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

RERA Newsletter “RERA” THE REAL ESTATE SECTOR REGULATOR” Monthly Corporate RERA Bulletin

  • UP govt to form panel to probe why NCR builders are going bankrupt, leaving buyers in the lurch

Noticing the repeated claims of insolvency and bankruptcy by private builders, the UP government will be setting up a high-level committee soon to find out the reasons for it. UP CM Yogi Adityanath has ordered the Industrial Development Department to set up the committee with the mandate to look into the conditions which are compelling private builders to file for bankruptcy leaving thousands of flat buyers in the lurch.

Significantly, a number of well-known firms have declared themselves bankrupt urging the National Company Law Tribunal (NCLT) to liquidate their assets so that they could arrange funds and deliver the incomplete projects. Buyers have been a harried lot due to non-deliverance of their units despite having paid the money. The sources claimed that NCLT has issued orders to declare at least a dozen small and big real estate firm owners as bankrupt.

In the National Capital Region, especially Noida and Greater Noida, scores of homebuyers have no clarity as to when will they get possession of their flats booked under various projects of these builders even after making the payments to the developers.

In Noida and Greater Noida, the status of the majority of projects, which were launched between 2009 – 2014, is incomplete. The system under RERA became effective three years after    that.    According    to    official     sources,     after     extracting     money     for the promised units from the buyers and banks, developers have made hay.

It is convenient to exit from the project instead of fulfilling the obligations. Insolvency proceedings and liquidation is a complex process and takes a lot of time. Before taking any adverse action against the developers, the authorities need to ensure protection of the buyers’ interest.

  • Structural safety of real estate projects, changes in RERA provisions to figure in upcoming CAC meeting

The Central Advisory Council (CAC) meeting will discuss issues relating to the structural safety of real estate projects following an incident of partial roof collapse in Gurugram wherein two women were killed.

The meeting will also deliberate on constituting a committee for the resolution of legacy stalled projects and the issue of some states tweaking the provisions of RERA, while framing rules under the Act by exempting the registration of ‘ongoing projects.’

The CAC, set up by the government for effective implementation of the Real Estate (Regulation and Development) Act, 2016 (RERA), will hold its third meeting on April 12. The first two meetings of the CAC were held on May 14, 2018, and April 29, 2020.

The council, chaired by Housing and Urban Affairs Minister will consider measures like physical inspection of projects during construction and structural audit at regular intervals by reputed institutes.

Recently, there have been reports of incidents related to structural safety in multistorey apartments. Though, RERA mandates the promoters to rectify the structural defects highlighted within a period of 5 years from the date of possession, some provisions related to structural safety may be deliberated to ensure further safety of high-rise buildings and to prevent loss of life and property.

These provisions may include a physical inspection of projects during construction, Structural Audit by reputed institutes on regular intervals, declaration of Structural Safety by promoter before applying for completion or occupancy certificate, etc. Central Advisory Council may consider.

The committee may comprise representatives from the Ministry of Finance, Ministry of Housing and Urban Affairs, sector experts (dealing with stalled projects and insolvency proceedings) and give its recommendations to the central government within two months from the date of its constitution, the agenda said.

Central government established the Alternative Investment Fund (AIF)- Special Window for Affordable and Mid-Income Housing Fund (SWAMIH) Investment Fund of Rs 25,000 crore to provide last mile funding for projects that are net-worth positive and registered under RERA, including those projects that have been declared as Non-Performing Assets (NPAs) or are pending proceedings before the National Company Law Tribunal ( NCLT) under Insolvency and Bankruptcy Code (IBC).

It is evident that this fund has proved to be very instrumental in completing the legacy stalled projects and is fulfilling the dreams of homebuyers, who invested their life savings in these legacy stalled projects, which were launched before the enactment of RERA.

The third meeting of the CAC will also discuss the issue of tweaking RERA provisions by some states. The CAC agenda noted   that   all   states   /   UTs   have   notified   rules under RERA except Nagaland, which is in the process to notify the rules. As many as 31 states / UTs have set up Real Estate Regulatory Authority (Regular-25, Interim-06). States like Meghalaya, Sikkim, West Bengal, and UT of Ladakh are yet to establish authority.

