Section 15 of  Real Estate (Regulation and Development) Act, 2016 

Obligation of Promoter in Case of Transfer of a Real Estate Project to a Third Party

Post enactment of the Real Estate (Regulation and Development) Act, 2016 (Act) is seeing consolidation in Industry for the reasons of –

1) Financial constraints in completing the development

2) Regulations like IBC / NCLT

3) Mandate of Lenders / Investors

Such consolidation has resulted in developers looking to either exit from the real estate projects or enter into association / collaboration with large established developers for completing development of such real estate projects.

It is very important for the promoter to know the applicable legal framework under various statutes before taking over such Real Estate projects  with the intention to achieve commercial prospects and continue with the customer expectations / satisfactions –

1. Property Laws

2. Income Tax Act

3. GST

4. RERA

5. Customer / vendor Contracts

Considering the market scenario’s of consolidation / collaboration etc.,  requirements under RERA, few states RERA Authorities have pro-actively issued the necessary circulars / notification prescribing the procedure for a takeover / change in promoter of a Real Estate Project

1. Maharera Circular No 24/2019 dated 04-06-2019

2. K RERA Circular No 2/2019 dated 27-08-2019

Sec 15 mandates – in case of transfer or assignment of majority rights and liabilities in Real Estate Project to 3rd Party –

1. Prior consent of 2/3 Allottees

2. Prior written Approval of RERA Authorities

(In case Allottee holding multiple units /apartments in the project – shall be treated as 1 vote only for the purposes of Sec 15

Sec 15 – 2/3 Prior Written Consent of Allottees – 

1. Promoter shall send the communication to all the Allottees in the project mentioning the facts, reason etc of the proposed transfer of Real Estate Project (includes name of the proposed promoter, address etc)

2. Shall obtain written consent either manually or electronically

3. Minimum of 2/3 of the total Allottees in the RE Project

Sec 15 – Prior written Approval of Authority –

1. Application for the proposed transfer in prescribed format

2. Hearing before the Authority

3. On satisfaction, application for take over may be granted / rejected

Sec 15 – Application and Documents

1. Duly filled Application

2. 2/3rd Consent of Allottees copeis

3.Details of the proposed transaction – including copy of EOI / MOU

4. List of Complaints before the authority / Appellate relating to the project – disposed / pending

5. List of pending litigation, directions from any courts / NCLT/ NGT or any other authority

6. Professional Certificates – Architect, Engineer, CA stating the status of development of the project

7. CA certificate on financials of the project including money collected from the Allottees, utilization etc

8. Affidavit from the promoter

Sec 15 – Additional details, enquiry –

Authority may seek for additional details or documents in order to satisfy themselves before approval for takeover of the project by 3rd party –

1. NOC’s from lenders / FI’s

2. Background of new promoter / 3rd party

3. Commercial Viability or feasibility for the new promoter

4. All compliances under RERA till date of transfer

5. Any such other matter which impacts the rights of the Allottees under the statute

Sec 15 – Post Approval –

1. Communicate to All Allottees

2. All the obligation of erstwhile promoter shall be complied / honored as per Agreement/ advertisement etc (pending litigations, delay compensation,

3. No extension of time for completion of project is permitted

4. Modification / Update the details online

write to rera@vnv.ca for more details

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