Modification of Plan Under RERA – Section 14 – Adherence to sanctioned plans and project specifications by the promoter
Under – RERA
Section 14 – Adherence to sanctioned plans and project specifications by the promoter
(1) The proposed project shall be developed and completed by the promoter in accordance with the sanctioned plans, layout plans and specifications as approved by the competent authorities
(2) Notwithstanding anything contained in any law, contract or agreement, after the sanctioned plans, layout plans and specifications and the nature of the fixtures, fittings, amenities and common areas, of the apartment, plot or building, as the case may be, as approved by the competent authority, are disclosed or furnished to the person who agree to take one or more of the said apartment, plot or building, as the case may be, the promoter shall not make –
i. any additions and alterations in the sanctioned plans, layout plans and specifications and the nature of fixtures, fittings and amenities described therein in respect of the apartment, plot or building, as the case may be, which are agreed to be taken, without the previous consent of that person
Provided that the promoter may make such minor additions or alterations as may be required by the allottee, or such minor changes or alterations as may be necessary due to architectural and structural reasons duly recommended and verified by an authorised Architect or Engineer after proper declaration and intimation to the allottee
Explanation—For the purpose of this clause, “minor additions or alterations” excludes structural change including an addition to the area or change in height, or the removal of part of a building, or any change to the structure, such as the construction or removal or cutting into of any wall or a part of a wall, partition, column, beam, joist, floor including a mezzanine floor or other support, or a change to or closing of any required means of access ingress or egress or a change to the fixtures or equipment, etc.,
ii. Any other alterations or additions in the sanctioned plans, layout plans and specifications of the buildings or the common areas within the project without the previous written consent of at least two-thirds of the allottees, other than the promoter, who have agreed to take apartments in such building.
Explanation —For the purpose of this clause, the allottees, irrespective of the number of apartments or plots, as the case may be, booked by him or booked in the name of his family, or in the case of other persons such as companies or firms or any association of individuals, etc., by whatever name called, booked in its name or booked in the name of its associated entities or related enterprises, shall be considered as one allottee only.
Understanding and Discussion on the Section 14
1. This section has 2 parts –
a. Adherence to the sanctioned plans
b. Adherence to the project specifications
2. This section aims at protecting the Allottees as against any changes being made either to the specifications of the individual unit or changes to the sanctioned plans (as approved by the planning authority) of the Project at large, unilaterally, by the Promoter.
3. The practice hitherto adopted of including clauses in the Agreements reserving unbridled rights to modify and amend the sanction plans cannot be done now and even if such a clause is added, the same cannot be enforced now by virtue of the requirements of the Section 14 of the RERA Act 2016.
4. In case of modifications to specifications of the individual unit a Promoter would now have to necessarily obtain consent from the individual Allottee before going ahead and carrying out the modifications.
5. In case of modification to any Sanctioned Plans (as defined under Section 2 (zq) of the RERA Act 2016), the Promoter would have to obtain prior consent from ⅔rd Allottees in the Project and also to ensure such modifications are reported to the Authority and details of the Project accordingly modified.
6. While arriving at the count of 2/3rdconsent of the allottees, irrespective of the number of apartments or plots as the case may be, booked by him or booked in the name of the family or in the case of company or LLP or its associated entities shall be considered as one allottee only.
7. It is important for the promoters of the project to understand the implication of this Section 14 of the RERA Act 2016 and compliance requirements for modification of plan under RERA.
8. In case of phased developments, the modification of plan under RERA in relation to the development plan (DP) also shall satisfy Section 14 Compliance. It may not directly affect the existing phase and its construction of building, however by virtue of modification of the development plan, the compliance is mandatory.
E.g.,
1. Large project having 3 phases, initially shown as All 3 phases as residential towers in a project. However, later considering the market requirements etc., promoters intend to have a commercial block in one phase. Means, change in use of part of the project. It shall satisfy the conditions of Section 14
2. Change / shifting of the main entrance to the Project Entry.
3. Change of Specification of Swimming Pool against specified in sanction plan or specifications
4. Increase in FAR or FSI or Built-up Area by adding TDR or additional FSI
Non- adherence to the provisions of this section 14 of the RERA Act 2016 would enable an Allottee to seek recourse by filing a complaint under Section 31 and seek for the compensation and/or request for direction from the Authority to the promoter to adhere to the sanction plan.