In the agenda, it was pointed out that some states have tweaked the provisions of RERA while framing rules under the Act by exempting the registration of ‘ongoing projects. The matter was taken up by the housing ministry on several occasions and through various communications.

The CAC in its first meeting deliberated upon the issue of dilution by the states while framing rules under the Act. As decided in the meeting, the ministry has taken up the matter through various communications.

Homebuyers’ body Forum for People’s Collective Efforts (FPCE) said in a statement that the agenda for the upcoming CAC meeting shows that the Ministry of Housing and Urban Affairs is serious and keen to address all major concerns not only in the implementation of RERA but also in providing resolution for incomplete legacy stalled projects started before RERA came into force.

We have been raising the issue of dilution in RERA Rules by the states due to which many incomplete projects were left out of the ambit of RERA and also that RERA Authorities are unable to enforce their own orders due to which RERA orders became nothing more than a piece of paper.

The recent incident of poor construction quality leading to loss of lives will also be part of the discussion. The proposal to form a committee under the Chairmanship of CEO, NITI Aayog is also welcome and shows that the government is keen to ensure the completion of remaining incomplete stalled legacy projects.

  • RERA execution to improve post SC direction on studying states’ rules: FPCE

Homebuyers’ apex body FPCE expects the implementation of realty law RERA to improve following the Supreme Court’s recent direction to the Centre to examine the rules framed by states and see whether those subserve the consumers’ interest.

Last month, the Supreme Court directed the Centre to examine whether the rules framed by various states under the Real Estate (Regulation and Development) Act, 2016 (RERA) are in conformity with the central legislation and subserve the interest of homebuyers.

The SC gave three months to the Centre to examine if there are any deviations between the rules drawn up by the states and those framed by the Centre in 2016, and to place the report by the first week of May 2022.

When contacted, Forum for People’s Collective Efforts’ (FPCE) opined despite five years of its full implementation, RERA is yet to reach anywhere near its intended objective.

The prime reason for this is that the states to whom responsibility has been given for its implementation did not follow any uniformity in their general real estate rules and rules for agreement for sale, he pointed out.

The States’ rules were not within the four corners of the provisions of RERA. This took sting out of the Act and homebuyers were deprived of the benefits of RERA.

On the other hand, the association’s president said, builders took full advantage of this and the fear of RERA catching them faded. In view of this, though late, but still this ruling

from the Supreme Court will set things right going forward and many homebuyers will then reap the benefit. Most importantly, this ruling would break the belief in most builders that they are above the law or that they can take the law for granted.

This order has once again raised the hopes of homebuyers that they will get justice sooner than later, he added.

Colliers India CEO Ramesh Nair said the Supreme Court’s decree to scrutinise RERA rules of states is significant as there is a lack of uniformity in builder-buyer agreements across RERA rules of various states.

This directive will help bring accountability and transparency in dealings between homebuyers and developers in several cases.

The anomalies mainly existed with respect to the payment schedule, delivery schedule and associated delays, as well as liability towards structural defects.

A uniform builder-buyer agreement will also lead to more confidence amongst homebuyers. It will instil trust in homebuyers, without the fear of any unwarranted liabilities.

Real estate project registration breached per-Covid levels: UP RERA

The UP RERA has received 116 applications for registration of new project in the last four months, a substantial increase from 68 applications during the same period two years ago, just before Covid disrupted the economy.

The rise in registration of projects also points to the improvement in the economic activities across different sectors in the state leading to the higher purchasing capacity of the prospective home buyers.

As a result, people are now investing in the property in larger numbers, just as they were doing in the pre-Covid times.

During the four months prior to the first wave of Covid-19, in December 2019 and January, February and March 2020, when there was normalcy all around, a total of 68 applications were received for registration of new projects with the UP RERA,” the authority said.

There has been considerable fall in the number of applications for registration of the projects during one and half years following the outbreak of Covid. The sector started gaining momentum since August 2021 and now the pace appears to be better than even the pre-Covid                                                         days.

