The Real Estate (Regulation and Development) Act, 2016 (‘RERA’) has been enacted to establish the Real Estate Regulatory Authority for regulation and promotion of the real estate sector and to ensure sale of plot, apartment, building, or sale of real estate project, in an efficient and transparent manner and to protect the interest of consumers in the real estate sector.
This articles aims at providing the basic understanding and additional compliance requirement which will be required to be complied by the land owner / developer of the real estate project under MahaRERA.
2. Framework of joint development agreement:
Under a Joint Development Agreement (‘JDA’), builder / developer enters into an agreement with land owner for developing building on his land. Land owner will transfer his development right in land to the builder / developer. As a consideration, builder / developer will allot certain apartments / units (in case of area sharing JDA) or certain percentage of gross revenue ( in case of revenue sharing agreement JDA) to land owner. For better understanding, framework arrangement is depicted below:
Section 2(zk)(ii) of RERA, promoter means, “person who develops land into a project, whether or not the person also constructs structures on any of the plots, for the purpose of selling to other persons all or some of the plots in the said project, whether with or without structures thereon”
Further, the MahaRERA authority has clarified vide circular 12/2017 that, “a careful consideration of the aforesaid definition in the light of the true object and purpose of the said Act, leaves no manner of doubt that such individual/organization will be covered and clearly falls within the definition of the term ‘Promoter’”.
On careful, pursuance of the definition prescribed under the Act and clarification provided by the MahaRERA authority, it is clear that, land owner who enters into JDA with builder will also be considered as ‘Promoter’ for the purpose of RERA.
4. Additional compliance burden on land owner:
Since, land owner will be considered as a promoter (in case of JDA), the land owner will be required to comply with the following:
|11||Functions and duties of promoter||The promoter shall:
|12||Obligation of promoter regarding veracity of the advertisement or prospectus||Refund of amount along with interest for any incorrect or false statement in the advertisement|
|13||No deposit or advance to be taken by promoter without first entering into agreement for sale||The promoter shall not accept a sum more than 10% of agreed value as an advance payment or an application fee, from a person without first entering into a written agreement for sale with such person and register the said agreement for sale, under any law for the time being in force.|
|14||Adherence to sanctioned plans and project||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.|
|15||Obligations of promoter in case of transfer of a real estate project to a third party||He cannot transfer or assign his majority rights and liabilities in respect of a real estate project to a third party without obtaining prior written consent from two-third allottees and written approval of the RERA Authority|
|16||Obligation regarding insurance of real estate project||The promoter shall obtain all such insurances as may be notified by the appropriate Government|
|17||Transfer of title||The promoter shall execute a registered conveyance deed in favour of the allottees|
|18||Return of amount and compensation||If the promoter fails to complete or is unable to give possession of an apartment, plot or building, he shall refund the amount received from allottees along with interest|
5. Queries which requires clarification from authorities