RERA – Important Definitions and References in all other Statutes
Indeed, the real estate sector plays a pivotal role in addressing the nation’s housing and infrastructure needs. As the second-largest contributor to India’s GDP, the industry employs a vast workforce across various skill levels. Despite its substantial growth in recent decades, the sector has remained largely unregulated, leading to issues such as a lack of professionalism, accountability, standardization, and adequate consumer protection. While the Consumer Protection Act, of 1986 provides a recourse for buyers in the real estate market, it primarily offers curative remedies and is not comprehensive enough to address the concerns of both buyers and promoters. The absence of standardization has further hindered the industry’s healthy and orderly growth.
The need for regulating the real estate sector has been repeatedly highlighted in various forums. The Real Estate (Regulation and Development) Act, of 2016 (RERA) was a significant step towards addressing these concerns. RERA aims to establish a transparent and accountable real estate sector, protect the interests of home buyers, and promote fair practices among promoters.
The status as on 6th Nov 2023 as per Ministry of Housing and Urban Affairs–
i. All States/UTs have notified rules under RERA except Nagaland, which is in the process of notifying the rules.
ii. 32 States/UTs have set up Real Estate Regulatory Authority (Regular – 27, Interim – 05). Ladakh, Meghalaya, Nagaland, and Sikkim are yet to establish a Real Estate Regulatory Authority.
iii. 28 States/UTs have set up the Real Estate Appellate Tribunal (Regular -24, Interim – 04). Arunachal Pradesh, Jammu &
iv. Kashmir, Ladakh, Meghalaya, Mizoram, Nagaland, Sikkim, and West Bengal are yet to establish an Appellate Tribunal.
v. Regulatory Authorities of 30 States/UTs have operationalized their websites under the provisions of RERA. Arunachal
vi. Pradesh and Manipur are yet to operationalize.
vii. 26 States/UTs have appointed an Adjudicating Officer. 10 States/UTs i.e., Arunachal Pradesh, Bihar, Manipur, Meghalaya,
viii. Nagaland, Sikkim, Uttarakhand, West Bengal, Jammu & Kashmir, Ladakh are yet to appoint Adjudicating Officer.
ix. 1,15,973 Real Estate Projects and 82,572 Real Estate Agents have registered under RERA across the Country.
x. 1,15,901 Complaints have been disposed of by the Real Estate Regulatory Authorities across the Country.
You’re right. The Real Estate (Regulation and Development) Act, 2016 (RERA) is a comprehensive regulatory statute that governs the real estate sector in India. It provides unambiguous definitions for various terms related to real estate, ensuring consistency and clarity in the interpretation and application of the law.
The importance of RERA’s definitions is further emphasized by the fact that other statutes, such as the Income Tax Act, GST, FEMA, and PMLA, rely on RERA for any definitions related to real estate. This ensures that there is a uniform understanding of these terms across different legal frameworks, which is crucial for effective enforcement and compliance.
Here are some specific examples of how RERA’s definitions are used in other statutes:
i. The Income Tax Act uses the RERA definition of “real estate project” to determine which projects are eligible for certain tax benefits.
ii. The GST Act uses the RERA definition of “carpet area”, “Promoter”, “Real Estate Project” to calculate the GST payable on the sale of real estate.
iii. The FEMA regulations use the RERA definition of “real estate” to determine which transactions are subject to foreign exchange restrictions.
iv. The PMLA Act uses the RERA definition of “promote” to determine which individuals or entities can be prosecuted for money laundering offenses related to real estate.
By providing clear and consistent definitions for real estate terms, RERA has helped to streamline the regulatory environment and make it easier for businesses and individuals to comply with the law. This has contributed to a more transparent and accountable real estate sector in India.
The definitions in the RERA Act and the Karnataka RERA Rules are important for several reasons. They:
- Provide clarity and consistency in the interpretation of the Act and the Rules.
- Help in identifying the scope of the Act and the Rules.
- Facilitate the effective implementation of the Act and the Rules.
- Protect the interests of all stakeholders including allottees and real estate agents.
