Experts & Views
Date of Enactment: 26th March, 2016
Chapters: 10
Sections: 92
Section No. | Section Summary |
2. |
Definition Clause It introduced 44 definitions, among which are: ‘Advertisement’, ‘Agreement for Sale’, ‘Allottee’, ‘Appellate Tribunal. ‘Appropriate Government’, ‘Authority’, ‘Carpet Area’, ‘Commencement Certificate’, ‘Completion Certificate’, ‘Estimated Cost of Real Estate Project’, ‘Interest’, ‘Occupancy Certificate’, ‘Promoter’, ‘Real Estate Agent’, ‘Real Estate Project’. Notable definitions include: Appellate Tribunal: the Real Estate Appellate Tribunal (for short ‘REAT’) established under section 43.
Carpet Area: the net usable floor area of an apartment, including internal partition walls of the apartment. It excludes the area of external wall, service shafts, exclusive balcony or verandah area and exclusive open terrace.
Interest: the rates of interest payable by the promoter or the allottee, as the case may be. In the explanation to the clause it is mentioned that the rate of interest in case of default by either of the parties, paid to the other party shall be same for both cases. That is, interest rate payable, in case of default, by promoter or the allottee shall be equal. Promoter: any person who inter alia, undertakes the construction/ development work and any developmental authority in respect of the allotees of area constructed/owned by such developmental authority. Real Estate Agent: any person, who negotiates on behalf of the one person in the sale of his plot/apartment/building with another person, or who negotiates the sale of plot/apartment/building of another person to him, or who introduces prospective buyers and sellers to each other for sale of plot/apartment/building and receives remuneration or fees or commission for his services. |
3. |
Prior Registration of real estate project with RERA. Promoters are not allowed to advertise, market, book, sell or offer for sale any plot/apartment/building before registering the project with Real Estate Regulatory Authority (RERA). Ongoing projects are required to be registered within 3 months from commencement of this Act. Registration not required where land size does not exceed 500 sq. meters, or when number of apartments in total does not exceed 8, or where completion certificate has been received for the project. |
4. |
Application for Registration Following documents shall be enclosed with the application:
RERA shall have an operational online system for submitting applications for registration, within a period of one year from the date of its establishment. |
5. & 6. |
Grant and Extension of Registration The Authority shall within a period of 30 days from receipt of application reject or grant registration. If registration is granted, then RERA shall provide a registration number, including a Login Id and password to the applicant for accessing the website of the Authority and to create his web page and to fill therein the details of the proposed project. No application can be rejected unless the applicant has been provided with an opportunity to be heard. If neither rejected or granted registration, within 30 days time, the application shall be deemed to be granted registration. Registration shall be valid for the duration of time as mentioned by the Promoter in the application, the time in which the project is to be completed. A registration may be extended by an application from the Promoter for reasons of force majeure. |
7. & 8. |
Revocation of Registration RERA may, suo motu, or on receipt of a complaint, or on the recommendation of the competent authority, revoke registration on the following grounds:
Revocation may only be done after RERA gives in writing, a 30 days’ notice stating the grounds for proposed revocation, and consideration of any cause shown by the Promoter within the notice period. RERA, upon revocation:
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9. |
Registration of Real Estate Agents Before facilitating the sale or purchase of any unit part of a real estate project registered under the Act, being sold by the Promoter, the real estate agent (for short ‘Agent’) must have obtained registration under this section. For registration as an Agent under this Act, one must make an application to RERA, along with such fee and relevant documents, as may be prescribed. Registration may be granted to an Agent for the entire state or union territory, as the case may be. Registration may be valid for the prescribed period, and subject to renewal, in the manner and on payment of such fee, as may be prescribed. A registered Agent shall have a registration number, which shall be quoted in all sales facilitated by him. Registration of an Agent may be revocable or suspendable on the grounds such as breach of provisions of the Act, or when the Authority is satisfied that such registration has been obtained by the Agent via misrepresentation or fraud. Opportunity to be heard in this regard shall be given before any such revocation or suspension. |
10. |
Functions of Real Estate Agents
A registered Agent shall:
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11. |
Functions and Duties of Promoter
The promoter also has the right to cancel allotment, but only on the terms of agreement of sale. Although, allottee shall have the right to approach the Authority aggrieved by such cancellation citing it unilateral and not in accordance with the terms of the agreement of sale. |
12. |
Compensation for loss/damage due to incorrect or false information provided by Promoter Promoter shall have to compensate any person who makes a payment on the basis of information in the notice advertisement or prospectus or model apartment and sustains loss or damage due to incorrect, false information. If such person shall decide to withdraw from the project then his entire investment along with interest shall be returned to him along with the compensation. |
