RERA - The Real Estate ( Regulation and Development ) Act : 2020

Wednesday, 21 October 2020

File Application for Kerala - RERA before 31st October 2020 to Avoid Higher Penalty

Kerala Real Estate Regulatory Authority has issued order/circular on 29th and 30th September 2020 in relation to –

a. Delayed Submission of Application for Registration of Ongoing Projects-Penalty under Section 59 of the Act, 2016 - reg: Dated 29-09-2020

b. Penalty for delayed submission of application for registration of ongoing projects - projects for which occupancy certificate have already been issued - reg: Dated 30-09-2020

Earlier Authority had extended the time limit for submission of application for registration of ongoing projects in Form A1 till 30th September on account of Covid 19 pandemic, lockdown and instability due to unlocking stages which adversely affected the real estate sector and have restricted the functioning of office of the authority.

Though previously authority vide public notice on 27th December 2019 has informed that ongoing projects shall be registered within 3 months from 1st January 2020 and real estate projects that have obtained occupancy certificate prior to 31st December 2019 need not to register under Kerala RERA.

But now after reviewing corona impact on the real estate market and buyers, Kerala Real Estate Regulatory has extended the date of submission of Application for Registration of ongoing Projects till 31st October 2020 with 10% application fee as a penalty, 30th November 2020 with 40% application fee as a penalty, 31st December 2020 with 100% application fee as a penalty and from 1st January 2021 as Decided by Authority on Case to Case basis, which may Extend up to 10 percent of the Projects Cost as per Section 59 of the Real Estate (Regulation & Development) Act, 2016.

RERA Consultants LLP having experience and expertise in advising real estate promoters in filing application for registration of Real Estate Project Kerala State in a professional way. Our Kerala office is situated at RERA Consultants LLP, No. 39/2359, Opp. Lotus Club, Warriam Road, Kochi – 682016. Contact Mr Krishna Prasad - 91 484 4060899, 81380 10899 or write to us on rerapromo@reraconsultants.in

Authored By: Shweta Kaushik, RERA CONSULTANTS LLP

Disclaimers

This blog underlines the information as per issued notice by Kerala Real Estate Regulatory Authority in their website - https://rera.kerala.gov.in/

We recommend the Promoters to seek the assistance of the Professionals involved in the real estate / RERA practice in case of any queries and clarifications.

Contact

For any other details, clarifications, assistance, advice and other services, please visit www.reraconsultants.in or can get in touch with us at 080 – 2223 3003 or email to rerapromo@reraconsultants.in

Wednesday, 2 September 2020

ANOVERVIEW OF THE AGREEMENT FOR SALE NOTIFIED UNDER THE KARNATAKA REAL ESTATE(REGULATION AND DEVELOPMENT) RULES, 2017

AN OVERVIEW OF THE AGREEMENT FOR SALE NOTIFIED UNDER THE KARNATAKA REAL ESTATE (REGULATION AND DEVELOPMENT) RULES, 2017

Adv. Hitendra V.Hiremath

(Authored by Mr. Hitendra V.Hiremath, presently works as Legal Consultant with RERA Consultants LLP at Bengaluru, Karnataka, India)

An Agreement for Sale is an agreement entered into between the promoter and the allottee as per Section. 2 (c) of The Real Estate (Regulation and Development) Act, 2016 ("Act"). The definition doesn't actually define an Agreement for Sale, however, the definition can be deduced keeping in mind the objective of the Act, an Agreement for Sale is a binding legal contract entered between the Promoter and Allottee to sell an apartment, building or plot as the case may be. The Agreement for Sale is also required to be notified under the respective state rules and all Agreement for Sale being entered between the promoter and allottees should necessarily adhere to the notified drafts. Further, the Housing Department, Government of Karnataka through its notification dated 12/06/2020 bearing No. DOH 8 RERA 2017 has notified the Agreement for Sale in Annexure – A under newly inserted Rule 8A of Karnataka Real Estate (Regulation and Development) Rules, 2017 ("Rules"). After notification of the Agreement for Sale and as per Section.13 of the Act it is now mandatory that the Promoter has to enter to Agreement for Sale in the format as prescribed for the sale of apartments, plots and villas as the case may be.

The key highlights of the notified Agreement for Sale in Karnataka are as follows:

1. The Promoter have to strictly follow the approved plans for the project and units proposed to be sold and any changes in the approved plans can be undertaken with 2/3^rd consent of the allottees of the Project and in strict compliance of Section. 14 of Act.

