Monthly Corporate RERA Bulletin
THE RERA NEWSLETTER 39th EDITION – Monthly (January, 2024)
Monthly Corporate RERA Bulletin
- RERA GAINS MOMENTUM IN ADDRESSING CONSUMER COMPLAINTS ACROSS INDIA
The Real Estate (Regulation and Development) Act (RERA) has gained momentum in addressing consumer complaints, with State authorities resolving 1,16,300 cases as of November 28, 2023, according to data from the Ministry of Housing and Urban Affairs. Out of the total, Uttar Pradesh led with 38 per cent (44,602 cases), followed by Haryana with 20,604 cases (18 per cent) and Maharashtra with 15,423 cases (13 per cent, jointly accounting for 69 per cent of resolved cases nationwide, states ANAROCK Property Consultants. Maharashtra dominates project registrations under RERA, constituting 36 per cent, while Tamil Nadu (16 per cent), Telangana (11 per cent), and Gujarat (7 per cent) follow.
In fact, registrations for projects and real estate agents under RERA have also been increasing steadily. Nationally, 116,117 projects and 82,755 real estate brokers were registered by November 28, 2023, marking a 63 per cent and 47 per cent growth, respectively, over the previous two years.
“Resolving homebuyer concerns is one of the main functions of the Real Estate (Regulation and Development) Act, which it has been demonstrably fulfilling,” said Anuj Puri, Chairman – ANAROCK Group. “More than 1.16 lakh consumer complaints have been handled by the various State and Union Territories’ RERA bodies, according to official data from MoHUA. Over the previous two years, the pace of project and real estate agent registrations was not slowed down,” he added.
Almost all States / UTs have notified rules under RERA. The North-Eastern State of Nagaland is still under process to notify its rules, while West Bengal – which earlier enacted its own legislation – was challenged on this by MoHUA before the Supreme Court. In March 2022, the apex court struck down the West Bengal Housing Industry Regulation Act, 2017 (WBHIRA), stating that it overlapped with RERA, which was enacted a law in the Parliament.
With 32 States/UTs having a functional Real Estate Regulatory Authority, Ladakh, Meghalaya, Nagaland, and Sikkim are yet to establish theirs. Real Estate Appellate Tribunals have been set up in 28 States/UTs, with Arunachal Pradesh, Jammu and Kashmir, Ladakh, Meghalaya, Mizoram, Nagaland, West Bengal, and Sikkim in progress.
Websites under RERA provisions are operational in 30 States/UTs, while Arunachal Pradesh and Manipur are in the process of implementation.
Moreover, adjudicating officers have been appointed in 26 States/UTs, with 10, including Arunachal Pradesh, Bihar, Manipur, Meghalaya, Nagaland, Sikkim, Uttarakhand, West Bengal, Jammu and Kashmir, and Ladakh yet to do so. The Supreme Court’s decision in March 2022 struck down the West Bengal Housing Industry Regulation Act, 2017, acknowledging its overlap with RERA.
- RECORD RALLY: REALTY PROJECT REGISTRATIONS UNDER RERA TOUCH 1.16 LAKH IN 2 YEARS
With the enactment of the Real Estate (Regulation and Development) Act, 2016, there has been a record-breaking rally in project registrations during the two years from November 2021 to November 2023. The RERA Act during the 2 years saw a surge of 63% in project registrations, which touched the peak high milestone of 1.16 lakh in November 2023, according to data analysed by property consulting firm ANAROCK. Comparatively, the registered projects stood at 71,307 in November 2021.
To contain the rising real estate prices and safeguard the interest of home buyers, the government established RERA or Real Estate (Regulation and Development) Act, 2016, which regulates and tracks the real estate sector in all the states.
The RERA Act makes it mandatory to register a project with RERA, for the launch of any residential or commercial real estate project where the land area is more than 500 square meters. Registering with RERA helps in creating transparency in the implementation of the projects launched.
With 36% of all projects registered under RERA to date across 34 states and UTs, Maharashtra continues to lead the field in project registrations. With a share of 16%, Tamil Nadu is next, followed by Telangana and Gujarat, which have shares of roughly 7% and 11%, respectively.
Since it was put into effect, RERA has been gaining increasing traction, particularly in terms of handling consumer complaints among various states and UTs. According to data from the Ministry of Housing and Urban Affairs, as of November 28, 2023, the relevant state authorities had resolved up to 1,16,300 cases.
