Real Estate (Regulation and Development) Act 2016 with reference to Maharashtra

Government of India enacted the Real Estate (Regulation and Development) Act 2016 and the act came into force with effect from May 1, 2017. The act aims to:

• Ensure efficiency and transparency in the real estate sector in relation to the sale of a building, apartment, land, or other real estate project.
• Protect consumers’ interests in the real estate industry
• Establish a dispute resolution process for quick resolution of disputes.
• Create an appellate tribunal to hear appeals from Real Estate Regulatory Authority rulings, orders, or directives.[1]

For the purpose of regulating and promoting the real estate industry in the State of Maharashtra, the Maharashtra government formed the Maharashtra Real Estate Regulatory Authority (MahaRERA), which has its headquarters in Mumbai.

As a result, the Maharashtra government also issued the following regulations:

• Maharashtra Real Estate Appellate Tribunal, Officers a
• Maharashtra Real Estate Regulatory Authority, Officers and Employees (Appointment and Service Conditions) Rules, 2017
• nd Employees (Appointment and Service Conditions) Rules, 2017
• Maharashtra Real Estate (Regulation and Development) (Recovery of Interest, Penalty, Compensation, Fine payable, Forms of Complaints and Appeal, etc.) Rules, 2017
• Maharashtra Real Estate Regulatory Authority (Form of Annual Statement of Accounts and Annual Report) Rules, 2017
• Maharashtra Real Estate (Regulation and Development) (Registration of Real Estate Projects, Registration of Real Estate Agents, Rates of Interest and Disclosures on Website) Rules, 2017

The following Regulations and Orders have been issued by MahaRERA:

• The Maharashtra Real Estate Regulatory Authority (Recruitment and Conditions of Service of Employees) Regulation, 2017.
• The Maharashtra Real Estate Regulatory Authority (General) Regulations, 2017.

The following are the essential components of the Real Estate (Regulation and Development) Act, 2016:

1. Establishing Real Estate Regulatory Authority and Appellate Tribunal

Real Estate Regulatory Authority must be established by the appropriate government in accordance with this Act for the purpose of regulating and promoting the real estate industry in the State / UTs.[2] While defending the interests of allottees, promoters, and real estate brokers, the Authority should endeavor to encourage the growth and promotion of a wholesome, transparent, efficient, and competitive real estate sector. Additionally, the authorities must set up a dispute resolution procedure for registered real estate projects.[3] The following must be the Authority’s main responsibilities:

• Making sure that promoters disclose real estate projects;
• Registering real estate projects;
• Registering real estate agents;
• Resolving complaints
• Make suggestions to the relevant Government regarding issues pertaining to the growth & promotion of the real estate sector;

Additionally, the relevant government must create an appellate tribunal to hear appeals from the Real Estate Regulatory Authority’s judgments, recommendations, or orders. Any individual who feels wronged by a direction, judgment, or order issued by the Authority or by an adjudicating officer may appeal to the Appellate Tribunal, which will handle the appeal as quickly as feasible and make every effort to resolve it within a sixty-day window.[4]

2. Registration of Real Estate Projects

Every residential and commercial real estate project must be registered, with the exception of those where –

• The projected development area does not exceed 500 square metres,
• The total number of flats envisaged for development does not exceed 8, including all phases,
• Before this Act came into effect, the promoter had a certificate of completion for a real estate project,
• For the purpose of redevelopment, remodeling, or repair that does not entail the marketing, sale, or new allocation of any apartment, plot, or building under the real estate project.

No promoter shall advertise, market, book, sell or offer for sale, or solicit anyone to acquire any plot, apartment, or building, as the case may be, in any real estate project or portion of a real estate project, in any planning area within Maharashtra, unless the real estate project is registered with the Maharashtra Real Estate Regulatory Authority (MahaRERA). Promoters of continuing real estate projects in which all buildings, as per the sanctioned plan, have not gotten a Completion Certificate must additionally register for the phase of the project that includes structures that do not have an occupation or completion certificate.[5]

A promoter who violates the law by failing to register is subject to a fine that might amount to 10% of the project’s anticipated cost. He will be punished for continuing to violate the law by being imprisoned for a term that can last up to three years, paying a fine that can last up to an additional 10% of the project’s anticipated cost, or both.

In addition to registration, the promoters must give the authorities quarterly reports on the project’s status.

3. Registration of Real Estate Agents

Under this Act, all real estate agents must register. No real estate agent may help in the sale or purchase of, or act on behalf of any person to aid in the sale or purchase of, any plot, apartment, or building, as the case may be, in a real estate project or portion of it, without first registering under this section.

If a real estate agent fails to register, he shall be responsible to a penalty of ten thousand rupees for each day that such omission persists, which may cumulatively amount to 5% of the cost of the plot, apartment, or buildings, as the case may be, of the real estate project for which the sale or purchase has been facilitated.[6]

4. Complaint Filing

For any breach or infringement of the provisions of this Act or the rules and regulations issued thereunder, any aggrieved person may make a complaint with MahaRERA or the adjudicating authority, as the case may be, with regard to any registered real estate project. The Authority must set up a dispute resolution process for prompt resolution of such concerns.[7]

• Any individual who feels aggrieved by a directive, judgement, or order issued by MahaRERA or a hearing officer may appeal the matter to the Appellate Tribunal.
• Any individual who disagrees with an Appellate Tribunal decision or order may appeal it before the High Court.

