2016 Lok Sabha passed the Bill as passed by Rajya Sabha 14 25 March, 2016 President gives assent to the Bill 15 15 April, 2016 59 Sections of the Act were notified making them effective from May 1, 2016 enabling preparation of Real Estate Rules, setting up of Regulatory Authorities and other infrastructure 16 28 October, 2016 Real Estate Removal of Difficulties Order 17 19 April, 2017 Remaining 32 Sections of the Act notified making them effective from May 1st this year requiring registration of projects within three months from tomorrow 18 1 May, 2017

• Establish the Real Estate Regulatory Authority for regulation and promotion of the real estate sector. • Ensure sale of plot, apartment of building, as the case may be, or sale of real-estate project, in an efficient and transparent manner. • Ensure protect the interest of consumers in the real estate sector. • Establish an adjudicating mechanism for speedy dispute redresses and also to establish the Appellate Tribunal to hear appeals from the decisions, directions or orders of the Real Estate Regulatory Authority (RERA) • Regulates transactions between buyers and promoters of residential real estate projects. • Establishes state level regulatory authorities called Real Estate Regulatory Authorities (RERAs). • Residential real estate projects, with some exceptions, need to be registered with RERAs. • Promoters cannot book or offer these projects for sale without registering them. Real estate agents dealing in these projects also need to register with RERAs.

of the project on the website of the RERA. These include the site and layout plan, and schedule for completion of the real estate project. • Amount collected from buyers for a project must be maintained in a separate bank account and must only be used for construction of that project. The state government can alter this amount. • Right to Legal Representation on behalf of Client by Company Secretaries or chartered accountants or cost accountants or legal practitioners. • Imposes stringent penalty on promoter, real estate agent and also prescribes imprisonment.

Sale of Parking Not Permissible. Only covered car parking space / Garages including mechanical car parks. Carpet Area Balcony included, and net usable area was permissible.

Not to exceed 20% Not to exceed 10%

Chargeable Chargeable Deemed conveyance Applicable within Six months of Applicable within three months of completion

Simple interest @ 9% p.a. from the date sums are received. Simple interest @ 2% + prevailing MCLR rate of the State Bank of India from the date sums are received. Formation of Society As soon as minimum number of person (60%) require to take flats. Within 4 months of 60% occupation. Within 3 months of date of 51% of allotters that have booked their apartments. Conveyance If no period mention within 4 months of formation of society. If no period mentioned, then for single building within 3 months of issue of occupation certificate or 51% of total number of allotters in the building/ wing having paid full consideration whichever is earlier. In case an apex body has to be formed if no date is agreed upon the 3 months from the completion of the building.

flats. other building, water or electric supply. b). War, civil commotion or act of God. c). Any notice, order, rule, notification, of the government and/or other public or competent authority. Note-The provisions of this proviso are not mandatory but negotiable. b). Any notice, order, rule, notification, of the government and/or other public or competent authority. c). Excludes period of registration where actual construction not carried by promoter due to specific stay, injunction order to the project by any court of law, tribunal, competent authority, statutory authority, high power committee etc. or due to other mitigating circumstances as decided by the RERA authority d). If authority is convinced that due to no fault of the promoter there has been a delay he can get extension for the registration of the project. Payment Terms Very stringent/Not practical therefore no developers used to follow. Liberal and practical for promoters and allotters. Escalation Increase in local taxes, water charges, insurance and such other levies, if any, imposed local authority/government. Escalation free except duty increase in account of development charges. Share of Outgoings In proportion to floor area of flat. In proportion to carpet area. All Receipts Mentions maintain a separate account. 70% to be maintained with designated account and to be withdrawn as per progress of construction. Project Potential Till conveyance Disclosure to be made about would belong to developer. expectation of future FSI or else consent of 2/3rdallottees required. Interest Developer‘s discretion. M.C.L.R. plus 2% of SBI Bank Rate. Termination Developer was entitled to terminate after notice on default of payment. Developer was entitled to terminate after 3 installments not paid and notices given. Refunds must be made within 30 days. Specification of materials. Generic declaration would suffice. To mention brand or price of product (Unbranded). Registration of Project. Not required. Compulsory before any advertisement or receipt of payment. Insurance Of building Of building and title. Disclosure To be available on site. On the site and website. Title Liability Up to conveyance is done. Liability in perpetuity. Offences and Penalties Imprisonment and nominal files were prescribed.

Consent not required unless individual unit is affected.

Phase wise development not mentioned. Detailed phase wise development permitted along with different date of possessions for apartment and amenities. Unfinished project No provision of take over. Authority with approval of state government may allow development of project by any other person including first right to take over and complete the project will rest with allottees who

The Act has turned around the legal outline for the real estate sector. While it may take some time for the execution of the various commitments under the Act such as the setting up of the authorities etc., there is maximum faith in the general public that the Act will achieve its target.

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(ME Student) Department of Civil Engineering, Dr. D. Y. PATIL School of Engineering and Technology, Lohegaon, Pune – 412105, India