The RERA aims to establish the Real Estate Regulatory Authority that would regulate and promote the real estate sector. The main aim of the Act is to protect the interest of homebuyers and promote the timely delivery of properties or projects. RERA was also enacted to boost investment in the sector. Applicability of RERA and RERA Registration RERA has been enacted and implemented in all the states as well as Union Territories except the States of Jammu and Kashmir and West Bengal. The State of West Bengal has followed a different path altogether. Instead of RERA, the State of West Bengal has implemented, West Bengal Housing Industry Regulation Act. Separately, the State Advisory Council of Jammu and Kashmir has approved the Real Estate (Regulation and Development) Bill, 2018. RERA makes it mandatory for all commercial and residential real estate projects where the land under development is over 500 square meters or no. of units to be constructed exceeds 8 apartments will have to register with the RERA authority before launching of the real estate project. Every promoter shall make an application to the authority for the registration of a real estate project. The projects that are ongoing on the date of commencement of this act and for which completion certificates have not been issued have to get registered with RERA. If a real estate project fails to register a property, it will attract a penalty. However, renovation, repair or redevelopment projects not involving marketing, advertising, selling and new allotment are not required to get registered. Compliance under RERA RERA registration is just the start of RERA compliances of various provisions of RERA regulations. It gives complete details of the project to the RERA authority and public at large which would try to ensure that all compliances are met. Some of the compliance for builders are as under: • Uploading of Agreement/Plan/Approval etc. – RERA regulation has mandated to publish the details along-with copies of agreements, approvals etc., on the website of RERA Authority for general public viewing purposes. • Quarterly updating with RERA – Every registered project shall update the prescribed details regarding the project on the respective State RERA authority website. Failure to do so may attract heavy penalties and penal proceedings from the RERA authority. • Separate bank accounts for 70% of receipts – As per the RERA law, every developer is required to deposit 70% of the receipts from the customers in a separate RERA designated account which shall be used only for the cost of the project. • Comply with Prescribed process of booking and allotment– RERA regulations have prescribed certain obligations and responsibilities on the developers while booking the new flat or allotment, some of 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 • Taking necessary approval and insurance – As per RERA regulation, the builder or developer is required to take all the necessary approvals and insurance, as required by state laws. RERA regulations relating to insurance are very confusing and shall require detailed 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 the respective State Government. If nothing is specifically provided by State Government, then society shall be constituted within 3 months from the month in which the majority of flats are sold. 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 the association of the allottees. • Review of building quality – The developer needs to review the quality of the building. As per RERA law, any defects in the structure shall be rectified by the builder within 30 days of intimation without any additional cost. Penalties for non-compliance under RERA The RERA Act gives explicit and mentions specific penalties for offences by promoters, real estate agents, builders and other parties who are involved under the ambit of this act: • For non-registration of the project with the RERA Authority: 10% of the total estimated cost of the project. However, the agent is charged a penalty of Rs. 10,000 per day during default tenure up to 5% of property cost • Where information or advertisement regarding the project is found to be false: Penalty for the promoter is 5% of the estimated cost of the project Where any provisions of the Act (except above) have been contravened: Penalty for promoter and agent is 5% of the estimated cost of the project/ property • Where an order of the RERA has been contravened or has not been executed: Daily penalty for every day after passing of the order which has been contravened up to 5% of the estimated cost of the project/ property for the promoter, agent, and the allottee. • Where an order of the Appellate Tribunal has been contravened: Penalty up to 10% of the estimated cost of the project/ property for the promoter, agent, and the allottee. Prosecution and Compounding • Non-compliance of penalty order by Promoter (for non-registration of Project) issued by the Authority entails imprisonment up to 3 years or further penalty of 10% of estimated cost or both • Non-compliance with the order of the Appellate Tribunal by Promoter entails imprisonment up to 3 years or further penalty of 10% of estimated cost or both • Non-compliance with the order of the Appellate Tribunal by Agent entails imprisonment up to 1 year or a daily fine of 10% of the estimated cost of apartment or plot of land • Non-compliance with the order of the Appellate Tribunal by Allottee entails imprisonment up to 1 year or a daily fine of 10% of the estimated cost of apartment or plot of land • Imprisonment punishment could be compounded (before or after the institution of prosecution) by the Court
