Q1. What is the effective date of RERA?

A1. Real Estate (Regulation and Development) Act is effective from 1 May, 2017.

Q2. What are the conditions for Applicability of the Act?

A2. Act is applicable when land size exceeds 500 sq.mtrs and units exceed 8.

No promoter shall advertise, market, book, sell or offer for sale for any real estate project in any planning area without first registering such project.

Q3. Is RERA act, 2016 applicable to all Indian States?

A3. Yes, this act is applicable to all Indian states excluding Jammu & Kashmir.

Q4. How RERA secures allottees’ interest and empowers them?

A4. As per the RERA rules, the allottee is entitled to receive information about the   sanctioned plan, approved layout plan, stage wise progress of the project, carpet area and facilitation of basic amenities & services such as drinking water, electricity, sanitation etc.

The allottees can claim possession of the unit and the association of allottees can collectively claim possession of the common areas as declared by the real estate developer.

In case the real estate developer fails to meet the timeline or does not deliver what is promised then allottee has a right to claim refund of amount paid with prescribed interest and compensation for the same.

Q5. Does the Act cover on-going / incomplete projects?

A5. The Act covers both on-going/ incomplete projects.

All on-going projects which have not received the completion certificate will need to be registered under RERA but on-going project will exclude-

  • 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.
  • Where sale/lease deeds or possession letter of minimum sixty percent of the apartments/ houses/ plots in the phase/ project have been executed.
  • Where all development works has been completed and completion certificate has been obtained from chartered engineer in practice.
  • Where completion certificate has been obtained from the competent authority or where all development works have been completed and application has been filed with the competent authority.
  • Where development is done in phases then each phase shall be considered as a separate project and the phase which fulfills any of the above conditions shall be excluded.
  • Where competent authorities/ local bodies have started issuing lease deed for plots
  • Where services have been handed over to local authorities for maintenance or more than 50% of the development charges have been deposited to local authorities.

Q6. Does the Act cover both residential and commercial real estate project?

A6. The Act covers both residential and commercial real estate project.

Q7. Does it cover rental arrangements also?

A7. RERA does not cover rental arrangements.

Q8. Does the definition of ‘promoter’ include public bodies such as Development   Authorities and Housing Boards?

A8. The Act covers all bodies (private and public) which develop real estate projects for sale to the general public. Section 2(zk) defines the term ‘promoter’ which includes both private and public real estate promoters. Thus, both Development Authorities and the Housing Boards, when involved in sale are covered under the Act.

Q9. As of today, which area should be mentioned in the sale agreement– Built-up area or the Carpet area?

A9. As per RERA, Carpet area is mandatory to be mentioned in sale agreement.

Q10. Why the Act has mandated the real estate developers to specify the ‘carpet area’ rather than the ‘super built-up area’?

A10. Carpet area is the net usable area which excludes common areas, balconies, verandas, terraces and thickness of outer walls, etc.

Therefore, to let the allottee know what he/ she is paying for, it is mandatory for the real estate developer to specify the carpet area thus enacting a straight forward definition to be adopted across the country.

Q11. What is the time limit for grant of registration by RERA?

A11. Registration by RERA shall be granted within 30 days from date of application.

Q12. What if RERA fails to grant registration or reject application?

A12. If RERA fails to grant registration or reject application, project shall be deemed to have been registered. RERA shall also within 7 days (from expiry of 30 days) provide registration number, Login ID and password to applicant for accessing website of Authority and to create his web page and to fill details of proposed project.

Q13. What is the period of validity of registration granted to a real estate project by the Regulatory Authority?

A13. The validity of the registration granted to a project shall be the period declared by the promoter at the time of making the application for registration to authority.

Q14. If real estate project will be developed in phases? Should promoter get a single registration or multiple registrations?

A14. In such cases, every phase will be considered a standalone real estate project and the developer has to obtain registration under this Act for each phase separately.

Q15. Is the promoter required to maintain an ‘escrow account’ or a ‘separate account’? Is a ‘separate account’ to be maintained for every project or it can be for one or more projects? What are the purposes for which the promoter can withdraw the money from the separate account?

A15. The promoter shall maintain a ‘separate account’ for every project undertaken by him wherein seventy per cent of the money received from the allottees shall be deposited in that account.

The funds can only be used for construction and land cost.

Q16.What is the obligation of the promoter as regards insurance of real estate project?

A16. The promoter is required to seek an insurance of the real estate project towards title of the land and towards construction of the project.

Q17. On what basis is the promoter required to withdraw the money from the separate account?

A17. The promoter is required to withdraw the amounts from the separate account, to cover the cost of the project, in proportion to the percentage of completion of the project after certified by an engineer, an architect and a chartered accountant in practice.

Q18. How can an aggrieved allottee lodge a complaint in the case of dispute with the real estate developer?

A18. It is mandatory to set up an Appellate Tribunal by the state government within one year of the commencement of the Act. The  aggrieved allottee is required to approach the RERA in the case of disputes and the RERA will pass order of  penalty or punishment by acknowledging the nature of the violation. If in case the allottee is not satisfied by the decisions of the RERA or an adjudicating officer then he/she can file an appeal to the Appellate Tribunal. This setup will speed up the process of dispute settlement because it minimizes the involvement of the existing judicial system. Further, if the allottee is not satisfied with the decision of the Appellate Tribunal then he/ she can appeal in the High court.

Q19. Is there a time limit imposed under the Act for getting the accounts of promoter audited?

A19. Yes, the promoter shall get his accounts audited within 6 months after end of every financial year by a chartered accountant in practice, and shall produce a statement of accounts duly certified and signed by such chartered accountant and it shall be verified during audit that amounts collected for a particular project have been utilized for project and withdrawal has been in compliance with proportion to percentage of completion of project.

Q20. Does advertisements include solicitation by emails and SMS?

A20. Advertisement means any medium adopted in soliciting for sale would be covered under the said definition, including SMS and emails.

Author Bio

Qualification: CA in Practice
Company: RAWAT PRATEEK & COMPANY
Location: JAIPUR, Rajasthan, IN
Member Since: 03 Jun 2017 | Total Posts: 1

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3 responses to “FAQs on Real Estate (Regulation and Development) Act, 2016 Series-1”

  1. prateek_rawat says:

    Yes, Builder will have to mention carpet area and charged according to carpet area. As in RERA act,2016 only carpet area definition is defined and there is no definition of built up or super built up area and such is applicable from 1 may,2017 .

  2. RB says:

    Buyer pays only for carpet area instead of SBUA, right?

    Kindly clarify and if possible pls mention the exact clause etc. I am in urgent need for this data as my builder is insisting on full payment for SBUA in agreement. Pls help. Thanks.

  3. PRAVIN M VORA says:

    Good article

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