It has been only five days that RERA act has been implemented and there have been lot of ambiguity regarding the act. As only 13 states have so far notified the rules, several states have diluted the rules and there is question of presence of regulator. There are many who still don't know what RERA is and what are its effects on real estate market. Concerns like what are the penalties for developers if they don't follow RERA rules and regulations. Whether there would be any impact on price of real estate properties after RERA implementation and many more such questions pertaining to RERA act.
The act has been pending for 9 years, the main aim of the act is to protect the interest of homebuyers and encourage genuine promoters/ developers.
Below are the most frequently asked questions by homebuyers on builder's perspective.
FAQs from Promoter's perspective:
1. How does the Act Impact Joint Promoters or joint Venture Agreements or cases of joint development with land owner on revenue share basis or area share basis, where landlord and promoter are two different parties but both are beneficiaries of sale of project?
The Act makes both the Promoters and the landlord or any such parties which are beneficiary of a sale of a project and receive payments from allottees as Co-Promoters and hence liable to adhere to the provisions of the Act and Rules and Regulations made there under.
2. How does the promoter make an application for registration?
MahaRERA shall launch online application for registration from 1st May 2017. All promoters shall make their applications online through this IT solution, filling the details in the requisite forms, uploading the required documents and paying the necessary fees.
3. Is it compulsory for the promoter to register the project immediately after he gets sanctioned approvals?
Promoter has to register the project before he starts any form of advertising, marketing, booking, selling, offer for selling or inviting people to purchase plots, apartment or buildings.
4. Will ongoing Project have to stop sales or construction till receiving the Registration?
At the end of ninety days from the date of notification of Section 3 of the Act, the promoter of an ongoing project shall not advertise, market, book, sell or offer for sale or invite persons to purchase in any manner any plot, apartment or building, unless he registers the project.
5. Can promoter change the completion date for ongoing projects while registering?
Yes, while registering project, promoter needs to give revised date of completion which should be commensurate with the amount of development completed 40. If an ongoing project is registered under MahaRERA, then will the Act be applicable for the entire project or will it be applicable only to units sold after registration?
Registration is of the Project/Phase and hence the provisions of the Act are applicable to all units of the Project/Phase.
6. Can an allottee who has executed agreement with the promoter prior to the ongoing project getting registered with the Authority, be a complainant before MahaRERA?
MahaRERA empowers any aggrieved person to file a complaint with respect to a registered real estate project. This will include an allottee that has an agreement executed before the project is registered with MahaRERA. However, MahaRERA will have authority to adjudicate for violations and contravention of provisions of the Real Estate (Regulation and Development) Act or rules and regulations made there under.
7. Can the promoter change the plans of subsequent phases after registration of the 1st phase?
The Act puts an obligation on a promoter to obtain consent of each allottee, if he wants to change the building plans for the phase that is registered. If a subsequent phase has not been registered, the promoter can change the plans of the subsequent phases without obtaining consent of the allottees from current / ongoing phases. However, if the subsequent phases are also registered, consent of allottees, of the concerned phases, would be needed as mentioned in section 14 of the Act
8. If the promoter needs to change the plans of an on-going project post registration, will he need the consent of the pre-registration purchasers?
MahaRERA protects the interest of all the Allottees; including those who have executed an agreement before the project is registered under its provisions Hence, if the promoter wants to change the plans post registration, then consent of all pre-registration allottees shall be required as well.
9. The promoter can hand over the common amenities only after completing subsequent phases. What should he commit to the customer for the registered phase?
A promoter should meticulously plan the buildings of the registered phase & common areas and then declare the individual date of handing over possession of the building & common areas. Each phase along with the development works shall have to completed and handed over to the allottee within the time frame defined by the promoter, during registration, for that phase of the project.
10. Is insurance of the project compulsory? What are the provisions regarding Insurance?
Promoter has to obtain all such insurance as notified by the State Government. So insurance will be compulsory only after the Notification is issued by the State Government. The Act says that the State Government can prescribe various types of insurance including but not limited to a) Title of the land and building as a part of the real estate project; and b) Construction of the real estate project. The promoter is liable to pay the insurance premium before transferring the same to the allottee / association of allottees. The documents related to insurance will have to be handed over to the association of allottees when the same is formed.
11. Can project finance taken by promoters from financial institutions be withdrawn from designated 70% account?
Yes, if this is declared at the time of registration and subject to provisions of Section 4 of the Act and 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 made there under. However, the money withdrawn should be utilized towards construction expenses of the project, on priority.
12. In case of joint development with land owner on revenue share basis or area share basis, whether land owner’s component could be withdrawn from designated account of 70%?