13. |
No Deposit or Advance without Agreement for Sale Promoter shall accept amount not more than 10% of the cost of the apartment as advance payment/application fee without entering into a registered agreement for sale. Such an agreement shall include details of the project, dates and manner of payments are to be made, and the date on which possession is to be handed over, rates of interest payable by either party in case of default. |
14. |
Adherence to sanctioned plans and Defect Liability
The Promoter shall complete the Project in accordance with the sanctioned plans. The Promoter shall not change or alter the sanctioned plans without the prior consent of the person taking one or more apartments/plots. The Promoter shall rectify/make good all structural or other quality related defects which are brought into its notice within 5 years, within a period of 30 days from notice. In the event of failure by the Promoter to carry out its defect liability, the aggrieved allottees shall be compensated accordingly. |
15. |
Transfer of Rights and Liabilities in Project to Third-Party Promoter shall first obtain consent form two-third allottees and written approval of the Authority before transferring or assigning his majority rights and liabilities in the project. |
17. |
Transfer of Title
The promoter shall execute a registered conveyance deed with the allottee and hand over the physical possession of the plot/apartment to the allottees in the project. In the absence of any local laws, physical possession shall be granted bythe Promoter within three months from the occupation certificate.
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18. |
Return of Amount and Compensation
If Promoter is unable to complete or give possession on time as stipulated in the agreement for sale due to discontinuance of his business as a developer on account of suspension or revocation of the registration under this Act or for any other reason, he shall be liable, if the allottee wishes to withdraw from the project, to return the investment with interest on it as well as compensation for the same. If the allottee does not wish to withdraw, then the Promoter shall be liable to pay interest for every month of delay till possession. Promoter is liable to pay compensation for failure in discharging any other obligation imposed on him under the Act or the agreement for sale. In case of loss caused to the Promoter due to defective title of land or failure to discharge any other obligations imposed on him under this Act, he is liable to compensate the allottees according to the Act. |
19. |
Rights and Duties of Allottees
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20. |
Establishment of RERA The Real Estate Regulatory Authority (RERA) will come into existence one year from the date of commencement of the act, by a notification, which will be issued by the appropriate government. The Government or Governments, as the case may be, have the discretion of establishing just one RERA for two or more states, or establish more than one RERA in a single state. The Government can appoint any authority to carry out the functions of a RERA for as long as the RERA is not established. As soon as the RERA is established, all the cases would be transferred from the authority acting as RERA to the established RERA. RERA shall be a body corporate. |
21. 22. & 23. |
Constitution, Appointment and Term of Members of RERA RERA will consist of 1 chairman and minimum 2 whole time members. The appropriate government will have the authority of appointing the members, on the recommendation of a selection committee which will comprise of the Chief Justice of the High Court, Secretary of the Department (Housing and Law Secretary). The Chairperson is to have a minimum experience of 20 years in the members are to have 15 years in urban development, real estate development, infrastructure, management, industry, etc. The Chairperson and the members will hold the office for 5 years or until they turn 65 years of age. |
31. |
Filing of Complaints Any aggrieved person may file a complaint with the Authority or the adjudicating officer for any violation of the provisions of the Act against any promoter allottee or real estate agent. |
34. |
Functions of RERA
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35. & 38. |
Powers of RERA
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43. |
Establishment of Real Estate Appellate Tribunal REAT shall be established by the appropriate government within a period of One year from the enforcement of the Act. Any person aggrieved by the direction, decision or order made by the Authority or by an adjudicating officer may appeal before REAT. Ordinarily one state can establish one REAT. By the act of governments, one may have more than one Tribunal and more than one state may have one sole Tribunal. States to establish Tribunals within one year from enactment that are to be known as— (name of the State/Union territory) Real Estate Appellate Tribunal. |
44. |
Application for Settlement of Disputes and Appeals Appeals may be filed by appropriate Government or the competent authority or any person aggrieved. Appeals may be filed within 60 days from date of order of Authority. Tribunal may entertain appeals beyond this period subject to satisfaction of the cause of delay. On receipt of an appeal Appellate Tribunal may after giving the parties an opportunity of being heard, pass such orders, including interim orders, as it thinks fit. |
45. & 47. |
Composition and Term of REAT
The Appellate Tribunal shall consist of a Chairperson and a minimum of two whole time Members. The Chairperson and the members will hold the office for 5 years or until they turn 65 years of age.