5. Bolstered Financial Discipline

The Act aims to improve financial discipline in the real estate business. Some of its provisions are as follows:

A promoter cannot receive an advance payment or application fee from a person which equals to more than 10% of the cost of the apartment, plot, or building, as the case may be, without first entering into a formal agreement for sale with that person and registering the said agreement for sale.

• 70% of the funds received from the allottees for the real estate project from time to time must be put in a separate account to be kept in a designated bank to pay the cost of construction and the cost of the land, and must only be used for that purpose.
• Withdrawals from such accounts must be made in accordance with the project’s progress as recognised by an engineer, an architect, and a practicing chartered accountant.
• The promoter will pay the buyer for any inaccurate or erroneous statements by refunding the entire cost of the property plus interest.[8]
• Every financial year, project accounts must be audited, and a copy must be provided to MahaRERA.[9]
• MahaRERA has the option to freeze a project’s bank account if compliance is not maintained.[10]
• Stronger financial penalties are provided for violations of the MahaRERA

6. Increased Transparency

As a result of the Act, the real estate industry will become transparent in the following ways:

• Details of all the Registered Projects shall be available online for citizens including:
• sanctioned plans, layout plans, and specifications that have been accepted by the appropriate authorities, proposed plans, proposed layout plans for the whole project, and the floor space index that the promoter has suggested would be consumed throughout the entire project; Number of proposed buildings or wings to be built, as well as the number that has been approved for each building or wing.
• The project’s stage-wise timetable for completion, which includes preparations for public infrastructure including water, sewage, and power.
• quarterly update of the quantity and types of booked flats or plots, if applicable, a quarterly report on the number of covered parking spaces and garages booked, quarterly update of the list of permissions obtained and those still pending following the issuance of the commencement certificate, a quarterly report on the project’s progress; and
• any other information and documentation that may be mandated by MahaRERA regulations.[11]
• The promoter’s marketing or prospectus must prominently display the MahaRERA website URL, where all details of the registered project as well as the registration number acquired from the Authority have been recorded.

7. Buyer Friendly

• Buyers will be able to read all disclosures relevant to registered projects on the MahaRERA website. This will enable decision-making that is informed by data.[12]
• Without the prior approval of at least two-thirds of the allottees, other than the promoter, who have agreed to take apartments in such a building, the promoter is not permitted to make any additions or modifications to the sanctioned plans, layout plans and specifications, and the nature of fixtures, fittings and amenities, etc.
• The promoter will be required to pay interest for each month if a building, apartment, or plot is delayed from completion or cannot be delivered in line with the conditions of the agreement for sale. Furthermore, if the allottee decides to withdraw from the project, he must repay the cash received with interest, without prejudice to any other remedy available.
• The promoter must permit the establishment of a legal entity, such as a cooperative society, company, association, or federation, within three months after the date on which 51% of all potential buyers in that building or wing have reserved their apartments.
• Within three months on the date of issuing of the occupancy certificate, or when 51% of the total number of Purchasers in such a building or wing has paid the full amount to the promoter, the promoter shall execute a registered conveyance deed in favour of the allottee.[13]

CONCLUSION

The Real Estate (Regulation and Development) Act of 2016 is a step toward reforming the Indian real estate industry by promoting increased accountability, transparency, and public centricity. The lack of laws and regulations in the real estate industry caused a lot of hardship for the homebuyers. The RERA was implemented to benefit the buyer and provide them with rights and obligations. Although the act as a whole is carefully thought out, it mostly takes the buyers’ perspective into account. The act has altered the dynamics of the real estate business, but it is a touch too hard on the builders. The RERA can take builders into account and should consider making a few changes.

Author: Manish Kumar – an Intern, and Co-Author: Ajay Kacher – Legal Associate,  at IP & Legal Filing, in case of any queries please contact/write back to us at support@ipandlegalfilings.com.

References:
^{[1] The Real Estate (Regulation and Development) Act, 2016 Act no. 16 of 2016}

^{[2] The Real Estate (Regulation and Development) Act, 2016, S. 20}

^{[3] The Real Estate (Regulation and Development) Act, 2016, S. 32(c)}

^{[4] The Real Estate (Regulation and Development) Act, 2016, S. 43}

^{[5] The Real Estate (Regulation and Development) Act, 2016, S. 4}

^{[6] The Real Estate (Regulation and Development) Act, 2016, S. 9}

^{[7] Maharashtra Real Estate Regulatory Authority (General) Regulations, 2017, S. 24}

^{[8] The Real Estate (Regulation and Development) Act, 2016, S. 12}

^{[9] The Real Estate (Regulation and Development) Act, 2016, S. 77(1)}

^{[10] The Real Estate (Regulation and Development) Act, 2016, S. 7(4)(c)}

^{[11] The Real Estate (Regulation and Development) Act, 2016, S. 19(1)}

^{[12] Maharashtra Real Estate Regulatory Authority (General) Regulations, 2017, S. 4}

^{[13] The Real Estate (Regulation and Development) Act, 2016, S. 19(10)}