“Resolving homebuyer concerns is one of the main functions of the Real Estate (Regulation and Development) Act, which it has been demonstrably fulfilling,” said Anuj Puri, Chairman – ANAROCK Group. “More than 1.16 lakh consumer complaints have been handled by the various state and union territories’ RERA bodies. Over the previous two years, the pace of project and real estate agent registrations was not slowed down.”
Out of this, 38% cases (approx. 44,602 complaints) were resolved in Uttar Pradesh alone, followed by Haryana with 20,604 cases (18%) and Maharashtra with 15,423 cases (13%). The three states cumulatively accounted for nearly 69% of the total disposed cases under RERA in the country.
“In fact, over the past two years, project registrations have increased dramatically by 63%. Also, the RERA authorities of various states and UTs have resolved over 37,397 consumer complaints in this period,” said Puri. “Uttar Pradesh has resolved the highest number of cases. Considering how severely Noida and Greater Noida in UP had been impacted by unscrupulous players, this is noteworthy.”
Registrations for projects and real estate agents under RERA have also been increasing steadily. Almost 1,16,117 projects and 82,755 real estate brokers nationwide were registered under RERA as of November 28, 2023. Approximately 71,307 projects and 56,177 real estate agents were registered over the same period in 2021. This represents a 63% and 47% growth, respectively, over the previous two years.
Almost all states/UTs have notified rules under RERA. The North-Eastern state of Nagaland is still in the process of notifying its rules, while West Bengal – which earlier enacted its legislation – was challenged on this by MoHUA before the Supreme Court. In March 2022, the apex court struck down the West Bengal Housing Industry Regulation Act, 2017 (WBHIRA), stating that it overlapped with RERA, which was enacted as a law in Parliament. Thirty-two states/UTs have set up a Real Estate Regulatory Authority since implementation, and of this at least five are interim.
Ladakh, Meghalaya, Nagaland and Sikkim are yet to establish Real Estate Regulatory Authorities. Twenty eight States/UTs have set up Real Estate Appellate Tribunal for disposing of consumer complaints, including four as interim. Arunachal Pradesh, Jammu and Kashmir, Ladakh, Meghalaya, Mizoram, Nagaland, West Bengal and Sikkim are still underway to establish theirs. Regulatory authorities of 30 States/UTs have operationalized their websites under RERA provisions. Arunachal Pradesh, and Manipur are under process to operationalize. 26 States/UTs have appointed adjudicating officers, while 10 States/UTs i.e., Arunachal Pradesh, Bihar, Manipur, Meghalaya, Nagaland, Sikkim, Uttarakhand, West Bengal, Jammu and Kashmir, Ladakh are yet to do so.
- UP-RERA MAKES THREE BANK ACCOUNTS MANDATORY FOR THE REAL ESTATE PROJECTS
Uttar Pradesh Real Estate Regulatory Authority (UP-RERA) has issued detailed real estate project banks account directions to ensure effective protection the interest of the consumers and utilization of funds strictly as per RERA Act as a guarantee for completion of projects. UP-RERA prohibits promoters from creating lien on the separate account of the project, further prohibiting them from paying any interest or penalty or assured return from this account.
Sanjay Bhoosreddy, chairman, UP-RERA said, “the disclosure of three accounts by the promoter on the web portal of U.P. RERA and proper utilization of funds, more particularly of the funds deposited in the separate bank account of the project, will take care of the time bound completion of the project and the rigorous control mechanisms will ensure transparency and accountability in the management of the accounts of the project. And that any violation of these directions shall be heavily penalized.”
Every project will have a collection account for taking payments from allottees and the promoter must disclose this account in its advertisements, in the allotment letter, agreement for sale and all communications with the allottees.
The promoter must provide standing instructions to the bank for auto-sweep of not less than 70 percent of the amount from the collection account to the separate account and not more than 30 percent to the transaction account of the project. The promoter must submit the particulars of the three bank accounts, namely the collection account, the separate account and the transaction account with registration application of the project.
The money from the separate account can be used only for payment of the cost of land, construction and development of the project. The promoter can pay normal interest against the project loans but no penal or compound interest or interest and compensation payable to the allottees. All the secured and unsecured loan amount to finance the project must also be deposited in the separate account.
No withdrawal from the separate account without submission of the certificates issued by the chartered accountant, the engineer and the architect to the bank and cannot be more than the verified cost of the work completed.
