Introduction: This article discusses in detail about registration of project under RERA.
1. Does the Act cover both residential and commercial real estate?
The Act covers both residential and commercial real estate. Section 2(e) defines ‘apartment’ and section 2(j) defines ‘building’ which include both residential and commercial real estate.
2. Does the Act cover ongoing / incomplete projects?
As regards the ambit of the Act, there is no distinction between an ongoing project and a future project, i.e. both ongoing / incomplete projects and future projects are covered under the Act.
Section 3(1) first proviso provides that promoters of ‘all ongoing projects which have not received completion certificate will need to register their project with the Regulator Authority, within 3 months of its commencement’.
3. Does the Act cover all projects in urban areas and in rural areas?
Section 3(1) provides that all projects within a ‘planning area’ will require to be registered with the Authority.
‘Planning Area’ has been defined under section 2(zh).
However, section 3(1) second proviso gives powers to the Authority ‘in the interest of allottees’ to order / direct the promoter to register projects beyond the planning area, which has the requisite permission of the local authority.
Which projects are exempt from the ambit of the Act?
4. As per section 3(2) the following projects do not require to be registered under the Act:
(a) where the area of land proposed to be developed does not exceed five hundred square meters or the number of apartments proposed to be developed does not exceed eight, inclusive of all phases;
(b) where the promoter has received completion certificate for a real estate project prior to commencement of this Act;
(c) 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.
5. At what stage can a promoter start to advertise his project for sale?
The promoter can advertise his project for sale after the project has been registered with the Regulatory Authority as provided in section 3(1).
6. What are the details to be furnished at the time of application for registration of real estate project with the Regulatory Authority?
Section 4 of the Act provides for details / information and undertaking to be provided by the promoter to the Authority for registration of the project. The mechanism for registration i.e. the requisite forms to be filled, the fees to be paid etc. are to be determined by the Rules made by the appropriate Government.
7. What are the formalities for the registration of a real estate project with the Regulatory Authority?
The promoter is required to make an application as per Form and fees prescribed by the Rules made by the appropriate Government, along with the documents / information and undertaking specified in section 4 to the Authority for registration of the project.
In addition, the promoter is also required to append other / additional documents / information as specified in the Rules.
8. In how many days is the Regulatory Authority required to register the real estate project?
The Regulatory Authority is required to register the project, if in compliance with the Act and the Rules and Regulations, within 30 days of the application having been received by the Authority.
9. What in case the application for registration of the real estate project is incomplete?
If the application for the registration of the project is not complete as required under the Act or the Rules and Regulations made there under, the Authority may grant an opportunity to the promoter to complete the application in all respects. However, in case of non-compliance the Authority has the power to reject the application, only after giving an opportunity to the promoter of being heard.
10. Is there a provision for deemed registration of a real estate project in case the Regulatory Authority does not respond to the application?
Section 5 of the Act provides that the Authority has to decide on the application within 30 days of its receipt. It further provides that in case the Authority fails to take a decision within the said period of 30 days the project shall be deemed to be registered.
11. What is the period of validity of registration granted to a real estate project by the Regulatory Authority?
As per section 4, the validity of the registration granted to a project shall be the period declared by the promoter under section 4(2)(l)(C), at the time of making the application for registration, within which he would complete the project.
12. 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?
Section 4(2)(l)(D) provides that the promoter shall maintain a ‘separate account’ for every project undertaken by him wherein seventy percent of the money received from the allottees shall be deposited for the purposes of construction and land cost.
The account has to be self maintained and is not an escrow account requiring the approval of the Authority for withdrawal.
13. What are the purposes for which the promoter can withdraw the money from the separate account?
Section 4(2)(l)(D) clearly provides that the funds can only be used for construction and land cost.
14. On what basis is the promoter required to withdraw the money from the separate account?
As per section 4(2)(l)(D) first and second proviso, 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.
In addition, the promoter is permitted to withdraw from the separate account after it is certified by an engineer, an architect and a chartered accountant in practice that the withdrawal is in proportion to the percentage of completion of the project.
15. Is the promoter required to get his accounts audited?
As per section 4(2)(l)(D) third proviso, the promoter is required to get his accounts audited within six months after the 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 the audit that the amounts collected for a particular project have been utilized for the project and the withdrawal has been in compliance with the proportion to the percentage of completion of the project.
16. Is the application for registration of a real estate project, proposed under the Act is manual or it can also be done online?
Section 4 envisages that for a period of one year the application process can be both manual and online based, however, after one year it is mandatory to make the entire process online.
However, for the purposes of project information to the prospective consumers, it would help in establishing the web portal at the earliest.
17. Can the period of registration granted to a real estate project by the Regulatory Authority be extended?
Section 6 envisages two situations within which the registration granted to a project can be extended.
Extension of registration can be granted in case of force majeure, in addition, it can also granted under reasonable circumstances, without the fault of the promoter, which shall not be more than a maximum period of 1 year.
18. What is the definition of force majeure?
Explanation to section 6 has defined force majeure to mean ‘a case of war, flood, drought, fire, cyclone, earthquake or any other calamity caused by nature affecting the regular development of the real estate project’.
19. What are the terms and conditions for extension of registration?
The terms and conditions, the application form and the fees payable for extension of registration shall be in the manner as prescribed by the Rules.
20. Can the registration of a project be revoked?
As per section 7, the Authority has the powers to revoke registration of a project, for violations specified under the said section.
However, revocation of registration of a project is envisaged as a last resort and can only be done after providing a reasonable opportunity of being heard.
21. What are the next steps that can be taken for project completion in case of revocation of a project?
In case a project is revoked, section 8 provides for various mechanisms in which the project can be completed. However, in such a scenario, the association of allottees shall have the first right of refusal for carrying out the remaining development works.
The author is a practicing CA based in Delhi and is registered Insolvency Professional. He can be reached at firstname.lastname@example.org , Mob. +91 9953587496.
Disclaimer: The views expressed in this article are strictly personal. The content of this document are solely for informational purpose. It doesn’t constitute professional advice or recommendation. The Author does not accept any liabilities for any loss or damage of any kind arising out of information in this article and for any actions taken in reliance thereon.