“The number of applications for registration of new projects during the last four months, – November 2021, December 2021, January, 2022 and February 2022 is as high as 116,” the authority said.

Interestingly, more projects are now being registered from tier 2 cities. The registration data of projects in UPRERA for the last four months also shows that during this period, 83 applications for registration of new projects were received from the districts outside of NCR as compared to 33 applications from the NCR.

80% of all the applications for registration of new projects are from outside of NCR, especially from Lucknow-Barabanki region, Kanpur region and Agra-Mathura region.

“The current trend is also an indicator that the housing activities in the districts outside of NCR are showing more upward trend which reflects the increasing interest of the people in modern housing units.

Relief for home buyers: RERA pulls up realtor for abandoning incomplete project midway

The RERA Odisha has pulled up a city-based realtor for the arbitrary act on its part in abandoning a housing project midway, leaving the home buyers in the lurch.

“The project is still incomplete as appears from the averments made in the complaint petition. Without completing the project, the promoter is going to leave the project which is detrimental to the interest of the allottees. In the circumstances, we allow the application filed by the learned Counsel for the complainant”, RERA stated while pronouncing an interim order”.

The real estate regulatory authority passed the order that “the builder cannot shift the responsibility of maintenance to the flat owners unless the project is fully completed, flat- owners society is formed, the common area is transferred to the society and production of valid occupancy and completion certificate.”

“The promoter is not supposed to leave management before handing over the charge to the association as contemplated u/s 2(4)(e) of the Real Estate (Regulation & Development) Act, 2016. The Act specifically stipulates that it is the responsibility of the promoter to enable formation of an association/society of the allottees under the local laws applicable”, the regulatory authority said.

Section 17 of the Act provides that the promoter shall execute a registered conveyance deed in favour of the allottee along with the undivided proportionate title in the common areas to the association of the allottees or the competent authority, as the case may be, and handover the physical possession of the plot, apartment or building, as the case may be, to the allottees and the common areas to the association of the allottees or the competent authority, as the case may be, in a real estate project, and the other title documents pertaining thereto within specified period as per sanctioned plans as provided under the local laws, it pointed out.

Therefore, till handing over management to the association of allottees, the promoter has to manage the affairs of the project, the RERA order maintained.

RERA CASE LAWS

1. Vinod Kumar Agarwal vs. Jaipur Development Authority (Rajasthan RERA) RAJ-RERA-C-2020-3622

The question discussed here was whether the provisions of RERA will have an overriding effect over the provisions of local laws. The question of law also involved the application of Section 13 of Real Estate Regulation Act.

The section provides for that the promoter of the project shall not accept any amount which is more than 10 percent of the total amount unless the agreement for sale and other conditions have been fulfilled.

The facts of the case are that the authority wanted more consideration as against the 10 percent rule and it stated that the reason for this that the local act of the state that is Rajasthan Improvement Trust Rules,1974 provides about that.

Also further they contended that the respondent was not obligated to do certain development around that area. While the petitioner contended that the provisions of RERA signify that it is a act made by Central Legislature and would have an overriding effect over the provisions of state laws.

Hence following Section 13 of RERA the authority should be made to execute the sale deed and complete the agreement before asking for any more amount. The tribunal here accepted the arguments and said that it is true that Central Law would prevail here, and also the fact that the above section is mandatory in nature hence the authority is required to execute the said agreement of sale. (To read full – Click Here)

2. Will Supreme Court’s RERA jurisdiction verdict empower the regulatory authority?

The Supreme Court judgment has defined the constitutional validity and ambit of RERA. This will set a precedent for RERA in other states, but it is difficult to say whether the apex court has set the tone for builders to fall in line.

The Supreme Court on November 11, 2021, in a landmark judgment in the case of Newtech Promoters & Developers versus State of UP and others has Constitutionally validated the challenged provisions of RERA.

When a few reporters rushed to the office of the Uttar Pradesh Real Estate Regulatory Authority (UP RERA) at Greater Noida to seek the authority’s reaction, following the Supreme Court landmark judgment on November 11, a few homebuyers who happened to be there for their respective cases, wondered if something would change radically for them.

