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As per RERA, what is a real estate project?

Saturday, December 16, 2017
By Ramesh S. Prabhu

Q. If a promoter builds godowns to give to individual purchaser on long term lease basis for say 30-99 years, then will it come under Real Estate (Regulation and Development) Act, 2016 (RERA)?
A.In order to answer the question let us study the definition given in the section 2(d) of the Act which is as under:

“allottee” in relation to a real estate project, means the person to whom a plot, apartment or buildings, as the case may be, has been allotted, sold (whether as freehold or leasehold) or otherwise transferred by the promoter, and includes the person who subsequently acquires the said allotment through sale, transfer or otherwise, but does not include a person to whom such plot, apartment or building, as the case may be, is given on rent;'
Thus, if a promoter develops a real estate project and sells or allots or transfers the apartment on leasehold basis or If the promoter enters into a long term lease for godowns and a consideration/ lump sum lease premium is involved to create a leasehold interest in favour of the Lessee, then RERA would be applicable.The leasehold interest created is also a transfer of property and RERA would be applicable. However, when apartment is fully ready and gives on leave and license basis, RERA is not applicable.

Law on MHADA: The objective for the payment of lease premium during such lease is to acquire of leasehold rights. Hence, it is implicit to enter into lease to acquire such leasehold rights. That leasehold rights which comprise of bundle of rights including but not limited to right of possession, right of long term enjoyment, but also right of transfer and succession.

Thus, by implication transferor would forego all such rights in favour of transferee for a term only if such lease deed is executed. Thus even when Mhada sells plot on lease basis, RERA is applicable.

Q.Is RERA applicable to the Housing Society who themselves appointed the developer to build flats for the members? And the land has already been transferred in the name of Housing Society. Construction of building and allotment of flats has not yet started.
A.Since the society has appointed a developer, it is the duty of the developer to register the project before RERA, before selling or marketing a single flat. Society need not register with RERA as a co-promoter as the society is not selling a single flat. The developer can register before RERA only after getting the plan's sanction and on receiving the IOD.

Q.What is real estate Project ?
A.As per section 2(zn) of Real Estate (Regulation and Development) Act, 2016, "real estate project" means the following :
(i)     the development of a building or
(ii) a building consisting of apartments, or
(iii) converting an existing building or a part thereof into apartments, or
(iv) the development of land into plots or apartment, as the case may be,
(v) for the purpose of selling all or some of the said apartments or plots or building, as the case may be, and
(vi) includes the common areas, the development works, all improvements and structures thereon, and all easement, rights and appurtenances belonging thereto.

Q.What is phase wise development and when do the phase wise projects require to be registered with the authority?
A.Explanation to section 3 of the Act, provides that where the real estate project is to be developed in phases, every such phase shall be considered a standalone real estate project, and the promoter shall obtain registration under this Act for each phase separately.

As per Rule 2(p) of Maharashtra Real Estate (Regulation and Development)(Registration of real estate projects, Registration of real estate agents, rates of interest and disclosures on website) Rules, 2017, it provides that “Phase of a Real Estate Project” may consist of a building or a wing of the building in case of building with multiple wings or defined number of floors in a multistoried building/wing.

As per section 3(2) of the Act, no registration of the real estate project shall be required—
(e) where the area of land proposed to be developed does not exceed five hundred square meters inclusive of all phases or
(f) the number of apartments proposed to be developed does not exceed eight inclusive of all phases:
As per first proviso to section 3(2) of the Act, provides that, if the appropriate Government considers it necessary, it may, reduce the threshold below five hundred square meters or eight apartments, as the case may be, inclusive of all phases, for exemption from registration under this Act; Maharashtra government has not issued any notification to reduce the number of units or lesser area for registration of the real estate projects.

Thus, if all phases together, exceeds 8 units or area exceeds 500 sq. meters of the land, each such phase needs to be registered within three months, if they are ongoing projects and new projects before advertisement for sale of apartments, building or plots in the said real estate project after the commencement of the Act.

(Ramesh S. Prabhu is Chairman, Maharashtra Societies Welfare Association)

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