The Act makes both the Promoters and the land owner or any such parties which are beneficiary of a sale of a project and receive payments from allottees, as Co Promoters and hence liable to adhere to the provisions of the Act and Rules and Regulations made there under. The withdrawal of money would be subject to provisions of Section 4 of the Act and the 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 made there under.
13. Whether money collected from allottees towards stamp duty, registration, share money for society, deposits for maintenance, corpus funds, infrastructure charges, parking charges etc., are required to be deposited in the designated bank account (70 %)?
Yes, since these are part of the project cost
14. When does the promoter need to form society, association etc.?
The Promoter has to ensure that an association of allottees is formed within three months of 51% of allottees have booked their apartment in the project.
15. If due to a change in government policy, the promoter is entitled to additional FSI etc., can the promoter build additional floors in a registered ongoing project where initially those floors were not planned?
Yes, but consent of allottees would be needed as mentioned in section 14 of the Act.
16. Whether MahaRERA recognizes Maharashtra Ownership Flats Act and Apartment Ownership Act?
Yes, the said Acts have not been repealed. However, In case of inconsistent provisions, the provisions of the Central Act shall prevail.
17. There is a provision for deemed registration of a real estate project in case the Regulatory Authority does not respond to the application. How will the promoter receive ID & password?
In accordance with the Act, MahaRERA shall within a period of seven days of the deemed registration, provide registration number.
18. How will the Act, Rules and Regulations affect advertisement of projects with many phases?
A promoter would be allowed to advertise, market, book, sell or offer to sell or invite persons to purchase plot, apartment or building in a phase of a real estate project, only if the said phase is registered. A promoter cannot advertise, commit or sell amenities or facilities that are in a subsequent phase which is still not registered.
19. What if an adjoining land is purchased by the promoter? Can he continue with same registration?
No, it has to be separately registered if the said adjoining land was not a part of the project which has been registered.
20. What should the promoter do in case the particular brand of fixtures and fittings as mentioned in the specifications are not available in the market since the production of that type is stopped by the supplier? Will the promoter still be liable in such case? And what in case fixture/fittings do not give guarantee for more than five years.
In accordance with section 14 of the Act, the promoter should take previous consent of the concerned allottee.
21. what if Part OC is received for the project: is it exempt from registration?
22. Estimated Cost should be submitted only for area for which approvals/plans cleared as on date of registration of project or it should also include costs even for the proposed future expected area to be generated? (Bearing in mind the pros and cons for the figures depending solely on estimated costs)
Estimated cost of the whole project that has been put up for registration has to be indicated while applying for registration.
23. Registration: Are various certificates (Architect, Engineer, and CA) required at the time of registration?
Please refer to the Forms 1, 2 and 3 of Maharashtra Real Estate Regulatory Authority (General) Regulations 2017.
24. Does developer need to submit the certificates to Banker or retain with him?
The original certificates have to be retained by the promoter because the same are required to be verified and audited by the statutory auditor of the promoter's company at the end of every financial year. Copies may also have to be submitted to the concerned bank, if demanded by them
25. Separate Bank Account: can escrow account opened with the Bank from whom loans are availed, be treated as Separate Bank Account for a MahaRERA registered project.
No. A separate bank account needs to be opened in accordance with the provisions of the Act and rules made there under.
26. Can separate account be more than one since at times there might be multiple lenders in same project (building wise lender) though developer might register the project at one go?
No. There should be one designated bank account for every registered project or registered phase of a project.
27. Sometimes buyer is ready and gives undertaking that he is ok to give money beyond 10% however does not want to register. Should it be allowed?
No. Section 13(1) of the Act prohibits the promoter from taking more than 10% of the cost of apartment without entering into a written agreement for sale, duly registered.
28. Referral bookings: Existing customers referring to others for buying the flat in same project or other project of same developer: will they be treated as Real Estate Agent?
Yes, if it is against a consideration. Real Estate Agent is clearly defined in section 2(zm) of the Act
29. For Foreign broker's registration and advertisement outside India, will same rule apply as in India?
Yes, if it pertains to a registered project under MahaRERA.
30. In case of customers default: can developer be selective in cancelling units?
Provision of termination of agreement is covered in the Model Form of Agreement attached to 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.
We will have to wait to know whether RERA a boon or curse to homebuyers, whether it will be beneficial for buyer or seller. Housing and Urban Poverty Alleviation Minister M Venkaiah Naidu said "The act coming into force after 9 years is beginning of new era". Also many real estate promoters believe the act would bring big change in real estate market.