The Supreme Court in a landmark judgment in the case of Newtech Promoters & Developers versus State of UP and others has Constitutionally validated the challenged provisions of RERA. The apex court has settled the principle of law through its judgment with respect to appeals emanating against UP RERA jurisdiction.

A retired army veteran wanted to know whether the RERA order passed in his favour will no longer be challenged by the builder. Another young couple waiting for a RERA Recovery Certificate to be executed were wondering if the Supreme Court judgment touched upon some grey areas as well.

The real estate market of Uttar Pradesh in general and Noida-Greater Noida in particular is a hotbed of consumer grievances, ranging from delay to default, unmet promises to builders’ high-handedness. As per an industry estimate, nearly 40% homebuyer grievances in India are reportedly from this market alone. It is, therefore, no surprise that even when the Real Estate Regulatory Authority proposes to clean up the market, the builders devise their own ways and means to oppose it.

“Finally, the apex court has held that pre-existing contracts (i.e. contracts in existence prior to RERA coming into effect) will be read as per RERA and thereby the legislative has the power to make an Act retroactive and therefore RERA does not violate the Constitution of India,” says Rao.

The Supreme Court judgment has only defined the Constitutional validity and ambit of RERA. This will definitely set a precedent for RERA in other states as well. However, it is difficult to say whether the apex court has set the tone for builders to fall in line. More importantly, it can only be a guestimate now as to when and in which shape the real estate regulatory body emerges from its stage of trial and error. (To read full – Click Here)

  • Compliances under RERA

Real Estate (Regulatory and Development) Act, 2016 is an Act of Parliament of India which seeks to protect homebuyers as well as help to boost investments in the real estate sector.

RERA registration is just a start of RERA compliances of various provision of RERA regulations. It gives complete details of the project to  RERA authority and public at large which would try to ensure that all compliances are met.

Quarterly Progress Report (QPR)

  • There is no need to pay any fees for the updating of QPR (Quarterly progress report) of First Quarter of Year 2019,
  • Fees Rs.10,000/- per Quarter; need to deposit INR 10,000/- per Quarter for updating the QPR, if the updating is pending more than equal to two.
  • The Developer need to update the details of the registration granted by the UP RERA for the prospective project;
  • Construction of each building with photographs proof;
  • Construction of each floor with photographs proof;
  • Internal infrastructure and common areas’s construction with photographs proof.

Thus, it is always advisable for all the Developers/builders to keep their projects updated and complied, so that there is always transparency in the whole tenure of the project.

Our State RERA Corner:

TN & MAHARERA

1.  TN law pushes for redeveloping old apartments, single owners’ associations

A new legislation being planned to safeguard the interest of apartment owners and improve the administration of common areas allows only one recognised association per property.

Flats across Tamil Nadu will not have multiple owners associations anymore and neither would there be delay in redeveloping dilapidated buildings as the State is planning to repeal Tamil Nadu Apartment Ownership Act, 1994, which came into effect in 1997.

A new legislation being planned to safeguard the interest of apartment owners and improve the administration of common areas allows only one recognised association per property. The memorandum of law calls for formation of federation of associations in case of multiple complexes or satellite townships.

The Tamil Nadu Ownership Act, 2022, introduced after 25 years allows for redevelopment of dilapidated buildings with consent from 66% owners as 100% unanimity is difficult. The new legislation is required as housing industry has changed considerably and large complexes and townships with multiple residential and commercial assets are a reality. A top housing department official said the Act will give legislative cover after the role of RERA ends.

One of the biggest issues with the 1994 law was the difficulty in registering associations. Since there is no authority constituted or yet to be notified as stipulated under the Act, the associations are being formed under Tamil Nadu Co-operative Societies Act, 1961, or Tamil Nadu Societies Registration Act, 1975.

