RERA for Promoters, Developers & Agents

Ashish M. Shaji

17 Feb, 2021

Promoters are the builders or the developers who build apartment, buildings and sell those to home seekers. With increasing complaints against the promoters, the Real Estate Regulatory Authority (RERA) notification by the government of India has made multiple guidelines which the promoters have to meet to build a project or sell it legally.

RERA Registration Requirements

• It is now compulsory for every builder to register projects whether commercial, residential or under construction projects. All have to be registered with RERA and while applying for the registration, the promoter shall give a copy of ownership of land, every small detail of the project that has been planned, schedule of the construction, status of land, Performa agreements and the information of all the real estate agents, contractors, engineers, etc.
• If the project is to be developed in phases, then the developer has to obtain registration for each phase separately.
• The developers must also deposit 70% of the total amount that they get from the consumers. The developer has the flexibility of withdrawing this amount, but the same needs to be used solely to develop an individual project post getting approval from an architect, chartered accountant or engineer.

Changes to the Registered Plan

• If a plan has been registered under RERA, it can only be changed with the consent of two-thirds buyers of that project. This will help the Authority and the buyers to tackle the problems arising due to the consistent change of plans by a promoter even if the buyer has signed an agreement with a particular plan and layout of the project.

Public Portal

• If the project gets registered, then the promoter will be provided a login ID and password so that he can upload all the details of the real estate project along with his photograph on the RERA India’s website. This will be done so that a buyer can access all the necessary details that he should know before signing the agreement.
• A promoter cannot advertise a project until it gets registered. Also, the website will contain the list of defaulters so that a buyer can beware of them.

Ending the Misuse of Funds: Rules under RERA

• Many times it happens that a builder uses the money he gets from a project to invest it in another project without finishing the previous one first. Doing this, a promoter draws himself into a web created by his owning doings, and this leads to major problems for the buyers. Thus, to end this greed of some promoters, RERA has made some rules. Now, a separate account would be made in the name of the project. Leaving a minimum fund of 50% which a promoter gets through a project’s sale is mandatory. This will ensure that even if the promoter faces losses in other deals, he will have money to construct that project.

Functions and Duties of a Promoter

The functions and duties of a promoter are as follows:

• RERA has given certain functions of a promoter that he must do for a buyer. These include the details of a project’s registration, updates on projects, information about actions of a promoter regarding the project, etc.
• A promoter has to take care of the services he provides and will have to guide a society until society makes a local authority.
• The promoter shall also provide completion or occupancy certificate from a local governing body.
• The promoter cannot transfer the real estate project without the consent of two-thirds buyers of that project and the prior approval of the Authority. A promoter has to refund and return the entire amount if he fails to deliver a project.

Penalty for Non-Compliances by the Promoter

• If the promoters or the developer fails to comply with the directions or violates the rules prescribed by RERA or the Appellate Tribunal^[1] then, they may face imprisonment up to three years with a fine of up to 10% of the total estimated cost of the project in question.

RERA for Real Estate Agents

The Real Estate agents are the medium between a buyer and a promoter. They have a strong presence in the real estate sector as they have the marketing skills to profitably buy or sell a property. A buyer does not know all the property details, and a promoter does not sell his properties himself. Thus, real estate agents’ role is of paramount importance.

Rules for Real Estate Agents:

• RERA mandates intermediaries (including intermediary websites) to get themselves registered and retain a valid RERA registration number before facilitating any real estate deal on behalf of any real estate developer to stimulate the fair practice of doing business in the real estate sector.
• The intermediary is also required to maintain and preserve account logs and other documents as prescribed by the Act and they must facilitate all information and provide any further assistance as prescribed by the Act to the buyer/customer.
• If the intermediary fails to comply with the duties and responsibilities prescribed by the RERA then, their registration can be revoked.
• Further, they can be penalized up to Rs 10,000 per day, which may extend up to 5% of the total estimated cost of the unit in question and the agent/intermediary can also face imprisonment up to 1 year if they breach any orders given by the Appellate Tribunal.

Conclusion

RERA for Real Estate was introduced to protect the interests of the allotees and with a view to bring about accountability. It helps in maintaining transparency and reduces frauds and delays.

Read our article:Statutory Provisions of RERA: Registration Process, Documents, Offences, etc.