RERA- A CONFIDENCE BOOSTER
The hope and the confidence aroused in the buyers as a result of the obligations cast on the promoters and their effective enforcement by the Regulatory Authority established in each State and the Union Territory have gone a long way in promoting the growth of the sector as an organized and professional one. Discussed below are certain requirements under the Act which enable the Authority to achieve the objectives of orderly functioning of the real estate sector. Ensuring total disclosure through Registration The application of RERA revolves round the obligation of the promoter to get the project registered with the authority. Registration is a necessity not only for the projects launched after RERA came into force but also in respect of ongoing projects which were launched prior to RERA but were incomplete and had not received the completion certificate when the law came into force. Such projects were required to be registered within three months. Non-registration debars the promoter from advertising, marketing, booking, selling or inviting persons in any manner to purchase till the project is registered. Any such action taken before getting registration invite prohibitive penal action. Registration, when granted is valid for the period declared by the promoter within which he undertakes to complete the project or the phase thereof. Provision exists for extension of the validity period for reason of force majeure. Rules generally provide for extension in reasonable circumstances but the Act provides for such extension to not exceed the period of one year. Registration can also be revoked by the Authority Suo moto or on receipt of complaint on the satisfaction that the promoter has committed default or violated the terms of approval or has involved himself in any kind of unfair practice or irregularity. On revocation the Authority is competent to make alternative arrangement for developing the remaining uncompleted work giving the association of allottees the first right of refusal to carry out the remaining work. Preventing diversion of funds to other projects In order to ensure that the amount received by the promoter from the allottees of a particular real estate project is used towards meeting the land cost and cost of construction of that very project only, the law requires promoters to deposit 70% of the amount realized from time to time in respect of a project, in a separate account with a scheduled bank. A declaration to this effect is to be made by the promoter along with the application for registration. The amount so deposited is to be used for the land cost as well as the cost of construction of that project only. To ensure this, the law provides that only so much amount can be withdrawn from this account as does not exceed the amount proportionate to the completion of the project as certified by an Engineer, an Architect and a Chartered Accountant in practice. Ensuring construction as per plan and promised specifications Sub-section (2) of s.14 provides that notwithstanding anything contained in any law or agreement, after the sanctioned plans and specifications are disclosed or furnished to the person who agrees to purchase on the basis of such representation, the promoter shall not make – (i) any addition and alteration in the plans, specifications, furniture, fixtures and amenities in respect of any specific plot, apartment or building which has been booked for sale, without the previous consent of the person agreeing to buy that plot apartment or building. The Act, however, permits minor additions, alterations as may be required by the allottee or as may be necessary due to architectural or structural reasons duly recommended and verified by the authorized architect or engineer after proper declaration and intimation to the allottee. (ii) In case any alteration or addition in the sanctioned plan, lay out plan or specifications is desired of the building or common area in the project, It cannot be done by the promoter without obtaining the previous written consent of at least two- third of the total number of allottees, other than the promoter, who have agreed to take apartment in the building. Ensuring timely completion and delivery of possession The promoter is required to complete the construction and deliver possession of the plot, apartment or building within the time as mentioned in the agreement for sale. Clause (l) of sub-section (2) of section 4 requires a declaration to be made by the promoter along with the application for registration stating the time period within which he undertakes to complete the projects or the phase thereof, as the case may be. Time within which possession is to be handed over is also to be mentioned in the Agreement of Sale. In Ongoing projects an opportunity is provided to the promoter to mention a fresh date applicable to allotments after registration which, as per Rule 4(2) shall be commensurate with the extent of development already completed. Consequences for failure to abide by the term of the agreement are provided in section 18 of the Act under which if the promoter fails to complete or is unable to give possession in accordance with the terms of the agreement for sale or, as the case may be, duly completed by the date specified and- (i) If the allottee decides to withdraw from the project, the promoter shall be liable, on demand, to return the amount received by him in respect of that plot, apartment or building with interest at such rate as may be prescribed in the Rules framed by the appropriate governments including compensation in the manner as provided under the Act. (ii) If the allottee decides to continue, the promoter shall on demand, be liable to pay interest at the prescribed rate, for every month of delay, till the handing over of possession. Rule 18 prescribes the rate of interest payable by the promoters to the allottees or by allottees to the promoters, as the case may be, equal to the highest Marginal Cost of Lending Rate of the State Bank of India plus two percent. The above consequences will be there even if the failure to complete or give possession in time is due to discontinuance of business as a developer on account of the suspension or revocation of the registration under the Act or for any other reason. Ensuring formation of Association of Allottees (AOA) and conveyance of title- RERA under clause (e) of sub-section (4) of section 11 obligates the promoter to form a society or cooperative society or a company or any other association of the allottees, or a federation of the same, under the applicable laws. Once the AOA is formed, the promoter is to hand over the common area, amenities and facilities to such association and thereafter the management of the building as well as the common area is carried out by the AOA in accordance with the relevant law and the bye laws or the Article of Association, as the case may be. In case of lay out plan where the development of land consists of construction of several buildings, AOA is to be formed for each building separately and for the management of common area and common facilities, an Apex body or Federation is constituted with membership of individual societies. RERA requires the promoter and allottees to form the association within the time and in the manner as provided in the applicable law. Conveyance Once the association of allottees in the form of a society or cooperative society or a company or in the form of any other legal entity is registered, the promoter is required to convey the title of the undivided proportionate common area to such association within the time as specified in the Act and the Rules. As to the timeline, RERA requires conveyance to be executed within the time permitted under the local law. In case of lay out, the Apex Body shall be registered within three months from the date of receipt of occupancy certificate of the last of the buildings. Here again, there is dichotomy between the provisions of RERA and the Rules and giving preference to the substantive legislation, the timeline should be governed by the local law. Redressing grievances of the aggrieved parties The provisions for safeguarding the interest of the flat buyers would have been meaningless without an effective mechanism to redress their grievances. RERA provides the remedy by way of complaint to the Authority/Adjudicating officer against persons contravening the provisions of the Act. Section 31 of the Act lays down that any aggrieved person may file a complaint with the Authority or the Adjudicating Officer, as the case may be, for any violation or contravention of the provisions of this Act or the Rules or Regulations made thereunder against any promoter, allottee or real estate agent, as the case may be. Person for this purpose includes the Association of Allottees or any voluntary consumer association registered under any law for the time being in force. Section 71 of the Act empowers the Authority to appoint one or more judicial officers having specified qualification to be the Adjudicating Officer (AO) for purpose of adjudging compensation under the provisions of ss 12,14,18 and 19.
Tags : RERA confidence booster Advocate KK Ramani buyers builders promoters enforcement Regulatory Authority objectives registration projects