What is RERA?

The Real Estate (Regulation and Development) Act, 2016 is an Act of the Parliament of India which seeks to protect home-buyers as well as help boost investments in the real estate industry. The bill was passed by the Rajya Sabha on 10 March 2016 and by the Lok Sabha on 15 March 2016.

What are objectives of Real Estate (Regulation and Development) Act, 2016?

The main objectives of RERA are:

  • To protect interest of consumer in real estate sector

  • To establish a process for speedy dispute redressal

  • To ensure sale of plot, building or apartment, or real estate project, in an efficient and transparent manner

  • To establish a tribunal to hear appeals from decisions, directions or orders of Real Estate Regulatory Authority and adjudicating officer

When is this Act expected to commence? Is there any specific date?

The RERA Act was assented by the president of India on 25th March, 2016 and was notified in Gazette of India for public information on 26th March, 2016. However, commencement of specific sections of the ACT will be done in step by step manner. The entire process will take around 12 to 18 months.

When does the Act notified in e-Gazette?

The Act was notified in e-Gazette on 26th March 2016. The Act is applicable to whole of India except Jammu & Kashmir

What are the key terms that have been defined in the Act?

A number of key terms have been defined. Some of them are:

Advertisement, Agreement for Sale, Allottee, Apartment, Architect, Building, Carpet Area, Commencement Certificate, Common Areas, Completion Certificate, Development, Development Works, Engineer, Estimated Cost of Real Estate Project, External Development Works, Family, Garage, Immovable Property, Interest, Internal Development Works, Local Authority, Occupancy Certificate, Person, planning area, Project, Promoter, Prospectus, Real Estate Agent, Real Estate Project, Sanctioned Plan

Is prior registration of real estate project with Real Estate Regulatory Authority mandatory?

Yes, no developer or builder shall advertise, market, book, sell or offer for sale, or invite persons to purchase any plot, apartment or building, in any real estate project or part of it, in any planning area, without registering Real Estate Project (REP) with Real Estate Regulatory Authority (RERA).

What are all situations in which registration of Real Estate Project is not required?

There are three situations:

  • Where area of land proposed to be developed does not exceed 500 sq m or number of apartments proposed to be developed does not exceed 8 inclusive of all phases

  • Where promoter has received completion certificate for Real Estate Project prior to commencement of Act

  • For purpose of renovation or repair or re-development which does not involve marketing, advertising, selling or new allotment of any apartment, plot or building, under real estate project

How does a promoter make an application – manual or electronic form?

It is stated that RERA shall operationalise a web based online system for submitting applications for registration of projects within a period of 1 year from date of its establishment. RERA is yet to be established. Until a web based online system is established, all applications shall be made in paper format.

Important information to be enclosed by the promoter while making an application to RERA.
  • Details of the company

  • Detail of projects launched by developer in the past five years whether already completed or being developed, including current status of said projects, any delay in its completion, details of cases pending, details of type of land and payments pending

  • Authenticated copy of approvals and commencement certificate from competent authority for real estate project mentioned in application

  • Sanctioned plan, layout plan and specifications of proposed project or phase, and whole project as sanctioned by competent authority

  • Plan of development works to be executed in proposed project and proposed facilities to be provided including fire fighting facilities, drinking water facilities, emergency evacuation services, use of renewable energy

  • Location details of project, with clear demarcation of land dedicated for project along with its boundaries including latitude and longitude of end points of project

  • Pro-forma of allotment letter, agreement for sale, and conveyance deed proposed to be signed with allottees

  • Number, type and carpet area of apartments for sale in project along with area of exclusive balcony or verandah areas and exclusive open terrace areas apartment with apartment

  • Names and addresses of his real estate agents for proposed project

  • Names and addresses of contractors, architect, structural engineer and other persons concerned with development of proposed project

  • Declaration, supported by an affidavit, which shall be signed by promoter or any person authorised by promoter

  • Declaration to be provided by the promoter in his affidavit while making an application to RERA.

What percentage of amounts for real estate project from allottees should be deposited in a separate account?

The developer shall deposit 70% of amounts realised for real estate project from allottees, in a separate account to be maintained in a scheduled bank to cover cost of construction and land cost and shall be used only for that purpose.

What are the rules for withdrawal by developer from such account?

The developer shall withdraw amounts from separate account, to cover cost of project, in proportion to percentage of completion of project

What is the time limit for grant of registration by RERA?

