P V A R & Associates
Chartered Accountants

The remaining sections of "The Real Estate (Regulation and Development) Act, 2016" (RERA) come into force w.e.f. 01st May 2017. The Act largely seeks to protect the interest of the allottees / purchasers by promoting transparency, accountability and efficiency in the construction and execution of real estate projects by promoters and to ensure standardized business practices and transactions in the real estate Sector.

• Real Estate Regulatory Authority (RERA) Bill was introduced by the Indian National Congress government in 2013.
• In December 2015, the Union Cabinet of India had approved 20 major amendments to the bill based on the recommendations of a Rajya Sabha committee that examined the bill.
• The bill got approval of the Rajya Sabha on 10 March 2016 and by the Lok Sabha on 15 March 2016.
• The bill received the assent of the President on 25th March 2016.
• The Act came into force from 01st May 2016 with 59 of 92 sections. (Regarding Establishment of RERA, their authorities, terms & restrictions etc.)
• Now, the remaining 33 sections become applicable w.e.f. 01st May 2017.

• The Act makes it mandatory for all commercial and residential real estate projects to register with Real Estate Regulatory Authority (RERA) established under this Act except where the area of land proposed to be developed does not exceed 500 square meters or the number of proposed apartments does not exceed 8 (All phases).
• Promoters cannot advertise or sell any plot or apartment in any real estate project without registration.
• No registration is required if completion certificate is received for a project before commencement of this Act.
• In case of ongoing projects, the project shall be registered within a period of 3 months from the date of commencement of this Act (i.e. on or before 31st July 2017).
• All real estate agents shall also get registered with the Authority. Every registered real estate agent shall be granted a registration number by the Authority, which shall be quoted by the real estate agent in every sale facilitated by him. 

• Publicly accessible disclosures of the project and promoter details, along with a self-declared timeline within which the promoter is required to complete the project, are compulsory. Quarterly project related disclosures are also required. The disclosures are to be made available online.

• 70% of the amounts realised for the real estate project from the allottees shall be deposited in a separate account to be maintained in a scheduled bank to cover the cost of construction and the land cost and shall be used only for that purpose.
• The promoter shall withdraw the amounts from the separate account, to cover the cost of the project, in proportion to the percentage of completion of the project. The amounts from the separate account shall be withdrawn only after it is certified by an engineer, an architect and a CA in practice that the withdrawal is in proportion to the percentage of completion of the project.
• A promoter cannot accept more than 10% of the cost of the apartment / unit as an advance or application fee from any person without entering into a written agreement for sale with such person.
• The agreement for sale shall specify the all particulars of development of the project like dates by which payments towards the cost of the apartment are to be made by and the possession date & the rates of interest etc.
• The promoter is required to declare that it has legal title to the project land or authenticate validity of title, if such land is owned by another person. The promoter is also required to obtain insurance for title and buildings along with construction insurance.
• The proposed project shall be developed and completed by the promoter in accordance with the sanctioned plans and specifications as approved by the competent authorities. The promoter shall not make any other alterations in plans of the buildings or common areas within project without previous written consent of at least 2/3rd of the allottees.
• The promoter shall not transfer or assign his majority rights and liabilities in respect of a project to a 3rd party without prior written consent from 2/3rd allottees and the Authority.

• Where any person makes an advance or a deposit on the basis of the information contained in the advertisement, prospectus or any model apartment and sustains any loss or damage by reason of any incorrect statement, he shall be compensated by the promoter. If the affected person intends to withdraw from the proposed project, he shall be returned his entire investment along with interest and compensation.
• In case any defect in workmanship or quality of services as per the agreement for sale and it is brought to the notice of the promoter within a period of five years by the allottee from the date of possession, promoter shall rectify such defects without further charge, within 30 days. In the event of promoter's failure to rectify such defects within such time, the aggrieved allottees shall be entitled to receive appropriate compensation.
• If the promoter fails to complete or is unable to give possession of an apartment, plot or building in accordance with the terms of the agreement for sale or duly completed by the date in agreement or due to discontinuance of business or for any other reason, In case the allottee wishes to withdraw from the project promoter shall return the amount received by him in respect of that apartment with interest and compensation. Where an allottee does not intend to withdraw from the project, he shall be paid, by the promoter, interest for every month of delay, till the handing over of the possession, at prescribed rate.

• The Act imposes monetary penalties on the promoter of up to 5% of the 'estimated cost of the project' (as determined by the RERA) for disclosure related defaults, and
• Up to 10% for other defaults, along with a maximum imprisonment of 3 years.

• The Act will help establish state-level Real Estate Regulatory Authorities (RERAs) to regulate transactions related to both residential and commercial projects and ensure their timely completion and handover. Appellate Tribunals will now be required to adjudicate cases in 60 days as against the earlier provision of 90 days and Regulatory Authorities to dispose of complaints in 60 days while no time frame was indicated in earlier Bill.