Maha RERA, Maharashtra Real Estate Regulatory Authority Updates 2018


These are the early days of RERA implementation in the country, yet the response has been largely positive with more people trying to understand how best to leverage the new rules and responsibilities. Given the dynamic nature of the Mumbai real estate market, it is no surprise that there has been considerable excitement in the huge number of real estate professionals in the city’s various associations. However, at this stage, there is a strong need for more information for all the stakeholders. In continuing with our previous article, “What Will Be the Impact of RERA on real estate stakeholders? “, we are covering one more aspect of the RERA development, that of its impact on the real estate promoters in real life situations.


What’s the first step after registering the property with the RERA Authority?
As per section 11 of the RERA Real Estate Bill, each promoter has to update all the relevant project information at the time of application on the website of the Authority. Also, it is his responsibility to update certain information quarterly, to inform the buyer about the project and the progress of the project.

For more information, Section 4 and Section 11 provides a list of disclosures on the Authority’s website to be provided by the promoter for public viewing, and to be specified in the rules.

Is the promoter really responsible for:
Confirming the advertisement or prospectus.
As per section 12 of the Act, the promoter is in fact responsible for the veracity of all information contained in marketing materials such as ads and prospectus. In case of any loss sustained by any buyer due to false information contained therein, the promoter is liable to compensate for the loss.

Transfer to third party
Section 15 directly relates to the transfer of the promoter’s rights. As per this section, the promoter cannot transfer or assign his majority rights and liabilities in the project to a third party. Such a transfer can only be done by obtaining the prior written consent of 2/3rd allottees, and the Regulatory Authority. The two-third allottees cannot include the apartments held by the promoter himself. Further, irrespective of the number of the apartments held by any one allottee, he/ she shall only be entitled to one vote.

Insurance of the real estate project
Section 16 of the Act clearly states that the promoter is required to seek an insurance for the real estate project towards the title of the land, and towards the construction of the project too. However, it is clear that this provision will come into effect only later, and in the manner as may be notified by the Government.

Transfer of Title of the apartment/ plot
According to the Section 17 of the RERA Act, there are clear rules on transfer of the title of the apartment and the project to the allottee and to the association of the allottees.

Return of amount and compensation to the allottee
The Section 18 provides provisions for various situations in which the allottee would be compensated by the promoter due to delay in completion of the project, etc.

Can the promoter decide the final cost of booking the apartment/ plot?
Section 13 clearly states that the promoter can charge a maximum of 10 percent of the total apartment/ plot cost as advance payment or application fees. If there is a modification to this amount, or there is a need for further collection, he will have to enter into a ‘Agreement for Sale’ with the allottee.

What exactly is the ‘Agreement for Sale’, and how binding is it on the ‘promoter’ and the ‘allottee’?
This has been left up to the appropriate Government to specify through Rules for the ‘Agreement for Sale’, as clarified in the section 13(2). However, the individual provisions are left up to the Allottee and the promoter, as decided mutually to their benefit. In that way, there is some internal flexibility to this section.

Does the promoter retain any rights to modify/ amend the sanctioned plans or project specifications after the competent authority has approved and shared it with the allottees?
The Act is very clear that the promoter can only make minor additions or alterations to the sanctioned plans or project specifications. If at all a major redesign or modification is needed, more than two thirds of the allottees have to approve in writing. As again, the promoter’s apartments will be excluded from this count, and moreover, each allottee, irrespective of the number of apartments shall be entitled to one vote only.

What is the period of the promoter’s liability for the project/ apartment’s structural defects and such?
The promoter shall be liable for 5 years from the date of handing over possession to the allottee towards structural defect or any other defect as specified in section 14(2).

What are the rights and the responsibilities of the Allottees under the Act?
Section 19 and 20 deal with the various rights that the Allottees are afforded under the RERA Act, especially to ensure that they can expect better cooperation from the promoters. The Act makes the promoters liable to fulfill based on the agreement entered into with the allottees, namely – stage-wise schedule of completion of the project and the services, to claim timely possession of the apartment/ plot, entitlement to necessary documents and plans, etc.

Section 20 lays out the various duties of the allot tees, which provide for matters relating to the payment regarding the apartment/ plot, liability towards interest for delay in payment, responsibility to take possession, participate in formation of association, etc.

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