Monthly Corporate Real Estate Regulatory Authority (RERA) Bulletin for December, 2022

Monthly Corporate RERA Bulletin

  • Bengaluru flat buyers get rare relief under RERA’s order

Five years after Real Estate Regulatory Authority (RERA) came into existence, the full force of its orders do not see the light of the day as revenue officials have not been moving files unless the home buyers wage a struggle, as seen in the case of a recent seizure.

As per the law, RERA passes revenue recovery orders in cases where builders have defaulted. However, the enforcement has to be carried out by the Revenue Department under Section 190 of Land Revenue Act. Officials in RERA said they have close to 500 cases, more than half of which were older than three years.

“Tracking the status of the orders issued by the Authority is near impossible due to lack of transparency. We have been writing to the Revenue Department to open a portal to provide update on the status of each of the order passed by RERA. The matter has been escalated to the chief secretary. However, not much has changed,” an official told DH.

In the instant case, documents from RERA show that Rs 4.6 crore had to be recovered from Sanchaya Land and Estate Pvt Ltd in 25 cases before the authority. However, the file didn’t move for months after the order. Following persistent protests and petitions by The Greens Buyers Association, revenue officials in Anekal have seized 2 acre 9 gunta.

For the buyers, however, the action is too little and too late. K C Raghu of the Association said the parcel of the land seized makes up for recovery of the money spent by 25 buyers. He said the total land being developed by the builder was 17.5 acres. However, a part of the land was “recovered” by the revenue authorities who have claimed that it was public land under encroachment.

A senior official in the Revenue Department said enforcing RERA orders require time and constant followups. “Issuing notice and seizure of the land involves legal procedure. There is no shortcut. The pandemic has delayed the work. Enforcement will be expedited in the coming days,” he said.

  • Jaypee Greens Kalypso Court Phase-2 gets occupancy certificate, becomes first project to achieve completion via rehabilitation under RERA Act

After going through a rollercoaster ride of over a decade, home buyers of Jaypee Greens Kalypso Court Phase -2, located in JP Wish Town Sector 128 of Gautam Buddh Nagar, will finally receive their homes as the promoter of the society has received the required occupancy certificate (OC) for its remaining two towers.

According to a statement issued by UP Real Estate Regulatory Authority (UP RERA) on November 18, after obtaining the OC of its remaining two towers, 11 and 12, Jaypee Greens Kalypso Court Phase-2 has become the first project in the country to achieve completion via rehabilitation under provisions of Section 8 of RERA Act under supervision of UP RERA.

The promoter Jaiprakash Associates Limited (JAL) obtained the OC for the last two towers of the project from Noida Authority on November 17, 2022, the statement said.

The project was rehabilitated by UP RERA under the provisions of Section 8 of the RERA Act. Section 8 of the RERA Act allows for stripping the developer of the stuck projects and handing those over to competent authorities or to an association of homebuyers. In this case, the project was taken over by the allotees of Jaypee Greens Kalypso Court Phase-2 project.

As of now, the promoter has obtained OC of all 304 units in the remaining four towers, enabling the promoter to offer possession to the 274 existing allottees, and to sell the remaining 30 unsold units. The project was launched around 2010-11. And now, more than 10 years after investing in these flats, the home buyers will see their dreams turn into reality, the statement said.

Presently, UP RERA is facilitating completion of 14 such projects under Section 8 of RERA through joint endeavours of promoters and allottees. These projects are under various stages of completion, and over 7,000 allottees will be able to get possession in these challenged projects on completion, the statement said.

  • K-RERA issues notice to 180 real estate projects

As many as 180 projects registered with the Kerala Real Estate Regulatory Authority (K- RERA) have failed to submit annual accounts to the authority. As the developers’ lethargy has triggered concerns among customers, the authority has issued show-cause notices to erring promoters. The defaulters’ list is available on the authority’s website www.rera.kerala.gov.in

The Real Estate (Regulation and Development) Act 2016 mandates promoters to open an exclusive bank account for each project. The promoters have to submit an audited account of the project certified by a chartered accountant, Form 5 as it is called, before October 31 of the next year. Only 340 of the 520 ongoing projects have complied with this provision.

