RERA – obligation of the promoters and duties of the allottees – Post Completion of the REAL Estate Projects
RERA – Post Completion of the REAL Estate Projects – Provisions included
Adequate housing is not merely a desired goal; it is a basic human right of all human beings. This has been affirmed by the Universal Declaration of Human Rights in 1948, which recognizes the right to adequate housing as an integral component of the human right to an adequate standard of living.
The real estate sector plays an important role in fulfilling the need and demand for housing and infrastructure in the country. Real estate Industry contributes the 2nd highest GDP to the country next to agriculture. Largest and highest contributor towards taxes, fees etc., collected by state, central government directly and indirectly. It employs a large number of skilled, unskilled resources. While this sector has grown significantly in recent decades, it has been largely unregulated (before, during and post completion of the projects), with absence of professionalism, accountability, standardisation and lack of adequate, speedy consumer protection. Though the Consumer Protection Act, 1986 is available as a forum to the buyers in the real estate market, the recourse is only curative and is not adequate to address all the concerns of buyers and promoters in that sector. The lack of standardisation has been a constraint to the healthy and orderly growth of industry. Therefore, the need for regulating the sector has been emphasised in various forums.
The results and outcome from the efforts made by various stakeholders resulted in the enactment of The Real Estate (Regulation and Development) Act 2016 popularly known as RERA Act. The RERA Act extends to the whole of India including J & K. The RERA Act 2016 is a central enactment; however, powers are given to the state government to frame the rules and regulate the Real Estate Industry. Most of the states and UT’s have enacted, Established and appointed the RERA Authorities. As per the Latest data of Ministry of Housing and Urban Affairs, a total of 1,12,472 Real Estate Projects are registered under RERA across India.
In the earlier articles, I have included and explained the various provisions of RERA and Real Estate Practices, From Inception of the Project to completion of the Project (Prior registration, various definitions under RERA, Carpet Area, Quarterly filing, annual audit, modification of plan, transfer of rights, defect liability, financial management, functions and duties of promoters, rights and duties of allottees, completion of the project etc)
Prior to RERA, there was neither a direction nor a regulator to monitor the obligations of the promoters of the project and duties of the allottees in the project once the works in the project is completed.
In this article, I would like to explain the provisions included in RERA with respect to post completion of the Project.
1. Once the promoter obtains the RERA registration, he shall report and submit the Quarterly progress report along with the professional certificates of Engineer, Architect and a Chartered Accountant in practice – Section 4(2)(L)(D) of the RERA Act 2016 read with Rule 15 of the Karnataka RERA Rules 2017
2. Promoter shall also submit the Report on Annual Audit of the Accounts of the project in accordance with proviso 3 to Section 4(2)(L)(D) of the RERA Act 2016 in a form and manner as notified by the RERA Authorities. Accordingly, Karnataka RERA has notified form 7. It is mandatory for all the promoters of the Real Estate projects to submit form 7 with in the due date as prescribed.
3. Once the development work in the project is completed, the promoter shall submit the application along with necessary documents (Completion Certificate, NOCs from Various agency’s, professional certificates, Affidavits etc) to the RERA Authorities. Karnataka RERA has enabled an online module to submit these documents.
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Sl No |
Reference of Provision under RERA | Provision | Provision |
| 1 | Section 2(w) | Complete the external development works in the project. | includes roads and road systems landscaping, water supply, sewage and drainage systems, electricity supply transformer, sub-station, solid waste management and disposal or any other work which may have to be executed in the periphery of, or outside, a project for its benefit, as may be provided under the local laws; |
| 2 | Section 2(zf) | Obtain the – occupancy certificate | means the occupancy certificate, or such other certificate by whatever name called, issued by the competent authority permitting occupation of any building, as provided under local laws, which has provision for civic infrastructure such as water, sanitation and electricity; |
| 3 | Section 2(q) | Obtain the “completion certificate” | means the completion certificate, or such other certificate, by whatever name called, issued by the competent authority certifying that the real estate project has been developed according to the sanctioned plan, layout plan and specifications, as approved by the competent authority under the local laws; |
| 4 | Section 11(4)(b) | obtain the completion certificate or the occupancy certificate | be responsible to obtain the completion certificate or the occupancy certificate, or both, as applicable, from the relevant competent authority as per local laws or other laws for the time being in force and to make it available to the allottees individually or to the association of allottees, as the case may be; |
| 5 | Section 11(4)(c) | Functions and duties of the promoter | be responsible to obtain the lease certificate, where the real estate project is developed on a leasehold land, specifying the period of lease, and certifying that all dues and charges in regard to the leasehold land has been paid, and to make the lease certificate available to the association of allottees |
| 6 | Section 11(4)(d) | maintaining the essential services | Promoter is responsible for providing and maintaining the essential services, on reasonable charges, till the taking over of the maintenance of the project by the association of the allottees.