Flat deal

  • The Tamil Nadu Apartment Ownership Act, 1994, was implemented in 1997 but the authority is yet to be notified
  • Due to lack of authority, the apartment associations are being formed under the Tamil Nadu Co-operative Societies Act, 1961 or Tamil Nadu Societies Registration Act, 1975
  • Under Section 10 (2) of the Act, the Deed of Apartment has to be filed with the competent authority but due to lack of authority it could not be done
  • The new legislation calls for one recognised association
  • The redevelopment of dilapidated buildings can be carried out with two third consent of apartment owners
  • Formation of Federation of Associations in case of large complex or satellite townships

To read more please (Click Source)

2.  Mumbai: MahaRera allows interest on late possession for Andheri flat buyers

The MahaRERA in a recent order has allowed interest on delayed possession in an Andheri project to home buyers, who were promised possession in 2014. However, MahaRERA chairman Ajoy Mehta, while stating that the possession dates in agreements should prevail over the MahaRERA completion date, disallowed interest from the dates in the agreement for sale, citing that the complainant had not uploaded a copy of the agreements.

According to the complainants, which include a director of Basons Investment and his family members, they had booked several flats in the AR Avenue project in Andheri (W) and an agreement for sale was signed in December 2012; the date of possession was given as December 2014. However, despite making full payments for the flats, the complainants were not handed over possession of the flats. The developer handed over possession of some of the flats in June 2021.

Mehta also observed that there is a clear violation of Section 18 of the RERA Act. However, since all agreements registered are prior to MahaRERA coming into force, the possession date mentioned therein shall prevail over the MahaRERA completion date, but as complainants have not uploaded any copy of the said agreements, the proposed completion date of MahaRERA is December 2019, which shall be considered as the date on which the project was promised to be completed, Mehta said. To read more Click Source)

RERA Corporate Dose

Sl.Corporate UpdateLink
    1What should Supertech homebuyers who have filed cases with RERA do? Given the moratorium imposed by the National Company Law Tribunal, homebuyers will not be able to institute a suit or launch proceedings against Supertech before the courts, consumer courts, RERA or any other tribunal. The moratorium will be in operation until the completion of the resolution process.    Click Here
  2How real-estate regulator RERA failed to help homebuyers stuck in bad housing projects The failure of the real estate regulator in Haryana to give relief to  Click Here
 homebuyers in the Green View project developed by a state-owned company is only one instance of its limitations and indifference. 
  3UP RERA mediation helps restart housing project in Ghaziabad The UP Real Estate Regulatory Authority (UP RERA) has succeeded in restarting a stalled housing project by resolving the issues of its developer and allottees. The Spring View Heights project is the 12th in the series of big housing projects in Uttar Pradesh that missed its completion deadline and is now being revived.  Click Here
    4UP RERA resolves 1150 disputes through amicable settlements Most of the disputes were related to delay in execution of registered sale deeds, possession of houses, allotment of parking slots, shortcomings in maintenance and complaints of power back. The UP Real Estate Regulatory Authority (UP RERA) has settled 1,150 disputes involving properties worth ₹345 crore through amicable settlements between home buyers and developers.    Click Here
      512 real estate projects in Uttar Pradesh being completed under Section 8 of RERA provisions In case of non-payment of instalments by allottees of such projects, the promoter has the right to receive interest and cancel the allotment. Action is being taken by the Uttar Pradesh Real Estate Regulatory Authority under Section 8 of the RERA Act 2016 to complete such projects by a group of allottees or joint efforts of promoters and allottees. Most of the projects are progressing normally: UP RERA.      Click Here

RERA – TECH BITES

  • After pleas, RERA may address plaints digitally

Following multiple appeals by the Karnataka Home Buyers Forum, the Karnataka Housing Department has finally taken up the case of a potential digital complaints redressal system as part of K-RERA. The home buyers had been struggling for years to get relief after being allegedly stiffed by promoters and builders.

They had appealed to various government authorities, including the Karnataka Real Estate Regulatory Authority (K-RERA), on complaints and cases they had filed as well as suggestions on how to improve the current system to prevent years of waiting for complainants to get relief.

One of the suggestions was the implementation of a digital complaints redressal system, similar to the one recently imposed by Haryana RERA. If the request is implemented, Karnataka will become the second state to have such a system.

In a document shared with TNIE, the Housing department secretary has forwarded the request to the Karnataka Housing Department’s Secretary, who in turn asked K-RERA’s Secretary to look into the request. K-RERA Secretary Ibrahim Maigur could not be reached for comment regarding the potential implementation of the system.

