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Know Your Rera – L&t Realty

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Real Estate (Regulations and Development) Act, 2016


The need for regulations and uniform guidelines was being felt by the industry which perceived negatively by consumers because of unscrupulous activities of few. A long standing demand by the industry and consumers was largely unmet e.g. delays in grant of project approvals and dispute resolution. There was no better time to introduce Real Estate (Regulations and Development) Act as the Indian Government is focusing on – housing for all, smart cities and infrastructure development, fulfilment of these goals will require enablers such as the Act.

The Act paves way for empowering all stakeholders engaged in the business and consumption of real estate, be it – consumers, real estate developers , brokers/ intermediaries amongst others. However all commercial and residential real estate including plots, apartments, shops, offices and other such properties are all covered under the Act.

A few of the overarching themes in the Act are following –

Consumer rights and protection
Regulatory oversight ...
... on real estate developers and brokers/ intermediaries
Defining the duties of real estate developers and default scenarios
Setting up timelines for registration of projects and dispute resolution
Clearly defining penalties and liabilities of real estate developer and brokers/ intermediaries
Roles and duties of investors
Definitions of often used terms in this document –

Consumer: A person who has bought/ booked / intends to buy a plot, apartment or building from a real estate developer.

Real estate developer: A person who develops a building or a township of apartments and commercial complexes on an independently or a jointly owned land, which are later partially or completely sold to the consumers. It also includes a person who converts an existing building or apartments thereof and who acts as a builder, contractor or coloniser.

Project: Is a real estate project that is undertaken by real estate developer and a project can be an offering of Units (defined below) of one kind of mixed (i.e. apartments, plots, offices, shop, building)

Intermediary: An intermediary is a person who negotiates the transactions of buying and selling a property between two parties and receives remuneration for the same (It typically includes brokers and property dealers).

Unit: A single apartment, plot, shop or an office which is a part of a building or township being developed

Person: includes i) an individual; ii) a Hindu undivided family; iii) a company; iv) a firm under Indian Partnership Act; 1932 or Limited Liability Partnership Act, 2008, as the case may be; v) the Maharashtra Real State Regulatory Authority; vi) an association of persons or a body of individuals whether incorporated or not; vii) a co-operative society registered under any law relating to co-operative societies; viii) any such other entity as the appropriate Government, may specify in this behalf.

Carpet Area: means the net usable floor area of an apartment, excluding the area covered by the external walls, areas under services shafts, exclusive balcony or verandah area and exclusive open terrace area, but includes the area covered by the internal partition walls of the apartment.

Q1. What is Real Estate (Regulation and Development) Act, 2016?

The Real Estate (Regulation and Development) Act, 2016 (the Act, from hereon) is a Government of India initiative to bring about the much needed transparency and order to the real estate related transactions by creating a systematic and a uniform regulatory environment, thereby protecting consumer interest and making real estate developers accountable for timely completion of projects. The Act paves the way for setting up of Real Estate Regulatory Authority (RERA, henceforth) for regulation and promotion of real estate sector while promoting transparency and equity in real estate transactions.

Q2. What was the need for setting up RERAs?

Real estate sector is supposedly one of the largest contributor to Indian economy and amongst the largest employers too. However real estate transactions in the country have largely been a tiresome and ambiguous affair for consumers. Real estate developers have been found to violate prudential norms of conducting business which has further resulted in litigations and disputes. In worst cases consumers have been handed over poor quality units which at times can also be a hazard. The need for clean-up of this system was being felt for long.

Primarily RERAs will have an oversight on the real estate transactions and promote timely and satisfactory completion of projects, protect consumer interest and bring about transparency in all proceedings related to the sale, construction and handover of projects.
The Act brings all stakeholders – consumer, real estate developer and intermediaries under the purview of the RERA.
RERA will also maintain a web portal which will host almost all the relevant information a consumer requires from a real estate developer including – details of land titles, project approvals, construction progress, names of intermediaries, contractors etc.
RERA thereby becomes one body which can be approached during disputes arising out of real estate transactions and contracts, and this body will have power to impose penalties and punishment as set out under the Act
Q3. Is the Act applicable to both residential and commercial projects?


Q4. Are there any supporting government bodies set up to assist the RERA?

Yes. A Central Advisory council will be set up to advise the Central Government on the implications of the Act, recommend policy, protect consumer interest and to oversee the growth and development of the real estate sector. In addition, there will be a dedicated Appellate Tribunal set up for RERAs to hear appeals from orders of the RERAs and the adjudicating officer.

Real estate developer section

Q1. What are the roles and responsibilities of a real estate developer as stated in the Act?