Bhoosreddy added that the authority will be more strict in case of rehabilitation of a project as per section-8 of the RERA Act and in such cases the promoter shall have to deposit 100 percent of the money collected from the allottees as well as all the money raised through loan for construction and development work in the separate account of the project. The promoter must also be required to inform all the allottees of the project about making the payments in the separate account only.
- FROM FLOOD COMPENSATION TO PARKING RULES: KARNATAKA RERA’S TOP FIVE GAME-CHANGING ORDERS FOR BENGALURU IN 2023
Among the several orders passed by Karnataka Real Estate Regulatory Authority (KRERA) in 2023, many left an unprecedented impact on the real estate sector in the city. Here are the top 5 KRERA orders that impacted the real estate sector in Bengaluru. In July, KRERA passed an order that flooding in an apartment complex cannot be considered an “act of God” and ordered the builder to pay Rs 1 lakh to homebuyers in the project as compensation.
This comes at a time when Bengaluru continues to make the headlines for massive flooding across the city. Despite all the technological aids and scientific studies, it all boils down to two old culprits – urbanisation and encroachments.
In another major order, KRERA noted that as per the deed of cancellation, the amount refunded to the homebuyer was towards a full and final settlement between the parties.
Thus as per the deed of cancellation, the homebuyers and the developer agreed that all rights, liabilities and interest with respect to the property would be considered to have been settled. Accordingly, KRERA said the developer refunded the principal amount as a final settlement, which the homebuyer accepted.
“Thus his claim for delayed interest is hit by the doctrine of estoppel and cannot be considered,” the regulator said. Estoppel is the principle that prevents one person from contradicting an action or statement from the past.
Lakhs of homebuyers walk a treacherous path from booking a house to moving in, one that runs through several government offices, tribunals and courts. As many as 500,000 homes worth Rs 4.48 lakh crore are stuck across seven micro markets in the country, according to reports.
In a major relief to the homebuyers, KRERA has held that developers cannot claim delay interest from homebuyers for non-payment of dues until they have furnished valid documents like building plans and project clearances.
Passing an order in favour of a homebuyer, the Authority found that most of the documents provided by the developer, including the Bengaluru Development Authority (BDA) modification plan and elevation plan, were either expired or invalid.
Thus it prevented the developer from collecting delayed interest for non-payment of dues until handing over of the documents.
With the real estate sector in Bengaluru expanding gradually, vehicle parking became a major challenge in Bengaluru. Developers started cutting down on parking spaces, to be able to sell more space.
However, KRERA intervened and set down a precedent that the minimum parking space provided for allottees should not be less than 18 square metres (3m X 6m), in accordance with the local municipal bylaws in Bengaluru.
While a project is delayed, often homebuyers, under the burden of financial stress, move into the project even without an occupancy certificate (OC).
However, KRERA has already made it clear that homebuyers who have accepted possession before the occupancy certificate (OC) has been issued will not be entitled to compensation in case of delayed possession.
“The Bruhat Bengaluru Mahanagara Palike Act clearly mentions that possession should be taken only after the OC is obtained. In cases where homebuyers take possession without the OC, not only the developers but also the homebuyers are violating the contractual agreement signed between them. In such cases, developers will always capitalise on the situation,” Anil Kalgi, president of the Bangalore City Flat Owners’ Welfare Association, said.
RERA CASE LAWS
1. Pre-registration sales to be penalized
To protect home buyers from being cheated, the Gujarat Real Estate Regulatory Authority (Rera) will take suo moto action and penalize builders engaging in soft launches or pre-Reramarketing and taking bookings without obtaining the mandatory Rera registration number.
Many developers sell units at relatively low rates before they get Rera approval. This contravenes Rera regulations, which stipulate that developers cannot sell such units. It also leaves the buyers vulnerable as they will not be given protection under the law.
Rera officials, who have received complaints about these practices will monitor social media platforms for such activities.
A senior Rera official stated, “A developer cannot market a project before registering it with Rera. However, we have observed widespread instances where developers promote their upcoming projects without obtaining a Rera registration number. We are scrutinizing social media to identify such developers and have already issued notices.
“According to the act, violating Section 3, which requires prior registration before selling and marketing a project, can result in penalties of up to 10% of the estimated project cost. In 2021, we imposed a penalty of Rs 10 lakh on a developer for marketing a project in the GIFT City before obtaining registration to set an example.”
