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Rush and fear as RERA deadline nears

Friday, July 28, 2017

We can find the builders in Maharashtra are in a great rush to register their ongoing projects with Maharashtra Real Estate Regulatory Authority (MahaRERA). The last date for RERA registration is July 31. The illegal activities, cheating and fraudulent activities, taking consumer for ride prevailing in the real estate sector, forced the government of India to bring out a legislation to regulate the real estate sector.  Real Estate (Regulation and Development ) Act, 2016 ( RERA) has become effective from 1st May, 2017 across India except Jammu and Kashmir.  Every state government has to formulate its own rules and also establish the Real Estate Regulatory Authority, Real Estate Appeallate Tribunal and Adjudicating officer to administer and regulate the sector. MahaRERA is the authority set up by the government of Maharashtra to register the real estate projects, monitor, administer, supervise and penalise the builders, land owners, agents or consumers who contravene any of the provisions of RERA.  

Registration details
As per section 3 of RERA, every promoter (Builder or developer) who is developing plots, building or apartment is legally required to register such projects with MahaRERA before carrying out any advertisement, marketing, sale or book.  As far as on going projects are concerned where there is no occupation certificates, such projects are required to registered within 3 months of the commencement of the Act which expires on 31st Jul, 2017.

MahaRERA has launched the online registration of the projects from 1st May 2017 itself and is regularly issuing necessary guidelines to clarify easy registration process.   As per the information, there are more than 10,000 ongoing projects in Maharashtra of which nearly 1500 applications have been received by MahaRERA.

The promoter is required to give all the information of the projects and also the projects which have been completed in the last 5 years. In order to get the projects registered with MahaRERA, proper approval has to be submitted with the draft copies of allotment letter, agreement for sale, conveyance deed, sale deed including the date by which the projects shall be completed.  

Some of  concerns of the developers who are avoiding  the registration of the ongoing projects are

  • Flats have been sold of which there are no approvals


  • Additional construction over and above the approved plans have been done


  • The projects are delayed for a period exceeding 3 to 5 years


  • Same flats have been sold to multiple investors/ consumers


  • Projects are stalled due to litigation or changes in the policies of the government


  • Lack of required funds or slow sales which makes it difficult to declare the date of completion of the projects

Once the project is registered, the developer will have to comply with the following provisions which some of the developers want to avoid
(a)    70% of the receipts from the customers will have to be kept in a separate account which compulsory required to be used for the purpose of land and construction cost. For withdrawal three professionals like Architect, Engineer and CAs certificate has to be obtained.

(b)    Audit has to be done by another CA within 6 months and same has to be uploaded on the website.

(c)    On quarterly basis, the project details, money spent for the project with progress done need to be updated.

(d)    All the details of the flats, their booking status, approval received need to be submitted.

(e)    Payment of interest as per SBI maximum Marginal lending plus 2% need to be paid to the customers for any delay including any compensation which may be decided by the adjudicating officers.

(f)    For any illegal activities or unfair trade practices, the registration may be cancelled by the authority which means the projects shall be handed over to the association of the allotees or any other persons but the developer will lose the project

(g)    Any addition or alternation or use of additional future FSI which is not disclosed require the permission of 2/3rd allottees consent

(h)    Sale or Transfer of the projects require consent of 2/3rd allottees as well as the authority.

No way out for builders
The developer or builders also cannot avoid the registration of the projects. They are caught in crossroads not knowing the next course of action against such stringent provisions. Already few developers have filed a case before the Nagpur Bench of Mumbai High Court and builders and developers welfare association have filed PIL before Madhya Pradesh High court challenging the registration of on going  projects and restriction on use of money collected from the customers.

The quantum of penalty and the penal actions that follows certainly means it makes sense for the genuine builders to get their projects registered with MahaRERA. Any business which is done within a regulatory frame work shall help them to grow and prosper. If the projects which required to be registered do not get registered, the following will be the consequences on such erring developers.

(a)    If the ongoing projects are not registered on or before 31st July, 2017, the MahaRERA on the basis of sourced information may initiate penalty proceedings and the penalty may go up to 10% of the estimated cost of the project as determined by the authority.

(b)    MahaRERA has already issued a standard operating procedure to hear the complaints vide SOP dated 24th July, 2017 through a dedicated email : It has been made clear that the details of the complaint will be kept secret.

(c)    MahaRERA has already started collecting information from the local authorities about the projects which have been sanctioned of which Occupation certificates have not been issued.

(d)    Going forward, the MahaRERA shall issue necessary directions to the local authorities not to provide with any further Commencement certificate, unless and until the registration with MahaRERA is done or provide an undertaking that no sales or marketing has been done.

(e)    Even after, the order for registration is granted and the developer fails to register the project, a provision for further penalty of 10% of the cost of the project or three years imprisonment or both.

(f)    To compound the imprisonment terms,  a compounding fees ranging between 5% to 10% of the cost of the project is provided.

(g)    Any false information or any violation of any of the legal provisions attract penalty up to 5% of the cost of the project.

(h)    Any appeal before the appellate tribunal requires the developer to deposit at least 30% of the amount decided as penalty by the authority or any higher amount as may be decided.

(i)    All the complaints are heard within 60 days by the authority or the appellate tribunal and thus decisions are also going to be very quick.

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

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