THE REAL ESTATE (REGULATION AND DEVELOPMENT) ACT, 2016 : A BRIEF OVERVIEW


The Indian Real Estate Sector is a significant pillar of the Indian Economy contributing about 6-7 percent to the GDP. A catalyst for Economic Growth coupled with high output, the sector caters to aspirations of the wide range of homebuyers. However the Real Estate sector displayed various discrepancies and maladministration often leading to exploitation of the buyers. In order to bring transparency and accountability, The Real Estate (Development and Regulation) Act came into force in 2016. Its primary purpose, apart from defining rules, was to build trust among buyers and builders in a market where opaque deals thriving in grey payment systems operating outside the legitimate financial system had become commonplace.

The Real Estate Regulatory Authority
Under the Act, the Central and State governments are required to notify their own rules under the Act on the basis of the model rules framed under the central Act. Section 20 of the Act provides for establishment and incorporation of Real Estate Regulatory Authority by the appropriate government of States and Union Territories consisting of a Chairperson and not less than two whole time Members to be appointed by the Government on the recommendations of a Selection Committee consisting of the Chief Justice of the High Court or his nominee, the Secretary of the Department dealing with Housing and the Law Secretary. An aggrieved person can file a complaint with the Real Estate Regulatory Authority for any violation of the provisions of the RERA Act, 2016 against any promoter/real estate agent/allottee. The functions of the authority under section 34 include registration and regulation of real estate projects and real estate agents, ensuring compliance with the Act and the rules made thereby, fixing regulation and standard fee to be levied and maintaining database, records on website. The Authority shall have the same powers as are vested in a civil court under the Code of Civil Procedure, 1908 (5 of 1908) while trying a suit in regards to the complaints pertaining non compliance or contravention of the provisions of the Act or the rules and impose penalty or interest. 
It is empowered to make recommendations to the government in regards to the protection of the interests of the promoters, allottees and  real estate agents, encouraging investment in the sector, sustainable real estate development ,project grading, etc.

Registration
The Legislation bars advertisement, marketing. selling ,booking or offer to sale or inviting persons to purchase in any real estate project without prior registration with the Real Estate Regulatory Authority. However the Real estate projects where the area of the land proposed does not exceed 500 square meters or the number of apartments proposed to be developed does not exceed 8 including all phases are exempted from registration. The appropriate government of the state/union territories can reduce the threshold below five hundred square meters or eight apartments, as the case may be, inclusive of all phases, for exemption from registration. Every promoter should make an application to the authority for registration of the real estate along with the prescribed fee. The application must include the following details-
1) Brief details of the enterprise, registered address, particulars of registration, names and photographs of  the  promoter, particulars of the project launched in past 5 years along with the current status, delay in its completion, details of cases pending, details of type of land and payments pending.
2) An authenticated copy of approvals and commencement certificate obtained from the competent authority.
3)  Sanctioned plan, layout plan of the real estate project sanctioned by the competent authority
4) Proforma of the allotment letter, agreement for sale, and the conveyance deed proposed to be signed with the allottees.
5) The number, type and the carpet area of apartments for sale in the project along with the area of the exclusive balcony.
6) Time period required for the project .
7) A declaration stating that the promoter has the legal title to the land on which development is proposed and 70 percent amount realised for the real estate project from the allottees, is to 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. 

Liability of the Promoter
It is obligatory for the promoter under section 11 of the Act to create a web page of the proposed project on the website of the authority and provide regular updates. The sanctioned plan, layout plan, stage wise schedule of completion must be communicated to the allottees.  Promoter is responsible to acquire completion certificate/occupancy certificate. Where any person makes an advance or a deposit on the basis of the information contained in the advertisement or on the basis of any model apartment and sustains any loss or damage by reason of any incorrect, false statement included therein, he should be compensated by the promoter. Section 13 bars the promoter for accepting a sum more than 10 percent of the cost of the apartment/plot/building as an advance payment from a person without entering into a written agreement of sale. If the promoter fails to complete the project or is unable to give possession he shall be liable on demand to the allottees, if the allottee wishes to withdraw from the project, to return the amount received for that apartment, plot, building with interest at such rate as may be prescribed in this behalf including compensation in the manner as provided under the Act.

Tribunal
Section 43 of the Act mandates the government of the state/union territory to establish an Appellate tribunal within one year from the commencement of the Act to hear appeal by any person aggrieved by order or direction of the Real Estate Regulatory Authority. When a promoter files an appeal with the Appellate Tribunal, the promoter must first deposit with the Appellate Tribunal at least thirty per cent. of the penalty, or such higher percentage as may be determined by the Appellate Tribunal, or the total amount to be paid to the allottee including interest and compensation imposed on him, if any, or with both, before the said appeal is heard. Every Appeal should be made within 60 days from the date on which copy of direction or order of the Regulation Authority is received. 

Penalty
A promoter who does not register his real estate project with the Authority is liable to a penalty which may extend up to ten per cent of the estimated cost of the real estate project as determined by the Authority and if he continues to violate provisions of registration, he shall be punishable with imprisonment for a term which may extend up to three years or with fine which may extend up to a further ten per cent of the estimated cost of the real estate project, or with both. Promoter providing false information to the authority at the time of registration is liable to a penalty which may extend up to five per cent of the estimated cost of the real estate project. If any promoter fails to comply with, or contravenes any of the orders or directions of the Authority, he is liable to a penalty for every day during which such default continues, which may cumulatively extend up to five per cent., of the estimated cost of the real estate project. If any promoter, who fails to comply with, or contravenes any of the orders, decisions or directions of the Appellate Tribunal, he shall be punishable with imprisonment for a term which may extend up to three years or with fine for every day during which such default continues, which may cumulatively extend up to ten per cent. of the estimated cost of the real estate project, or with both. No civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which the Authority or the adjudicating officer or the Appellate Tribunal is empowered by or under this Act to determine and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred under the Act.

Case  Law
The Bombay High Court in Neelkamal Realtors Suburban Pvt. Ltd Vs Union of India upheld the constitutional validity of the provisions of the Act. In Real Estate Regulation Authority, Punjab Vs. Sushma Buildtech Ltd, the authority imposed a penalty of Rs 10,000 on Respondent for Advertisement of their projects in print media and visual media without displaying the registration Number issued by the authority for the projects. It was held to be violative of Section 11(2) of the Real Estate (Regulation and Development) act, 2016.

 In the case of Avinash Saraf, Neha Duggar Saraf Vs. Runwal Homes Pvt Ltd, the MAHA RERA authority held that (i) RERA has jurisdiction even for agreement executed before RERA came into effect if the cause of action survives after RERA come into force. (ii) Possession without occupation certificate is illegal. 

RERA is envisaged with the dual task of Registration and Regulation. It aims to rectify the loopholes in the Real estate sector which provided an upper hand to the promoters. Since its inception by the government of respective States/Union Territories, RERA has induced structural reforms in the sector, thereby fostering the confidence of the home buyers as well as promoters. It has resulted in increase in fair transactions in the real estate sector, better accountability and transparency, and a fundamental upward shift in consumers’ sentiment. 

"This article is authored by Adv. Ajinkya Gaikwad graduated from Government Law College, Mumbai. He was former President of Corpus Juris - An Association of Law students of India. You can reach out to him at gaikwad.ajhi6@gmail.com"


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