Q.1 What is The Real Estate (Regulation and Development) Act, 2016?
Ans. The Real Estate (Regulation and Development) Act, 2016 is an initiative by Indian Government to enhance transparency in the real estate related transactions by creating a systematic and a uniform regulatory environment, thereby protecting consumers’ interest and making real estate developers liable for timely completion of projects.
Q.2 What was the need for regulatory law for real estate?
Ans. The real estate has grown in the recent years but has largely been unregulated from the perspective of consumer protection. Though, consumer protection laws are available, the recourse available therein is only curative, but not preventive. This has affected the overall potential growth of the sector due to absence of professionalism and standardization.
Q.3 Does the definition of promoter includes public bodies such as Development authorities & Housing Boards?
Ans. 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 all Development Authorities, UITs, Municipal bodies, Housing Board, when involved in sale, are covered as Promoter under the Act.
Q.4 What is the difference between Occupancy certificate & Completion certificate?
Ans. Occupancy certificate relates to the occupation of the apartment/building, which has provision for civic infrastructure such as water, sanitation and electricity and is habitable.
Completion certificate relates to the completion of the entire project certifying that the project has been developed according to the sanctioned plan, layout plan and sections, as approved by the competent authority.
Q.5 Does long term leasehold excluded from ambit of the Act?
Ans. The wording in Section 2(d) “has been sold (whether as free hold or lease hold) or otherwise transferred by the promoter” indicates that the long-term lease falls within the ambit of the Act. However, the premises given on short term lease not exceeding five years are not covered under the Act.
Q.6 Whether the act covers both the commercial & residential projects?
Ans. Yes, The Act covers both residential and commercial real estate. Section 2(e) defines ‘apartment’ and section 2(i) defines ‘ building’ which include both residential and commercial real estate.
Q.7 Definition of Ongoing Project?
Ans. For the purpose of this rule “Ongoing Project” means, a Project where development is going on and for which Occupancy Certificate or Completion Certificate has not been issued but excludes such Projects which fulfill any of the following criteria on the date of notification of these rules.
i. Where roads, open spaces, amenities and services have been handed over to the local authority in layout Projects.
ii. Where all slabs are laid in housing projects.
iii. Where all developmental works have been completed and sale /lease deeds of 50% of the Apartments / Houses/ Plots have been executed
iv. Where development works have been completed and application has been filed to the competent authority for issue of Completion or Occupancy Certificate.
Q.8 What is the definition of “advertisement”?
Ans. “Advertisement” means any document described or issued as advertisement through any medium and includes any notice, circular or other documents or publicity in any form, informing persons about a real estate project, or offering for sale of a plot, building or apartment or inviting persons to purchase in any manner such plot, building or apartment or to make advances or deposits for such purposes.
Q.9 What is the definition of “apartment”?
Ans. Apartment” whether called block, chamber dwell in it flat, office, showroom, shop, godown, premises, Suit tenement, unit or by any other name, means a separate and self-contained part of any immovable property, including one or more rooms or enclosed spaces, located on one or more floors or any part thereof, in a building or on a plot of land, used or intended to be used for any residential or commercial use such as residence, office, shop, showroom or godown or for carrying on any business, occupation, profession or trade, or for any other type of use ancillary to the purpose specified;
Q.10 What is the definition of “carpet area”?
Ans. “Carpet area” means the net usable floor area of 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.
For the purpose of this clause, the expression “exclusive balcony or verandah area” means the area of the balcony or verandah, as the case may be which is appurtenant to the net usable floor area of an apartment, meant for the exclusive use of the allottee: and “exclusive open terrace area” means the area of open terrace which is appurtenant to the net usable floor area of an apartment, meant for the exclusive use of the allottee;
Q. 11 What Are The Roles And Responsibilities Of A Real Estate Developer as stated In The Act?
Ans. In order to escalate the responsibility and accountability of real estate developers towards consumers, the RERA has made the following compulsory for them:
a. It is mandatory for the real estate developer to register the project with the RERA and obtain a valid registration number before proceeding
b. Any kind of marketing, advertising or selling of units is strictly prohibited before the registration of the project
c. The real estate developer is required to submit all documents related to the project which is considered necessary by the RERA
d. The real estate developer must deposit 70% of the payment received from the consumers in an escrow account and ensure that the amount is solely used for the development of the project for which it was taken
e. Must adhere to the project plan at all times
f. Refund the money taken from the consumers with an applicable interest in case the project cannot be completed.
g. Compensate the consumer for the time delay if any
h. To repair any structural defects in the construction even after 5 years of handover of the project.
Q.12 What are the projects exempted from registration (or) What are the requirements for real estate project to get registered?
Ans. As per section 3(2) the following projects do not require to be registered under the Act:
i. Where the area of land proposed to be developed does not exceed five hundred square meters or the number of apartments proposed to be development does not exceed eight, inclusive of all phases. The State Govt. may reduce the threshold below 500 sqm. or 8 apartments.
ii. Where the promoter has received completion certificate for a real estate project prior to commencement of the Act, i.e. 1st May, 2017.
iii. For the purpose of renovation or repair or re-development which does not involve marketing, advertising selling or new allotment of any apartment, plot or building, as the case may be, under the real estate project.
Q.13 If a project has less than 500 sq mts but more than 8 flats (or)
If a project has more than 500 sq mts but less than 8 flats, does it require to register?
