The RERA Im­passe

The le­gal va­lid­ity of RERA has been the cen­ter of dis­cus­sion ever since it came into ex­is­tence. Sudip mul­lick, Part­ner, Khai­tan& co. in con­ver­sa­tion with shub­ham singh ex­plains the le­gal im­pli­ca­tions of Real Es­tate Reg­u­la­tory Act (RERA).

Realty Plus - - Contents -

for a reg­is­tered realestate project, the ju­di­cial ju­ris­dic­tion be­longs only to Rera

and not any civil court. but a crim­i­nal com­plaint can still be filed by the ag­grieved per­son, though not ad­vis­able.

Q In the cur­rent sce­nario for a real-es­tate buyer or in­vestor what will be ap­pli­ca­ble- RERA or MOFA? The on-go­ing projects manda­to­rily have to reg­is­ter with RERA. The pe­nal pro­vi­sions of MOFA (Ma­ha­rash­tra Own­er­ship of Flats Act) rules are ap­pli­ca­ble up to the date of reg­is­tra­tion and there­after RERA comes in force. The pro­vi­sions of MOFA (State Act) which are in­con­sis­tent with the pro­vi­sions of RERA are over­rid­den by pro­vi­sions of RERA (Cen­tral Act). How­ever, the chal­lenge is to co­or­di­nate and cor­re­late the pro­vi­sions of MOFA and RERA al­though, RERA takes prece­dence over MOFA. Un­der MOFA, a con­sumer can file crim­i­nal pro­ceed­ings against a de­vel­oper over non-com­pli­ance or project de­liv­ery is­sues. In my opin­ion, giv­ing a crim­i­nal an­gle to civil of­fence is not ap­pro­pri­ate. The over­all rem­edy lies in civil pro­ceed­ings. The ju­ris­dic­tion of RERA starts from the reg­is­tra­tion of the project and there are penal­ties on the de­vel­oper for non-reg­is­tra­tion of projects by the given date. Once the project gets reg­is­tered un­der the Act, the au­thor­ity is re­quired to dis­pose it un­der 60 days. If it can­not, it is re­quired to record its rea­sons for the de­lay. the chal­lenges De­vel­op­ers Are fac­ing With the Rera com­pli­ances If there is a de­lay in the project, de­vel­op­ers are re­quired to pay 10% in­ter­est to the buy­ers on the in­vested amount. If the buyer chooses to let go of the project, he will get the prin­ci­pal amount as well as the in­ter­est on the money till that time as com­pen­sa­tion. The ad­ju­di­cat­ing au­thor­ity de­cides the quan­tum of com­pen­sa­tion to be given to the buyer. But, there should be a mech­a­nism to an­a­lyse the cause of de­lay – whether it’s solely the de­vel­oper or var­i­ous ex­ter­nal fac­tors which are be­yond the con­trol of de­vel­op­ers, A lot of de­vel­op­ers en­ter into a joint de­vel­op­ment pro­cesses which can be rev­enue or area share ba­sis. This may raise com­pli­ca­tions for them. Also, de­lays in govern­ment ap­provals, sanc­tions etc. also can lead to de­lays in com­ple­tion of projects. Though a de­vel­oper can bring this to the no­tice of RERA au­thor­ity, but RERA doesn’t have much power over other au­thor­i­ties. Also if the de­vel­op­ment is in phases with a lot of com­mon ar­eas, the in­for­ma­tion gets dif­fi­cult to up­load on the RERA web­site. This is one of the rea­sons de­vel­op­ers are reg­is­ter­ing their project phase wise or as in­di­vid­ual build­ings.

Im­pli­ca­tions of RERA on the real es­tate mar­ket Go­ing for­ward, RERA will bring a very struc­tured growth. Prin­ci­pally the de­vel­op­ers will be­come project man­agers. Fi­nan­cial in­sti­tu­tions will feel more con­fi­dent of lend­ing & in­vest­ing money in real-es­tate and con­struc­tion com­pa­nies will get in­volved on EPC ba­sis.rera will def­i­nitely bring the re­quired dis­ci­pline that this in­dus­try was wait­ing for.

sudip Mul­lick

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