Introduction:

This article discusses in details Responsibilities of Co-Promoter & unregistered real estate agent under RERA (Real Estate Regulation and Development Act, 2016) and penalties on him.

Query 1: Under the RERA Act, the term PROMOTER includes Landowner also… But take a case, where in a Joint Development of 10 apartments, the Builder gets 7 apartments and Landowner gets 3 apartments… The Landowner intends to retain the 3 apartments for his own use or let it out on rental and does not wish to sell these 3 apartments…In this circumstance, can the Landowner be exempted from the definition of Promoter ?

Reply to Q1: Land owner is co promoter be it is a revenue sharing agreement or area sharing agreement.

He is not exempted from the definition of co promoter.

However the liabilities of such Co-Promoters shall be as per the agreement or arrangement with the Promoters, however for withdrawal from designated Bank Account, they shall be at par with the Promoter of the Real Estate Project.

Query 2: An individual refers an customer to Builder and the booking is done… The individual does not intend to register himself as “Real Estate Agent” with the state RERA authorities … What are the penal consequences to the Individual Agent ? Will there be any penal consequences to the Builder for accepting the sale through an un-registered Agent ?

Reply to Q2: no real estate agent ( whether it is individual or company or firm) can facilitate the sale/purchase of properties in a real estate projects registered u/s 3 of the Act without obtaining registration under section 9.

If he does so, there are hefty penalties on him.

Penalty for non registration and contravention u/s 9 & 10 – Sec. 62

If any real estate agent fails to comply with or contravenes the provisions of section 9 or 10, then he shall be liable to a penalty of:

  • 10,000 Per Day during which default continues cumulatively which may extend to 5% of the cost of the property of which sale / purchase has been facilitated by him.

Penalty for failure to comply with orders of the Appellate Tribunal by Real Estate Agent – Sec. 66

If any real estate agent fails to comply with or contravenes the orders or directions of the Appellate Authority, then he shall be punishable with:

I. Imprisonment up to 1 year; or

II. Fine for every day during which default continues, which may cumulatively extend up to 10% of estimated cost of the property as determined by the authority, or

III. With both.

Penalty on builder / Promoter

Sec. 61 If any promoter contravention any other provisions of this Act or rules or regulations made there under. Penalty up to 5% of estimated project cost as determined by the authority.

The above offence is compoundable by the court as per section 70 of the Act.

Compounding of offences by Court –Section 70

Notwithstanding Code of Criminal Procedure, 1973, if any person is punished with imprisonment under this Act:

1. The court may compound the offence on paying 10% of estimated cost of the property.

2. The promoter shall comply with orders of Appellate Tribunal within period of not more than 30 days of compounding orders of court.

3. On such payment and compliance of court order, the promoter who is in custody shall set at liberty and no proceeding shall be instituted or continued against such person.

4. The acceptance of such money for compounding shall be deemed to be an acquittal order.

Offences by Company

1. In case of offence by company or partnership firm, Officer in charge as well as company shall be deemed to be guilty of the offence and be liable to be proceeded accordingly.

2. Such person shall not be liable for punishment if he proves that offence was committed without his knowledge or that he exercise all due diligence to prevent such offence.

3. Where an offense under this Act has been committed by company or partnership firm, and it is proved that the offence was committed with the consent or connivance of or due to neglect of any director or partner, manager, secretary or any other officer of the organisation, then such person shall also be deemed to be guilty of that offence and be liable to be proceeded against and punished accordingly.

The author is a practising CA and is registered Insolvency Professional. He can be reached at cavinodchaurasia@gmail.com, Mob. +91 9953587496.

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