In order to regulate the real estate sector and to ensure sale of plots, apartments or buildings in an efficient and transparent manner and to protect the interest of consumers in the real estate sector, the Union of India enacted the Real Estate (Regulation and Development) Act, 2016 (hereinafter ‘RERA’). The main operational provisions of the said Act were brought into force w.e.f. May 1, 2017. Thereafter, as of now, 14 States and Union Territories (UTs) have notified RERA Rules, whereas the rest of the States are in advance stage of notifying the same.
This article examines the current commercial issues, as has been dealt with by the States/UTs of NCT Delhi, Haryana, Uttar Pradesh and Maharashtra from legal perspective, as set out below in tabular analysis:
| ISSUES | NCT DELHI | HARYANA | UTTAR PRADESH | MAHARASHTRA |
|---|---|---|---|---|
| Registration requirement of ongoing Projects | On-going project which has not received CC is required to be registered with the Regulatory Authority | Registration not required for Projects, which has applied for grant of OC/part CC, provided same is granted within three months of the application. | Excludes registration of projects where services are handed over to local authority; common areas and facilities are handed over to Association; all development works are completed and sale/lease deeds of 60% of apartments/houses/plots stand executed; and where all development works are completed and application is filed with competent authority for CC. | Requires registration of on-going projects, as that of Delhi Rules. |
| Penalty for delay in handover of the project / delay in payment by the allottee | Penalty as interest @ SBI highest Marginal Cost of Funds based Lending Rate plus 2% in both the cases. | Provides for same provision in respect of penalty, as that of Delhi Rules. | Format of Agreement for Sale, bearing such penalty is not notified. | Provides for same provision of penalty, as that of Delhi and Haryana Rules. |
| Payment Schedule | Advance payment not exceeding 10% can be collected from allottees while entering into an Agreement for Sale. Payment Schedule as per Format of Agreement for Sale. | Provides for same payment schedule as that of Delhi Rules. | The Format of Agreement for Sale bearing payment schedule is not notified. | Collection of sums not exceeding (a) 10% of the total consideration while entering into an Agreement for Sale; (b) 20% on execution of Agreement for Sale; (c) 15% on completion of plinth work; and balance as per model Agreement for Sale. |
| Requirement of Separate Account | Builders to deposit 70% of amounts realized from allottees, in a separate account maintained in a scheduled bank, to cover cost of construction, on condition: (a) Withdrawal in proportion to percentage of completion of project, to cover cost of project. (b) Certification by an engineer, an architect and a CA in practice that withdrawal is in proportion to the percentage of completion of the project. (c) Audit of Accounts within 6 months after end of every financial year. | Bears same provisions as that of Delhi Rules. | Bears same provisions as that of Delhi and Haryana Rules. | Categorizes projects as (a) new and (b) on-going; and applies provisions as that of Delhi only in relation to new projects. For on-going projects, there is no clarity regarding maintenance of bank account. |
| Structural Defects | Promoters to rectify structural defects etc., if brought to his notice within 5 years of handing over possession of project; failing which, aggrieved allottees to claim compensation as per RERA. | Bears same provisions as that of Delhi Rules. | Format of Agreement for Sale, bearing remedy for Structural defects not notified. | Bears same provision as that of Delhi, except that the obligation of the promoters to rectify is, wherever the same is possible. For non-rectification, the allottee may claim compensation as per RERA. |
Impact assessment of RERA upon the prevailing real estate jurisprudence, is worth reference, more so in cases of:
There is no conflict between Apartment Ownership Act and RERA. Further, Section 88 of RERA declares that the provisions of RERA are in addition to and not in derogation of any other law for the time being in force.
RERA excludes jurisdiction of Civil Courts. Section 31 entitles aggrieved person to file a complaint with the Real Estate Regulatory Authority for violation or contravention of the provisions of the Act, Rules and Regulations thereunder. An aggrieved person may also approach Forums under Consumer Protection Act, 1986, as its provisions are also declared to be in addition to and not in derogation of any other law.
Section 13(2) of RERA, requires the Agreement for Sale to be in such form as may be prescribed by the Rules, notified by States and Union Territories. Therefore, in Projects where the Agreement for Sale has already been entered into between Parties, the Developers may enter into addendum Agreements to make it compliant.
Overall, RERA era is a positive move in the right direction wherein the end all concerned Parties benefit, if the Law is implemented and enforced as per its essence. The attempt has been made to minimize the instances of non-compliance and to restore the confidence of the builders and the allottees on each other. RERA provides for strict regime for regulating the real estate in India and in the process keeps a tight watch on the defaulters by making provision for penalty. However, there are certain grey areas and ambiguities in the RERA and the Rules framed thereunder, and the same are likely to be resolved and clarified in course of its implementation.
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