The Real Estate (Regulation and Development) Act, 2016 (RERA) was passed by the Parliament of India inter alia to protect the interests of the consumers in the Indian real estate sector by providing for the establishment of an Authority for regulating and promoting the real estate sector. The RERA also provides for the establishment of a Tribunal to adjudicate disputes arising between the buyer and developer.
The RERA also contains provisions which require certain projects and real estate agents to be mandatorily registered with the Real Estate Regulatory Authority (Authority) failing which certain consequences would follow.
Registration of Projects
Registration of certain projects with the Authority has been made mandatory. Non-registration of such projects would disentitle the promoter (builder/developer) from advertising, marketing, selling or even offering to sell units to prospective purchaser in its project. Further, various states have now put in place online portals for the purpose of registration.
Which Projects require compulsory registration?
New projects which have been started pursuant to the passing of the RERA are required to be compulsorily registered. Further, even projects which were ongoing at the time of the commencement of RERA are required to be mandatorily registered.
Which projects would not require compulsory registration?
Under the RERA Act, the following projects need not be registered-
a. Projects which are to be developed on a land not exceeding 500 sq.m.
b. Projects for which the promoter received the completion certificate prior to the commencement of the RERA Act.
c. Where only renovation or re-development is being done and no fresh marketing or selling is undertaken
What is the process for registration of a Project?
Though the RERA Act provides for the broad framework for registration of the project, it is to be noted that every State Government has been conferred with the power to make its own Rules regarding the same. A brief overview of the provisions for registration of a Project as provided under the RERA Act as well as the Rules in force in the National Capital Territory of Delhi are as below:
a. An application in the prescribed form along with the requisite fee has to be made by the promoter to the Authority along with a comprehensive list of documents, including:
- Details pertaining to the promoter company including its name, registered address, type of company, names & photographs of promoter.
- Authenticated copy of the promoter’s PAN card
- Annual reports containing the P&L account, balance sheet, etc. for the preceding 3 financial years.
- Details of the projects undertaken by the promoter in the preceding 5 years.
- Copies of the requisite approvals and commencement certificate issued by the competent authorities.
- Sanction plan, details about location of the project with clear demarcation.
- Proforma allotment letter, agreement to sell, conveyance document (sale deed) proposed to be executed with the purchasers.
- Information regarding number of units in the project and the carpet areas,
- Details about the architecture, structural engineer, contractors engaged for the proposed project.
- Details about encumbrances on the land, if any.
- A declaration stating:
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That the promoter has lawful title of the land on which the project is proposed to be constructed,
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The time within which the project would be completed.
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Deposition of 70 per cent of the amount received from purchasers in a separate account to cover the construction cost.
b. The NCT of Delhi Real Estate (Regulation and Development) (General) Rules 2016 also provides that in case of an ongoing project which has not received completion certificate at the time of commencement of the RERA Act, the promoter thereof shall also provide the following details in addition to the ones already mentioned above:
- Total amount of money collected, and the total amount of money used for development of the project,
- Status of the project,
- Original sanctioned layout plan and modifications
c. Upon receipt of the application for registration of the project, the Authority has to act within a period of 30 days either by granting registration of the project or by rejecting the same. The Act also provides that in case the Authority fails to take a decision within the period of 30 days, then the project shall be deemed to have been registered and the Authority shall within 7 days thereafter, provide to the Promoter a registration number for the Project.
What is the period for which the registration of a Project is valid?
a. The registration is valid for a period which the Promoter declares to be the period within which the project would be completed.
b. The registration can be extended due to force majeure reasons, on an application made by the Promoter, for a period not exceeding 1 year in aggregate.
Can registration once granted be revoked?
The Authority has been vested with the powers to revoke the registration either suo moto or on a complaint received by it when-
a. The Promoter commits a default under the provisions of the RERA Act or the Rules framed thereunder,
b. The Promoter violates any of the conditions on which the registration was granted by the Authority,
c. The Promoter commits any unfair practice or irregularities.
However, before its registration is revoked, proper notice and opportunity of hearing has to be given to the Promoter.
What are the consequences of non-registration of a Project required to be registered?
As already mentioned above, projects, barring those exempted, are required to be compulsorily registered with the Authority.
Non-registration of the Project does not only disentitle the Promoter from advertising, marketing or selling units in such Project but also burdens the Promoter with harsh punishment and penalties.
As provided under Section 59 of the RERA Act, non-registration of a Project would make the Promoter liable to pay a penalty which may extend to 10% of the estimated project cost as determined by the Authority.
Registration of Real Estate Agents
The RERA Act also provides for compulsory registration of Real Estate agents who facilitate sale and purchase of the units/flats or flats in the projects registered with the Authority.
What happens if a real estate agent is not registered under the Act?
Section 9 of the RERA Act provides no real estate agent can facilitate the sale or purchase of any property unless he is registered with the Authority, meaning thereby that in case a real estate agent is not registered with the Authority, then such agent cannot legally facilitate the sale or purchase of property.
What is the process for registration of a Real estate agent?
a. A Real estate agent intending to be registered under the Act has to make an application to the Authority in the prescribed form providing the following details:
- Details of his enterprise- name, registered address and contact details,
- Name, address, contact details of the real estate agent along with proof of address,
- Authenticated copy of agent’s PAN Card.
b. Within 30 days of receipt of application, the Authority has to either grant or reject the application for registration, failing which registration is deemed to have been granted.
For how long is the registration valid for?
As per the NCT of Delhi Real Estate (Regulation and Development) (General) Rules 2016, registration granted to a Real Estate Agent is valid for a period of 5 years, unless renewed.
Conclusion
As can be seen from the above, the RERA Act and the Rules framed thereunder by the state governments, provide for strict provisions regarding registration of real estate projects. It is imperative that the Promoters register their project in strict compliance with the law so as to avoid unnecessary complications and penalties which may ensue. Apart from this, registration of a Project under RERA also boosts the confidence of the purchasers in the Promoters.
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