2. The total price of the apartment /plot has to be mentioned along with detailed breakup of amounts such as cost of apartment/plot, cost of exclusive balcony/verandah/open terrace areas for apartment, proportionate cost of common areas, preferential location charges, taxes, maintenance charges.

3. Details of apartment / building shall be Carpet Area, common area etc (compare to the practices of super built up area)

4. Allottees have to pay the amounts to Promoter as per the Schedule Payment Plan, failure to pay the same the Promoter can levy interest for delay in payment of amounts.

5. The apartment/plot as sold shall not be mortgaged by the Promoter nor should create any charge.

6. The Promoter has to declare and mention the handover date of possession of apartment/plot as the case may be to allottee along with common areas and common amenities and facilities to the association. Further, if the possession is delayed due to force majeure conditions then the reasonable extension is allowed, however if the Promoter is unable to complete the project due to Force Majeure conditions and that the contract cannot be implemented then the allotment stands terminated and within 60 days the amounts has to be refunded to allottee.

7. The Promoter has to give a notice in writing after obtaining the Occupancy Certificate to allottee to take possession of apartment/plot within 60 days from date of occupancy certificate and execute the conveyance deed as per the local laws, however if the allottee fails to possession within 60 days then the allottee shall be liable to pay the maintenance charges.

8. If in case the allottees initiates the cancellation of the allotment of the apartment/plot then the Promoter shall withhold the booking amount as forfeiture fee and shall refund the remaining amounts within 60 days from date of cancellation.

9. The Promoter is liable for a period of 05 (five) years for any structural defect, defect in workmanship, quality or provision of services or any other obligations as agreed by the Promoter under the Agreement for Sale.

10. The Promoter shall now have to compulsorily declare that the project is now in accordance with the provisions of Karnataka Apartment Ownership Act, 1972 and Karnataka Ownership Flats (Regulation of the Promotion of the Construction, Sale Management and Transfer) Act, 1972 which means that the allottees shall also have to follow and comply with all the provisions of the aforementioned acts.

11. There are many more clauses of important and relevance for all the stake holders viz., Allottees, Promoters, lenders, professionals while entering into Sale Agreement.

12. The Promoter and Allottee can enter any additional clauses, however the said clauses shouldn't be in contravention of the provisions of the Act and Rules.

Further, as per Section.13(1) of the Act, Agreement for Sale needs to be executed with allottee if the promoter intends to accept a sum more than 10% (ten percent) of the cost of the apartment/plot and such that Agreement for Sale has to be registered.

Further as per Section 61 of Act, if the promoter contravenes any provisions or rules then shall be liable to a penalty extending upto five percent of the estimated cost of real estate project as determined by the authority.

As the notified Agreement for Sale has inserted a note stating that any additional clauses can be added by the Parties, however not being in contravention to provisions of Act and Rules, the Parties can insert clause such as Assignment in order to avoid the process of cancellation and reallotment. However, the ambiguity and grey areas still remains unanswered over cancellation of Agreement for Sale due to death of Allottee/s as the same will be registered.

DISCLAIMERS

· This post underlines the information as per the notified Agreement for Sale as available in https://erajyapatra.karnataka.gov.in/WriteReadData/2020/344.pdf last visited on 29th August, 2020 at 08:00 pm; and

· We recommend the Promoters to seek the assistance of the Professionals involved in the real estate practice in case of any queries and clarifications.

CONTACT

For any other details, clarifications, assistance, advise and other services, please visit www.reraconsultants.in; or can get in touch with us at 080 – 2223 3003 or email to legal@reraconsultants.in

AN OVERVIEW OF THE AGREEMENT FOR SALE NOTIFIED UNDER THE KARNATAKA REAL ESTATE (REGULATION AND DEVELOPMENT) RULES, 2017

Adv. Hitendra V.Hiremath

(Authored by Mr. Hitendra V.Hiremath, presently works as Legal Consultant with RERA Consultants LLP at Bengaluru, Karnataka, India)

The key highlights of the notified Agreement for Sale in Karnataka are as follows:

3. Details of apartment / building shall be Carpet Area, common area etc (compare to the practices of super built up area)

4. Allottees have to pay the amounts to Promoter as per the Schedule Payment Plan, failure to pay the same the Promoter can levy interest for delay in payment of amounts.

5. The apartment/plot as sold shall not be mortgaged by the Promoter nor should create any charge.

11. There are many more clauses of important and relevance for all the stake holders viz., Allottees, Promoters, lenders, professionals while entering into Sale Agreement.

12. The Promoter and Allottee can enter any additional clauses, however the said clauses shouldn't be in contravention of the provisions of the Act and Rules.

DISCLAIMERS

· We recommend the Promoters to seek the assistance of the Professionals involved in the real estate practice in case of any queries and clarifications.