  • Need to exempt RERA-registered realty projects from GRAP guidelines

Air pollution emerges as a major health threat in the winter months every year. The reasons

  • both human and climatic — are many and often intertwined with each other. Both Central and state governments are making immense efforts to curb this menace. Authorities like the National Green Tribunal (NGT) and the Commission for Air Quality Management in NCR and Adjoining Areas (CAQM) have been specially constituted to take proactive measures to lessen the impact of air pollution on the masses.

GRAP is an environmental action plan specially formulated to check the NCR’s deteriorating air quality. It is a step-by-step response system which was formulated by the Environmental Pollution Prevention and Control Authority (EPCA) jointly with the Delhi government in 2017. It is purely an emergency response mechanism and is only enforced when air pollution reaches a certain threshold. The responses are upgraded or downgraded depending on the air quality, the system is scalable and is enforced with the help of local authorities. Violators are punished with high penalties.

Categorization of GRAP measures and actions taken

  1. Every level of air pollution has been classified into the following categories in accordance with the presence of particulate matter.
    1. Moderate to poor – When particulate matter PM2.5 is at 61-120 µg/cu.m. or PM10 at 101-350 µg/cu.m.
    1. Very poor – When the particulate matter reaches 121-250 µg/cu. m. for PM2.5 or 351-430 µg/cu.m. for PM10.
    1. Severe – When PM2.5 levels cross 250 µg/cu.m. or PM10 crosses 430 µg/cu.m.
    1. Severe-plus or emergency – When PM2.5 concentrations shoot over 300 µg/cubic meter or PM10 levels are above 500 µg/cu. m. for more than 48 hours.

Real estate sector and GRAP

Even though air pollution is a concern for everyone, for the real estate industry it has at times meant some severe restrictions. While the industry is with the authorities in its efforts to curb the rising pollution levels, it has certain reservations. For example, it has been roughly estimated that a one-month construction ban delays the construction of a project by at least two to three months. Further, the process of RERA registration itself is stringent enough to bind the real estate developers to curb their pollution footprints. Besides, developers also undertake regular water sprinkling and other measures as mandated by the authorities apart from enforcing all the pollution mitigating measures like installation of anti-smog machines and wind-breakers, among others.

  • NCR dominant in terms of units of real estate projects, says UP RERA

Despite the high number of residential projects in non-NCR districts of Uttar Pradesh, three NCR districts — Ghaziabad, Gautam Buddh Nagar and Meerut — are dominating in terms of units, according to the UP Real Estate Regulatory Authority (RERA). In a statement UP RERA said, in September, 36 projects have been registered with UP RERA — the highest

ever. “Out of the total 8,116 units in these projects, 3,841 units, or about 47 per cent, are to be constructed in 12 projects of three NCR districts – Ghaziabad, Gautam Buddh Nagar and Meerut.

“While 4,275 units will be built in 24 projects in 11 non-NCR districts, which is approximately 53 per cent of the total units,” the UP RERA said. “Hence, it is clear that despite the registration ratio of new projects being 35:65 in NCR and non-NCR, the ratio of units is 47:53 which shows the dominance of NCR-based projects,” it noted.

Factors like Floor Area Ratio (FAR), better employment as well as business opportunities and preference of home buyers to settle in NCR have resulted in higher demand for housing units in the NCR region.

After the implementation of RERA Act 2016, it is mandatory to register a real estate project on UP-RERA website if the area of project is 500 square meters or 5,382 square feet and it has 8 or more units which comes within the purview of the notified planning area. At present, more than 3,300 projects are registered with UP RERA, according to the statement.

  1. Pay Rs 32 lakh to appeal vs RERA order: Assam tribunal tells builder

The appeal was filed by M/s Arya Erectors India Pvt. Ltd, against an order dated September 21, 2022, passed by the RERA, Assam

The Assam Real Estate Appellate Tribunal (REAT) has directed a builder to deposit with it a sum of Rs 32,32,850 before its appeal against an order of the Real Estate Regulatory Authority (RERA) of Assam can be considered for admission.

