The real estate sector got its own regulator from May 1, 2017, the date when the Real Estate (Regulation and Development) Act, 2016 (RERA) became effective in the entire country.
Each state and UT will have its own Regulatory Authority (RA) which will frame regulations and rules according to the Act.
In reality, not all the states have actually notified the rules in their state and many have not yet established a RA too. Few of the states have even diluted some of the provisions of the Act.
As on May 1, 2017, only 13 states and Union territories had notified their final rules. “Where the regulatory authority has not been established, the state government is required to designate any officer, preferably the Secretary of the department dealing with housing, as the regulatory authority,” informs Kalpesh Maroo, Partner, Direct Tax, BMR & Associates LLP.
RERA will not only impact new buyers but also help those who are yet to receive possession of real estate property. The new launches across the country, anyhow, will be almost absent till the builders get the Registration Number for the project after applying to the state RA.
Can the builder still advertise?
In the case of completed projects where the builders have received the completion and occupancy certificates (CC/OC), the selling may continue through an advertisement for units which had remained unsold. However, for projects where large inventory may have still remained unsold, builders may continue with selling for a limited time. “In cases where the CC for a project is expected in 3 months from the date of commencement, developers will be required to obtain registration in case they wish to continue to sell the project to customers post-May 1, 2017,” informs Maroo.
In the ongoing projects, builders may still advertise but this could be subject to state rules. As per the Maharashtra RERA ( FAQ released by them) at the end of 90 from the date of notification of Section 3 of the Act, the promoter of an ongoing project shall not advertise, market, book, sell or offer for sale or invite persons to purchase in any manner any plot, apartment or building, unless he registers the project. So, effectively they have got 90 days to book without obtaining registration numbers.
For all those ongoing projects for which the completion certificate has not been issued as on the date of commencement of this Act in the state, the promoter has to apply for registering such incomplete projects within a period of 3 months from the date of commencement of the Act. So, even if you had booked earlier and not yet got possession, your project is supposed to come under RERA ambit.
No registration of the real estate project shall be required where the promoter has received completion certificate for a real estate project prior to commencement of this Act.
And, while registering a project, the promoter needs to give a revised date of completion which should be commensurate with the amount of development completed. Some states are not including them while few are including them, subject to conditions.
How some states are keeping ongoing projects out of RERA
Some states are covering the ongoing projects but with conditions attached. Here is how some states are managing to keep the ongoing projects out of registration.
For the purpose of this rule “ongoing project” means a project where development is going on and for which CC has not been issued but excludes such projects which fulfil any of the following criteria:
(i) Where common areas and facilities have been handed over to the association of allottees or the competent authority, as the case may be, for maintenance.
(ii) Where sale/lease deeds or possession letter of minimum 60 of the apartments in the phase/project have been executed
(iii) Where all development work has been completed and CC has been obtained from a chartered engineer in practice as per prevalent Township Policy.
(iv) Where CC has been obtained from the competent (local) authority.
Registration requirement for ongoing projects
If you are waiting for possession of your home ensure that the builder is taking steps to make it RERA compliant. The promoter of an ongoing project has to compulsorily register it within 90 days from the date of commencement of the Act in the state, by furnishing following information.
The promoter has to inform the RA of the total amount collected from the allottees and the total amount spent till now and the total balance lying with the promoter.
The status of the project (extent of development carried out till date and the extent of development pending) including the original time period disclosed to the allottee for completion of the project at the time of sale including the delay and the time period within which he undertakes to complete the pending project, which shall be commensurate with the extent of development already completed, and this information shall be certified by an engineer, an architect and a chartered accountant.
(c)The promoter shall disclose the size of the apartment based on carpet area even if sold on any other basis such as super area, super built up area, built up area etc. which shall not affect the validity of the agreement entered into between the promoter and the allottee to that extent.
(d) For ongoing projects, the promoter has to deposit in a separate bank account, 70 percent of the amounts already collected from the allottees but not been utilised for construction of the project or the land cost for the project.
What to ensure as a buyer
The first thing to check for those not yet having got the possession of their home is to check if their state is bringing such ongoing projects, without any conditions, under the purview of RERA or not?
Thereafter, one needs to look out for what the builder is up to? The builder may be trying to complete your project in a hurry and obtain the completion and occupancy certificate before the three months deadline ends for the ongoing ongoing projects. This, however, could be possible for projects which are almost nearing completion. For projects where delivery is still a few years away, ensure that your builder gets it registered under the Act so that the rules apply even to your property which is yet to be possessed.
And once registered, there would be enough transparency and provisions of the Act to help the buyers end a long wait for their home. “All substantive provisions of the Act would apply to existing projects where CC has not been obtained. Buyers of such projects are vested with the complete rights available under the Act. The buyers can obtain full information about the project and the promoter on the website of the authority post the registration”, says Maroo.