CONTACT

Sunday, 26 July 2020

https://www.reraconsultants.in/whether-it-is-necessary-to-obtain-registration-of-a-project-when-the-promoter-himself-invests-the-funds-required-to-complete-the-project-and-obtains-occupancy-certificate.php

WHETHER IT IS NECESSARY TO OBTAIN REGISTRATION OF A PROJECT WHEN THE PROMOTER HIMSELF INVESTS THE FUNDSREQUIRED TO COMPLETE THE PROJECT AND OBTAINS OCCUPANCY CERTIFICATE ?

by E Suhail Ahmed

Whether it is necessary to obtain registration of a Project when the Promoter has completed the construction and obtain occupancy certificate ?

E. Suhail Ahmed

Partner- TRIALBASE,

Advocates Legal Consultant-RERA CONSULTANTS LLP

The above question is an often repeated question from time to time that the Promoters ask to which the answers were discussed in several fora. However, the question still lingers in the minds of the Promoters.

The answer to the said question is "YES"- it is necessary to register a Project even when the Promoter himself has invested all the funds to complete the Project and wants to sell only after obtaining occupancy certificate.

Under the Act, there is no distinction made as to time when the Promoter proposes to sell and when the new Project is required to be registered. The mandate under Section 3 of the Act is very clear that a Promoter shall not 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.

From the above, it can be made out that on and from the date of commencement of the act, it has now become mandatory for a Promoter to register the real estate Project before doing any of the aforesaid activities in relation to the Project. The Act does not stipulate as to whether the Project has be registered immediately after the plan sanction or at the time when the Promoter proposes to carry out the aforesaid activities in relation to the Project.

From my experience in dealing with the matters relating to registration of Projects and the method in which the Real Estate Regulatory Authorities are dealing with the registration of the Projects, it can be said that the Promoter should register the Project immediately after obtaining sanctions, failing which the authority may take action for non-registration of the Project if the registration is delayed up to the date of obtaining completion certificate or occupancy certificate. This stand is being taken by the authorities in view of the fact that it would not be possible for the authorities to monitor whether the Promoter s of the Projects for which the registration is not obtained are actually being advertised or marketed or sold, which view is rightly being taken by the authority, as it may become impossible to keep track of all the Projects in a particular State.

A Promoter of a Project would be of the view that since there are no compliances required to be fulfilled by him/her/it if the Promoter has invested all the funds necessary for completion of development of a Project and no sales in the Project are undertaken. If this view is to be accepted, then would become impossible for the regulatory authorities to make sure that the Promoter s do no contravene with the other provisions of the Act and in the even such Promoter s actually go on sale, market and sell the apartments or plots in any Projects and the Allottees are forced to take recourse against such Promoters, in which event, the regulatory authorities would find it difficult to take action as against such Promoters.

In a case where the Promoter is investing all the funds required to complete the Project and does not propose to market or sell the Project, the only formality for the Promoter to comply would be to obtain registration for the Project, Post Registration and Quarterly updates and no other compliances would be required to be fulfilled including the compliance in relation to the financial management of the Project being depositing of 70% of the amounts collected in the Project in such account and upon every withdrawal obtain certificates from the Chartered Accountants, Architects and Engineers. When such compliances would not be required when the Promoter is investing all the funds, it is advisable that the Promoter obtains registration for the Project in order to avoid any complications in future.

https://www.reraconsultants.in/updates-under-rera-quarterly-updates-under-rera.php

UPDATES UNDER RERA, QUARTERLY UPDATES UNDER RERA

by Vinay T

Vinay T

Partner- Venu & Vinay, Chartered Accountants,

Financial Consultant-RERA CONSULTANTS LLP

Every promoter after registration of their project under RERA, shall update on the Authority website complete details of the project including list of number and types of apartments or plots, booked, no of garages booked, list of approvals taken and the approvals, NOC obtained and development, construction status, Including Photos of stage of development, pending litigations and status of the same as per Sec 11 of RERD Act

In addition to above, Promoter shall obtain and update the quarterly certificates received from professionals viz., CA's, Engineer, Architects certifying the

● Status of development work completed (percentage of completion of project),

● Money collected from the Allottees, money spent on project, eligible funds to withdraw from RERA project bank account based on % of completion of development of the project as per Sec 4(2)(l)(D) of the Act –

● Provided further that the amounts from the separate account shall be withdrawn by the promoter after it is certified by an engineer, an architect and a chartered accountant in practice that the withdrawal is in proportion to the percentage of completion of the project

These Quarterly updates will help the buyers / Allottees to know the status of development of project from time to time. It will act as guidance for new buyers to check the movement of units in the project from quarter to quarter before they invest into the project. Buyers can know –

● status of development work with photographs

● no of units sold / booked

● status of various permissions / NoC's

● Litigations and status of litigations

● Modification of plan etc.,

● any other information as may be required to publish

Authority can know the development activity of the project apart from % of completion of project from time to time.

