The first set of regulation for real estate as RERA Act had been made effective from 01/05/2017. Now as per RERA Act, every State needed to implement the RERA Rules, RERA Authority and RERA Tribunal for the respective State.
Major of the States have implemented the RERA regulations, RERA authority and RERA Tribunal. As required by the Act, the deadline for registration of on-going project which was 31/07/2017, has been lapsed. And most of the registration has been completed. If any on-going project has not registered under respective State RERA, such project may have to face huge penalty which may be up to 10% of the project cost.
RERA registration is just a start of RERA compliances of various provision of RERA regulations. RERA registration give complete details of your project to RERA authority and public at large which would try to ensure that all compliances are met. We have summarized some the compliance for builders which are as under:
- Review of Agreement/Plan/Approval etc. – RERA regulation has mandated to publish the details along-with copy of agreements, approvals etc., on website of State RERA for general public purpose. Now the changes for compliant filing by buyers would be more. Hence, it become pertinent to review all the advertisement, agreement, builders-buyer agreements, allotment letter and other related processes.
- Quarterly updating with RERA – every registered project shall update the necessary details regarding the project to the respective State RERA failure of which may attract heavy penalty and penal proceeding from RERA authority. Even buyer can file complaint.
- Separate bank accounts for 70% of receipts – As per the RERA laws, every developer need to keep 70% of the receipts from the customers in a separate account which shall be used only for cost the project. Withdrawal shall require certificate from CA, architect and engineer.
- Synchronization of completion of project with receipts – the RERA laws regarding maintaining separate bank account, have may create multiple scenario for developer which shall require proper legal analysis and planning, like
- Whether amount can be used for repayment for loan
- What cost of land shall be considered, especially when the land is inherited or acquired about 20 years ago
- What if the cost of project is only 40% of the receipts?
- What if some flats are unsold and project has been completed? etc.
These questions require research and planning.
- Comply with Prescribed process of booking and allotment – RERA regulations has prescribed certain obligation and responsibilities on the developers to below while booking the new flat or allotment, some of the them are –
- Ensure that transaction is done through RERA registered agent
- Making available the approved plan to the buyer
- Non-acceptance of advance more than 10% of unit cost
- Compliance to the formats for agreements, etc.
- Taking necessary approval and insurance – As per RERA regulation, the builder or developer is required to take all the necessary approvals and insurance, if required by State laws. RERA Regulations relating to insurance, has very confusing and shall require big research.
- Formation of allottee’s association – As per RERA regulations, every builder or developer shall form the society/association or co-operative society as prescribed by respective State Government. If nothing is specifically provided by State Government, then society shall be constituted within 3 months of majority of buyers.
- Timely completion and delivery including common areas – Every builder/association is required to complete the project on given time and give possession within 3 months. All the common areas shall be transferred to association of the allottees.
- Review of building quality – The developer need to review the quality of building. As per RERA Act, any defects in the structure shall be rectified by the builder within 30 days of intimation without any additional cost.
- Others – There are other points also, like
- Change in promoter
- Change in license approval
- Refund or cancellation of allotment
- Withdrawal of amount for refund
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Note – Please note that the above article is for education purpose only. This is based on our interpretation of laws which may differ person to person. Readers are expected to verify the facts and laws