RERA - A Relief For Consumers?
With the coming into force of the Act on Labors day, in Maharashtra, the previous Act styled as MOFA (Maharashtra Ownership of Flats Act, 1963) governing the real estate also continues. How is RERA (Real Estate (Regulation and Development) Act, 2016) going to benefit the purchaser, designated as “Allottee” under the new Act.
No promoter is allowed to advertise, market, book, sell or offer for sale, or invite persons to purchase in any manner any plot, apartment or building, without registering the real estate project with the Real Estate Regulatory Authority. The exception carved out by the Act is that each phase, proposed to be developed, having more than five hundred square meters or the number of apartments does not exceed eight inclusive of all phases requires no registration with the Authority.
True, RERA shall ensure transparency and efficiency in the real estate sector, protection of the interests of the Consumers, speedy dispute redressal, check and balance system as also the regulation and promotion of the real estate sector, but to what extent?
Firstly, are all projects covered in RERA?
All the projects that are ongoing on the date of commencement of this Act and for which the completion certificate has not been issued, the promoter has to 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. No registration of the real estate project is required where the promoter has received completion certificate for the project prior to commencement of this Act, for the renovation or repair or re-development which does not involve marketing, advertising selling or new allotment of any apartment, plot or building. Where the real estate project is to be developed in phases, every such phase shall be considered a standalone real estate project, and the promoter has to obtain registration under this Act for each phase separately.
All the necessary disclosures and documents, as is mandated by the Act, Rules etc have to be submitted to the Authority, out of which some information will be available on the website. The Authority will then provide a registration number, including a Login Id and password to the promoter for accessing the website of the Authority and to create his web page and to fill therein the details of the proposed project.
Compared to the previous law, MOFA, it's not easy to use the amount received by the allottee. An amount of 10% can be taken by the Promoter at the time of booking and execution and registration of the Agreement is mandatory. Seventy per cent. of the amounts realized 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. The promoter can only withdraw the amounts from the separate account, to cover the cost of the project, in proportion to the percentage of completion of the project. The withdrawal can only be done 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. The Draft Certificates are annexed to the Rules.
The Act also deals with the registration of real estate agents, (individuals, Company, etc), insurance of the title of the land and the building by the Promoter, five year defect liability period by the promoter, and other aspects relating to registration of the project. Jurisdiction of the Civil Court to entertain any suit or proceeding in respect of any matter which the Authority or the adjudicating officer or the Appellate Tribunal is empowered by or under the Act is specifically barred. The Act makes the model Agreement to Sale mandatory, however the rules read that the draft agreement is optional. The specifications as to the manner and date of payment, date of possession, rate of interest given to the promoter and or the allottee have to be mentioned in the Agreement, according to the rules.
Only time will prove if the Act is a boon or a bliss to the allottees and to the Builders.
Advocate Surbhi Oswal is Real Estate Lawyer and Consultant.
[The opinions expressed in this article are the personal opinions of the author. The facts and opinions appearing in the article do not reflect the views of LiveLaw and LiveLaw does not assume any responsibility or liability for the same].
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