These updates shall be made till promoter complete the project and submit Occupancy Certificate at the end of the project having completed all development work as promised / committed

The quarterly update is mandatory as per Act and Rules, failing which authority may levy penalty as per Sec 60 of the RERD Act, which may extend upto 5 % of estimate cost of the real estate project

At broader level following information, documents, details shall be uploaded

1. Promoter Details – KYC

2. Project Development Details, Schedule

3. Sanctions / NOC's

4. Litigations

5. Professional Certificates

6. Latest Financial statements

7. Brochures / advertisement

8. Brochures / advertisement

9. Authorised signatory if any

10. Company member details

11. Project Schedule – of all development activities

12. Project Cost Details (including TDR)

13. Litigation Details

14. Modification to plan etc

15. Association of Allottees

Section 11 of the Act – FUNCTIONS AND DUTIES OF PROMOTER

The promoter shall, upon receiving his Login Id and password under clause (a) of sub-section (1) or under sub-section (2) of section 5, as the case may be, create his web page on the website of the Authority and enter all details of the proposed project as provided under sub-section (2) of section 4, in all the fields as provided, for public viewing, including—

1. Details of the registration granted by the Authority

2. Quarterly up-to-date the list of number and types of apartments or plots, as the case may be, booked

3. Quarterly up-to-date the list of number of garages booked

4. Quarterly up-to-date the list of approvals taken and the approvals which are pending subsequent to commencement certificate;

5. Quarterly up-to-date status of the project; and

● Such other information and documents as may be specified by the regulations made by the Authority.

https://www.reraconsultants.in/role-of-professionals-charted-accountscas-engineer-architects-under-rera.php

ROLE OF PROFESSIONALS CHARTED ACCOUNTS(CA'S),ENGINEER, ARCHITECTS UNDER RERA

by Vinay T

CA's, Engineer, Architects Professionals play a prominent role under RERA. All promoters shall obtain from these 3 professional's certificates from time to time to withdraw the money from the project Bank Account based on % of development of the project.

1. The engineer shall certify that the items shown in the cost of construction is matching to the physical condition at the site of the real estate project;

2. The architect shall certify that the physical condition at the site is built as per the sanctioned plan; and chartered accountant shall certify the cost incurred on construction cost and land cost;

3. The chartered accountant shall also certify the proportion of the cost incurred on construction and land cost to the total estimated cost of the project

Further few states have notified the drafts of the certificates along with guidance for issuance of these certificates.

We recommend each professional to go through the provisions of the Central Act and State Rules before issuance of Certificate. Few states have separate compliance and additional certifications based on type of project. E.g, Karnataka, Telangana etc., has a provision of bringing back unutilized funds within a period of three months from date of an application for registration of the project with the Authority, deposit in the separate bank account, seventy per cent of the amounts already realized from the allottees, which have not been utilized for construction of the project or the land cost for the project as required under sub-clause (D) of clause (l) of sub-section (2) of section 4

These certificates may be published online by the authorities and can be accessed by Allottees of projects. Follow best practices while issuance of certificates -

1. Don't be biased while issuing report / certificates

2. Don't be under the influence of Promoters

3. Don't be casual on report / certification

4. Collect sufficient documents / information as a working / back up documents

5. If you don't know, ask others

6. If you are not sure - state the fact - report it / Qualify it First time updates under RERA

https://www.reraconsultants.in/advertisement-of-real-estate-project-under-the-provisions-of-the-real-estate-regulation-and-development-act-2016.php

ADVERTISEMENT OF REAL ESTATE PROJECT UNDER THE PROVISIONSOF THE REAL ESTATE (REGULATION AND DEVELOPMENT) ACT, 2016

by Hitendra V.Hiremath

● Authored by Mr. Hitendra V.Hiremath, presently works as Legal Consultant with RERA Consultants LLP and has earlier worked as In-House Counsel at M/s. Shriram Properties Private Limited and thereafter with an investment banking firm Capaegis at Bengaluru, Karnataka, India

What is Advertisement?

