It is well settled that the Real Estate (Regulation and Development) Act, 2016 requires mandatory compliance from promoter towards real estate project registration and also sepcifies the revocation of registration if his activity found in contravention to the provisions of the same. If the situation so arise the question may come as to what will happened to the ongoing real estate project and individuals having interest in it.
Section 8 of the act empowers the authority to take certain action after consultation of the concerned government for the purpose of protecting the the interest of other parties who through mortgage or other investments are interested in the real estate project by carrying out the remaining development works by competent authority or by the association of allottees or in any other manner, as may be determined by the Authority.
The authority will also give notice to bank listed in encumbrance certificate and the other party having third party interest in the real estate project. Such parties includes Scheduled Banks, Housing Finance Companies, Insurance Companies, Non-Banking Finance Companies operating as Asset Finance Companies, Investment Companies, Loan Companies, Investment Finance Companies, Infrastructure Debt Funds, Micro-finance Institutions, Foreign Direct Investors, Private Equity Funds and the Real Estate Investment Trust.
Usually, the RERA authorities will step in and direct the Association of Allottees (herein after AoA) to undertake the pending development work only if the project is nearing its completion stage. However if the project is still in its early stages, it may become very difficult for the AoA to take over and the authorities will be more likely to direct the promoters to provide a refund of their monies along with interest and compensation.
The MahaRERA vide order no. 8/2019 dated 28.03.2019 provides the detail procedure on how the action under section 7 and 8 of the act be proceeded with.
– Financial blueprint containing detailed current financial status of the real estate project such as cash in hand, liabilities, expected revenue etc, financial estimate to complete the project and roadmap of the same
– Construction blue print containing amount of construction work needed to complete the project, roadmap, selection of contractor etc.
– Overall detail blueprint of the completion of project
– Existing professional attached to the authority such as Architect, Engineer, chartered accoutant, they will also assist the panel in preparing blue print
A four months time is given for the preparation of blue print as above. Afterward it will submitted to the authority. Once approved the construction work will commenced according to the blue print, and association of allottees are required to monthly update the authority with regard to construction work.