The RERA has made the following compulsory for them-

It is mandatory for the real estate developer to register the project with the concerned RERA and obtain a valid registration number before going ahead with the project
The real estate developer is required to submit all documents related to the project which are considered necessary by the RERA
The real estate developer must deposit 70% of the amount received from the consumers in an escrow account from time to time and ensure that the amount is solely used for the project for which it was taken
Adhere to the project plan at all times
Refund the money taken from the consumers with applicable interest in case the project cannot be completed for some reason
Compensate the consumer for the time delay if any repair structural defects if any in the construction even after 5 years of handover of the project. The Act lists down roles and responsibilities of the real estate developer at project launch, construction and handover stages. In fact the Act goes a step further and makes the real estate developer accountable for the project quality up to 5 years after handover of the project. The Act has been drafted well to define various nuances of real estate sector such as – phase wise development, commencement certificate, occupancy certificate amongst others. Also in its spirit the Act puts an end to the practice of launches without approvals (sometimes referred as soft launch) thereby a consumer is guarded to that extent as a violating real estate developer will suffer revocation of registration, penalties and be listed on public portal as a defaulter.
Q2. What are the documents to be produced by the real estate developer during registration of a project with the RERA?

Details of the project such as name, address, type, names and photographs of the Promoters etc.

Details of project already launched by the real estate developer and their status (in the preceding 5 years)
Approval and commencement certificates obtained from the Maharashtra Real State Regulatory Authority for each phase of the project.
Sanctioned plan and layout plan, development plan for the project and details of facilities being made available like drinking water, electricity etc.
Proforma of allotment letter, agreement for sale and conveyance deed to be signed with the consumers
Number of garages and their respective areas which are for sale in project;
Location of the project with clear demarcation of the land dedicated for the project.
Number, type and carpet areas of units to be sold along with details of open areas if any like terraces, balconies etc.
Details of associated engineers, contractors and architects and intermediaries in the project
A declaration stating that the land of the project is verified authenticated and the developer has a legal title to it, that the project will be completed within specified timeline and that 70% of money received from the consumers shall be deposited in a dedicated escrow account and this amount will be used solely for that particular project.
Q3. The Act has mandated real estate developers to specify ‘carpet area’ rather than ‘super built up area’. How will that help?

Carpet area is a measure of net usable area of the unit and does not include common areas, balconies, verandahs etc. whereas, the super built up area could be an addition of both. Therefore, to ensure that the consumer knows what he is paying for, it has been made mandatory for the real estate developer to specify carpet area. Essentially Carpet Area is the area within the walls of a unit where a consumer can reside or have his office. Even when the balconies, verandahs or terraces are exclusively available within a unit these cannot be added to the Carpet Area prescribed in the Act. The Act thereby enacts a straightforward definition to be adopted across the country.

Q4. What are the actions to be taken by the RERA after an application has been submitted for project registration?

The RERA is required to either grant registration or reject the application within 30 days of its submission. On acceptance of application, the real estate developer is to be provided with a login id and password to access the RERA portal for submission of documents and details. If the application is not in conformation with the guidelines and RERA finds it worth rejecting, it is mandatory that the applicant be heard in the matter before rejection.
This is a welcome change being brought through the Act that information pertaining to real estate projects will go online and regulators won’t even allow marketing of projects that are not registered with the RERA.

Q5. What happens if the concerned RERA fails to respond to the applicant within the stipulated thirty days time?

In this case, the application is considered accepted and the project, successfully registered. The RERA is mandated to provide the applicant a login id and password for its web portal within 7 days of expiry of the said period of thirty days.
The Act thereby sets timelines on the regulator within which it has to respond to various requests.

Q6. What is the validity period for a particular project registration?

The registration will be valid for a period specified by the real estate developer in the application form. Hence the real estate developer is accountable to adhere to timelines otherwise he risks suffering losses/ penalties.

Q7. Under what circumstances can the RERA extend the validity of the registration?

The RERA, if it considers necessary, may extend the validity of registration in the event of a natural calamity like flood, drought, fire etc and also in case of a war. Basically only force majeure events are the ones where real estate developer can have some leeway of not delivering on time. However he is still required to make a presentation to RERA for seeking extension and pay applicable fee. Also such extension will be for a period of one year in aggregate.

Q8.What happens to on-going projects? Will they have to be registered as well?

Yes. If the project in question meets the criterion for registration (as defined ahead), the application for the same has to be submitted within 3 months of commencement of the Act.

Q9. Do all projects fall under the radar of RERA? Are there any exceptions?

No. Only projects which are still under construction at the time of enactment of the Act and any new project thereon are under the purview of the RERA, provided- they are developed on a land area of more than 500 sq meter or which have more than 8 units with all phases combined.

Essentially almost all large projects which have not obtained completion certificate will immediately come under the purview of the Act. Thereby consumers of under construction project can seek protection under the Act. While the central government provides for these minimum area requirements the local governments can change the area requirements to conform to the Act, if required such minimum area threshold can be revised even lower.

Q10. Is there a common platform to access the details of the registered real estate developers and their projects?

Yes. A web based system will be made operational within one year of establishment of the RERA, for submission of details and documents by the real estate developer and this information can easily be accessed by consumers.
It is for the first time that an initiative of this sort is coming into play whereby real estate developers have to make several declarations and comply with norms, while all such information is online for consumers to access.

Q11. On what grounds can the RERA revoke a registration?

Upon receiving a complaint against the real estate developer, the RERA can revoke registration if it is satisfied that the real estate developer has not complied to the rules and regulations stated under the Act or rules and regulations made thereunder, or has violated the terms and conditions of approval given by the Maharashtra Real State Regulatory Authority or is involved in unfair practices to sell, market or advertise his project.

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