Procedure or Process to comply with Section 14 of the RERA Act 2016 –
If the Promoter decided to make modification in the sanction plan or project specification, then following steps or process would involve –
1. Note of proposed modification of plan or project specification describe the details of original and proposed modified
2. Feasibility of modification of plan or project specification with respect to statutory approvals, financial feasibility, acceptance level of the allottees in the project etc
3. Communicate to Land owners (in case of JDA project) about the proposed modification of sanctioned plans and project specification. Obtain the consensus in writing.
4. Communicate to all allottees in the project about the proposed modification of sanctioned plans and project specification. Such communication shall have complete details of earlier details and present proposed.
5. Send the consent letter drafts to each allottee in the project.
6. Obtain minimum 2/3rdConsent from the allottees in the project
7. Apply to various / applicable NOC’s or statutory agencies about the proposed modification of plan and project specification and obtain the approval from them.
a. Eg., environmental clearance, Airport Authority or SEIAA etc – as most of these NOC’s clearances shall have specific conditions that the applicant shall obtain the prior approval in case of change of plan sanction or terms of the plan etc.,
8. Apply to planning authority for Modification of plan.
9. On approval of Modification of plan, same shall be communicated to bankers or lenders or other stakeholders
10. Apply for modification of plan to RERA Authority for approval –
a. Application
b. Details of modification
c. Supporting documents
d. Applicable Fees
11. The authority shall verify and approve the modification of plan
a. Authority may call for hearing before approval
b. Verify 2/3rdConsent before such approval of the application
c. Publish the such modified details on the portal of the Website of the Authority
A Defect Liability period is a set period of time after the completion of a project and handing over the possession to the allottee, where the builder/promoter is held responsible/answerable to the allottees, for any kind of structural defects in the project and is duty bound to set right such structural defects within the given time and without any further collection of money / charge to the allottees.
1. The Real Estate (Regulation and Development) Act, 2016, which is laid down to establish regulation and promotion of the real estate sector in an efficient and transparent manner and to protect the interest of consumers in the real estate sector, has introduced a provision in which Act speaks/highlightson the “Defect Liability”
2. Section 14 (3) of the Real Estate (Regulation and Development) Act, 2016 lays down that,
“In case any structural defect or any other defect in workmanship, quality or provision of services or any other obligations of the promoter as per the agreement for sale relating to such development is brought to the notice of the promoter within a period of five years by the allottee from the date of handing over possession, it shall be the duty of the promoter to rectify such defects without further charge, within thirty days, and in the event of promoter’s failure to rectify such defects within such time, the aggrieved allottees shall be entitled to receive appropriate compensation in the manner as provided under this Act”.
3. One of the concerns in the real estate sector before this Act came into force was the quality of construction and sense of responsibility on the part of the builder/promoter towards the allottee. The builder/promoter was not bound by any Act or Regulations to check on the materials used for the construction and also quality of construction in a project building. The builder/promoter would not take any responsibility in rectifying the structural defects once the possession of the building was handed over to the allottee/s and allottees were forced to rectify the structural defects again by spending from his pocket, in spite of investing huge/heavy amounts on the project building. There was no sense of security to the allottees in regard to the quality of construction on any project building constructed by the builder/promoter/s.
4. Section 14(3) of the Real Estate (Regulation and Development) Act, 2016, now eliminates the absence of professionalism in the real estate sector and makes it mandatory for promoter/developers to rectify any construction/structural defects that may be noticed, even after possession has been handed over to the allottee/buyer/investor for a period of five years and within thirty days after the structural defect coming into the knowledge/notice of the builder and thus, making the allottee feel secure on his investment on the project building.
