Kiran Kumar R
Much awaited RERA is now a law in the state of Karnataka, as the state government notified the rules with cabinet node to it on 5th July 2017 in the official gazette notification, while 13 other states have also notified their respective rules.
The Real Estate (Regulation and Development) Act 2016 or popularly known as RERA Act, which was in the news for a long time is now in effect. Thecentral act came to force on 1st May 2017 in all the states and union territories of India.(RERA) Bill was introduced by the then UPA government in 2013 andthe same was passed by Parliament in March 2016.
The Bill included Real Estate sector as industry and brought all projects both commercial and residentialunder this act.RERA Act which seeks to protect the interest of the home-buyers at large as well as help boost investments in the real estate industry. It brings about a complete change in the approach from an unorganised to organised sector in Indian real estate chapter, giving it an edge to both builders, real estate agents and the consumers.
This Real Estate Act makes it mandatory for all commercial and residential real estate projects where the land is over 500 square metres, or 8 units/ apartments and 60% under-construction projects, to register with the Real Estate Regulatory Authority (RERA) under Section 4. Without such registration the builder or developer cannot go ahead with any kind of promotional activities, advertise, marketing, booking, offer for sale, sales of the real estate projects in any planning area, in order to provide greater transparency in project-marketing and execution,which is laid down in Section 3 of the Act.The application for registration will be filed online and the Authority after evaluating will grant the registration for the respective project within a stipulated time frame of 30 days. On successful registration with the RERA Authority the promoter will be given a user login Id and password along with a dedicated web page which as to be updated with all the required details of the project and the same will have to be updated every 3 months. A tough prosecution for failure to register, a penalty of up to 10 percent of the project cost or three years’ imprisonment may be imposed on the promoter.
Meanwhile escrow account is the main highlight of RERA Act, where total transparency is maintained by the promoter in handling the project finances with whichno buyers money invested in a particular project will be diverted to other projects or businesses by the promoter. Such separate escrow bank account for every individual project shall be maintained by the promoter with 70% of the money collected from the home buyer in the account.
Unlike in the past many wilful defaulting builders and developers had collected payments but had left projects incomplete making Complete life savings of people many of whom had to finance their needs by taking expensive loans are washed away and making lives miserable for thousands without a roof on their head. With RERA, now the home buyers can approach the RERA Appellate Tribunal which is constituted exclusively to take up these kinds of cases and the complaints will be disposed of within the said period of 60 days.
Some of the highlights of the RERA Act
n The Karnataka State rules will be applicable for all on-going and under-construction commercial and residential project which is under 60% completed.
n The promoter/ builder will have to register all under-construction projectswhich is under 60% completed, with the regulatory authority within 3 months of the implementation of the Act.
n The promoter/ builder should disclose all brief details of projects launched by him in the last 5 years, total cost of it and the completion status.
n The promoter/ builder will have to place 70% of the money collected from the home buyer in an escrow account for each individual project or phase.
n Under Section 9 of the Act, any individual agents or firm will have to pay a prescribed registration fee and register with the Authority once in 5 years, to facilitate the sale or purchase in any new project from the developer and by which the agent will receive a single registration number from the Authority.
n Under section 4 of the Act, registration will be mandatory for all commercial and residential real estate projects where the land is over 500sqm or includes eight apartments with projects which are under 60% completed.
n Each phase will be considered as a stand-alone real estate project and the promoter will have to obtain the registration certificate for each phase of the project.
n Flouting the rules will attract a penalty up to 10% of the project cost or imprisonment or both.
The writer Kiran Kumar R is an Advocate & RERA Consultant