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53. |
Powers of Tribunal
Tribunal to be not bound by procedure in the Code of Civil Procedure, 1908 or by the rules of evidence contained in the Indian Evidence Act, 1872 but shall be guided by the principles of natural justice. |
56. |
Legal Representation Applicant/Appellant may either appear before tribunal in person or authorise one or more of the following: accountants, company secretaries, cost accountants, legal practitioners, or any of its officers. |
57. |
Orders passed by Tribunal to be executed as Decree Every order made by the Tribunal shall be executable by itself or via civil court having local jurisdiction, as if it were a decree made by court. |
58. |
Appeal to High Court Within a period of sixty days from the date of communication of the decision or order of the Appellate Tribunal, one may file an appeal to High Court on grounds specified in section 100 of the Code of Civil Procedure, 1908. No appeal shall lie against any decision or order made by the Appellate Tribunal with the consent of the parties. |
59 – 61 63. & 64. |
Penalties & Punishment for Promoter
Promoter found in contravention of section 3 (registration) shall be liable to penalty up to the extent of 10% of the estimated cost of project. Repeat violation or non-compliance of the above shall be punishable with imprisonment of up to 3 years or with fine up to the extent of 10% of project cost, or both.
A Promoter for providing false information or contravention of Section 4, shall be liable to a penalty up to 5% of project cost.
A Promoter for contravention of provisions other than Sections 3 & 4, shall be liable to pay a penalty up to 5% of project cost.
A penalty for every day during which default continues extending up to 5% cost of project.
Punishable with imprisonment for a term which may extend up to three years or with fine for every day during which such default continues, which may cumulatively extend up to 10% of project cost. |
62. 65. & 66. |
Penalties & Punishments for Real Estate Agent:
Any Agent if contravenes Section 9 (Registration) or Section 10 (Functions), he shall be liable to a penalty of Rs. 10,000/- for everyday during which default continues, which may extend up to 5% of cost of apartment.
Liable to a penalty for every day during which such default continues, which may cumulatively extend up to 5% of the estimated cost of apartment.
Punishable with imprisonment for a term which may extend up to 1 year or with fine for every day during which such default continues, which may cumulatively extend up to 10% of the estimated cost of apartment. |
67. & 68. |
Penalties for Allottee
Liable to a penalty for the period during which such default continues, which may cumulatively extend up to 5% of the apartment.
Punishable with imprisonment for a term which may extend up to 1 year or with fine for every day during which such default continues, which may cumulatively extend up 10% of the apartment. |
69. |
Offences by Companies All persons in charge of the conduct of business of company, at the time offence was committed, as well as the company, shall be deemed guilty of the offence, and shall be proceeded against and punished accordingly. If consent or connivance or any neglect with regard to an offence under the Act may be established on the part of any director, manager, secretary or other officer of the company, such officer of the company may deemed guilty Defence may lie in the establishing the fact that the offence was committed without one’s knowledge and that due diligence was exercised to prevent commission of such offence. |
82. |
Power of appropriate Government to supersede RERA Appropriate Government may by notification supersede the Authority for a period not exceeding six months if it is of the opinion that RERA for reasons beyond its control is unable to perform its functions and duties, or that the Authority has persistently defaulted in complying with directions given by the government or by default in performance of functions has led to financial position of the Authority to suffer, or that it becomes necessary for public interest. |
84. & 85. |
Power to make Rules Within 6 months of enactment, state government shall make rules for carrying out provisions of the Act. RERA within 3 months of its establishment shall make rules for carrying out provisions of the Act. |
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