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Analysis of Section 15 and RERA complaint provisions

Soumya Bajpai

| Updated: Apr 14, 2020 | Category: Legal, RERA Registration

Analysis of Section 15

RERA Act which was passed by our India Parliament so as to protect the interest of the home buyers and also to encourage all possible ways in boosting investment in the real estate. The Act came into force from MAY 1, 2016. The Central and the state government are required to make their own rules under the model frame of the Central Act. In today’s scenario, the role of promoter plays a major role in any transaction done on a Real estate project if transferred to third party (Section 15). The contingencies involving consolidation has in turn been a black spot in the real estate front which in turn has resulted in the backing out of various developers from the real estate business or merging with a greater establishment for the purpose of development in this regard.

We can basically call it as a regulating authority in terms of buying and purchasing of real estate. The RERA provision has brought more transparency and equity in this regard to the buyers and has left no stone unturned in making it feasible for buyers to deal in the real estate. RERA has guarded the interests of not only the developers but also the buyer. RERA, in turn, has brought a regulating authority to deal with real estate transactions.

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

Section 15: Section 15 defines obligations of promoter in case of transfer of a real estate project to a third party is defined under the Act.

  • The promoter shall not transfer or assign his majority rights and liabilities without obtaining prior written consent from two-third allottees and without the prior written approval of the Authority in respect of a real estate project to a third party. Proviso that particular transfer or assignment shall not affect the allotment or sale of the apartments, plots or buildings in the real estate project made by the erstwhile promoter.
  •  The transfer or assignment when being permitted by the allottees and the Authority under sub-section (1), the intending promoter shall be required to independently comply with all the pending obligations under the provisions of this Act and the pending obligations as per the agreement for sale entered into by the erstwhile promoter with the allottees. Provided that any transfer or assignment permitted under provisions of this section shall not result in extension of time to the intending promoter to complete the real estate project and he shall be required to comply with all the pending obligations of the erstwhile promoter, and in case of default, such intending promoter shall be liable to the consequences of breach or delay, as the case may be, as provided under this Act or the rules and regulations made thereunder.

Importance of Section 15

  • The section 15 mainly put restrictions on developers from making any kind of amendment or alteration in any plans that have already been sanctioned without the prior consent of the buyers who are willing to buy home. It means that any kind of alteration or changes in any kind of apartment can only be done only if the previous of the buyer is obtained.
  • In a similar manner any kind of alterations in any kind of plans or layout cannot be done without prior consent of 2/3rd of the allottees which a developer is required to obtain from them so as to proceed further in this regard according to Section 15.
  • Similarly, Section 14 of RERA also talks about that consent of a home buyer must be ‘informed consent’ that is which free from any constraints and is given freely without any boundation. The consent must also be relatable and specific in nature. Hence, any sort of consent which is general in nature or not so specific and is obtained by developer well in advance is not valid and hence have no value in the eyes of the law.

RERA Compliant Under Certain Provisions of RERA Act

Section 10: Agents who are not registered cannot sell a project. Maintaining proper books and records. Not to get involved in any unfair trade practices or make any incorrect statements. Agents are also required to avail to the allottee all the important documents at the time of booking.

Section 3: No promoter or agent is authorized under whatsoever circumstances to advertise, book, allot, sell, and offer to sell without any registration with RERA Act. This makes it mandatory for the agents/ promoters to get the registration done before taking on any transaction of the project under this regard.

Section 9: No agent can sell any project without registration under RERA. RERA no. is required to be documented in every sale initiated by him. Registration needs to be renewed from time to time as per the requirement. Registration can easily be revoked or cancelled if any condition is not fulfilled or in case of any breach of any condition at the specified time.

RERA Complaint under Section 31

Complaints are required to be under Section 31 of the Real Estate (Regulation and Development) Act, 2016, either with the authority (Real Estate Regulatory Authority) or the adjudicating officer. Such complaints may be filed against promoters, allottees and/or real estate agents or brokers. Most state government rules have laid out the procedure and form, in which such applications can be made, and complaint can be directly made to the authority in the prescribed form. In the case of Chandigarh or Uttar Pradesh, these are placed as Form ‘M’ or Form ‘N’ (common with most other states and union territories).

RERA complaint is required to be in the form prescribed under the respective states’ rules. The complaint can be filed with respect to a project registered under RERA, within the prescribed time limit or within a particular time frame, for violation or contravention of provisions of the Act or the rules or regulations framed under RERA. For cases pending before the other consumer forum, the complainants/ allottees can withdraw the case and approach the appropriate authority under the RERA. Other offences (except complaints under Section 12, 14, 18 and 19) can be filed before the RERA authority.

Role of RERA

  • Keeping all the allottees well informed about any alteration, addition or any other major or minor changes.
  • Applying for Project Registration under RERA scheme.
  • Registration of agents and brokers under RERA.
  • Land title and construction insurance
  • The consent of 2\3rd allottee is necessary in case of any addition or alteration or any further changes in this regard.
  • Consent of 2\3rd allottees is necessary in case of transferring any majority rights to 3rd party.
  • Sharing about further project plans, layouts, constructions criteria, material quality, time duration, title deeds etc.
  • Formation of RWA on time or within 3 months from the day when maximum of it has been sold.
  • Dispute resolution within 6 months
  • Extension of project at max by 1 year in case of any delay.

