The Real Estate (Regulation and Development)Act, 2016 (RERA) defines a larger public interest it makes the system of promotion and propagation of Real Estate Projects by the promoter for his business. The RERA was passed because it was felt that several promoters had defaulted and such defaults had taken place prior to coming into force of RERA. The Real Estate plays a catalytic role in fulfilling the need and demand for housing and infrastructure in the country. In this view, the central legislation enacted the RERA in the interest of consumer protection and standardization of business practices in the real estate sector. In this article, we will discuss the registration of a real estate project of which the procedure has been laid down in the central Act and also from the M.P Real Estate (Regulation and Development) Rules, 2017.
Who is Eligible to Register a Project?
As per the Section 2(zk), the person eligible to Register a project is called a ‘promoter’ and the promoter means the following persons or company which you can check out here in this page as provided in the Act.
After the law being enacted a general and genuine question was raised before the Hon’ble Bombay High Court in the case of Lavasa Corporation Ltd. Hicon … vs Girish Vassan Panjwani And Others is that, whether a Real Estate Company as per the ‘Agreement of Lease’ executed wherein, the Real Estate Company being the lessee does give right to the Allottee under Section 18 of the RERA for compensation form the Real Estate Company as raised through a Second Appeal before the Authority. Since the Company had a registration certificate from the RERA but does not consider itself being a Real Estate Company as per the Act because it does not own any land and it acts as a lessee upon which the Real Estate project is to be built.
The facts of the lease agreement were that it has a lease period of 999 years and with the yearly rent of Rs.1/- only. The Single Bench of the Hon’ble Bombay High Court held that, if the entire ‘Agreement’ is perused as such, then it becomes apparent on the face of it, that it cannot be termed or treated as an ‘Agreement of Lease’, but, in its real purport, it is an ‘Agreement of Sale’. The very fact that more than 80% of the entire consideration amount is already paid by the Allottee to the Promoter and the lease premium agreed is only of Rs.1/- per annum, including the clause relating to the period of lease of 999 years, are self-speaking to prove that, in reality, the transaction entered into by the parties is an ‘Agreement of Sale’ and not an ‘Agreement of Lease’; though it is titled as such.
How to Register a Project?
As per the Act, an applicant promoter has the option of registering the whole project or a part of it as per the Section 3 of the Act, which means the promoter can take his project into such phases and register it in that accordingly.
Section 4 of the Act prescribes an application for registration of real estate project with the Real Estate Authority which has been provided in the section as well as additional documents provided by rules and regulations of the Act.
The promoter/applicant in short have to submit to the Real Estate Authority the details of the Company with its Balance Sheet details, the land upon which the project is to be developed, the legal title it holds on the Land, copies of approval and from all the competent authority, Sanctioned Layout of the Plan with the location, plan of work, the carpet area of the project, details of its Real Estate Agent and details of its contractors, architect, engineer and any other persons concerned with the development.
The Application should be submitted in the format as prescribed in rules & regulations three copies as provided in the rules. The Registration fees levied on the applicant/promoter shall be in the following manner and will be the sum of combined:-
- Ten rupees multiplied by the permissible floor area ratio per square meter for all plots in plotted residential projects, including plots for common educational, health or recreational facilitates, excepting green areas and roads or ten rupees per square meter of the proposed carpet area of the residential units and common facilities and other connected constructions in the case of constructed residential projects
- Twenty rupees multiplied by the permissible Floor Area Ration per square meter for commercial plots or plots for any other non-residential projects;
- In case of mixed projects the fee shall be calculated in proportion to the area proposed for residential and non-residential use, provided that educational, health and recreational facilities in a residential or mixed projects shall be treated as residential;
Provided that in case of application for registration of existing incomplete projects under the above rule, the application fee shall be three-forth of the amount calculated as above.
In addition to above application a declaration in Form ‘B’ is to be submitted mentioning the requirements under Section 4(2)(I) which shall declare that the promoter shall not discriminate against any allottee on the grounds of caste or creed or community or any other grounds at the time of allotment of an apartment, plot or building
In case for giving false information in the application, the promoter will be liable to a penalty which may extend up to 5 percent of the estimated cost of the real estate project[Section 60].