Ans. In either of the case, real estate project is required to register.
Q.14 What are the documents required for registration of real estate project?
Ans. Promoter shall make an application to authority for registration of real estate project by enclosing the following documents:
a. Brief details of his enterprise
b. Details of projects launched by him for past 5 years ( completed /being developed/ status of the project)
c. Copy of approvals from the competent authorities.
d. Sanctioned plan, layout plan of the proposed project.
e. Plan of development works to be executed in the project and proposed facilities to be provided thereof.
f. Location details of the project.
g. Allotment letter, agreement for sale and conveyance deed.
h. Number, type and carpet area of apartments for sale in project.
i. Number and areas of garage for sale.
j. Names, address of real estate agents.
k. Declaration by the promoter supported by affidavit stating that
a. The promoter has legal title on land.
b. The land is free from all encumbrances
c. Estimation of time, within which the project to be completed.
d. 70% of amounts realized from the project should be deposited in separate bank accountand shall be used only for that purpose.
i. Promoter shall withdraw the amount in proportion to the percentage of completion of project.
ii. Withdrawal shall be made after the certification made by an engineer, an architect and a Chartered Accountant in practice.
iii. Promoter shall get audited his accounts within 6 months after the end of every financial year by a Chartered Accountant in practice.
- All the pending approvals shall take from competent authorities.
Q. 15 What Actions Will Be Taken By The RERA After An Application Has Been Submitted For Project Registration?
Ans. Following actions will be taken by the RERA after an application has been submitted for project registration:
a. The RERA is required to either grant registration or reject the application within 30 days of its submission
b. On acceptance of application, the real estate developer will be provided with a login id and password to access the RERA portal for the submission of documents and details
c. If the application is not in conformation with the guidelines then the RERA may reject it after hearing the applicant’s plea.
Q.16 Is There Any Validity Period For A Particular Project Registration?
Ans. The real estate developer has to specify the project completion timein the RERA application form. Hence, the real estate developer is accountable to follow the timelines otherwise, he will suffer losses/ penalties.
The RERA, under given force majeure events, may extend the validity of the registration:
a. In the event of a natural calamity like flood, cyclone, drought, fire etc.
b. In the case of war
However, the developer is still required to make a presentation to the RERA by paying the applicable fee and such extension will be valid for a period of one year in aggregate.
Q.17 Does The Joint Venture Agreements Where Landlord And Developer Are Two Different Parties But Both Are Beneficiaries Of The Sale Of The Project Are Liable To Adhere To The RERA Act?
Ans. Yes, both the developers and the landlord or any such party which is the beneficiary of a sale of a project & receive payments from consumers as real estate developers (Promoters) are liable to adhere to the Act.
Q.18 How Does It Affect The Real Estate Developer’s Arrangements With The Real Estate Agents, Contractors, Architect, Structural Engineers And Similar Parties?
Ans. As per the government rules, only registered agents are legally allowed to function in the real estate business. Also, the RERA makes it mandatory for a developer to make a declaration about the real estate agents, architects, structural engineers and similar parties to the appellate Tribunal of the RERA.
Q.19 What Are The Norms By RERA On Advertisements Or Promotions Of Real Estate Projects?
Ans. https://www.lawyersclubindia.com/articles/Provisions-under-RERA-for-advertisements-of-Real-Estate-10293.asp
Q.20 Can A Real Estate Developer Leave The Project Mid-Way By Selling To Another Developer Or Party?
Ans. Yes, a developer can do so by taking written approval of 2/3rd of project’s consumers and also the prior approval of the RERA. If a consumer or his family holds more than one unit in the project then he/she will be considered as one consumer only.
Q.21 Can The Promoter Collect Any Amount Of Money Towards Booking Of The Apartment / Plot?
Ans. Section 13 provides that the promoter cannot accept a sum more than 10 percent of the apartment / plot cost as an advance payment / application fees. For any further collection towards the apartment / plot cost, the promoter is required to enter into an ‘Agreement for Sale’ with the allottee.
Q.22 What Are The Mandatory Rules For the Real Estate Agent?
Ans. As per the RERA act, 2016, an intermediary is required to be registered with the RERA and retain a valid registration number before facilitating any real estate deal on the behalf of any real estate developer. He/she is also required to maintain and preserve account logs and other documents as prescribed by the Act and also to facilitate all information and provide any further assistance as prescribed by the Act to the consumer.
In case if an intermediary violates the rules prescribed by the RERA, he/she will be liable to a penalty up to 5% of the estimated cost of the unit in question.
Also, the intermediary can face imprisonment up to one year if he/she breaches any orders, decisions or directions given by the Appellate Tribunal.
Q. 23 What Is The Punishment Prescribed For Non-Registration Of A Project Under The Act?
Ans. As per section 59, where under the Act, it is obligatory for the promoter to register a project with the Authority, and if the promoter fails to do the same, he shall be liable to a penalty upto ten percent of the estimated cost of the real estate project.
However, in case the promoter consistently defaults or does not comply with the directions / orders of the Authority as regards registration of the project with the Authority, he shall be liable to further ten percent of the estimated cost of the real estate project or imprisonment upto 3 years or both.
Author Bio
Builder has collected Service Tax during Feb 2018 after receipt of Occupancy Certificate in May 2017. What is the relief available for fraudulent collection of Service Tax
A) Collection of Service tax after GST Regime
B) Collection of Service Tax after Occupancy certificate