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RERA: About registration of project and its extension

Saturday, June 16, 2018

Mandatory registration of real estate project is one of key features of the RERA Act. Advocate Tanmay Ketkar explains what developers and buyers need to know about the same

The registration of project under Real Estate (Regulation and Development) Act, 2016 (RERA) has made it convenient for stakeholders to have vital information about the project. While registering the project, it is mandatory to declare the proposed date of completion of project. The on-going projects were required to declare the original proposed date of completion and revised proposed date of completion. The new projects are required to declare only the proposed date of completion.

According to the provision of section 5 of the Act, the registration of the project will be valid only till the proposed date of completion, declared by the promoter, while registration of project. The registration of project will automatically expire on the proposed date of completion. On backdrop of this provision the significance of proposed date of completion can be understood.

Proposed date of completion
Will selling of units in registered project after the proposed date of completion be valid? Till date the question has not been answered by the RERA Authority or the government. Section 3 of the Act states that, the projects required to be registered, cannot advertise or sell, unless and until it is registered. Combined understanding of provisions of section 3 and 5 leads to an inference that the projects cannot sell the units after expiry of its registration, unless and until the registration of project is extended.

The important aspect of proposed date of completion, must be studied from perspective of all sectors of real estate. From developers or promoters perspective, unless and until, there is explanation from competent authority, the developers before declaring proposed date of completion must consider both, the execution i.e. construction and marketing i.e. selling. From customer’s perspective, before going ahead the customer must find an answer to questions, what is proposed date of completion of project? Whether the project will be completed before that date?

Complaints against unregistered projects
Currently, the MahaRERA does not entertain complaints against unregistered projects. If the same policy is continued it would be difficult to file complaint against project with expired date of registration. From perspective of housing finance agencies or banks and financial institutes, they all must assess and study the proposed date of completion, before sanctioning housing and project loan. As a preventive measure, loan for unit in expired project shall not be sanctioned or disbursed unless and until its registration is extended.

After understanding proposed date of completion and its significance, its necessary to understand about the extension of registration. Section 6 of the Act has relevant provisions. Accordingly, an extension may be granted for delay attributable to the reasons beyond control of developer or promoter. What amounts to or would be treated as reasons beyond control is also clearly specified. Accordingly,war, drought, flood, fire, earthquake, cyclone, or other natural calamity only, would be accepted as reason beyond control of developer/promoter. Therefore, extension of registration for any other reason would be difficult, if not impossible.

If it is proved that the delay is caused by the above-mentioned reasons, the extension of registration may be granted. However, there is limit on extension. Accordingly,total period of extension cannot be more than one year in total.

In a nutshell, considering all these provisions, for developers its better to assess the construction and marketing before declaring proposed date of completion. The customers and banks and financial institutions, before investing or financing, must assess the project and its progress, on backdrop of its proposed date of completion.

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