Also where any promoter does not registers its real estate project shall be liable for penalty which may extend up to ten percent of the estimated cost of the real estate project and if the promoters does not comply with the orders, decisions or directions for non-registration shall be punishable with imprisonment for a term which may extend up to three years or fine which may extend up to further ten per cent of the estimated cost of the real estate project.
What To Do After Registration?
After the receipt of the application, the authority shall within a period of 30 working days either grant the registration or reject the application. In case of rejection, the applicant will have the opportunity to defend against the causes of rejections.[Section 5]
A Registration certificate is issued by the Authority with a registration number to the promoter. The Registration number will include a ‘Login ID’ and ‘password’ for accessing the website of the Authority and to create his webpage and to fill therein the details of the proposed project.
Upon the registration of a project, the registration number shall necessarily be displayed by the promoter on all advertisements or marketing material related to the project as well as in all the documentation with the allottee.
The Registration number shall be valid for a period as declared by the promoter in completion of the project or the phase of the project. On the lapse of such period, the promoter shall have the right to have an extension of the project or re-registration.[Section 6]
When Registration Gets Canceled?
Who can file a Complaint for Cancelation?
A registration can be revoked by a written complaint before the Authority or the authority can take suo moto action on behalf of or on the recommendation of the competent authority for the revocation of the registration.
Conditions for Cancelation
The conditions upon which cancelation can be initiated:-
- The promoter makes default in doing anything required by or under this Act or the rules or the regulations made hereunder;
- The promoter violates any of the terms or conditions of the approval given by the competent authority;
- The promoter is involved in any kind of unfair practice or irregularities.
– For the purposes of this clause, the term “unfair practice” a practice which, for the purpose of promoting the sale or development of any real estate projects adopts any unfair method or unfair or deceptive practice including any of the following practices, namely:-
- The promoter indulges in any fraudulent practices.
Consequences of Revocation of Certificate:
The Authority upon revocation of the registration [Section 7(3)] –
- Shall debar the promoter from accessing its website in relation to the project and specify his name in the list of defaulters and display his photograph on its website and also inform the other Real Estate Regulator Authority in other States and U.T about such revocation.
- Shall facilitate the remaining development works to be carried out in accordance with the provisions of section 8
- Shall direct the bank holding the project bank account, to freeze the account and thereafter de-freezing of the said account, towards facilitating the remaining development works in accordance with the provisions of section 8.
- to protect the interest of allottees or in the public interest, issue such directions as it may deem necessary.
Upon revocation of registration, the obligation of the authority shall after consultation of the appropriate government to take such action in for carrying out the remaining development works by the competent authority or by the association of allottees or in any other manner, as the authority shall determine.[Section 8].
As rightly state in the case of Mudassar Builders And Developers vs Union Of India upon the question of the validity of Section 6,7 and 8 which was raised that :
There is no expropriation of property, either by the authority or anyone else, upon the lapsing or revocation of registration, as erroneously contended on behalf of the petitioner. On the authority appointing a new entity or person, the person so appointed to carry out the remaining development work is merely an agency engaged by the authority for that purpose and does not become a promoter in place of the original promoter. Under Section 8, the authority has wide powers to take appropriate action. SECTION 18 :
The section is not at all penal in nature and in fact is compensatory. It appears that object and intent of provision is to recompense an allottee for depriving him the use of the funds paid by him. The RERA does not provide any particular rate of interest to be applied and does not levy penal interest at all, and only provides for interest and compensation. Assuming that Section 18 operates retroactively / retrospectively, the Parliament is empowered to enact such a provision having regard to the prevalent situation, including, inter alia, the unequal bargaining power between an allottee and a promoter in the normal course.
Thus, RERA promotes a better and concise way of registration and initiation of a Real Estate Project. The intent of the legislature is clear from the enactment, that in every process from registration to completion of the project the buyer or the allottee has to be protected without damaging the Real Estate activity performed by the promoter. The theme of the registration of a project justifies the beginning of a real estate works on the ground level and the authority and the buyers of such property shall be protected in each level.
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