Builders are usually bound by certain responsibilities which they are compelled to do and also avoid certain things:  Buyers should disclose in detail about the carpet area, quarterly updation of website, time frame for completion of project work, no false commitments and advertisements, no biased cancellation of units by promoters.

Procedures

In case of transfer of majority of rights and liabilities in Real Estate to third party two main steps are involved:

  • Firstly, prior consent of 2/3rd  allottee either manually or electronically. The promoter shall take the responsibility of communicating to the allottee of all the facts of the project and also each and every detail of the transfer of Real Estate project
  • Secondly, approval of RERA is necessary in all the circumstances also this should be kept in mind that where any allottee is holding more than one unit that shall be treated as one vote only. In this case Application for the purpose of transfer shall be made in the prescribed form after which hearing shall be conducted before the Authority in the prescribed manner. Thereafter as the authority shall find it feasible the application may be granted or rejected (as the case may be).

There after the list of prescribed documents which are necessary for the procedure to bet completed is mentioned as follows:-

  • Dully filled and complete Application form
  • Details of the transactions including MOU /EOI
  • List of all the complaints lying before the Authority is respect of any pending cases or disposed cases.
  • Any litigation or any order from the side of any Court/NCLT/NGT/ NCLAT or any other higher authority.
  • Any sort of Professional certificates which states the status of the undergoing Project.
  • Authorized certificate from the Chartered Account and also stating the amount of money collected from the allottees.
  • The affidavit from the promoter.

The concerned Authority may seek for additional information and enquiry in order to satisfy themselves of any flaw or discrepancy which they might have sensed under the process of the transaction before any approval for takeover of the project by a third person.

This may be as follows:

  • NOC’S from lenders
  • Background in detail of any promoter or third party.
  • Feasibility and reliability of new promoter and third party.
  • All the compliances herewith  till the date of transfer
  • Any such other important matters which are not disclosed herewith and affects the rights of the allottees.

Certain ways by which builders can make RERA compliant

Talking about builders we may say that builders can compliant under RERA act by the ways of advertisement, registration of the project, any audit accounts, alteration by the consent of 2\3rd allottees, withdrawals where 70% of it should be included in the project account, to freeze bank accounts in case of any non-compliance, interest to be same in case of promoter and customer in the case of any delay, website upgrade or disclosure.

How to check RERA registration number?

Buyers can check the RERA registration number from the respective state’s portal. Every web portal has a list of registered projects along with RERA registration number, approvals and other documents which are easily accessible by all the buyers and they can avail the required information from there itself.

What is RERA approval?

Mostly, RERA approval means RERA registered. There are few guidelines that every builder has to follow to register its project with authority. This includes approvals, land titles, insurance etc. and other formalities as prescribed thereon.

Penalties under RERA

  • Section 62: Contravention of Section 9 & 10, Penalty of Rs 10,000/- day during which the default is in continuance.5% of unit cost sold.
  • Section 9(7): Registration done under misinterpretation or fraud, breach of conditions under which registration is obtained. Punishment in the form of cancellation or revocation of registration.
  • Section 65: Contravention of orders under RERA Authorities. Penalty of 5% of cost.
  • Section 66: Contravention of orders of Appellate Authorities. Imprisonment of up to 1 year or fine or extend up to 10% cost of unit sold.

Current Scenario in RERA

In the present scenario we would say that there has been decline in the project launches and mostly the focus has been on its execution. Developers are also giving their best and trying to adhere with all the compliances and rules thereon for the purpose of avoiding complex situations that may arise in future and also avoid long process of litigation. The relaxed timelines of delivery in turn have given developers a new hope to work under zero pressure, complying with all the necessary guidelines. Though there have been many judgments that talks in detail about RERA provisions as such but yet a market is set to witness a landmark judgment that could set a precedent.

 In some recent judgment of Delhi High Court it was held that aggrieved homebuyers could take their case to either state real estate regular authority as well as in National Consumer dispute Redressal Committee since they both have concurrent jurisdiction over the matters. Most of the relief seekers even seek relief on the basis that pending cases should be heard in NCDCR and be disposed of there itself. However, Delhi HC has said that the verdicts of both, NCDRC and RERA are ‘concurrent’ and that in previous similar cases, the Supreme Court (SC) and the NCDRC have upheld that for buyers’ benefit, cases can run parallel in both the Authorities.

Conclusion

 RERA is very useful in today’s scenario; it applies only in the case of development of property and not in the rented ones. RERA mostly covers each and every domain i.e. all commercial and residential projects including shops, complex, and apartments. In fact an initiative has also been taken from the side of the Government and it is ensured under PRADHAN MANTRI AWAAS YOJNA that each and every individual should have house of their own for which purpose subsidy was also given on loan.

After the Real Estate (Regulation and Development) Act, 2016 enforcement, registration of sale deed of a project unit cannot be done in the office of the sub-registrar without obtaining Occupancy Certificates or Completion Certificates. After the Act implementation, the developers will have to follow several formalities if they wish to make certain changes to the project after its commencement (Section 15). Short-term chaos might break out in the real estate industry, but in the long run, it will boost the confidence of the customers, and they will invest more.

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Soumya Bajpai

Soumya has done LLB (Hons) and has a 2+years experience in writing. Her main interest is in reading judgments, new enactments and amendments taking around in law. She always strives to bring the best to work that she does.

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