5. WHAT ACCORDING TO THE RERA ACT 2016 IS DEFECT LIABILITY/STRUCTURAL DEFECTS?
As the word “Defect Liability/Structural Defect” is not specifically defined in the Karnataka Real Estate (Regulation and Development) Rules, 2017, thus giving rise to confusion on the definition, we are referring to the Rules framed by other States on Real Estate Act, 2016 which have explicitly defined the word “Structural Defect”.
6. Telengana State Real Estate (Regulation and Development) Rules, 2017 defines “Defect Liability” in its Agreement of Sale as,
“Structural defect or any other defect in workmanship, quality or provision of services or any other obligations of the promoter as per the agreement for sale relating to such development is brought to the notice of the promoter within a period of five years by the allottee from the date of handing over possession, it shall be the duty of the promoter to rectify such defects within such time, the aggrieved allottees shall be entitled to receive appropriate compensation in the manner as provided under the Act”.
The Telengana Rules, 2017 further defines the word “Defect Liability” as;
Notwithstanding anything contained in the above clause the following exclusions are made:
a) Equipment (lifts, generator, motors, STP, transformers, gym equipment etc.,) which carry manufacturer’s guarantees for a limited period.
b) Fittings related to plumbing, sanitary, electrical, hardware, etc., having natural wear and tear.
c) Allowable structural and other deformations including expansion quotient.
d) The terms of work like painting etc., which are subject to wear and tear.
7. The Haryana Real Estate (Regulation and Development) Rules, 2017 (draft rules) defines “Defect Liability/Structural Defect” as,
actual physical damage/ defects to the designated load-bearing elements of the building, apartment or unit like faults, breakage or cracks, appearing over time in elements such as load bearing columns, walls, slabs, beams etc. which can affect the strength and stability of the apartment or the building and shall include any of the following, namely:-
(i) defects due to design attributes of reinforced cement concrete (RCC) or structural mild steel (MS) elements of an engineered (structurally designed) building structure;
(ii) defects due to faulty or bad workmanship of RCC or MS work;
(iii) defects due to materials used in such RCC or MS work;
(iv) major cracks in masonry work that are induced as result of failures of RCC or MS work;
(v) Any defect which is established to have occurred on account of negligence, use of inferior materials or non-adherence to the regulatory codes of practice by the promoter.
Explanation: – The promoter shall not be liable for any such structural/ architectural defects induced by the allottee, by means of carrying out structural or architectural changes from the original specifications/ design.
Thus, the clause “Defect Liability” will give rise to careful consideration on the quality of construction in a project by the promoters and in case of any structural defects, then gives the allottee/buyer a window to get the defects rectified by the promoter for a period of five years from the date of possession being handed over by the promoter and hence securing the interest and safeguarding the investment made by the allottee in a project building.
Best Practices –
1) Promoters to enter into contract with Contractors / Suppliers / Service providers having back to back quality assurance (min 5 years) to pass on the risk of defect liability.
2) If Contractors / Suppliers / Service providers are not covered for 5 years, then to rely on separate AMC’s to protect and mitigate financial risks.
3) Promoters consider the increased cost due to defect liability as part of their project cost.
Reference in WB RERA Rules –
Clause 6 in Agreement to Sale as notified by WB RERA –
CONSTRUCTION OF THE PROJECT/ APARTMENT – The Allottee has seen the specifications of the [Apartment/Plot] and accepted the Payment Plan, floor plans, layout plans [annexed along with this Agreement] which has been approved by the competent authority, as represented by the Promoter. The Promoter shall develop the Project in accordance with the said layout plans, floor plans and specifications. Subject to the terms in this Agreement, the Promoter undertakes to strictly abide by such plans approved by the competent Authorities and shall also strictly abide by the bye-laws, FAR and density norms and provisions prescribed by the [Please insert the relevant laws in force] and shall not have an option to make any variation /alteration /modification in such plans, other than in the manner provided under the Act, and breach of this term by the Promoter shall constitute a material breach of the Agreement.
The author Vinay Thyagaraj is partner at M/s. Venu & Vinay, Chartered Accountant, one can reach by writing mail to vinay@vnv.ca
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