(To read more: Click Here)

  • LEGAL REMEDIES IF REAL ESTATE PROJECT IS STUCKED

–     By Naina seth, @ sethn8861@gmail.com

HIGHLIGHTS

  • Section 18 and Section 31 of the Act provides that the allottee through an Advocate, Company Secretary or Chartered Accountant or by himself file a Complaint with the Designated authority of Real EstatAe Regulatory Authority (herein referred to as “the RERA”) set up under the jurisdictional State or Union Territory
  • The RERA shall issue notice for Compliance of the Order and provide some time for submission of required documents to proof that the Builder has complied the Order of the Court

Real Estate Sector, which seems to be one of the major contributors in the inclusive growth of the nation with the contribution of around 8% of total GDP. Remarkable performance of this Industry with the involved substantial transactions has fetched the government attention to make proper policy and regulation for the real estate sector. Apart from this, the sudden downfall in the Real estate sector due to Statutory & Regulatory changes, diversion of funds by the Builder, Legal disputes pending with the Regulatory authorities as well as Farmers led to a deep-seated transformation for which the Real Estate (Regulation and Development) Act, 2016 (herein referred to as “the Act”) came into force in 2017.

At the time of enforcement of the Act, many Real estate projects were stalled in which many buyers invested their hard-earned money and were neither given possession as per the agreement entered with the Builder nor got a refund of their hard-earned money. Such a situation was handled by the Act which provided provisions to help out these buyers through the legal process.

Following are the legal solutions that an allottee must avail if he is also stuck in one of these stalled Real Estate Project:

A. Taking possession of the property along with delayed interest and penalty, as applicable

    1. Section 18 and Section 31 of the Act provides that the allottee through an Advocate, Company Secretary or Chartered Accountant or by himself file a Complaint with the Designated authority of Real EstatAe Regulatory Authority (herein referred to as “the RERA”) set up under the jurisdictional State or Union Territory.
    2. The RERA shall review the Complaint and if thought fit, shall admit the case and issue notice to the Builder to Show Cause, why the relief should not be granted to the Complainant under Section 18 of the Act.
    3. The allottee has the right to get possession of the alleged property along with the Interest on delayed period at such rate as may be determined by the Court.
    4. The RERA on considering the merits of the Case may dispose off the case or pass orders for possession of the property along with delayed period Interest and penalty, if any.
    5. If the Builder does not adhere to the Court orders, then the Complainant can also proceed for filing Execution of the Order passed by the Court and get its order executed.
    6. The RERA shall issue notice for Compliance of the Order and provide some time for submission of required documents to proof that the Builder has complied the Order of the Court.
    7. If still the Builder does not comply with the Execution of Order proceedings, the RERA shall proceed with proceeding under Section 63 of the Act in which the Builder shall be liable to pay 5% of the total cost of the project along with relief awarded to the Complainant.
B. Withdrawal from the Real Estate Project
  1. Section 18 of the Act also provides that if the Allottee does not wishes to continue in the Real Estate Project then such allottee through an Advocate, Company Secretary or Chartered Accountant or by himself, file a Complaint with the Designated authority of Real Estate Regulatory Authority (herein referred to as “the RERA”) set up under the jurisdictional State or Union Territory.
  2. The same process as mentioned in the above paragraph (A) 2 to 7 will be followed and the allottee can get the refund of the money invested along with interest, as may be determined by the Court.
  • In case, the Complainant is aggrieved by the Order of the RERA, then he may approach the Real Estate Appellate Tribunal to file appeal against the order passed by the respective RERA within 60 days from the date on which a copy of order was received.
  • In case, the Complainant is aggrieved by the Order of the Appellate Tribunal then he may approach the jurisdictional High Court to file appeal within 60 days from the date on which a copy of the order was received.

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.

“Growth is the only evidence of life.” – John Henry Newman

“RERA stands for transparency in the real estate industry. The Act aims at protecting the rights and interests of consumers and promotion of uniformity and standardization of business practices and transactions in the real estate sector.”

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