Note – Safety and Security, Water and sanitation, Electricity and waste management. While maintaining the project, the promoter shall comply with all applicable laws. Further promoters are permitted to collect the charges for those maintenance and furnish the receipts and payments, expenses statement to the allottees. |
| 7 | Section 11(4)(e) | enable the formation of an association or society | Promoter shall enable the formation of an association or society or co-operative society, as the case may be, of the allottees, or a federation of the same, under the laws applicable.
Note – promoter shall invite the allottees / owners of the units to form the association. In case of large projects, multiple associations may be formed and a federation of associations may be formed. Promoter shall share the copy of the draft bye-laws with the allottees before it is registered. As we understand that, the association by-laws drafted and registered by the promoters are practically not achieved once the allottees /owners’ takeover the project from the promoters. |
| 8 | Section 11(4)(f) | Conveyance deed of apartment, plot or building |
2. along with the undivided proportionate title in the common areas to the association of allottees or competent authority, as the case may be, as provided under section 17 of this Act; |
| 9 | Section 11(4)(g) | Promoter shall pay all outgoings until he transfers the physical possession of the real estate project to the allottee or the associations of allottees | 1. pay all outgoings until he transfers the physical possession of the real estate project to the allottee or the associations of allottees, as the case may be, which he has collected from the allottees, for the payment of outgoings (including land cost, ground rent, municipal or other local taxes, charges for water or electricity, maintenance charges, including mortgage loan and interest on mortgages or other encumbrances and such other liabilities payable to competent authorities, banks and financial institutions, which are related to the project):
2. Provided that where any promoter fails to pay all or any of the outgoings collected by him from the allottees or any liability, mortgage loan and interest thereon before transferring the real estate project to such allottees, or the association of the allottees, as the case may be, the promoter shall continue to be liable, even after the transfer of the property, to pay such outgoings and penal charges, if any, to the authority or person to whom they are payable and be liable for the cost of any legal proceedings which may be taken therefor by such authority or person) Note – those payments include corpus / deposits collected from the allottees for maintenance or otherwise. |
| 10 | Section 14(3) | Responsible for structural defect – 5 years from date of handing over possession | 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.
Note- Prior to RERA, the defect liability would be for 1 or 2 years. There was no standard practice adopted. However post RERA it has become 5 years and it is mandatory in nature. Hence, it is recommended that the promoters follow / improve the handover process in order to avoid the disputes at a later stage. In recent days the promoters are setting aside % of the cost towards defect liability. |
| 11 | Section 16(3) | Transfer of insurance (tile and building) to the Association of Allottees | The insurance (title and building) On formation of the association of the allottees, all documents relating to the insurance specified be handed over to the association of the allottees.
Note- it is important to transfer the insurance to the association name immediately after the association is registered. Irrespective of whether a handover is made or not. |
| 12 | Section 17(2) | Handover of the Physical possession of the unit to the allottees. | After obtaining the occupancy certificate and handing over physical possession to the allottees), it shall be the responsibility of the promoter to hand- over the necessary documents and plans, including common areas, to the association of the allottees or the competent authority, as the case may be, as per the local laws:
Note – it is important for the allottees / owners / association to collect all drawings, application made, fees or charges remitted to various agency’s, Warranty cards of equipment or machineries, copies of invoice of equipment or machineries, copies of approved plans, NOC’s etc |
| 13 | Section 17(2) | Handover facilities and amenities in the project | Promoter shall make a list of amenities and facilities as promised in the agreement of sale, marketing collaterals or any other documents and handover the same to the association of the allottees. |
| 14 | Section 19(7) | Interest on Delay payment of installements | The allottee shall be liable to pay interest, for any delay in payment towards any amount or charges to be paid in accordance with the Agreement of Sale entered. |
| 15 | Section 19(9) | Participate in formation of association | Every allottee of the apartment, plot or building as the case may be, shall participate towards the formation of an association or society or cooperative society of the allottees, or a federation of the same. |
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