Scope and Participants under RERA

Ashish M. Shaji

16 Dec, 2020

Real Estate (Regulation and Development) Act, 2016 (“RERA”) has been enacted to ensure transparency in a transaction during the sale of plots, apartments, and building and in real estate projects which seek to protect home buyers as well as help to boost investments in the real estate industry. In this article we shall look at the scope of the RERA Act and also have a detailed understanding on participants under it. 

Scope of the RERA Act

• The Act is applicable to whole of India except the state of Jammu & Kashmir;
• The RERA Act^[1] applies to not only residential apartments but to all apartments, plots, and buildings whether residential or commercial. The Real Estate Project as defined in the Act, states that it shall include:

1. Development of buildings;
2. Development of buildings consisting of apartments;
3. Converting existing buildings or part thereof into apartments (e.g.:- converting a bungalow or hotel into apartment);
4. Development of land into plots or apartments for the purpose of selling all or some of the said apartments or plots or buildings.

Thus, it is pertinent to note that the Act is wide enough to cover within its scope development of land for buildings, apartments as well as plots. Further, the Act covers not only residential projects but also commercial projects.

Who are the Promoters as per RERA Act?

As per the Act, the promoter is:

• A person who constructs or causes to be constructed an independent building or a building consisting of apartments, or converts an existing building or a part thereof into apartments for selling off all or some of the apartments to other persons and includes his assignees; or
• A person who develops land into a project, whether or not the person also constructs structures on any of the plots, for the purpose of selling to other persons all or some of the plots in the said project; or
• Any development authority or any other public body in respect of allottees;
• Buildings or apartments, as the case may be, constructed by such authority or body on lands owned by them or placed at their disposal by the Government; or
• Plots owned by such authority or body or placed at their disposal by the Government, for the purpose of selling all or some of the apartments or plots; or
• An apex State level co-operative housing finance society and a primary co-operative housing society which constructs apartments or buildings for its Members or in respect of the allottees of such apartments or buildings; or
• Any other person who acts himself as a builder, colonizer, contractor, developer, estate developer or by any other name or claims to be acting as the holder of a power of attorney from the owner of the land on which the building or apartment is constructed or plot is developed for sale; or
• Such other person who constructs any building or apartment for sale to the general public.

It may be noted that where the person who constructs or converts a building into apartments or develops a plot for sale and the persons who sell apartments or plots are different persons, both of them shall be deemed to be the promoters and shall be jointly liable as such for the functions and responsibilities specified, under this Act or the rules and regulations made thereunder.

Who are the Allottees?

The term has been defined as –

• “Allottee” in relation to a real estate project means the person to whom a plot, apartment or building, as the case may be, has been allotted, sold or otherwise transferred by the promoter, and includes the person who subsequently acquires the said allotment through sale, transfer or otherwise but does not include a person to whom such plot, apartment or building, as the case may be, is given on rent.

• Thus, it can be said that the term ‘allottee’ is used for the transferee of the building, apartment or plot from the Promoter who gets the property, by whatever mode including by way of allotment, sale, as consideration for services, exchange for development rights or by any other means.
• Moreover, the building, apartment or plot transferred can be a freehold property as well as a leasehold property. Therefore, an allottee of a building, apartment or plot on leasehold land is also an allottee. However, tenants are excluded from the definition of ‘allottee’.

What is the Carpet Area under RERA?

• Carpet area, or the net usable area, is the space where one can spread a carpet. The built-up area includes the carpet area, plus the extra areas certified by the authorities, such as the area of the outer and inner walls, dry balcony area, etc. Super built-up area includes the carpet area, the built-up area, as well as a share of the balance area, such as the stairs, lobbies, and galleries, which can be used by the entire building.
• According to the Act, carpet area is defined as ‘the net usable floor area of an apartment, excluding the area covered by the external walls, areas under services shafts, exclusive balcony or verandah area and exclusive open terrace area, but includes the area covered by the internal partition walls of the apartment’.

Who are Real Estate Agents as per RERA Act?

As per the Act, Real Estate Agent means any person:

Who negotiates or acts on behalf of one person in a transaction or transfer of his plot, apartment or building, as the case may be, in a real estate project by way of sale, with another person or transfer of plot, apartment or building, as the case may be, of any other person to him and receives remuneration or fees or any other charges for his services whether as a commission or otherwise.

It includes a person who introduces, through any medium, prospective buyers and sellers to each other for negotiation for sale or purchase of plot, apartment or building, as the case may be, and property dealers, brokers, middlemen by whatever name called.

The Real Estate Agents play a significant role in Real Estate transactions by being the link or acting as middlemen between the promoter and the allottee. They not only bring both the parties together but also induce the prospective buyer to buy the plot, apartment or building by informing about or making representations of the promoter and his project.

The Act prohibits real estate agents from facilitating any sale or purchase of plots/apartments in projects without obtaining RERA Registration. Moreover, the agents are, inter-alia, required to facilitate access to project information to consumers at the time of booking and refrain from making false statements, misleading representations and indulging in unfair trade practices.

Conclusion

The RERA Act was introduced to protect the home buyers against malafide intentions of builders, agents etc. It also sought to enhance investments in the Real Estate Industry. Therefore, the participants are required to act as per the prescribed regulations.

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