Registration by RERA shall be granted within 30 days from date of application. RERA shall also provide registration number, Login ID and password to applicant for accessing website of Authority and to create his/her web page and to fill details of proposed project.

What is the time limit for rejection of application by RERA?

RERA shall communicate in writing the reasons for rejection of application within 30 days from date of application.

What if RERA fails to grant registration or reject application?

If RERA fails to grant registration or reject application, project shall be deemed to have been registered. RERA shall also within 7 days (from expiry of 30 days) provide registration number, Login ID and password to applicant for accessing website of Authority and to create his web page and to fill details of proposed project.

What is the validity of the registration granted by RERA?

Registration shall be valid for a period declared by promoter for completion of project or phase.

What is force majeure?

Force majeure means a case of war, flood, drought, fire, cyclone, earthquake or any other calamity caused by nature affecting the regular development of the real estate project.

Is the Real Estate Act applicable to Ongoing/Existing Real Estate projects?

Yes, as per section 3(1) of the Act, ongoing / existing projects, which have not received completion certificate are covered under the Act. The said section is reproduced below:

“……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……” (RERA ACT & LAW)

Can the registration once granted by RERA be revoked?

Yes, RERA can revoke registration on receipt of a complaint or on recommendation of competent authority.

What acts lead to revocation of registration by RERA?

The following four acts are lead to revocation of registration by RERA:

Promoter makes default in doing anything under Act / Rules / Regulations
Promoter violates any terms or conditions of approval given by competent authority
Promoter is involved in any kind of unfair practice or irregularities
Promoter indulges in any fraudulent practices

What is the role of RERA after revocation of registration?

RERA shall debar promoter from accessing its website in relation to that project and specify his name in list of defaulters and display his photograph on its website and also inform other Real Estate Regulatory Authority in other States and Union territories about such revocation or registration

RERA shall facilitate remaining development works to be carried out in accordance with provisions of section 8

RERA shall direct the bank holding the project back account, to freeze account, and take necessary actions, including consequent de-freezing of said account, towards facilitating remaining development works in accordance with provisions of section 8

RERA may, to protect interest of allottees or in public interest, issue such directions as it may deem necessary

If the registration is revoked, it is the allottees who will suffer? How does RERA tackle such a situation?

RERA may, instead of revoking registration, permit registration to remain in force subject to such further terms and conditions as it thinks fit to impose in interest of allottees and any such terms and conditions so imposed shall be binding upon promoter.

What is the obligation of RERA consequent upon lapse of or on revocation of registration?

Upon lapse of or on revocation of registration, RERA may consult Appropriate Government to carry out remaining development works by competent authority or by association of allottees or in any other manner, as may be determined by RERA

In case of revocation of registration of a project, who shall have the first right of refusal for carrying out of remaining development works?

In case of revocation of registration of a project, association of allottees shall have first right of refusal for carrying out of remaining development works

Does the Act impose restriction on period of extension to be granted by RERA?

Yes, RERA may in reasonable circumstances, without default on part of promoter, based on facts of each case, extend registration granted to a project for such time as it considers necessary, which shall, in aggregate, not exceed a period of 1 year.

Does this Act need consent / ratification from State Governments to be applicable in states?

No, as RERA is not a Constitutional Amendment Act affecting the States, no consent / ratification, by whatever name called is required. States are bound to implement the Act according to the timelines provided therein.

What if the promoter is unable to complete the project as stipulated in the affidavit? Does the promoter have to file a fresh application for registration?

Registration granted may be extended by RERA on an application made by promoter due to force majeure. Also, RERA may in reasonable circumstances, without default on part of promoter, based on facts of each case, extend registration granted to a project for such time as it considers necessary, which shall, in aggregate, not exceed a period of 1 year.

Is there a time limit imposed under the Act for getting the accounts of promoter audited?

Yes, the promoter shall get his accounts audited within 6 months after end of every financial year by a chartered accountant in practice, and shall produce a statement of accounts duly certified and signed by such chartered accountant and it shall be verified during audit that amounts collected for a particular project have been utilised for project and withdrawal has been in compliance with proportion to percentage of completion of project.

I am a promoter and I have an existing project on date of commencement of this Act but completion certificate has not been issued. Is registration still mandatory?

Yes, the promoter shall make an application to RERA within 3 months from date of commencement of Act.