Developers cannot advertise their under construction projects from May 1 2017, once the Real Estate (Regulation & development) Act (RERA) will come into force across the country from May 1, 2017. However, if they have projects that have already obtained completion and occupancy certificates, those can continue to be advertised and sold.
However, the good news is that many states have already created an interim authority and are ready to receive applications from Builders and agents. This includes Kerala, Maharashtra, Punjab, Rajasthan, Mizoram, Haryana, Delhi, Andaman & Nicobar Islands and Chandigarh.
Many others are in advanced stages of being closed. This includes Orissa, Bihar, Jharkhand, Assam, Tamil Nadu, Andhra Pradesh, Telangana, Tripura, Dadra & Nagar Haveli and Daman & Diu. Once completed the final authority of Andaman & Nicobar Islands will align with that of Tamil Nadu.
RERA is central act, it doesn’t need to be notified by states. It’s only the Ministry of HUPA which notifies the sections etc. However, the states are supposed to make their own rules and set up authorities and tribunals which will function at the state and district levels.
As of Thursday April 27, 2017, 12 states had notified the rules, 18 were in an advanced stage of doing it.
Once it is notified on May 1, developers and agents have to conform to the provisions and register themselves with the RERA authority. Explains a ministry source, “Unless the promoters do not register their projects they cannot advertise, whether ongoing or future.” This is in line with Section 3 & 4 of the Act which mandates registration of projects by developers comes into effect from 1st May. These are discussed in more detail below.
Section 3 deals with Registration of real estate projects and agents. It states that:
(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:
Provided further that if the Authority thinks necessary, in the interest of allottees, for projects which are developed beyond the planning area but with the requisite permission of the local authority, it may, by order, direct the promoter of such project to register with the Authority, and the provisions of this Act or the rules and regulations made thereunder, shall apply to such projects from that stage of registration.
(2) 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 completion certificate for a real estate project prior to 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 stand-alone real estate project, and the promoter shall obtain registration under this Act for each phase separately.
There are some important points to note here.
1) The developer has just 3 months to register the project with the RERA authority.
2) If the project is outside the planned area but is being built with the requisite permissions of the local authority, the promoter can be directed to register that project too, in the interest of the allottees.
3) Projects below 500 sq m or less than 8 units in one development need not register with RERA.
4) Units with Completion Certificate do not need to register
5) Renovation projects that are not being marketed or allotted afresh are exempted
6) Where a project is being developed in Phases, every phase would be considered a stand-alone real estate project
Section 4 deals with registration by developers
(1) Every promoter shall make an application to the Authority for registration of the real estate project in such form, manner, within such time and accompanied by such fee as may be specified by the regulations made by the Authority.
(2) The promoter shall enclose the following documents along with the application referred to in sub-section (1), namely:—
(a) a brief details of his enterprise including its name, registered address, type of enterprise (proprietorship, societies, partnership, companies, competent authority), and the particulars of registration, and the names and photographs of the promoter;
(b) a brief detail of the projects launched by him, in the past five years, whether already completed or being developed, as the case may be, including the current status of the said projects, any delay in its completion, details of cases pending, details of type of land and payments pending; Prior registration of real estate project with Real Estate Regulatory Authority.
(c) an authenticated copy of the approvals and commencement certificate from the competent authority obtained in accordance with the laws as may be applicable for the real estate project mentioned in the application, and where the project is proposed to be developed in phases, an authenticated copy of the approvals and commencement certificate from the competent authority for each of such phases;
(d) the sanctioned plan, layout plan and specifications of the proposed project or the phase thereof, and the whole project as sanctioned by the competent authority;
(e) the plan of development works to be executed in the proposed project and the proposed facilities to be provided thereof including fire fighting facilities, drinking water facilities, emergency evacuation services, use of renewable energy;
(f) the location details of the project, with clear demarcation of land dedicated for the project along with its boundaries including the latitude and longitude of the end points of the project;
(g) proforma of the allotment letter, agreement for sale, and the conveyance deed proposed to be signed with the allottees;
(h) the number, type and the carpet area of apartments for sale in the project along with the area of the exclusive balcony or verandah areas and the exclusive open terrace areas apartment with the apartment, if any;
(i) the number and areas of garage for sale in the project;
(j) the names and addresses of his real estate agents, if any, for the proposed project;
(k) the names and addresses of the contractors, architect, structural engineer, if any and other persons concerned with the development of the proposed project;
(l) a declaration, supported by an affidavit, which shall be signed by the promoter or any person authorised by the promoter, stating:—
(A) that he has a legal title to the land on which the development is proposed along with legally valid documents with authentication of such title, if such land is owned by another person;
(B) that the land is free from all encumbrances, or as the case may be details of the encumbrances on such land including any rights, title, interest or name of any party in or over such land along with details;
(C) the time period within which he undertakes to complete the project or phase thereof, as the case may be;
(D) that seventy per cent. of the amounts realised for the real estate project from the allottees, from time to time, shall be deposited in a separate account to be maintained in a scheduled bank to cover the cost of construction and the land cost and shall be used only for that purpose:
Provided that the promoter shall withdraw the amounts from the separate account, to cover the cost of the project, in proportion to the percentage of completion of the project:
Provided further that the amounts from the separate account shall be withdrawn by the promoter after it is certified by an engineer, an architect and a chartered accountant in practice that the withdrawal is in proportion to the percentage of completion of the project:
Provided also that the promoter shall get his accounts audited within six months after the end of every financial year by a chartered accountant in practice, and shall produce a statement of accounts duly certified and signed by such SEC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 9 chartered accountant and it shall be verified during the audit that the amounts collected for a particular project have been utilised for the project and the withdrawal has been in compliance with the proportion to the percentage of completion of the project.
Explanation— For the purpose of this clause, the term "schedule bank" means a bank included in the Second Schduled to the Reserve Bank of India Act, 1934;
(E) that he shall take all the pending approvals on time, from the competent authorities;
(F) that he has furnished such other documents as may be prescribed by the rules or regulations made under this Act; and (m) such other information and documents as may be prescribed.
3. The Authority shall operationalise a web based online system for submitting applications for registration of projects within a period of one year from the date of its establishment.