The appeal was filed by M/s Arya Erectors India Pvt. Ltd against an order dated September 21, 2022, passed by the RERA Assam, wherein it had directed the builder to pay the buyer of a villa interest on Rs 1.5 crore with effect from August 28, 2020 until the handing over of possession of the villa. In addition, an amount of Rs 1 lakh was also imposed on the builder by way of penalty.

The tribunal ruled that under the proviso to Sub-section (5) of Section 43 of the Real Estate (Regulation and Development) Act, 2016, firstly, where penalty has been imposed by RERA and the same is put to challenge by a promoter by way of appeal before REAT, the promoter

must first deposit with the appellate tribunal at least 30 percent of the penalty or such higher percentage as may be determined by the appellate tribunal.

While passing the order, the tribunal drew strength from the law laid down by Supreme Court of India vide judgment dated November 11, 2021 in Newtech Promoters and Developers Pvt. Ltd. versus State of UP and others wherein it held that pre-deposit, as envisaged under Section 43(5) of the Act, in no circumstances can be said to be onerous or in violation of Articles 14 or 19(1)(g) of the Constitution of India.

The order was passed by Justice (retd) Manojit Bhuyan, chairperson and Onkar Kedia, member, Assam REAT.

Earlier, in September this year, the Assam Real Estate Appellate Tribunal had directed a builder to deposit with it a sum of about Rs 64 lakh before an appeal against an order of RERA Assam could be considered for admission.

2. Realty players fear recall of SC’s interest rate order may hit firms

The Supreme Court on Monday recalled its June 2020 order capping interest payable by builders to the Noida and Greater Noida authority at 8% and clarified that this benefit would apply only to Amrapali projects, being constructed by state-owned NBCC since July 2019.

Real estate developers in Noida and Greater Noida fear the recall of a Supreme Court order of 2020, which capped the interest rate at 8% for delays in payment of land costs by the builders to the authorities, will push many more developers into insolvency.

According to some estimates, 100 projects in Noida and 90 in Greater Noida will be impacted as a result of this order, and the pending penalty and compounding interest figures could be to the tune of Rs 6,000-7,000 crore, said Manoj Gaur, president, CREDAI-NCR.

According to the authorities, the 2020 SC order had directed that interest on various liabilities would be levied based on the SBI’s marginal cost lending rates (MCLR) on the first day of 2010 rather than rates specified in lease documents. However, the authorities had filed for a review of the order on the grounds that there were heavy financial implications on them.

Gaur explained that the RERA (Real Estate Regulatory Authority) prescribes an interest rate of 8% MCLR that a developer, or the customer, can charge in case of outstanding dues on either side. “Similarly, authorities are also qualified as developer under RERA law. So our view is that since RERA prescribes a rate of interest of 8%, how is it that the authorities are charging 23-27% interest?” he said. He added that the developers have also been clearing their principal and interest levied at 11% as per the lease agreements, but the issue of piling up of compounding interest is posing a challenge for developers.

While the apex real estate body is awaiting the receipt of the final order, Gaur said that the authorities must consider a one-time settlement scheme with the developers, as has been done in the state of Haryana on a similar matter.

3. Refund Turning Point allottees’ money with interest: Rera court to Vatika

The case pertains to the Turning Point project for which the developer obtained a licence from the Department of Town and Country Planning in 2013. The Haryana Real Estate Regulatory Authority (H-Rera) has ordered Vatika Limited to refund money to 28 allottees with interest at the prescribed rate for a pending project in Sector 88B.

“Since the project has been abandoned by the promoter, the allottees are entitled to the refund of the amount paid by them against the allotment of their units, with interest at the prescribed rate of 10.25% per annum from the date of each payment, till the date of actual realisation within the timelines as prescribed under the rule 16 of the Rules 2017,” stated the Rera order dated October 28.

The case pertains to the Turning Point project for which the developer obtained a licence from the Department of Town and Country Planning in 2013. Though the flats were to be offered for possession by 2025, there was no work progress at the site except for some digging work, the Rera court observed.

“While depositing sale consideration of the allotted units, some of the allottees raised loans from the different financial institutions and the same was paid to the promoter. While refunding the amount deposited by the allottees who raised loans against the allotted units, the promoter would be liable to pay that amount with interest up to date to those financial institutions and remainder, if any, would be paid back to the allottees,” the court stated.