In some cases, developers have collected cash from investors or buyers by offering lower rates for the houses if bought before Rera registration.
“In the past few years, we have seen an increase in such activities. We have even come across cases where builders not only get cash but also cheques paid into accounts that are not registered with Rera because they haven’t received approval from the body. Some new builders, launching projects in competitive markets, offer cheaper rates to investors before obtaining Rera approval, mainly to secure liquidity for the project. However, this has led to disputes with investors.” Another official noted,
The official added, “People who invest in projects before Rera approval are forgoing the protection offered by the law in case the builder resorts to malpractices.”
- Source of the information: Click Here
- Compliances under RERA
- Promoters must ensure compliance of issued directions to avoid penalty: UP-R ..
Uttar Pradesh Real Estate Regulatory Authority (UPRERA) on Friday reviewed the status of the directions passed recently and found that promoters have indulged in non-compliance of its directions besides granting them sufficient time.
During the review, it was found that out of 1,810 promoters, only 666 promoters have uploaded details of director for correspondence. The authority has issued approximately 130 notices to promoters in violation of advertisements rules.
Hence, UP-RERA has issued an office notice under the provisions of section-37 of the RERAAct to promoters of registered projects and expressed its displeasure about non-execution of passed direction in a time bound manner.
Also, the authority has instructed to ensure the execution of all directions without further delay. According to the provisions of the RERAAct, non-compliance of passed directions from RERA is a punishable act and promoters will be responsible for this.
The authority, using its powers under section 63 of the RERA Act, may take strict action and impose appropriate amount of penalty.
Apart from this, the directions include providing complete details in project registration applications, all three bank accounts with standing instructions to banks to speed up project registration process, utilize model agreement for sale uploaded on the portal for agreement with consumers, uploading all QPRs for approval of extension applications, etc.
- Information Source: Click Here
Interpretation / Process Segment
- Section 18(1)(a) of the RERA states that 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 as the case may be, duly completed by the date specified therein, he shall be liable to refund the amount received by him if the allottee wants to withdraw from the project of paid interest for every month of delay till hand over of the possession.
- According to Section 8 of RERA, the real estate regulatory authority (RERA) must take the necessary steps to facilitate the refund of the amounts paid by the allottees along with interest if the registration of a real estate project is revoked or has expired due to the promoter’s failure to complete the project or for any other reason. This clause’s goal is to protect homebuyers from being abandoned if the promoter fails to finish the project or has their registration revoked. The RERA authority must intervene in this situation and take the appropriate steps to safeguard the interests of the homebuyers.
CASE LAWS RELATED TO SECTION 8 OF RERA
The first remedy accessible to homebuyers is provided by Section 8 of RERA, which was passed by the Legislature in response to instances in which construction projects were abandoned by the builders. According to this Section, the RERA Authority has the authority to work with the State Government to find a way to move stalled projects toward completion. In accordance with this rehabilitation strategy, either the State Construction Company (such as the NBCC, which completed the Amrapali projects) or the Association of the Buyers of a specific project may assume control of the project and carry out the construction independently under the supervision of the RERA Authority.
Section 8 of RERA, which addresses the obligation of authority following the expiration or cancellation of registration, is one of its key sections.
- RERA – Corporate Dose
| Sl. | Corporate Update | Link |
| 1 | Understanding RERA Telangana For Registration And Complaints | Click Here |
| 2 | RERA gains momentum in addressing consumer complaints across India | Click Here |
| 3 | Maha-RERA issues notice to 34 developers for advertising sans registration number | Click Here |
| 4 | SC issues notices to states which are yet to establish RERA | Click Here |
| 5 | Actual class of allottees & their treatment: RERA | Click Here |
- 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.
The authors can be approached at csrajatagrawal@gmail.com or cslalitrajput@gmail.com.
| Prepared & Compiled By: |
| CS Rajat AgrawalCompany SecretaryM. No.: +917003899800E-mail: csrajatagrawal@gmail.com LinkedIn: www.linkedin.com/in/csrajatagrawal/ |
| CS Lalit RajputCompany SecretaryCell: +91 8802581290 Email: cslalitrajput@gmail.com LinkedIn: www.linkedin.com/in/cslalitrajput/ |
| “All our dreams can come true if we have the courage to pursue them.”Walt Disney |