By understanding the definitions in RERA, individuals can better understand their rights and obligations under the Act. This can help in preventing disputes and ensuring that the real estate sector operates in a fair and transparent manner
| Sec | Definition | Sec | Definition | Sec | Definition |
| 2(a) | Adjudicating officer | 2(p) | Competent authority | 2(ze) | Notification |
| 2(b ) | Advertisement | 2(q) | Completion certificate | 2(zf) | Occupancy certificate |
| 2(c) | Agreement for sale | 2(r) | Day | 2(zg) | Person |
| 2(d) | Allottee | 2(s) | Development | 2(zh) | Planning area |
| 2(e) | Apartment | 2(t) | Development works | 2(zi) | Prescribed |
| 2(f) | Appellate tribunal | 2(u) | Engineer | 2(zj) | Project |
| 2(g) | Appropriate Government | 2(v) | Estimated cost of real estate project | 2(zk) | Promoter” means |
| 2(h) | Architect | 2(w) | External development works | 2(zl) | Prospectus |
| 2(i) | Authority | 2(x) | Family | 2(zm) | Real estate agent |
| 2(j) | Building | 2(y) | Garage | 2(zn) | Real estate project |
| 2(k) | Carpet area | 2(z) | Immovable property | 2(zo) | Regulations |
| 2(l) | Chairperson | 2(za) | Interest | 2(zp) | Rule |
| 2(m) | Commencement certificate | 2(zb) | Internal development works | 2(zq) | Sanctioned plan |
| 2(n) | Common areas | 2(zc) | Local authority | 2(zr) | Words and expressions |
| 2(o) | Company | 2(zd) | Member |
2(a)”adjudicating officer” means the adjudicating officer appointed under sub-section (1) of Section 71;
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Judicial officer who is or has been a District Judge appointed to be an adjudicating officer for holding an inquiry in the prescribed manner, for adjudging compensation under Sections 12, 14, 18 & 19 of the RERA Act 2016 The adjudicating officer can only admit, hear the matters relating to the claim of any compensation by the aggrieved person for any violation or contravention of the provisions under this Act or any rules and regulations made thereunder against any promoter or allottee or real estate agent. Hence any complaint other than for compensation, the matter shall be heard by the Authority. THE SUPREME COURT OF INDIA in the case of M/s. NEWTECH PROMOTERS AND DEVELOPERS PVT. LTD Vs STATE OF UP & ORS. ETC HIGH COURT OF CHHATTISGARH, BILASPUR in the case of M/s. Gold Bricks Infrastructures Pvt. Ltd |
2(b)”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;
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The definition of advertisement is exhaustive to cover the various modes, form, and medium – it includes – a. Print of any type like publication in newspaper, magazine, brochure, pamphlets, circulars, notice, leaflets, prospectus b. Events, trade shows, private shows c. Emails d. Audio, e. Video, f. Hoardings, Public Display, g. Call, SMS, h. Social Media, i. Show flat / model house Further, each state has notified the guidelines for advertisement, accordingly, the following are as per Karnataka RERA – a) RERA Karnataka has issued a circular dated 14/11/2019 regarding the release of advertisements in print and electronic media. b) No disclaimer clause should be mentioned stating the information is subject to change etc c) The KRERA Registration number should be mentioned on the display board at the project site. d) Advertisement of any real estate projects in the print media, hoarding, or any other visual medium shall mention the registration number issued by the RERA authority on the top right corner of the advertisement. e) The RERA Registration shall be prominently visible. f) The length and breadth of the “RERA REGISTERED” information must not be less than 10% of the length and breadth (whichever is higher) of the advertisement issued in print media. g) In an advertisement on the radio or through electronic media and SMS, the registration number issued by the authority shall be prominently pronounced/published. h) If the completion certificate for the real estate project was applied before 11/07/2017 has been obtained, the same shall be mentioned in the advertisement. i) The K-RERA Registration number should be mentioned on the display board at the project site of the Promoters. j) agents should adhere to the above points while releasing advertisements. Further, if the advertisement is by the Agents, Agent RERA Registration shall also be mentioned. |
2(c)”agreement for sale” means an agreement entered into between the promoter and the allottee;