Compliances under RERA

Some key provisions and Compliance under RERA:

  • Every real estate project of more than 500 square meters (sqm) needs to be registered under the Real Estate (Regulation and Development) Act. The builder has to submit information regarding the legal permissions for the project, project layout, financial statement and other required information. Following the approval, RERA will provide a registration number to the builder.
  • The builders will have to submit a delivery date for their project. Any delay in the delivery of the project to the buyers shall invite a penalty for the builders. Additionally, the builders are required to deposit 70 per cent of the money received from buyers of a specific project into a separate account. This is to avert the diversion of funds from one project to another.
  • The Act mandates the establishment of an appellate tribunal in every state and Union Territory to handle the complaints of the buyers. The tribunal needs to address the complaints within 60 days of the date on which the copy of the direction or order is made and is received by the aggrieved person along with the accompanying fees.

Interpretation Section

  • Section 3 of RERA Act, 2016: “Prior registration of real estate project with Real Estate Regulatory Authority”

Section 3 of Real Estate (Regulation and Development) Act (RERA), 2016, states: “No promoter shall advertise, market, book, sell or offer for sale, or invite persons to purchase in any manner any plot, apartment or building, as the case may be, in any real estate project or part of it, in any planning area, without registering the real estate project with the Real Estate Regulatory Authority established under this Act.”

Further, the projects that are ongoing on the date of commencement of this Act and for which the completion certificate has not been issued, the promoter shall make an application to the Authority for registration of the said project within a period of three months from the date of commencement of this Act:

The violation of Section 3 has stringent penalties. Section 59 of RERA empowers MahaRERA to impose a penalty which can be extended up to 10 per cent of the total project cost for such a breach. Section 60 provides for penalties that can be extended up to 5 per cent of the total project cost for giving false information.

Under Section 3 of the Act, rules relating to prior registration with RERA of any project is given to maintain a level of transparency and accountability and to regulate the sale and purchase of the real estate projects in a proper and efficient manner.

RERA – Corporate Dose

Sl.Corporate UpdateLink
  1Maharashtra: ED case against 65 builders booked for cheating buyers: The developers, mostly local, illegally constructed buildings, prepared fake documents of permissions, used them to obtain Rera certificates and sold the flats.  Click Here
2SIT arrests five more developers in Kalyan-Dombivli RERA scam: The SIT have booked 65 developers in case and earlier they had arrested 5 persons in this scam who had prepared forged documents making total arrest of 10 people in case so far.  Click Here
  3Haryana RERA awards 60 days’ civil imprisonment to ILD builder: The Real Estate Regulatory Authority (RERA) in Haryana’s Gurugram has awarded 60 days’ civil imprisonment to ILD builder Salman Akbar in  Click Here
 a contempt case. Adjudicating officer (AO) Rajender Kumar pronounced the sentence in the matter of Garima Gupta vs ILD Millennium Pvt. Ltd. 
    4NCR dominant in terms of units of real estate projects, says UP RERA: Factors like Floor Area Ratio (FAR), better employment as well as business opportunities and preference of home buyers to settle in NCR have resulted in higher demand for housing units in the NCR region. At present, more than 3,300 projects are registered with UP RERA.  Click Here
    5Karnataka Real Estate Authority asks buyers to submit house plan for uncomplete 2015 project: The Karnataka Real Estate Regulatory Authority (K-RERA) has asked home buyers of the Krishna Shelton apartment complex at Bagalur Road Cross to submit an action plan on their own to take over their residential project. With builder Krishna Enterprises Private Limited (KEPL) unable to complete the project with the promised amenities seven years post the deadline, buyers approached the authority for intervention.    Click Here

Best Regards,

CS Lalit Rajput                                                                     CS Rajat Agrawal

Disclaimer:

The content of this article is intended to provide a general guide to the subject matter. Every effort has been made to keep the information cited in this article error-free. Suggestions and feedback to improve the task are welcome. The article and opinions therein are based on my understanding of the law and provisions prevailing as on date.

The contents of this article are for information purposes only and does not constitute an advice or a legal opinion and are personal views of the author. The opinion may vary according to one’s interpretation of the law. It should not be relied upon as the sole basis for any decision which may affect you or your business.

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