India: RERA: Registration Of Real Estate Projects- A Brief Overview

Last Updated: 29 March 2018
Article by Saloni Sharma

The real estate sector has been one of the top-most contributors to the country's Gross Domestic Product (GDP) and employment creation. Surprisingly, inspite of being such an important part of the economy, the real estate sector was unregulated for numerous years. In order to regulate the aforesaid unorganized sector, the Indian Parliament passed a legislation called as The Real Estate (Regulation and Development) Act, 2016 ("RERA") which was made effective on May 1, 2016.

A batch of writ petitions was filed by real estate developers and individual plot owners in the Bombay High Court. They claimed that RERA is unconstitutional as its state-wise implementation and appointing state-level authority is arbitrary. They also challenged Section 3 of the RERA which mandates developers to register their new and ongoing real estate projects.

The Bombay Court held that RERA is constitutional. A bench of justices consisting Rajesh Ketkar and Naresh Patil stated that "RERA needs to be closely monitored in years to come. RERA is not a law relating to only regulatory concerns but its object is to develop realty sector particularly incomplete projects."

RERA is a central legislation though land is a state subject on which only the state government is empowered to frame laws. Hence, RERA being a central legislation, is adopted by each state government in India in its respective state assembly and has also framed its respective rules and regulations to implement RERA in its territory.

Registration under RERA

One of the salient features of RERA is the requirement of registration of the real estate project by the 'Promoter' with the Real Estate Regulatory Authority ("Authority"), which falls within the planning areas. In the absence of such registration, the Promoter of a real estate project is not permitted to advertise, market, book, sell or offer for sale, or invite persons to purchase in any manner in any real estate project or part of it.

RERA defines promoter as ("Promoter"):

  1. Builder;
  2. Developer;
  3. Development Authority;
  4. Society; or
  5. Holder of Power of Attorney from the owner of the land on which building / apartment is constructed or plot is developed for sale.

A "real estate project" is defined as the development of a building, converting an existing building or a part in apartments, development of land into apartments / plots for the purpose of selling and includes common areas, development works, all improvements and structures thereon and all easement, rights and appurtenances belonging to such building or land or structure.

The terms "apartment" and "building" as used in the aforesaid definition which is defined under the Act not only covers residential projects but also covers commercial projects.

In terms of Section 3 of RERA, the following real estate projects are not required to be registered:

  1. Where the area of the land does not exceed 500 square meters or number of apartments does not exceed 8 (eight);
  2. Where the Promoter has received completion certificate for a real estate project prior to commencement of RERA; and
  3. Where the work involved is limited only to renovation or repair or re-development and does not involve marketing, advertising, selling or new allotment of any apartment, plot or building.

In addition to the registration of real estate projects, every Real Estate Agent is also required to get itself registered before facilitating the sale / purchase of any real estate project or part of it, by making an application along with requisite information / documents and fee.

Application for registration under RERA

In terms of Section 4 of RERA, an application required to be made by every Promoter along with the prescribed fee for registration of its real estate project and shall be inter alia accompanied with the prescribed documents including:

  1. An authenticated copy of the approvals and commencement certificate obtained from the competent authority;
  2. Sanctioned plan, layout plan and specifications of the proposed real estate project as sanctioned by the competent authority; and
  3. A declaration by the Promoter supported by an affidavit inter alia stating:

    1. that the Promoter has a legal title over the land on which development is proposed;
    2. the details of all encumbrances on such land;
    3. the time period within which the Promoter undertakes to complete the real estate project;
    4. that the Promoter would deposit 70% of the amount realized for the real estate project from the allottee(s) from time to time in a separate bank account.

Validity of registration under RERA

The registration granted shall be valid for a period declared by the Promoter for completion of the real estate project or phase thereof as submitted in the affidavit along with the application for registration.

The registration granted by the Authority may be extended by it upon receipt of application from the Promoter in this regard in the following circumstances:

  1. Force Majeure: war, flood, drought, fire, cyclone, earthquake or any other calamity caused by nature affecting the regular development of the real estate project.
  2. Other than force majeure: The Authority may extend the registration to a maximum period of one year if it feels that the circumstances and reasons for extension of the case are reasonable.

Revocation of registration

RERA stipulates various compliances with respect to a real estate project. If the same are not complied with, the registration of an already registered real estate project may get revoked. The Authority may revoke a registration on the basis of a complaint received or suo motu by the Authority by giving 30 days' notice in writing to the Promoter of such real estate project stating grounds of proposed revocation and instructing him to show cause as to why the registration should not be revoked. On the basis of the Promoter's reply to the show cause notice, the Authority may allow the real estate project to be registered or alternatively, may cancel the registration.

A show cause notice proposing the revocation may be issued on the following grounds:

  1. If the Promotor defaults in doing anything required under RERA;
  2. If the Promotor violates any terms and conditions of the approval granted by the Authority;
  3. If the Promotor is involved in any kind of unfair practice or irregularities such as any misrepresentation or false representation and / or publication of any advertisement / prospects of services that are not intended to be offered; and / or
  4. If the Promoter indulges in any fraudulent practices.

Consequences of non-registration

In case of non-registration of the real estate project, Section 59 stipulates a penalty of up to 10% of the estimated project cost and in case of continued default, an additional fine up to 10% of the estimated project cost or imprisonment up to 3 (Three) years or both.

In terms of the provisions of Section 31 of the RERA legislation, any aggrieved person may file a complaint with the Authority against the Promoter for violation of the provisions. The Authority has been entrusted with very wide powers under RERA in relation to any non-compliance on the part of the Promoter including levy of penalty as well as taking such other remedial measures or safeguards as may be deemed fit by the Authority. The same may include granting of interim order(s), refund of consideration amount received by the Promoter from various allottee(s), change in the developer / Promoter, etc., on a case to case basis. 

Lending by Financial Institutions / Banks

In the event, any bank / financial institution decides to lend money to retail buyers under the real estate project, which is not registered or registration of the same has been cancelled, such decision may be a conscious call on the part of such bank / financial institution since such lending will involve high risk factors and uncertainties regarding the completion of the real estate project or actions to be taken by the Authority in relation to such real estate project / Promoter at a later stage, which may be detrimental to the interest of such bank / financial institution or other stakeholders. Hence, the Banks / Financial Institutions have also been insisting upon registration of real estate projects under RERA before sanction of the loan or approval of the real estate project in order to protect their interest.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions