Status as on- 30/09/2020

In its recent order, the Kerala Real Estate Regulatory Authority [“K-RERA”] has warned promoters, agents, firms from advertising real estate projects prior to registering the same. The Kerala RERA has also issued show cause notices to few developers which had indulged in such practice. Clemency in this respect is offered to only those developers who were not able to submit applications for registration owing to the Covid-19 pandemic.

The developer of a project is prohibited from advertising his project without getting the same registered with the relevant Real Estate Regulatory Authority. This mandate flows from S3(1) of the Real Estate (Regulation and Development) Act, 2016 [“Act”]. Furthermore, §11 of the Act mandates the promoter of a real estate project to mention the registration number of the project while advertising the same. Additionally, the promoters have to conspicuously mention if the project does not require registration.

The K-RERA took cognizance of the practice of developers, where they were involved in marketing their projects through printed, visual and social media without getting the same registered under the real estate projects. Even in the past, the K-RERA had issued notices on its website where it warned the developers of the consequence of advertisement without registration.

Objective of the Act

The Act was introduced to protect the interest of the homebuyers. The main aim of the Act is to provide relief to buyers from the malpractices of promoters. It specifies certain norms for building and development of real estate to enhance the transparency in transactions in the real estate sector.

Given that marketing is the first step towards invitation for purchase of flats and buildings, there are chances that a developer can misrepresent the ground reality in to lure the scrupulous buyers. Adherence to norms relating to advertisements ensures that the home buyers are not defrauded of their life savings. Thus, control and regulation of marketing is one of the measures towards protection of interests of homebuyers.

Conclusion

Although the step taken by the K-RERA is laudatory in nature. However, it remains to be seen whether the unscrupulous builders who had posted advertisements without registering their projects. Given that such show cause notices had been issued in the past, only time will tell if such notices will lead to concrete results.

Disclaimer– The above article is based on the interpretation of the related laws and judicial pronouncements. The readers are expected to take legal advice before relying on this article. The author can be reached at support@centrik.in or call the IP expert at 8383011629.