We frequently encounter the question: Why is RERA registration required for projects that have already received a completion certificate?
Under the Real Estate (Regulation and Development) Act (RERA), is it mandatory for a promoter to register a real estate project that has already obtained a completion certificate, particularly if the development was entirely self-funded? This scenario involves no external financing, marketing, sales, or receipt of any advances or deposits from potential buyers. Given these circumstances, is RERA registration still required?
This question serves as a powerful reminder and encourages continuous reflection on the value and purpose of RERA: Why is registration under RERA required even for projects that have already received a completion certificate?
Let’s carefully examine step by step, before reaching a conclusion –
The Preamble and the objective of the RERA Act 2016 –
An Act to establish the Real Estate Regulatory Authority for regulation and promotion of the real estate sector and to ensure the sale of plots, apartments or buildings, as the case may be, or the sale of real estate project, efficiently and transparently and to protect the interest of consumers in the real estate sector and to establish an adjudicating mechanism for speedy dispute redressal and also to establish the Appellate Tribunal to hear appeals from the decisions, directions or orders of the Real Estate Regulatory Authority and the adjudicating officer and for matters connected in addition to that or incidental to it.
1. One of the important objectives of the RERA Act 2016 is to protect the interest of the consumers in the real estate sector,
2. Another is an adjudicating mechanism for speedy dispute redressal
Section 79 of the RERA Act states – Further No civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which the Authority or the adjudicating officer or the Appellate Tribunal is empowered by or under this Act to determine and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act.
1. the RERA Act 2016 grants powers to the RERA Authority and limits the jurisdiction of civil courts in matters related to real estate transactions between promoters and allottees
Reviewing the objectives alongside Section 79 of the RERA Act 2016, it is evident that safeguarding the interests of allottees in a real estate project is primarily entrusted to the RERA.
To achieve this, real estate projects need to be brought under RERA (except those exempted under the RERA Act 2016) without placing an undue burden on the real estate industry and promoters
Further, it should be remembered that the RERA is a regulatory authority for the real estate industry (https://taxguru.in/corporate-law/rera-authority-regulator-promoter-real-estate.html) – The Act, and Rules have carefully drafted and considered various aspects for the Authority (Regulator) to function to Regulate and Promote the real estate industry. There is a common misconception or limited understanding that RERA functions solely as a registration authority.
With this background, let us examine the provisions of the RERA Act, 2016, regarding the registration of real estate projects, along with its exemptions and exclusions.
Section 3(1) No promoter shall advertise, market, book, sell or offer for sale, or invite persons to purchase in any manner any plot, apartment or building, as the case may be, in any real estate project or part of it, in any planning area, without registering the real estate project with the Real Estate Regulatory Authority established under this Act:
Provided that projects that are ongoing on the date of commencement of this Act and for which the completion certificate has not been issued, the promoter shall make an application to the Authority for registration of the said project within a period of three months from the date of commencement of this Act:
Further section 3(2) states – Notwithstanding anything contained in sub-section (1), no registration of the real estate project shall be required
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:
Provided that, if the appropriate Government considers it necessary, it may, reduce the threshold below five hundred square meters or eight apartments, as the case may be, inclusive of all phases, for exemption from registration under this Act;
b) where the promoter has received a completion certificate for a real estate project prior to the 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.
Explanation —For the purpose of this section, where the real estate project is to be developed in phases, every such phase shall be considered a standalone real estate project, and the promoter shall obtain registration under this Act for each phase separately.
By reading the proviso to Section 3(1) and Section 3(2)(b) it is evident that the Act has not exempted the project from registration even though development work is completed using its own funds without marketing, sales, collection of advances etc.
Furthermore, it is pertinent to note that in the Karnataka RERA registration module, while selecting the type of project from the drop-down menu, the available options are: New Project, Ongoing Project, or Completed Project. Further, Karnataka RERA exempts the requirement of opening a separate bank account for the project if the promoter has already received the completion certificate.
It is also important to note that the completion certificate issued by the competent authority is limited to the sanctioned plan, layout plan, and specifications approved under local laws. However, the promoter may promise additional amenities and facilities beyond the sanctioned plans, such as a swimming pool, health center, gym, well-equipped community hall, piped gas, sports hall, etc. Therefore, merely relying on the completion certificate issued by the competent authority may not be sufficient to consider the project as completed in all aspects.
The RERA Act imposes additional mandatory responsibilities and obligations on promoters under Section 11, Section 14, and Section 17 of the Act. These obligations continue even after the completion of development works in the project.
| Section | Provisions under the Act |
| 11(4)(d) | 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; |
| 11(4)(e) | enable the formation of an association or society or cooperative society, as the case may be, of the allottees, or a federation of the same, under the laws applicable.
(in case of absence of local laws, the association shall be formed within 3 months of majority allotments in the project) |
| 11(4)(e) | execute a registered conveyance deed of the apartment, plot or building in favour of the allottee 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 |
| 11(4)(g) | pay all outgoings until he transfers the physical possession of the real estate project to the allottee or the associations of allottees
(a) Land Cost (b) Ground Rent, (c) Municipal Taxes, (d) Water, (e)Electricity charges (f) Maintenance charges, (g) Mortgage loan, interest, (h)Any other liabilities |
| 14 | Defect Liability Period of 5 Years from the date of handover of the possession of the apartment or the common areas to the association of allottees |
| 17 | (a) execute a registered conveyance deed in favour of the allottee along with the undivided proportionate title in the common areas to the association of the allottees or the competent authority,
(b) hand over the physical possession of the plot, apartment of building, as the case may be, to the allottees and the common areas to the association of the allottees or the competent authority, (c) other title documents pertaining thereto within specified period as per sanctioned plans as provided under the local laws |
In cases where the promoter invests all the funds required to complete the development works in the project without marketing or selling the units, the promoter’s compliance is limited to obtaining registration for the project, filing one quarterly update, and submitting the completion details on the Karnataka RERA portal. Other compliances, including those related to financial management., such as depositing 70% of the amounts collected into a separate bank account and obtaining certificates from Chartered Accountants, Architects, and Engineers for withdrawals are not required since the promoter is solely funding the project.
The Rajasthan Real Estate Regulatory Authority, Jaipur, in the case of Shree Krishna Associates, passed an order directing the promoter to make declarations and apply for an exemption certificate to the Authority upon payment of the standard fee as prescribed. Readers are encouraged to read this judgment for a comprehensive understanding of the topic under discussion.
To conclude, to achieve the objectives of the Act, uphold the sanctity of RERA as a regulator for the real estate industry, and maintain an accurate count/record of real estate projects in the state, it is essential to ensure that all real estate projects approved by the planning authority are registered with the RERA authorities in compliance with the Act. However, the Karnataka RERA authority may consider relaxing or simplifying the registration process for projects that have already received a completion certificate.
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The author Mr.Vinay Thyagaraj is a partner of M/s.Venu & Vinay, Chartered Accountants. He can be reached at [email protected]
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