Section. 2 (b) of The Real Estate (Regulation and Development) Act, 2016 ("Act") defines advertisement, advertisement means any document described or issued as advertisement through any medium and includes any notice, circular or other documents or publicity in any form, informing persons about a real estate project, or offering for sale of a plot, building or apartment or inviting persons to purchase in any manner such plot, building or apartment or to make advances or deposits for such purposes;

So the definition has made it clear that advertisement includes any mediums i.e., online or print media, used in order to advertise by disclosing the details of the real estate project in order to sell the apartment, plot or building as the case may be.

When Promoters can advertise the Project?

As stipulated under Section. 3(1) of the Act, the promoters of the real estate project are prohibited to advertise, market and thereby book, sell or offer for sale or invite any persons to purchase plot, building or apartment in the project without registering it with the Real Estate Regulatory Authority.

Penalty and Punishment if Promoters advertise Project without registration?

If Promoters advertise, market, book, sell or offer for sale or invite any persons to purchase plot, building or apartment in the project without registering the project with jurisdictional Real Estate Regulatory Authority, then authority as per Section. 59(1) can impose penalty which may extend upto ten percent of the estimated cost of real estate project, failure to remit the penalty imposed then as per Section. 59(2) of the Act, the Promoter shall be imprisoned for a term which may extend upto three years or with fine which may extend up to a further ten percent of the estimated cost of the real estate project, or with both.

What Advertisement materials constitute?

Advertisement materials includes any materials describing the details of project which is marketed and advertised through the Short Message Service (SMS), e-mails, hoardings, prospectus, brochures, newspaper, leaflet, radio, television, social media platforms, websites and/or any other forms of media.

What should the Advertisement materials to include?

As stipulated under Section. 11(2) of Act, all advertisement materials must include the registration number of the project allotted by the Real Estate Regulatory Authority with website of such authority along with such other necessary information incidental thereto. If promoter fails to follow the guidelines as per Section. 11(2) and thereby contravenes, then the authority under Section.61 shall impose a penalty which may extend up to five percent of the estimated cost of the real estate project.

Apart from this the Advertisement materials must be clear and Promoter has to adhere to the following:

● Should not make false/misleading representation about the project.

● The contents must be near to actual.

● Testimonials shall be original and genuine.

● Specifications as mentioned under the marketing materials shall form part of Agreement for Sale to be executed with Allottee/s.

Obligations of Promoter in case of veracity of Advertisement?

As stipulated under Section.12 of the Act, if any person makes any advance on the basis of the information as per the advertisement or prospectus and sustains any loss or damage due to any false and incorrect information then he shall be compensated by the promoter of the real estate project.

The person, who is affected by such false advertisement, is entitled to withdraw from the project and his investment has to be returned with interest at such rate as may be with the compensation.

Who can hear the matters on veracity of advertisement?

The adjudicating officer appointed shall have the authority to hear the matter and decide the compensation based on the loss or damage sustained due to such false or incorrect information in the Advertisement. (Readers can read the article of the author on Ambit and Powers of Adjudicating Officer under the Act, Available at http://www.reraconsultants.in/2019/03/16/analyzing-the-ambit-and-powers-of-adjucating-officer-under-the-provisions-of-the-real-estate-regulation-and-development-act-2016-and-the-karnataka-real-estate-regulation-and-deve/ )

Cases were penalty imposed?

The Maharashtra Real Estate Regulatory Authority on April 5, 2018 imposed penalty of Rs.50,00,000/- (Rupees Fifty Lakh Only) under Section 61 of Act on Piramal Realty for not mentioning Maharashtra RERA website in an advertisement published in a national daily, the advertisement also carried the project's registration number on the second page instead of the first in "very small" font size. The penalty was imposed for contravention of Section. 11(2) of Act and the order stated:

"…on the front page the promoter has not mentioned MahaRERA registration number at all. The registration number is mentioned on the 2nd page in a very small font/print. In the full page advertisement, the MahaRERA registration number is not accompanied by the website address of MahaRERA." (Source: Money Control, MahaRERA imposes Rs. 50 lakh fine on Piramal Realty, April 6, 2018, Available at https://www.moneycontrol.com/news/business/real-estate/maharera-imposes-rs-50-lakh-fine-on-piramal-realty-2544155.html , last visited on March 23rd, 2019 at 02:25pm)

DISCLAIMERS

● This post underlines the information as per the applicable provisions of the Real Estate (Regulation and Development) Act, 2016; and

● We recommend the Promoters to seek the assistance of the Professionals involved in the real estate practice in case of any queries, clarifications with respect to advertisement of the real estate project.

CONTACT

For any other details, clarifications, assistance, advise and other services, please visit www.reraconsultants.in; or can get in touch with us at 080 – 2223 3003 or email to consult@reraconsultants.in