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i. The format of Such Agreement for sale is as notified under the Rules notified by the appropriate government. Most of the States have notified the form of Agreements for Sale. ii. Karnataka State has notified the Agreement for Sale on 12-06-2020 under The Karnataka Real Estate (Regulation and Development) (Agreement of sale) 2020 Rules while also inserting Rule 8 A. iii. All the promoters of the Real Estate project must follow such format and contents as notified under the Rules iv. Any addition or deletion in the Agreement for sale shall comply with the provisions of the Act and Rules. v. Any modification in the sale agreement by the promoter shall not affect the rights of the allottees/buyers. vi. The Agreement for Sale is the primary document between the allottees and promoters in case of any difference of opinion or disputes or case either party seeks legal remedy. Hence it is an important document that should be drafted carefully and professionally vii. Any application, letter of allotment, letter, or any other document signed by the allottee, in respect of the apartment, plot, or building, before the execution and registration of the agreement for sale for such apartment, plot, or building, as the case may be, shall not be construed to limit the rights and interests of the allottee under the Agreement for Sale or under the Act.” viii. The Act and Rules mandate the promoter shall submit the draft copy of the Agreement of Sale along with the Registration Application. Further, all the state authorities are insisting as part of the regulation function and to enable the intending buyer to be aware of the clauses provided in the Agreement of the Sale ix. The Authorities directing the promoters to modify/alter/ delete/remove the clauses that are unfair, one-sided agreement of sale, put the allottee in an inferior position, etc x. Karnataka RERA has mentioned the below condition as part of the Registration Certificate of the project in Form C– To conclude Agreement for Sale is a Standardized/Uniform contract document – across the Real Estate Industry/ business – with minimal scope for modification. Builders in India must mention the “non-negotiable” clauses at the time of providing a sale agreement, the Maharashtra Real Estate Regulatory Authority (RERA) has ruled. The state authority issued a notification in this regard on December 13, 2022. Modification in non-negotiable clauses defeats the very objective of the modal agreement to sale, the authority added |
2(d)”allottee” in relation to a real estate project, means the person to whom a plot, apartment or building, as the case may be, has been allotted, sold (whether as freehold or leasehold) or otherwise transferred by the promoter, and includes the person who subsequently acquires the said allotment through sale, transfer or otherwise but does not include a person to whom such plot, apartment or building, as the case may be, is given on rent;
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Throughout the Act, Rule’s reference to intending purchaser or owner of the Plot or Apartment is referred to as an Allottee (words like purchaser, buyer, and consumer have not been used). It is also important to note that a person who subsequently acquires the Plot or Apartment by way of transfer or assignment is also included in the definition of an Allottee. Is Investor an Allottee? In many instances, the Promoter enters into an arrangement with the investors (who invest money in the project, and in lieu of investment, he/she/it is allotted apartment/s at a discounted price. If so, is he/she/it also an Allottee in the Project? Ans – If a plot or an apartment is allotted and/or an Agreement of Sale has been executed, depending on the clauses in the agreement and if the agreement is the same as any other agreement albeit with a price discount, then such an investor shall be deemed to be an Allottee. Such an investor will have recourse to all remedies under the Act that are available to an Allottee. If the agreement contains clauses in the nature of investment and return on investment clauses etc., without there being any intention to actually own the plot or an Apartment, then he/she/it would be deemed to be an investor rather than the allottee. As his/her/it intends to earn profit rather than to own a plot or an apartment in the project. Maharashtra RERA has issued a circular stating investors may be treated as Promoters also. The interim Real Estate Tribunal – Karnataka has held in one case that persons who do not intend to remain in the project are Investors and not Allottees |
In this month, I have explained the definitions of Adjudicating officer, Advertisement, Agreement for Sale, and Allottee. The remaining definitions will be deliberated in the subsequent months.
The author is a practicing chartered accountant, and partner at M/s. Venu & Vinay, Bengaluru. He can be reached at [email protected]
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